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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 areacode) |

|   | 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,      2009 and December 31, 2008 | 3 |
|                                     |                                                                                                                                                                                                                                                       |   |   |
|                                     |                                                                                                                                                                                                                                                       | Consolidated Statements of      Operations--Three Months Ended          March      31, 2009 and 2008 |  4 |
|                                     |                                                                                                                                                                                                                                                       |   |   |
|                                     |                                                                                                                                                                                                                                                       | Consolidated Statements of Cash      Flows--Three Months Ended          March      31, 2009 and 2008 |  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      31,2009 |         |   | December      31,2008 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------------|--------|-----------------------|--------|
| Current      assets:                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |
| Cash      and cash equivalents                                                                                                                                                                                                                                                                                                                           |   | $                             | 817,602      |   |                  | $      | 710,111 |   |
| Accounts      receivable, trade – net of allowance for doubtful accounts                                                                                                                                                                                                                                                                           |   |                          | 279,714      |   |                  |   | 661,704 |   |
| Prepaid      expenses and other current assets                                                                                                                                                                                                                                                                                                           |   |                          | 52,707       |   |                  |   | 121,920 |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
|                      Total current assets                                                                                                                                                                                                                                     |   |                          | 1,150,023    |   |                  |   | 1,493,735 |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
| Property      and equipment, net                                                                                                                                                                                                                                                                                                                         |   |                          | 261,221      |   |                  |   | 278,853 |   |
| Other      assets                                                                                                                                                                                                                                                                                                                                        |   |                          | 19,901       |   |                  |   | 19,901 |   |
|                      Total assets                                                                                                                                                                                                                                             |   | $                             | 1,431,145    |   |                  | $      | 1,792,489 |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                          |   |                          |         |   |                  |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
| Current      liabilities:                                                                                                                                                                                                                                                                                                                                |   |                          |         |   |                  |   |   |   |
| Accounts      payable                                                                                                                                                                                                                                                                                                                                    |   | $                             | 533,319      |   |                  | $      | 438,878 |   |
| Obligations      under capital lease                                                                                                                                                                                                                                                                                                                     |   |                          | 27,818       |   |                  |   | 35,012 |   |
| Accrued      liabilities                                                                                                                                                                                                                                                                                                                                 |   |                          | 250,792      |   |                  |   | 207,809 |   |
| Deposits      and deferred revenue                                                                                                                                                                                                                                                                                                                       |   |                          | 490,000      |   |                  |   | 224,595 |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
|                      Total current liabilities                                                                                                                                                                                                                                |   |                          | 1,301,929    |   |                  |   | 906,294 |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
| Obligations      under capital lease, long-term                                                                                                                                                                                                                                                                                                          |   |                          | 25,919       |   |                  |   | 27,909 |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
| Total      Liabilities                                                                                                                                                                                                                                                                                                                                   |   |                          | 1,327,848    |   |                  |   | 934,203 |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
| Commitments      and contingencies                                                                                                                                                                                                                                                                                                                       |   |                          | –      |   |                  |   | – |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
| Stockholders'      equity:                                                                                                                                                                                                                                                                                                                               |   |                          |         |   |                  |   |   |   |
|      Convertible      preferred stock, $1.00 par value, 2,000,000 sharesauthorized;            No      shares issued and outstanding                                                                                                                                |   |                          | –      |   |                  |   | – |   |
|      Common      stock, $.00l par value, 120,000,000 shares authorized,            107,395,216      shares issued and outstanding at            March      31, 2009 and December 31, 2008, respectively |   |                          | 107,395      |   |                  |   | 107,395 |   |
| Additional      paid-in capital                                                                                                                                                                                                                                                                                                                          |   |                          | 109,373,720  |   |                  |   | 109,295,595 |   |
| Accumulated      deficit                                                                                                                                                                                                                                                                                                                                 |   |                          | (109,377,818 | )      |                  |   | (108,544,704 | ) |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
|                      Total stockholders' equity                                                                                                                                                                                                                               |   |                          | 103,297      |   |                  |   | 858,286 |   |
|                                                                                                                                                                                                                                                                                                                                                     |   |                          |         |   |                  |   |   |   |
|                      Total liabilities and stockholders' equity                                                                                                                                                                                                               |   | $                             | 1,431,145    |   |                  | $      | 1,792,489 |   |

