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| TEXAS                                                               | 76-0273345                           |
|---------------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
|                                                                |                                 |
|                                                                |                                 |
| 3006 Longhorn Blvd., Suite 107Austin, Texas                         | 78758                                |
| (Address of principal executive offices)                            | (Zip Code)                           |

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

|   | Large Accelerated Filer o | Accelerated Filer o         |   |
|--------|---------------------------|-----------------------------|--------|
|   | Non-accelerated Filer x   | Smaller Reporting Company o |   |

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|                                | Page                                                                                                                       |
|-------------------------------------|----------------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                                       |
| Part I.  Financial Information |                                                                                                                       |
|                                |                                                                                                                       |   |
|                                | Item 1.    Financial Statements                                                                        |   |
|                                |                                                                                                                       |   |   |
|                                |                                                                                                                       | Consolidated Balance Sheets--June 30, 2010 and December 31, 2009 | 3 |
|                                |                                                                                                                       |   |   |
|                                |                                                                                                                       | Consolidated Statements of Operations --Three Months and Six Months Ended June 30, 2010 and 2009 | 4 |
|                                |                                                                                                                       |   |   |
|                                |                                                                                                                       | Consolidated Statements of Cash Flows --Six Months Ended June 30, 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                                       | 11 |
|                                |                                                                                                                       |   |
|                                | Item 4.    Controls and Procedures                                                                          | 11 |
|                                |                                                                                                                       |   |
| Part II.  Other Information    |                                                                                                                       |
|                                |                                                                                                                       |   |
|                                | Item 1.    Legal Proceedings                                                                                | 12 |
|                                |                                                                                                                       |   |
|                                | Item 6.    Exhibits                                                                                         | 12 |
|                                |                                                                                                                       |   |
| Signatures                          | 13                                                                                                                         |

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| ASSETS                                                                                                                                                                                             |   | (Unaudited)June 30,2010 |         |   | December 31,2009 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|--------------|--------|------------------|--------|
| Current assets:                                                                                                                                                                                    |   |                    |         |   |             |   |
| Cash and cash equivalents                                                                                                                                                                          |   | $                       | 2,136,180    |   |             | $      | 286,971 |   |
| Accounts receivable – net of allowance for doubtful accounts                                                                                                                                 |   |                    | 369,248      |   |             |   | 249,164 |   |
| Prepaid expenses and other current assets                                                                                                                                                          |   |                    | 117,836      |   |             |   | 67,340 |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Total current assets                                                                                                                                                                               |   |                    | 2,623,264    |   |             |   | 603,475 |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Property and equipment, net                                                                                                                                                                        |   |                    | 241,121      |   |             |   | 267,008 |   |
| Other assets                                                                                                                                                                                       |   |                    | 17,119       |   |             |   | 22,884 |   |
| Total assets                                                                                                                                                                                       |   | $                       | 2,881,504    |   |             | $      | 893,367 |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)                                                                                                                                               |   |                    |         |   |             |   |   |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Current liabilities:                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Accounts payable                                                                                                                                                                                   |   | $                       | 480,068      |   |             | $      | 952,679 |   |
| Notes payable                                                                                                                                                                                      |   |                    | 320,000      |   |             |   | – |   |
| Obligations under capital lease                                                                                                                                                                    |   |                    | 23,380       |   |             |   | 21,939 |   |
| Accrued liabilities                                                                                                                                                                                |   |                    | 419,891      |   |             |   | 482,629 |   |
| Deferred revenue                                                                                                                                                                                   |   |                    | 353,636      |   |             |   | 310,000 |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Total current liabilities                                                                                                                                                                          |   |                    | 1,596,975    |   |             |   | 1,767,247 |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Obligations under capital lease, long-term                                                                                                                                                         |   |                    | 19,062       |   |             |   | 31,124 |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Convertible notes payable, long-term                                                                                                                                                               |   |                    | 1,592,678    |   |             |   | 165,834 |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Total Liabilities                                                                                                                                                                                  |   |                    | 3,208,715    |   |             |   | 1,964,205 |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Commitments and contingencies                                                                                                                                                                      |   |                    | –      |   |             |   | – |   |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Stockholders' equity (deficit):                                                                                                                                                                    |   |                    |         |   |             |   |   |   |
| 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,  108,591,333 and 107,473,133 shares issued and outstanding at  June 30, 2010 and December 31, 2009, respectively |   |                    | 108,591      |   |             |   | 107,473 |   |
| Additional paid-in capital                                                                                                                                                                         |   |                    | 110,412,661  |   |             |   | 109,518,998 |   |
| Accumulated deficit                                                                                                                                                                                |   |                    | (110,848,463 | )      |             |   | (110,697,309 | ) |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Total stockholders equity (deficit)                                                                                                                                                                |   |                    | (327,211     | )      |             |   | (1,070,838 | ) |
|                                                                                                                                                                                               |   |                    |         |   |             |   |   |   |
| Total liabilities and stockholders equity (deficit)                                                                                                                                                |   | $                       | 2,881,504    |   |             | $      | 893,367 |   |

