--------------------------------------------------------------------------------
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
--------------------------------------------------------------------------------
                             Washington, D.C. 20549
--------------------------------------------------------------------------------

                                    Form 10-Q

--------------------------------------------------------------------------------

(Mark One)

|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the QUARTERLY PERIOD ENDED March 31, 2009

                                       or

|_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from               to

                        Commission File Number 000-24911

--------------------------------------------------------------------------------

                                 BRAINTECH, INC.
--------------------------------------------------------------------------------
                 (Name of small business issuer in its charter)

          Nevada                                            98-0168932
(State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                       Identification No.)

                              1750 Tysons Boulevard
                                    Suite 350
                                McLean, VA 22102
                    (Address of principal executive offices)
                                 (703) 637-9752
                           (Issuer's telephone number)

--------------------------------------------------------------------------------

           Securities registered pursuant to Section 12(b) of the Act:
                                      None
                                (Title of class)
           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.001 Par Value
                                (Title of class)

--------------------------------------------------------------------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the Registrant was required to submit and post such files). Yes |X| No |_|

Indicate by check mark whether the registrant is a large accelerated files, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and smaller
reporting company" in Rule 12b-2 of the Exchange Act.

    Large accelerated filer  |_|            Accelerated filer    |_|

    Non-accelerated filer    |_|            Smaller reporting company   |X|
    (Do not check if a smaller
    reporting company)


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). |_|

As of May 15, 2009, there were 60,162,245 shares of the registrant's common
stock, par value $.001 per share, outstanding.


<PAGE>

                                 Braintech, Inc.
                                    Form 10-Q
                                TABLE OF CONTENTS

                                                                            Page

PART I      FINANCIAL INFORMATION............................................XX

Item 1.       Financial Statements...........................................XX

Item 2.       Management's Discussion and Analysis of Financial
                Condition and Results of Operations..........................XX

Item 3.       Quantitative and Qualitative Disclosures About Market Risk.....XX

Item 4.       Controls and Procedures........................................XX


PART II      OTHER INFORMATION...............................................XX

Item 1.       Legal Proceedings..............................................XX

Item 1A.      Risk Factors...................................................XX

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds....XX

Item 3.       Defaults Upon Senior Securities................................XX

Item 4.       Submission of Matters to a Vote of Security Holders............XX

Item 5.       Other Information..............................................XX

Item 6.       Exhibits.......................................................XX


                                       i
<PAGE>

                         PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

Each of the following items is contained in our Condensed Consolidated Financial
Statements and form part of this quarterly report.

     (i)      Condensed Consolidated Balance sheets (unaudited) as of March 31,
              2009 and December 31, 2008;

     (ii)     Condensed Consolidated Statements of Operations (unaudited) for
              the three ended March 31, 2009 and 2008;

     (iii)    Condensed Consolidated Statement of Stockholders' Deficiency
              (unaudited) for the three months ended March 31, 2009;

     (iv)     Condensed Consolidated Statements of Cash Flows (unaudited) for
              the three months ended March 31, 2009 and 2008; and

     (v)      Notes to Condensed Consolidated Financial Statements (unaudited)
              for the three months ended March 31, 2009 and 2008.


<PAGE>









                      Condensed Consolidated Financial Statements
                      (Expressed in United States dollars)

                      BRAINTECH, INC.


                      Three months ended March 31, 2009 and 2008
                      (Unaudited - Prepared by Management)








<PAGE>

<TABLE>
<CAPTION>
BRAINTECH, INC.

Condensed Consolidated Balance Sheets
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

----------------------------------------------------------------------------------------------
                                                                   March 31,     December 31,
                                                                     2009            2008
----------------------------------------------------------------------------------------------


Assets (note 6)

Current assets:
<S>                                                              <C>             <C>
      Cash and cash equivalents                                  $  2,051,169    $  2,446,538
      Accounts receivable                                             354,551       1,317,798
      Inventory                                                        10,958          13,705
      Prepaid expenses                                                 21,602          23,556
     -----------------------------------------------------------------------------------------
                                                                    2,438,280       3,801,597

Intangible assets and goodwill (note 3)                                    --              --

Fixed assets                                                           61,530          50,743
----------------------------------------------------------------------------------------------
                                                                 $  2,499,810    $  3,852,340
----------------------------------------------------------------------------------------------

Liabilities and Stockholders' Deficiency

Current liabilities:
      Accounts payable                                           $  1,090,129    $  1,048,205
      Accrued liabilities                                           1,137,590       1,184,583
      Deferred leasehold inducements (note 4)                              --              --
      Deferred revenue (note 5)                                     1,234,597       1,260,510
      Bank loan (note 6)                                            1,803,752       2,104,376
     -----------------------------------------------------------------------------------------
                                                                    5,266,068       5,597,674
----------------------------------------------------------------------------------------------
Stockholders' deficiency:
      Common stock (note 7):
         Authorized: 200,000,000 shares, with $0.001 par value
         Issued: 58,662,245 shares                                     58,662          56,502
                (December 31, 2008 - 56,502,245)
      Additional paid-in capital                                   35,788,350      35,627,161
      Accumulated deficit                                         (38,613,270)    (37,428,997)
     -----------------------------------------------------------------------------------------
                                                                   (2,766,258)     (1,745,334)
----------------------------------------------------------------------------------------------
                                                                 $  2,499,810    $  3,852,340
----------------------------------------------------------------------------------------------

</TABLE>

Description of Business and Future Operations (note 1)
Commitments and Contingencies (notes 10 and 11)
Subsequent Events (note 12)

See accompanying notes to condensed consolidated financial statements.


<PAGE>

BRAINTECH, INC.
Condensed Consolidated Statements of Operations
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

--------------------------------------------------------------------------------

                                                Three Months ended March 31
                                     ------------------------------------------
                                                   ------------    ------------
                                                       2009            2008

Sales                                              $     25,913    $  1,105,965
Cost of sales                                                --         117,199
--------------------------------------------------------------------------------

Gross margin                                             25,913         988,766
--------------------------------------------------------------------------------

Operating expenses:
      Research and development                          156,153         175,132
      Selling, general and administrative             1,028,728         792,701
    ----------------------------------------------------------------------------
                                                      1,184,881         967,833

Operating income/(loss) before the following         (1,158,968)         20,933
--------------------------------------------------------------------------------

Interest income                                              54             221
Loss on disposition of fixed assets                      (2,316)             --
Financing expenses
      Interest on bank loan                             (21,090)        (25,902)
      Other financing expenses                           (1,953)             --
      Bank loan guarantee expenses                           --          (5,955)
    ----------------------------------------------------------------------------
                                                        (25,305)        (31,636)
--------------------------------------------------------------------------------

Net loss and comprehensive loss for the period     $ (1,184,273)   $    (10,703)
--------------------------------------------------------------------------------

Loss per share information:
      Basic and diluted                            $      (0.02)   $      (0.00)

--------------------------------------------------------------------------------

Weighted average number of common
      shares outstanding                             51,046,579      38,747,335

--------------------------------------------------------------------------------


See accompanying notes to condensed consolidated financial statements.