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|                                                                            |   | For       the Three Months EndedMarch      31, |
|---------------------------------------------------------------------------------|--------|-----------------------------------------------------|
|                                                                            |   | 2009                                                |   |   | 2008 |
| Revenues                                                                        |   |                                                |   |   |   |
| Government      contracts                                                       |   | $                                                   | 551,184 |   |   | $ | 545,824 |   |
| Contract      research                                                          |   |                                                | 260,000 |   |   |   | 184,358 |   |
| Other                                                                           |   |                                                | 13,341 |   |   |   | 139,832 |   |
|           Total      Revenues |   |                                                | 824,525 |   |   |   | 870,014 |   |
|                                                                            |   |                                                |   |   |   |   |   |   |
| Research      and development                                                   |   |                                                | 928,148 |   |   |   | 1,182,135 |   |
| Selling,      general and administrative expenses                               |   |                                                | 733,843 |   |   |   | 1,055,270 |   |
|                                                                            |   |                                                |   |   |   |   |   |   |
| Operating      costs and expenses                                               |   |                                                | 1,661,991 |   |   |   | 2,237,405 |   |
|                                                                            |   |                                                |   |   |   |   |   |   |
| Gain      on sale of intellectual property and other assets                     |   |                                                | 6,000 |   |   |   | 100,000 |   |
|                                                                            |   |                                                |   |   |   |   |   |   |
| Loss      from operations                                                       |   |                                                | (831,466 | ) |   |   | (1,267,391 | ) |
|                                                                            |   |                                                |   |   |   |   |   |   |
| Other      income (expense), net                                                |   |                                                |   |   |   |   |   |   |
| Interest      Expense                                                           |   |                                                | (2,785 | ) |   |   | (1,598 | ) |
| Interest      Income                                                            |   |                                                | 1,137 |   |   |   | 21,410 |   |
| Litigation      Settlement                                                      |   |                                                | – |   |   |   | 500,000 |   |
|                                                                            |   |                                                |   |   |   |   |   |   |
|  Loss      from continuing operations before taxes                         |   |                                                | (833,114 | ) |   |   | (747,579 | ) |
|                                                                            |   |                                                |   |   |   |   |   |   |
|  Provision      for taxes                                                  |   |                                                | – |   |   |   | – |   |
|                                                                            |   |                                                |   |   |   |   |   |   |
| Net      loss                                                                   |   | $                                                   | (833,114 | ) |   | $ | (747,579 | ) |
| Loss      per share                                                             |   |                                                |   |   |   |   |   |   |
|                                                                            |   |                                                |   |   |   |   |   |   |
| Basic      and Diluted                                                     |   | $                                                   | (0.01 | ) |   | $ | (0.01 | ) |
| Weighted      average shares outstanding                                        |   |                                                |   |   |   |   |   |   |
|                                                                            |   |                                                |   |   |   |   |   |   |
| Basic      and Diluted                                                     |   |                                                | 107,395,216 |   |   |   | 107,173,549 |   |