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|                                                   |   | For the Three MonthsEnded June 30, |        |   | For  the Six MonthsEnded June 30, |   |
|--------------------------------------------------------|--------|-----------------------------------------|-------------|--------|----------------------------------------|--------|
|                                                   |   | 2010                                    |        |   | 2009                                   |   |   | 2010 |   |   | 2009 |   |
| Revenues                                               |   |                                    |        |   |                                   |   |   |   |   |   |   |   |
| Government contracts                                   |   | $                                       | 618,674     |   |                                   | $      | 321,951 |   |   | $ | 1,239,467 |   |   | $ | 873,135 |   |
| Contract research                                      |   |                                    | 209,254     |   |                                   |   | 574,897 |   |   |   | 588,965 |   |   |   | 834,897 |   |
| License fees and royalties                             |   |                                    | 1,000,000   |   |                                   |   | – |   |   |   | 1,000,000 |   |   |   | – |   |
| Other                                                  |   |                                    | 38,011      |   |                                   |   | 25,249 |   |   |   | 47,143 |   |   |   | 38,590 |   |
| Total revenues                                         |   |                                    | 1,865,939   |   |                                   |   | 922,097 |   |   |   | 2,875,575 |   |   |   | 1,746,622 |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Research and development                               |   |                                    | 1,068,306   |   |                                   |   | 887,183 |   |   |   | 2,045,986 |   |   |   | 1,815,331 |   |
| Selling, general and administrative expenses           |   |                                    | 271,684     |   |                                   |   | 687,649 |   |   |   | 827,183 |   |   |   | 1,421,492 |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Operating costs and expenses                           |   |                                    | 1,339,990   |   |                                   |   | 1,574,832 |   |   |   | 2,873,169 |   |   |   | 3,236,823 |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Gain on sale of intellectual property and other assets |   |                                    | –     |   |                                   |   | – |   |   |   | 2,732 |   |   |   | 6,000 |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from operations                          |   |                                    | 525,949     |   |                                   |   | (652,735 | ) |   |   | 5,138 |   |   |   | (1,484,201 | )  |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expense), net                            |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                                       |   |                                    | (107,659    | )      |                                   |   | (1,632 | ) |   |   | (157,050 | )  |   |   | (4,417 | )  |
| Interest income                                        |   |                                    | 496         |   |                                   |   | 340 |   |   |   | 758 |   |   |   | 1,477 |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Income (loss) from continuing operations before taxes  |   |                                    | 418,786     |   |                                   |   | (654,027 | ) |   |   | (151,154 | )  |   |   | (1,487,141 | ) |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for taxes                                    |   |                                    | –     |   |                                   |   | – |   |   |   | – |   |   |   | – |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                      |   | $                                       | 418,786     |   |                                   | $      | (654,027 | ) |   | $ | (151,154 | ) |   | $ | (1,487,141 | ) |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Earnings (loss) per share                              |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and Diluted                                      |   | $                                       | 0.00        |   |                                   | $      | (0.01 | ) |   | $ | (0.00 | ) |   | $ | (0.01 | ) |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares outstanding                    |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                  |   |                                    | 108,580,633 |   |                                   |   | 107,395,216 |   |   |   | 108,244,919 |   |   |   | 107,395,216 |   |
|                                                   |   |                                    |        |   |                                   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                                |   |                                    | 108,729,402 |   |                                   |   | 107,395,216 |   |   |   | 108,244,919 |   |   |   | 107,395,216 |   |