<PAGE>


<TABLE>
<CAPTION>

BRAINTECH, INC.

Condensed Consolidated Statements of Stockholders' Deficiency
(Unaudited - Prepared by Management)
(Expressed in United States dollars)


-----------------------------------------------------------------------------------------------------------------------------------
                                                   Common stock
                                          ---------------------------------                                             Total
                                                 Number                         Additional         Accumulated       stockholders
                                                of shares        Amount        paid-in capital       deficit          deficiency
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                            <C>          <C>               <C>               <C>                <C>
Balance, December 31, 2008                     56,502,245   $        56,502   $    35,627,161   $   (37,428,997)   $    (1,745,334)

Common stock transactions
      (net of share issue costs)
      Shares issued at $0.01 pursuant to
         Bonus Stock Plan                       1,750,000             1,750            15,750                --             17,500
      Shares issued for services rendered         410,000               410            40,590                --             41,000
Fair value of stock options expensed                   --                --           104,849                --            104,849
Loss for the period                                    --                --                --        (1,184,273)        (1,184,273)
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2009                        58,662,245   $        58,662   $    35,788,350   $   (38,613,270)   $    (2,766,258)
-----------------------------------------------------------------------------------------------------------------------------------

See accompanying notes to condensed consolidated financial statements.

</TABLE>

<PAGE>


<TABLE>
<CAPTION>


BRAINTECH, INC.

Condensed Consolidated Statements of Cash Flows
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

-----------------------------------------------------------------------------------------------

                                                                    Three months ended March 31
                                                                    ---------------------------
                                                                        2009           2008
-----------------------------------------------------------------------------------------------

Cash flows from operations:
<S>                                                                 <C>            <C>
      Loss for the period                                           $(1,184,273)   $   (10,703)
      Items not involving cash:
         Amortization                                                     8,050          8,594
         Loss on disposition of fixed assets                              2,316             --
         Fair value of shares issued for services rendered                1,248             --
         Fair value of stock options expensed                           104,849         88,048
      Changes in non-cash operating working capital:
         Accounts receivable                                            963,247        (61,496)
         Inventory                                                        2,747         (1,793)
         Prepaid expenses                                                 1,954         16,006
         Accounts payable and accrued liabilities                        34,683        195,938
         Due to related party                                                --         (3,486)
         Deferred leasehold inducements                                      --         (5,733)
         Deferred revenue                                               (25,913)       146,317
     ------------------------------------------------------------------------------------------
      Net cash (used in) provided by operations                         (91,092)       371,692
-----------------------------------------------------------------------------------------------

Cash flows from investments:
         Purchase of fixed assets                                       (21,153)       (17,838)
     ------------------------------------------------------------------------------------------
      Net cash used in investments                                      (21,153)       (17,838)
-----------------------------------------------------------------------------------------------

Cash flows from financing:
         Common shares issued, net of issue costs                        17,500             --
         Repayment of bank loan                                        (300,624)      (330,000)
     ------------------------------------------------------------------------------------------
      Net cash used in financing                                       (283,124)      (330,000)
-----------------------------------------------------------------------------------------------
(Decrease)/increase in cash and cash equivalents                       (395,369)        23,854

Cash and cash equivalents, beginning of period                        2,446,538        921,367
-----------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period                            $ 2,051,169    $   945,221
-----------------------------------------------------------------------------------------------

Supplemental information:
      Non-cash financing:
      Shares issued for financing services and financing expenses   $    41,000             --
      Cash interest paid                                            $    21,090    $    25,902
-----------------------------------------------------------------------------------------------

   See accompanying notes to condensed consolidated financial statements.

</TABLE>

<PAGE>

BRAINTECH, INC.

Notes to Condensed Consolidated Financial Statements
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

1.   Description of business and future operations:

     Braintech, Inc. (the "Company") together with its wholly owned subsidiaries
     is a high tech development company, developing advanced software for the
     vision guidance of robotic systems. In the three months ended March 31,
     2009, all of the sales revenue was from the recognition of previously
     deferred revenue invoiced to ABB Inc. ("ABB"). For the three months ended
     March 31, 2008, 100% of sales revenue was generated from ABB.

     These condensed consolidated financial statements have been prepared on the
     going concern basis under which an entity is considered to be able to
     realize its assets and satisfy its liabilities in the ordinary course of
     business. The Company's operations have resulted in losses of $1,184,273
     for the three months ended March 31, 2009, an accumulated deficit of
     $38,613,270 at March 31, 2009 and a working capital deficiency of
     $2,827,788 at March 31, 2009. The Company has generated only small amounts
     of revenues and is continuing to develop its business. Operations to date
     have been primarily financed by sales to our major customer and equity and
     debt transactions. The Company has generated nearly all of its revenues
     from ABB pursuant to its Exclusive Global Channel Partner Agreement which
     expired in accordance with its terms on December 31, 2008. No new revenue
     sources have been generated by the Company since December 31, 2008. The
     Company estimates that without further funding or new revenue, it will
     unable to repay its loan from the Royal Bank of Canada on its maturity date
     of July 11, 2009. These factors raise substantial doubt about the Company's
     ability to continue as a going concern.

     The Company's future operations and its continuation as a going concern are
     dependent upon its ability to raise additional capital and to sell its
     products and services to new customers, generate positive cash flows from
     operations and ultimately attain profitability.

     Financing transactions may include the issuance of equity securities,
     obtaining additional credit facilities, or other financing mechanisms.
     However, the trading price of the Company's common stock and the downturn
     in the U.S. stock markets could make it more difficult to obtain financing
     through the issuance of equity securities.

     The Company is currently in negotiations with loan providers and is
     actively pursuing new sales contracts, however, there can be no assurances
     that appropriate financings having favorable economic terms will be
     available as required or that the Company will be able to sell its products
     and services to new customers on terms satisfactory to the Company.

     If none of these events occur, there is a risk that the business will fail.
     The consolidated financial statements do not include any adjustments
     relating to the recoverability of assets and classification of assets and
     liabilities that might be necessary should the Company be unable to
     continue as a going concern.


<PAGE>

BRAINTECH, INC.