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|                                                                                 | For the      Three Months EndedMarch      31, |   |
|--------------------------------------------------------------------------------------|----------------------------------------------------|--------|
|                                                                                 | 2009                                               |   |   | 2008 |   |
| Cash      flows from operating activities:                                           |                                               |   |   |   |   |   |
|  Net      loss                                                                  |                                               | $      | (833,114 | ) |   | $ | (747,579 | ) |
| Adjustments      to reconcile net loss to net                                        |                                               |   |   |   |   |   |   |   |
| cash      used in operating activities:                                              |                                               |   |   |   |   |   |   |   |
| Depreciation      and amortization expense                                           |                                               |   | 18,090 |   |   |   | 16,049 |   |
| Stock      based compensation expense                                                |                                               |   | 78,125 |   |   |   | 87,418 |   |
| Changes      in assets and liabilities:                                              |                                               |   |   |   |   |   |   |   |
| Accounts      receivable, trade                                                      |                                               |   | 381,990 |   |   |   | (88,282 | ) |
| Prepaid      expenses and other assets                                               |                                               |   | 69,213 |   |   |   | 16,975 |   |
| Accounts      payable and accrued liabilities                                        |                                               |   | 137,424 |   |   |   | 274,880 |   |
| Deposits      and Deferred Revenue                                                   |                                               |   | 265,405 |   |   |   | (37,274 | ) |
|                                                                                 |                                               |   |   |   |   |   |   |   |
| Total      adjustments                                                               |                                               |   | 950,247 |   |   |   | 269,766 |   |
|                                                                                 |                                               |   |   |   |   |   |   |   |
| Net      cash provided by (used in) operating activities                             |                                               |   | 117,133 |   |   |   | (477,813 | ) |
|                                                                                 |                                               |   |   |   |   |   |   |   |
| Cash      flows from investing activities:                                           |                                               |   |   |   |   |   |   |   |
| Capital      expenditures                                                            |                                               |   | (458 | ) |   |   | (6,395 | ) |
|        Net      cash used in investing activities |                                               |   | (458 | ) |   |   | (6,395 | ) |
|                                                                                 |                                               |   |   |   |   |   |   |   |
| Cash      flows from financing activities:                                           |                                               |   |   |   |   |   |   |   |
| Repayment      of capital lease obligations                                          |                                               |   | (9,184 | ) |   |   | (7,049 | ) |
|                                                                                 |                                               |   |   |   |   |   |   |   |
|        Net      cash used by financing activities |                                               |   | (9,184 | ) |   |   | (7,049 | ) |
|                                                                                 |                                               |   |   |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                            |                                               |   | 107,491 |   |   |   | (491,257 | ) |
|                                                                                 |                                               |   |   |   |   |   |   |   |
| Cash      and cash equivalents, beginning of period                                  |                                               |   | 710,111 |   |   |   | 3,020,096 |   |
|                                                                                 |                                               |   |   |   |   |   |   |   |
| Cash      and cash equivalents, end of period                                        |                                               | $      | 817,602 |   |   | $ | 2,528,839 |   |

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|                                                 |   | ANI    |     |   | EBT    |   |   | All      Other |   |   | Total    |   |
|------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------|----------------|--------|--------|----------|--------|
| 2009                                                 |   |   |     |   |   |   |   |           |   |   |     |   |
|                                                 |   |   |     |   |   |   |   |           |   |   |     |   |
| Revenue                                              |   | $      | 824,525  |   |   | $      | -      |           |   | $      | -        |   |   | $ | 824,525 |   |
|                                                 |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
| Profit      (Loss)                                   |   |   | (553,448 | )      |   |   | 5,459  |           |   |   | (285,125 | )      |   |   | (833,114 | ) |
|                                                 |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
| Expenditures      for                                |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
|      long-lived      assets |   |   | 458      |   |   |   | -      |           |   |   | -        |   |   |   | 458 |   |
|                                                 |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
| 2008                                                 |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
|                                                 |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
| Revenue                                              |   | $      | 870,014  |   |   | $      | -      |           |   | $      | -        |   |   | $ | 870,014 |   |
|                                                 |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
| Profit      (Loss)                                   |   |   | (440,541 | )      |   |   | (520   | )         |   |   | (306,518 | )      |   |   | (747,579 | ) |
|                                                 |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
| Expenditures      for                                |   |   |     |   |   |   |   |           |   |   |     |   |   |   |   |   |
|      long-lived      assets |   |   | 6,395    |   |   |   | -      |           |   |   | -        |   |   |   | 6,395 |   |

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|                                                      | APPLIED      NANOTECH HOLDINGS, INC.(Registrant)                                                                                                                                                                                                                                                                                                                                            |
|-----------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                      |                                                                                                                                                                                                                                                                                                                                                                                        |
| Date:     May      1, 2009       |      /s/ Thomas F. Bijou                                             Thomas      F. BijouChief      Executive Officer (Principal Executive Officer)                                           |
|                                                      |                                                                                                                                                                                                                                                                                                                                                                                        |
| Date:     May      1, 2009  |      /s/ Douglas P.      Baker                                       Douglas      P. BakerChief      Financial Officer(Principal      Financial Officer and PrincipalAccounting      Officer) |

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| Exhibit |                                                          |
|---------|---------------------------------------------------------------|
|    |                                                          |
| 11      | Computation      of (Loss) Per Common Share                   |
|    |                                                          |
| 31.1    | Rule      13a-14(a)/15d-14(a) Certificate of Thomas F. Bijou  |
|    |                                                          |
| 31.2    | Rule      13a-14(a)/15d-14(a) Certificate of Douglas P. Baker |
|    |                                                          |
| 32.1    | Section      1350 Certificate of Thomas F. Bijou              |
|    |                                                          |
| 32.2    | Section      1350 Certificate of Douglas P.Baker              |

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