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|                                                                        |   | For  the Six Months EndedJune 30, |      |
|-----------------------------------------------------------------------------|--------|----------------------------------------|-----------|
|                                                                        |   | 2010                                   |      |   | 2009 |   |
| Cash flows from operating activities:                                       |   |                                   |      |   |   |   |
| Net loss                                                                    |   | $                                      | (151,154  | ) |   | $ | (1,487,141 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                                   |      |   |   |   |   |   |
| Depreciation and amortization expense                                       |   |                                   | 32,347    |   |   |   | 32,909 |   |
| Amortization of discount on debt                                            |   |                                   | 93,094    |   |   |   | – |   |
| Stock based compensation expense                                            |   |                                   | 48,163    |   |   |   | 125,504 |   |
| Changes in assets and liabilities:                                          |   |                                   |      |   |   |   |   |   |
| Accounts receivable, trade                                                  |   |                                   | (120,084  | )  |   |   | 443,005 |   |
| Prepaid expenses and other assets                                           |   |                                   | (44,731   | )  |   |   | 45,208 |   |
| Accounts payable and accrued liabilities                                    |   |                                   | 50,651    |   |   |   | 339,536 |   |
| Deferred revenue                                                            |   |                                   | 43,636    |   |   |   | 280,405 |   |
|                                                                        |   |                                   |      |   |   |   |   |   |
| Total adjustments                                                           |   |                                   | 103,076   |   |   |   | 1,266,567 |   |
|                                                                        |   |                                   |      |   |   |   |   |   |
| Net cash used in operating activities                                       |   |                                   | (48,078   | ) |   |   | (220,574 | ) |
|                                                                        |   |                                   |      |   |   |   |   |   |
| Cash flows from investing activities:                                       |   |                                   |      |   |   |   |   |   |
| Purchases of property and equipment                                         |   |                                   | (6,460    | ) |   |   | (3,153 | ) |
| Net cash used in investing activities                                       |   |                                   | (6,460    | ) |   |   | (3,153 | ) |
|                                                                        |   |                                   |      |   |   |   |   |   |
| Cash flows from financing activities:                                       |   |                                   |      |   |   |   |   |   |
| Repayment of capital leases                                                 |   |                                   | (10,621   | ) |   |   | (18,638 | ) |
| Payments on notes payable                                                   |   |                                   | (20,000   | ) |   |   | – |   |
| Proceeds from long-term debt                                                |   |                                   | 1,730,000 |   |   |   | – |   |
| Proceeds from stock issuance, net of costs                                  |   |                                   | 204,368   |   |   |   | – |   |
|                                                                        |   |                                   |      |   |   |   |   |   |
| Net cash provided by (used in) financing activities                         |   |                                   | 1,903,747 |   |   |   | (18,368 | ) |
|                                                                        |   |                                   |      |   |   |   |   |   |
| Net increase (decrease) in cash and cash equivalents                        |   |                                   | 1,849,209 |   |   |   | (242,365 | ) |
|                                                                        |   |                                   |      |   |   |   |   |   |
| Cash and cash equivalents, beginning of period                              |   |                                   | 286,971   |   |   |   | 710,111 |   |
|                                                                        |   |                                   |      |   |   |   |   |   |
| Cash and cash equivalents, end of period                                    |   | $                                      | 2,136,180 |   |   | $ | 467,746 |   |

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|                               |   | ANI    |       |   | EBT    |   |   | All Other |   |   | Total    |   |
|------------------------------------|--------|--------|------------|--------|--------|--------|--------|-----------|--------|--------|----------|--------|
| 2010                               |   |   |       |   |   |   |   |      |   |   |     |   |
| Revenue                            |   | $      | 2,875,575  |   |   | $      | -      |      |   | $      | -        |   |   | $ | 2,875,575 |   |
|                               |   |   |       |   |   |   |   |      |   |   |     |   |   |   |   |   |
| Profit (Loss)                      |   |   | 282,225    |   |   |   | (571   | )         |   |   | (432,808 | )      |   |   | (151,154 | ) |
|                               |   |   |       |   |   |   |   |      |   |   |     |   |   |   |   |   |
| Expenditures for long-lived assets |   |   | 6,460      |   |   |   | -      |      |   |   | -        |   |   |   | 6,460 |   |
|                               |   |   |       |   |   |   |   |      |   |   |     |   |   |   |   |   |
| 2009                               |   |   |       |   |   |   |   |      |   |   |     |   |   |   |   |   |
| Revenue                            |   | $      | 1,746,622  |   |   | $      | -      |      |   | $      | -        |   |   | $ | 1,746,622 |   |
|                               |   |   |       |   |   |   |   |      |   |   |     |   |   |   |   |   |
| Profit (Loss)                      |   |   | (1,040,806 | )      |   |   | 5,459  |      |   |   | (451,794 | )      |   |   | (1,487,141 | ) |
|                               |   |   |       |   |   |   |   |      |   |   |     |   |   |   |   |   |
| Expenditures for long-lived assets |   |   | 1,461      |   |   |   | -      |      |   |   | 1,692    |   |   |   | 3,153 |   |

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|                                             | APPLIED NANOTECH HOLDINGS, INC.(Registrant)                                                                                                                                                                                                                                                                                                                                                                          |
|--------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                             |                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Date:     July 30, 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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