Notes to Condensed Consolidated Financial Statements
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

2.   Basis of presentation:

     (a)  Unaudited financial information:

          These condensed consolidated financial statements have been prepared
          in accordance with accounting principles generally accepted in the
          United States of America and reflect all adjustments (all of which are
          normal and recurring in nature) that, in the opinion of management,
          are necessary for fair presentation of the interim financial
          information. The results of operations for the interim periods
          presented are not necessarily indicative of the results to be expected
          for any subsequent quarter or for the entire year ending December 31,
          2009. Certain information and footnote disclosures normally included
          in annual financial statements prepared in accordance with generally
          accepted accounting principles have been condensed or omitted. These
          unaudited condensed consolidated financial statements and notes
          included herein have been prepared on a basis consistent with and
          should be read in conjunction with the Company's audited consolidated
          financial statements and notes for the year ended December 31, 2008,
          as filed in its annual report on Form 10-K.

     (b)  Principles of consolidation:

          These condensed consolidated financial statements include the accounts
          of the Company, and its wholly-owned subsidiaries Braintech Canada,
          Inc., Braintech Government & Defense, Inc., Braintech Consumer &
          service, Inc., Braintech Industrial, Inc., and Shafi Inc. All material
          inter-company balances and transactions have been eliminated.

     (c)  Use of estimates:

          The preparation of financial statements in accordance with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions that affect the reported
          amounts of assets and liabilities and disclosure of contingent assets
          and liabilities as of the date of the financial statements, and the
          reported amounts of revenues and expenses during the reporting period.
          Significant areas requiring the use of estimates relate to the
          collectability of accounts receivable, the impairment of assets and
          rates for amortization, amount of income tax balances, the assumptions
          used in the determination of the fair value of stock-based
          compensation, the valuation of accrued liabilities, and the valuation
          of intangible assets and goodwill. The Company has recorded
          liabilities under dispute which are subject to measurement
          uncertainty. Any adjustment may have a material effect on net loss and
          will be recognized in the consolidated financial statements as they
          become known. Actual amounts may differ from these estimates.


<PAGE>

BRAINTECH, INC.

Notes to Condensed Consolidated Financial Statements
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

     (d)  Stock based compensation:

          The Company follows Statement of Financial Accounting Standards No.
          123R, "Share Based Payment" ("SFAS 123R"). SFAS 123R requires
          companies to estimate the fair value of share-based payment awards on
          the date of grant using an option pricing model. The value of the
          portion of the award that is ultimately expected to vest is recognized
          as an expense over the requisite service period in the Company's
          financial statements. Stock-based compensation recognized during the
          period is based on the value of the portion of the stock-based payment
          awards that are ultimately expected to vest during the period. The
          Company estimates the fair value of stock options using the
          Black-Scholes valuation model, consistent with the provisions of SFAS
          123R. The Black-Scholes valuation model requires the input of highly
          subjective assumptions, including the option's expected life and the
          price volatility of the underlying stock. The expected stock price
          volatility assumption was determined using historical volatility of
          the Company's common stock.

     (e)  Loss per share:

          Loss per share is calculated based on the weighted average number of
          common shares outstanding.

          As the effect of all outstanding stock options (note 8) and share
          purchase warrants (note 9) is anti-dilutive, diluted loss per share
          equals basic loss per share.

          The number of shares used to calculate loss per share for the three
          month periods ended March 31, 2009 and 2008 was reduced by 300,000
          shares in each year for shares issued and held by the Company. The
          number of shares used to calculate loss per share for the three month
          period ended March 31, 2009 was reduced by 7,250,000 shares (2008 -
          6,750,000 shares) for shares issued and held in escrow pending
          completion of performance milestones (note 7(b)).

     (f)  Revenue recognition:

          The Company recognizes revenue when there is persuasive evidence of an
          arrangement, the fee is fixed or determinable, collectibility is
          reasonably assured, and there are no substantive performance
          obligations remaining. The Company's revenue recognition policies are
          in conformity with the AICPA's Statement of Position No. 97-2 ("SOP
          97-2"), "Software Revenue Recognition".

          Cash received or accounts receivable recorded in advance of meeting
          the revenue recognition criteria are recorded as deferred revenue and
          the costs related to that revenue are recorded as deferred costs.

     (g)  Business combinations and intangible assets including goodwill:

          The Company accounts for business combinations using the purchase
          method of accounting and, accordingly, the assets and liabilities of
          the acquired entities are recorded at their estimated fair values at
          the date of acquisition. Goodwill represents the excess of the
          purchase price over the fair value of the net assets, including the
          amount assigned to identifiable intangible assets.


<PAGE>

BRAINTECH, INC.

Notes to Condensed Consolidated Financial Statements
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

2.   Basis of presentation (continued):

     (g)  Business combinations and intangible assets including goodwill
          (continued):

          Identifiable intangible assets with finite lives are amortized over
          their estimated useful lives. They are generally amortized on a
          non-straight line approach based on the associated projected cash
          flows in order to match the amortization pattern to the pattern in
          which the economic benefits of the asset are expected to be consumed.
          They are reviewed for impairment if indicators of potential impairment
          exist. Goodwill and indefinite lived intangible assets are tested for
          impairment on an annual basis, or sooner if an indicator impairment
          occurs.

3.   Shafi acquisition:

     On August 12, 2008, in a stock for stock transaction, the Company acquired
     100% of the outstanding shares of Shafi, Inc. and 80% of the shares of
     Shafi Innovation, Inc. (together "Shafi") from Adil Shafi pursuant to a
     Share Purchase Agreement ("Shafi Purchase Agreement"). Total consideration
     for the purchase was 3,000,000 shares of the common stock of Braintech,
     Inc. at a fair value of $0.33 per share (the "Closing Purchase Shares")
     issued at the closing of the acquisition ("Shafi Closing") and 1,000,000
     shares of Braintech, Inc. common stock to be issued quarterly over the next
     12 months upon the achievement of specified performance criteria (the
     "Contingent Purchase Shares").

     The primary reason for the Shafi transaction was the acquisition of key
     proprietary assets and the acceleration of revenues through the Shafi
     pipeline and to provide the Company with a technological launching pad to
     accelerate its expansion into a wide range of new markets that include
     aerospace, food and beverage, government, medical, pharmaceutical,
     plastics, and semi-conductors.

     Prior to the completion of the purchase transaction, on June 5, 2008, the
     Company advanced $100,000 to Shafi to meet its working capital needs. This
     advance was secured by all of the assets of Shafi, and was documented and
     secured at the Shafi Closing by a demand promissory note bearing an annual
     interest rate of 2.54%.

     In order to finance the $100,000 advance, the Company's Chief Executive
     Officer and former Chief Executive Officer each advanced to the Company
     $50,000 against delivery by the Company of promissory notes. The promissory
     notes provide for interest at 6% per annum. The promissory notes also
     provide that, each of the promissory note holders will be issued 50,000
     common share purchase warrants as additional compensation. On September 26,
     2008, the promissory notes plus accrued interest were repaid in full and
     the Company issued a total of 100,000 common share purchase warrants to the
     Chief Executive Officer and former Chief Executive officer. Each common
     share purchase warrant entitles the holder to purchase one share for three
     years at a price of $0.36 per share. The fair value of the warrants
     ($17,082) was recorded as stock-based compensation in financing expenses.
     The fair value was calculated using the Black-Scholes valuation model and
     the following assumptions: dividend yield 0%, expected volatility 190%,
     risk-free interest rate 2.11%, and an expected term of two years.

     The acquisition was accounted for under the purchase method. The following
     table summarizes the preliminary estimated fair values of the assets and
     liabilities of the Shafi Inc. companies net of the debt Adil Shafi
     personally assumed as of August 12, 2008.


<PAGE>

BRAINTECH, INC.

Notes to Condensed Consolidated Financial Statements
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

3.   Shafi acquisition (continued):

         ----------------------------------------------------
         Intangible assets of Shafi Inc.       $  1,090,000
         Goodwill of Shafi Inc.                     900,000
         Due to Braintech, Inc.                    (100,000)
         Current liabilities of Shafi Inc.         (900,000)
         ----------------------------------------------------

         Net assets acquired of Shafi Inc.     $    990,000
         ----------------------------------------------------

         Consideration: Common stock issued    $    990,000
         ----------------------------------------------------

     Of the $1,090,000 of acquired intangible assets, $500,000 was assigned to
     branding and the Shafi customer base and contacts and $590,000 was assigned
     to the purchased technology. The $900,000 of goodwill was assigned to the
     estimated value of future net revenues. At December 31, 2008, management
     believed that significant uncertainty existed as to the value of the Shafi
     Inc. intangible assets and goodwill, and accordingly, an impairment charge
     of $1,990,000 was recorded.

     As part of the Shafi acquisition, the parties agreed that any current
     liabilities of Shafi in excess of $900,000 would be fully and finally
     satisfied in a timely manner by Adil Shafi without liability to the Company
     or the Shafi companies. As of the date of closing the excess debt assumed
     by Adil Shafi was approximately $172,000. Through March 31, 2009,
     Braintech, Inc. had advanced additional funds to Shafi Inc. thereby
     allowing Shafi Inc. to repay $103,882 of the $900,000 in current
     liabilities.

     Included in accounts payable is the amount of $796,118 of Shafi Inc.
     current liabilities, which is non-recourse to the Company.

     The Closing Purchase Shares are subject to a lock-up agreement that
     restricts the sale thereof for six months and thereafter places volume
     restrictions on the number of such shares that may be sold during any
     weekly period. The Company also agreed to register for resale the shares of
     Company common stock issued to Adil Shafi and to cause the related
     registration statement to be effective not later than six months after the
     acquisition of Shafi. Mr. Shafi's sales of common stock under the
     registration statement will be subject to compliance with his lock-up
     agreement.

     On February 6, 2009, the Company filed a lawsuit in the U.S. District Court
     for the Eastern District of Michigan, Southern Division, against Adil Shafi
     for rescission of the acquisition of Shafi, Inc. and Shafi Innovations,
     Inc. On April 22, 2009, Shafi filed a First Amended Counterclaim asserting
     eight causes of action against the Company and its CEO, Frederick
     Weidinger. The Company believes that Mr. Shafi's claims are groundless both
     as to the Company and Mr. Weidinger. In a letter dated May 7, 2009, the law
     firm representing the Company and Mr. Weidinger advised Mr. Shafi and his
     counsel that Mr. Shafi added Mr. Weidinger as a third-party defendant
     solely for improper purposes, and demanded that Mr. Shafi dismiss the
     Weidinger claims within 21 days, or the Company will file a Motion to
     Dismiss and seek all available sanctions, including but not limited to
     costs and attorney fees, against Mr. Shafi and his counsel. Mr. Weidinger
     has not benefited in any way from the Shafi transaction, nor acted
     improperly in any way with respect to the Shafi transaction. While the
     Company has initiated this action and is vigorously pursuing it, the final
     outcome, which the Company believes will be favorable, cannot now be
     determined. This matter is subject to inherent uncertainties and
     management's view may change in the future.


<PAGE>

BRAINTECH, INC.

Notes to Condensed Consolidated Financial Statements
(Unaudited - Prepared by Management)
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

4.   Deferred leasehold inducements:

                                          Three Months Ended March 31
         ------------------------------------------------------------
                                             2009           2008
         ------------------------------------------------------------

         Balance, beginning of period   $       -      $  14,327
         Amortization                           -         (5,251)
         Foreign exchange adjustment            -           (482)
         ------------------------------------------------------------

         Balance, end of period         $       -      $   8,594
         ------------------------------------------------------------

5.   Deferred revenue:

<TABLE>
<CAPTION>
                                                                                   Three Months Ended March 31
         -----------------------------------------------------------------------------------------------------------------
                                                                                    2009                      2008
         -----------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                       <C>
         Balance, beginning of period                                          $     1,260,510           $       622,971
         Revenue invoiced and deferred for future recognition                                -                   176,565
         Previously deferred revenue recognized in current period                      (25,913)                  (30,248)
         -----------------------------------------------------------------------------------------------------------------

         Balance, end of period                                                $     1,234,597           $       769,288
         -----------------------------------------------------------------------------------------------------------------
</TABLE>

6.   Bank loan and loan guarantee:

     On October 23, 2006 the Company completed a transaction redeeming all of
     its previously outstanding secured convertible debentures. To facilitate
     the transaction, a bank loan of $2,473,000 amortized over 18 months
     commencing June 2007 was obtained from the Royal Bank of Canada (the "2006
     RBC Loan Agreement"). A general security agreement covering all of the
     Company's personal and intangible property, including intellectual
     property, has been pledged as collateral.

     As additional security, the Royal Bank required that standby letters of
     credit securing the full amount of the loan be provided. Certain accredited
     investors (the "LC Providers") agreed to provide the letters of credit as
     financing to the bank in order to enable the loan and as compensation the
     Company agreed to issue one Unit for each one dollar pledged as security
     for the bank loan. Each Unit consists of two shares of the common stock of
     the Company, three share purchase warrants, each warrant entitling the
     holder to purchase one additional share of common stock at a price of $0.30
     per share for a period of five years; and one and one-half share purchase
     warrants, each whole warrant entitling the holder to purchase one
     additional share of common stock at a price of $0.50 per share for a period
     of five years. The Company's CEO, who is the largest shareholder, is also
     the provider of the largest letter of credit and is the Managing Member of
     the LC Providers. Another director, the Company's former CEO, is the
     provider of the second largest letter of credit. A general security
     agreement covering all of the Company's personal and intangible property,
     including intellectual property has been pledged as security to the LC
     Providers. The general security agreement pledged to the LC Providers is
     subordinate to the general security agreement pledged to the Royal Bank.
     The Managing Member has formed a committee of the three largest LC
     Providers, Frederick Weidinger (our CEO and largest shareholder), Owen
     Jones (a director and second largest shareholder), and Kenneth Brooks (a
     shareholder) ("LC Providers Committee") to assist him in his role as
     Managing Member of the LC Providers. The LC Provider Committee will operate
     by unanimous vote.


<PAGE>

BRAINTECH, INC.

Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

6.   Bank loan and loan guarantee (continued):

     In the event the Company defaults on the loan and the letters of credit are
     called by the Royal Bank, the Company will pay 10% annual interest to the
     LC Providers for the balance of the outstanding letters of credit. In the
     event that the letters of credit are drawn down by the Royal Bank or upon
     any other specified default by the Company, the Company will then require
     and accept the resignations of the then current directors of the Company
     and appoint the LC Providers as member of a new Board of Directors. The
     Board of Directors will immediately decide upon and approve appropriate
     compensation for the Managing Member and decide upon the management of the
     Company. In any case where the letters of credit are drawn by the Royal
     Bank to any level, the Company will immediately appoint the Managing Member
     as the manager of the Company's assets with full power under the LC
     Providers' general security agreement with the Company to take such action
     as is necessary to recover the amounts due to the LC Providers and manage
     the business and affairs of the Company, in the best overall interests of
     the LC Providers.

     A total of $2,450,000 letters of credit were obtained to secure the bank
     loan and accordingly the Company has issued 4,900,000 common shares,
     7,350,000 warrants exercisable at $0.30 and 3,675,000 warrants exercisable
     at $0.50. As further compensation, the exercise price of 332,500 share
     purchase warrants previously held by certain LC Providers has been reduced
     from $1.00 to $0.30 per share and the term of those warrants has been
     extended by 24 months to expire May 2, 2010. The Company has also agreed to
     reimburse the LC Providers for all banking fees incurred in establishing
     and maintaining the letters of credit.

     Of the letters of credit, $2,150,000 was received October 23, 2006 and,
     accordingly, 4,300,000 common shares were issued, 6,450,000 warrants were
     exercisable at $0.30 and 3,225,000 warrants were exercisable at $0.50. On
     October 23, 2006 $1,376,000 was recorded as an expense on account of the
     fair value of the common shares issuance and $2,350,617 on account of the
     fair value of the warrant issuance. The fair value of the common shares was
     calculated using the closing market price of the common stock on October
     23, 2006 ($0.32) and the fair value of the warrants was calculated using
     the Black-Scholes valuation model and the following assumptions: dividend
     yield 0%, expected volatility 167%, risk-free interest rate 4.90%, and an
     expected term of two years.

     The remaining $300,000 of the letters of credit was received February 5,
     2007 and, accordingly, 600,000 common shares were issued, 900,000 warrants
     were exercisable at $0.30 and 450,000 warrants were exercisable at $0.50.
     On February 5, 2007, $180,000 was recorded as an expense on account of the
     fair value of the common shares issuance and $302,835 on account of the
     fair value of the warrant issuance. The fair value of the common shares was
     calculated using the closing market price of the common stock on February
     5, 2007 ($0.30) and the fair value of the warrants was calculated using the
     Black-Scholes valuation model and the following assumptions: dividend yield
     0%, expected volatility 165%, risk-free interest rate 4.92%, and an
     expected term of two years.


<PAGE>

BRAINTECH, INC.

Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

6.   Bank loan and loan guarantee (continued):

     The agreement governing the LC Providers and the Loan Guarantee terms
     required that the Company file a Registration Statement such that the
     securities issued to the LC Providers would qualify for resale pursuant to
     the Registration Statement. The Agreement contained penalty provisions if
     the Company did not file a Registration Statement, and if the Registration
     Statement did not become effective, within certain time provisions. Upon
     review, it was determined that the penalty provision clauses applied and,
     in accordance with the terms of the penalty provisions, the Company issued
     one additional common share to the LC Providers that delivered letters of
     credit on or before October 23, 2006. On August 10, 2007, the Company
     issued 1,625,000 common shares at a fair value of $0.48 per share.

     Prior to the receipt of the final letters of credit, cash collateral had
     been pledged by accredited investors to allow the Royal Bank of Canada to
     fund the total amount of the loan. The receipt of the final letters of
     credit allowed for the release of the cash collateral. As compensation for
     pledging the cash collateral, on March 22, 2007 the Company issued to one
     of the accredited investors 100,000 common shares and 100,000 share
     purchase warrants exercisable at $0.30 for a period of three years. On
     March 22, 2007 the Company recorded as an expense, $36,000 on account of
     the fair value of the common shares issuance and $28,406 on account of the
     fair value of the warrant issuance. The fair value of the common shares was
     calculated using the closing market price of the common stock on March 22,
     2007 ($0.36) and the fair value of the warrants was calculated using the
     Black-Scholes valuation model and the following assumptions: dividend yield
     0%, expected volatility 165%, risk-free interest rate 4.58%, and an
     expected term of two years. As further compensation, the exercise price of
     1,008,548 share purchase warrants previously held by the accredited
     investor was reduced from $0.60 to $0.30 per share and the term of those
     warrants was extended by 36 months to expire January 18, 2011.

     On September 17, 2008, the Company entered into a letter agreement with the
     Royal Bank of Canada dated July 29, 2008 (the "2008 RBC Loan Agreement").
     The 2008 RBC Loan Agreement provides for a $250,000 revolving demand
     facility and a $2,405,000 non-revolving term loan and supersedes and
     cancels the 2006 RBC Agreement. Immediately prior to funding under the 2008
     RBC Loan Agreement, $1,197,837 remained outstanding under the 2006 RBC Loan
     Agreement. The remaining balance under the 2006 RBC Loan Agreement was
     rolled into the $2,405,000 funded under the 2008 RBC Loan Agreement. The
     term loan is repayable in equal monthly installments of $108,208 principal
     plus monthly accrued interest with the first payment due on October 11,
     2008. The maturity date for the term loan is July 11, 2009. Interest is
     calculated at the floating 30 day LIBOR rate plus 1.50%.

     The Company's obligations under the 2008 RBC Loan Agreement are
     collateralized by a general security agreement covering all of the
     Company's personal and intangible property, including intellectual property
     of the Company and its subsidiary, Braintech Canada, Inc., and the
     irrevocable and unconditional standby letters of credit which were
     previously pledged by the LC Providers as security under the 2006 RBC Loan
     Agreement. The LC Providers' security arrangement remains in place as
     described earlier in this note 6.


<PAGE>

BRAINTECH, INC.

Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

6.   Bank loan and loan guarantee (continued):

     On September 26, 2008, as compensation for extending the letters of credit
     as described above, the Company issued an aggregate of 10,375,000 common
     share purchase warrants, each of which entitle the holder to purchase one
     share of the Company's common stock at $0.30 per share for a period of five
     years, to the LC Providers. Additionally, on September 29, 2008, the
     Company issued an aggregate of 4,150,000 shares of the Company's common
     stock to the LC Providers. Each LC Provider received two shares of common
     stock and five share purchase warrants for each dollar of letter of credit
     provided.

     In the year ended December 31, 2008, the Company recorded an expense of
     $1,814,055 related to the share purchase warrants issued as compensation to
     the LC Providers and an expense of $626,650 related to the common shares
     issued to the LC Providers. The fair value of the common shares was
     calculated using the closing market price of the common stock on September
     29, 2008 ($0.151) and the fair value of the warrants was calculated using
     the Black-Scholes valuation model and the following assumptions: dividend
     yield 0%, expected volatility 190%, risk-free interest rate 2.11%, and an
     expected term of two years.

     The Company is attempting to renegotiate the maturity date of the 2008 RBC
     Loan Agreement. In addition, one LC Provider who is also a director, has
     asked to have his letter of credit released and to be removed as an LC
     Provider, while three of our employees have posted new letters of credit in
     order to become LC Providers, and another LC Provider has increased the
     amount of his letter of credit. In connection with these changes and with
     our strategic move of our operations to the United States, in March 2009
     RBC recorded a new Security Agreement in Nevada, our state of
     incorporation. In addition, on April 21, 2009, RBC offered a loan amendment
     increasing the interest rate and increasing the revolving portion of the
     loan from $250,000 to $500,000. RBC did not offer to refinance or extend
     the maturity date in this amendment, but the Company is continuing to
     negotiate any possible refinancing or extension with RBC. The Company
     signed this amendment on May 5, 2009, and the Company's CEO also
     acknowledged the amendment as Managing Member of the LC Providers. As a
     formality, on May 5, 2009, the Company asked the LC Providers to also
     acknowledge the amendment. RBC, however, subsequently took the position
     that the amendment will not become effective until it is acknowledged by
     all of the LC Providers individually. The Company intends to follow up with
     the LC Providers to request their acknowledgement. In any case, however,
     the May 5, 2009 amendment does not extend the maturity date beyond its
     current maturity date of July 11, 2009.

7.   Common stock:

     (a)  During the three month period ended March 31, 2009, common shares were
          issued as follows:

          On January 26, 2009, as final compensation for advancing $255,000 in
          emergency financing in 2006, the Company issued 410,000 shares of
          common stock at a fair value of $0.10 per share to a single party in
          addition to 100,000 shares and 100,000 share purchase warrants
          previously issued to such party. In conjunction with this final
          compensation arrangement, such party returned to the Company for
          cancellation the 100,000 share purchase warrants, each entitling the
          holder to purchase one additional share of common stock exercisable at
          $0.30 per share. Although this compensation arrangement was settled in
          January 2009, the arrangement was made in December 2008. Accordingly,
          the Company had accrued the fair value of the financing expense
          ($39,752) as of December 31, 2008.

          On March 12, 2009, the Company issued 1,750,000 shares of Bonus Stock
          for the purchase price of $0.01 per shares in accordance with the
          terms of an employment agreement with an officer of the Company. These
          shares are being held in escrow pending completion of five individual
          performance milestones. When management determines that it is likely
          that the milestones will be met, the corresponding shares will be
          released from escrow and the Company will record an expense equal to
          $0.09 per share. If the milestones are not completed, the Company will
          repurchase the shares for the purchase price of $0.01 per share.


<PAGE>

BRAINTECH, INC.

Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

7.   Common stock (continued):

     (b)  Bonus stock and bonus stock option incentive plan:

          At a meeting of the Board of Directors held October 22, 2007, the
          Company approved the Bonus Stock and Bonus Stock Option Plan (the
          "Bonus Plan"). The Bonus Plan provides for the issuance of common
          stock of the Company ("Bonus Stock") and options to acquire common
          stock of the Company ("Bonus Stock Options") to the participants upon
          the Company reaching certain identifiable milestones in its business
          plan. The aggregate amount of shares that may be issued under the
          Bonus Plan shall not exceed 30 million shares. The aggregate amount of
          shares to be issued as Bonus Stock shall not exceed 20 million shares
          and the aggregate amount of shares to be issued pursuant to the
          exercise of Bonus Stock Options shall not exceed 10 million shares.

          As of March 31, 2009, 13,500,000 shares of Bonus Stock (December 31,
          2008 - 11,750,000 shares) have been issued, of which 5,250,000 shares
          (December 31, 2008 - 5,250,000 shares) have been released from escrow
          upon the achievement of performance milestones and 8,250,000 shares
          (December 31, 2008 - 6,500,000 shares) remain in escrow pending the
          completion of performance milestones.

8.   Stock options:

     The Company reserved 1,500,000 common shares pursuant to the 2000 Stock
     Option Plan, 2,500,000 common shares pursuant to the 2003 Stock Option
     Plan, and 10,000,000 common shares pursuant to the 2007 Stock Option Plan.
     As of March 31, 2009, 689,000 stock options are unallocated and remain
     available pursuant to the 2000 Stock Option Plan, 898,000 stock options are
     unallocated and remain available pursuant to the 2003 Stock option Plan,
     and 4,280,000 stock options are unallocated and remain available pursuant
     to the 2007 Stock Option Plan. The Company's board of directors has
     discretion to set the price, term, vesting schedules, and other terms and
     conditions for options granted under the 2000 plan and the Company's
     Compensation Committee has discretion to set the price, terms, vesting
     schedules, and other terms and conditions for options granted under the
     2003 and 2007 plans. The Company's board of directors has granted the CEO
     authority to grant awards pursuant to the 2000 Stock Option Plan, 2003
     Stock Option Plan and 2007 Stock Option Plan.

     The Company also reserved 10,000,000 common shares pursuant to the Bonus
     Plan (note 7(b)). As of March 31, 2009 3,910,000 stock options are
     unallocated and remain available pursuant to the Bonus Plan. The Company's
     Board of Directors and CEO have discretion to set the price, term, vesting
     schedules, and other terms and conditions for options granted under the
     Bonus Plan.

     The weighted average fair value of stock options granted during the three
     months ended March 31, 2009 was $0.10 per option. No options were granted
     during the three months ended March 31, 2008. The fair value of each option
     grant is estimated on the date of grant using the Black-Sholes valuation
     model and the straight-line amortization approach with the following
     weighted average assumptions:


<PAGE>

BRAINTECH, INC.

Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

8.   Stock options (continued):

                                                Three Months Ended
                                       -----------------------------------------

                                           March 31, 2009       March 31, 2008
         ------------------------------------------------- --------------------

         Expected life (years)                        2.0                  N/A
         Risk free interest rate                    0.89%                  N/A
         Expected volatility                         248%                  N/A
         Dividend yield                                0%                  N/A
         Expected forfeitures                          0%                  N/A
         ------------------------------------------------- --------------------

     The Company recorded stock-based compensation related to stock options of
     $104,849 for the three months ended March 31, 2009 (2008 - $88,048). As of
     March 31, 2009, the unrecorded deferred stock-based compensation balance
     related to stock options was $237,575 (2008 - $626,143) and will be
     recognized over an estimated weighted average amortization period of 1.13
     years (2008 - 1.38 years).

     A summary of the Company's stock option activity is as follows:

         -------------------------------------------------------------------
                                                                   Weighted
                                                   Number           average
                                                of shares    exercise price
                                          ----------------------------------

         Balance, December 31, 2008           14,267,000             $0.40
         Options granted                       1,015,000             $0.11
         Options exercised                             -                 -
         Vested options expired                 (985,000)            $0.37
         Unvested options forfeited                    -                 -
                                          ----------------------------------

         Balance, March 31, 2009              14,297,000             $0.38
         -------------------------------------------------------------------

     Of those outstanding at March 31, 2009, 11,834,500 are exercisable
     (December 31, 2008 - 12,092,000), having a weighted average exercise price
     of $0.42 (December 31, 2008 - $0.43).

     The outstanding options as of March 31, 2009 have a weighted average
     remaining contractual life of 3.51 years (December 31, 2008 - 3.55 years).

9.   Share purchase warrants:

     On January 26, 2009, as final compensation for advancing $255,000 in
     emergency financing in 2006, the Company issued 410,000 shares of common
     stock at a fair value of $0.10 per share to a single party in addition to
     100,000 shares and 100,000 share purchase warrants previously issued to
     such party. In conjunction with this final compensation arrangement, such
     party returned to the Company for cancellation the 100,000 share purchase
     warrants, each entitling the holder to purchase one additional share of
     common stock exercisable at $0.30 per share. Although this compensation
     arrangement was settled in January 2009, the arrangement was made in
     December 2008. Accordingly, the Company accrued the fair value of the
     financing expense ($39,752) as of December 31, 2008.


<PAGE>

BRAINTECH, INC.

Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

9.   Share purchase warrants (continued):

     A summary of the Company's share purchase warrant activity is as follows:

<TABLE>
<CAPTION>
         --------------------------------------------------------------------------------------------
                                                                                            Weighted
                                                                    Weighted       average remaining
                                                   Number            average        contractual life
                                                of shares     exercise price                 (years)
         --------------------------------------------------------------------------------------------
<S>                                           <C>                     <C>                       <C>
         Balance, December 31, 2008           35,521,179              $ 0.33                    3.56
              Warrants granted                         -                  -                       -
              Warrants expired                         -                  -                       -
              Warrants exercised                       -                  -                       -
              Warrants cancelled (note 7)       (100,000)             $ 0.30                      -
         --------------------------------------------------------------------------------------------

         Balance, March 31, 2009              35,421,179            $   0.33                    2.84
         --------------------------------------------------------------------------------------------
</TABLE>

     Of the warrants outstanding as of March 31, 2009, 8,011,324 are held by the
     Company's former CEO and 7,411,250 are held by the Company's current CEO.


10   Commitments:

     The Company has obligations under operating lease arrangements that require
     the following minimum annual payments:

         --------------------------------------------------------

         Year ending December 31:
         2009                                            211,436
         2010                                            260,809
         2011                                            201,476
         2012                                            180,290
         2013                                             54,925
         2014                                             33,687
         --------------------------------------------------------

                                                $        942,623
         --------------------------------------------------------

     Effective April 1, 2009, the Company vacated its North Vancouver leased
     office premises and ceased making the monthly rent payments. The Company
     has been in communications with the landlord and the landlord has informed
     the Company that it reserves the right to seek remedies that are available
     under the lease. The lease expires in November 2012, with the remaining
     amounts payable under the terms of the lease agreement aggregating
     approximately $451,000. The fair value of these payments, net of any
     potential recoveries, will be recorded as a lease termination cost during
     the quarter ended June 30, 2009.


<PAGE>

BRAINTECH, INC.

Notes to Consolidated Financial Statements
(Expressed in United States dollars)

Three months ended March 31, 2009 and 2008

--------------------------------------------------------------------------------

11.  Contingencies:

     On February 13, 2009 two other former employees, released as part of a
     reduction in force by Braintech Canada, Inc., after receiving full salary
     pay, statutory severance payments, time-bank payments, accrued vacation
     payments and signing full releases, instituted claims in the Provincial
     Court of British Columbia (small claims court) for common law entitlement.
     Each claim is for $25,000 (Canadian). The Company disputes the plaintiffs'
     claims and believes that it has meritorious defenses and intends to
     vigorously defend these actions. Management believes that any potential
     loss associated with these matters is neither probable nor reasonably
     estimable at this time and accordingly has not accrued any amounts for any
     potential loss.

12.  Subsequent event:

     On February 10, 2009, Babak Habibi, formerly the Company's Chief Technology
     Officer, initiated an action in the Supreme Court of British Columbia
     against the Company. Mr. Habibi claimed that he had "good reason" to resign
     and secured a Garnishing Order before Judgment for CAD$336,045.73 claiming
     entitlement to that amount under his employment agreement. The Company
     disputed Mr. Habibi's claims and on March 30, 2009, the Company filed a
     counter claim against Mr. Habibi. On April 18, 2009 the Company and Mr.
     Habibi settled all these matters as follows (currency is Canadian unless
     otherwise indicated):

     (a)  The Company paid Mr. Habibi $70,000 as a settlement;

     (b)  The Company entered into a Consultancy Agreement with Mr. Habibi
          whereby (i) Mr. Habibi will make himself available to Braintech for
          limited consulting services at the mutual discretion of Mr. Habibi and
          the Company, (ii) Mr. Habibi will not provide similar consulting or
          other services to certain specified competitors or establish a
          competing business with the Company for a 33 month period, (iii) the
          Company will pay Mr. Habibi $10,000 monthly for three months and
          $5,000 monthly for 30 months for a total of $180,000 over a 33 month
          period, and (iv) as security for payment, the Company will initially
          place in escrow with its transfer agent 1,500,000 shares of its common
          stock and these shares will be returned to the Company in 50,000 share
          increments as payments are made.

     (c)  In June 2001, Mr. Habibi had acquired 133,334 shares from the Company
          which were placed in escrow, in exchange for a $100,000 non-recourse
          Promissory Note, which was recorded as a reduction to additional paid
          in capital. Under the existing terms of the 2001 Promissory Note, if
          Mr. Habibi had failed to repay, the Company's remedy would have been
          to cancel the shares. As part of the settlement of the litigation, Mr.
          Habibi requested, and the Company agreed to, cancellation of the Note
          and release of the shares, worth approximately $16,000 at the time of
          settlement.

     The impact of these settlement amounts will be recorded as an expense
     during the quarter ended June 30, 2009.

<PAGE>

Item 2. Management's Discussion and Analysis of Financial Conditions and Results
of Operations

CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report of Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the
Securities Exchange Act. We intend that certain matters discussed in this report
are "Forward-Looking Statements" intended to qualify for the safe harbor from
liability established by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements deal with our current plans, intentions, beliefs and
expectations and relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may", "will", "should", "intends", "expects", "plans", "anticipates",
"believes", "estimates", "predicts", "potential" or "continues" or the negative
of these terms or other comparable terminology.

Forward-looking statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our actual results in
future periods to differ materially from what is currently anticipated. We make
cautionary statements throughout this report and the documents we have
incorporated by reference. You should read these cautionary statements as being
applicable to all related forward-looking statements wherever they appear in
this report, the materials referred to in this report, and the materials
incorporated by reference into this report. Our independent registered public
accounting firm has issued an opinion on our consolidated financial statements
for the years ended December 31, 2008 and 2007 that states that the consolidated
financial statements were prepared assuming we will continue as a going concern
and further states that our recurring losses from operations raise substantial
doubt about our ability to continue as a going concern. You are also urged to
carefully review and consider the various disclosures made by us which attempt
to advise interested parties of the factors which affect our business,
particularly the risk of foreclosure as we approach the July 11, 2009 maturity
date of our loan with Royal Bank of Canada, and other disclosures including
without limitation the disclosures made under the caption "Management Discussion
and Analysis of Financial Condition and Results of Operations" and the audited
consolidated financial statements and related notes included in our annual
report filed on Form 10-K for the year ended December 31, 2008 and the
disclosures under the heading "Risk Factors" in this Quarterly Report and in the
Form 10-K as well as other reports and filings we make with the Securities and
Exchange Commission.

We cannot guarantee our future results, levels of activity, performance or
achievements. We are under no duty to update any of the forward-looking
statements after the date of this report.

When used in this Quarterly Report on Form 10-Q, except as specifically noted
otherwise, the term "Braintech" refers to Braintech, Inc. only, and the terms
"Company," "we," "our," "ours" and "us" refer to Braintech, Inc. and its
wholly-owned subsidiaries.

Overview

The following discussion and analysis should be read in conjunction with our
condensed consolidated financial statements and related notes and other
financial information appearing elsewhere in this report and in our Form 10-K
filed with the SEC on March 31, 2009. Except for historical information, the
following discussion contains forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions and our current beliefs regarding revenues we might earn if we are
successful in implementing our business strategies.

Our business consists of the research and development, supply,
commercialization, training, maintenance and support of machine vision and
vision guidance technologies, products and services for industrial robots and
other types of machines and material handling in the industrial, and government
markets. The field of machine vision and vision guided robotics requires our
vision software systems to incorporate advanced robotic engineering and
programming technology for optimal integration with manufacturing automation
systems.

During the first quarter of 2009 we had no revenue with the exception of
deferred revenue associated with honoring warranty obligations. Our long-term
exclusive contract with ABB expired on December 31, 2008. Since his appointment
in November 2007, our current CEO has developed and implemented a new business
plan that redefines the Company's markets, in order to better utilize its
technology and to create operating leverage. His management has refocused the
Company's efforts from a pure research and development company in Vancouver,
British Columbia with one customer in one niche market to an operating company
driven by marketing, sales and business development in several vertical markets
with a focus on the commercialization of our technology among a broad spectrum
of machine vision potential customers including the United States Government.
Our new mission is to "touch the customer" by establishing relationships with
potential customers in order to better understand their problems and solve them
more efficiently. To that end, the Company opened new offices near Washington,
DC and Detroit, Michigan to focus on developing new business in the government
and industrial markets. The Company is also considering the transition to a
recurring revenue license model and is seeking a robotics-oriented integrator or
"OEM" for such purpose.


<PAGE>

Throughout 2008 and 2009 we have been focused on finding new customers for our
products and technology. The progressively worsening economic environment during
this time period, particularly in the auto industry, has created an extremely
difficult environment. Potential customers lack capital budgets and the sales
cycle in both the industrial and government markets has been significantly
longer than anticipated. New markets have been difficult to penetrate,
particularly for a company with resources as limited as ours.

We are beginning to see signs of customer acceptance for our products and
technology. For example, major automotive companies are expressing strong
interest in our software, particularly our patented Random Bin Picking(R)
technology, which we believe is revolutionary. Our software, traditionally
associated only with ABB in the marketplace, now works with all major robot
manufacturers. We recently launched our Integrator Partner Program, and already
10 integrators have signed up. We have received our first purchase order from
one of these integrators, which although small, will result in a major Japanese
automaker using our software. The Office of Naval Research has announced that
Braintech is part of the winning team for its Automated Weapons Assembly
project. Our BAE-led team beat General Dynamics and Foster-Miller in that
competition. We expect to receive the subcontract for that work during the
second quarter.

In spite of these promising signs, the financial environment has been as
difficult as the sales environment, and our loan with Royal Bank of Canada
("RBC"), which is payable in full on July 11, 2009, poses an enormous risk to
investors. This loan has an outstanding balance of approximately $1.6 million as
of May 14, 2009. While we are in good standing and have made all payments to
date under this loan, we do not have the resources to pay this loan in full on
July 11, 2009. As we approach this July 11, 2009 maturity date for our RBC loan,
we are continuing our relentless sales efforts, we are implementing a cost
reduction program, we have downsized our personnel through layoffs and reduction
of consultants, we are seeking an extension of the maturity date or refinancing
of the RBC loan, and we are exploring other sources of financing, but there is
no guarantee that we will be successful. Unless RBC agrees to extend the
maturity date or refinance the loan, or we obtain debt or equity financing from
another source sufficient to pay this loan, RBC and/or the LC Providers may
foreclose and investors will lose their entire investment.

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and
estimates for the three month period ended March 31, 2009 from our disclosure in
our Annual Report on Form 10-K for the year ended December 31, 2008. For a
discussion of our critical accounting policies, please see our Annual Report on
Form 10-K for the fiscal year ended December 31, 2008.

Results of Operations

Three Months Ended March 31, 2009 Compared to the Three Months Ended March 31,
2008

The following table sets forth, for the indicated periods, data as percentages
of revenue:

<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                    ------------------------------------------
                                                        March 31                 March 31
                                                          2009                     2008
                                                    ------------------       -----------------
Statement of Operations Data:
<S>                                                         <C>                     <C>
         Sales                                              100.00%                 100.00%
         Cost of sales                                          -                   (10.60)
                                                    ------------------       -----------------
         Gross profit                                       100.00                   89.40
         Research and development                          (602.60)                 (15.84)
         Selling, general and administration             (3,969.93)                 (71.67)
                                                    ------------------       -----------------
         Operation income                                (4,472,53)                   1.89
         Financing expenses                                 (88.92)                  (2.88)
         Other income (expense), net                         (8.73)                   0.02
                                                    ------------------       -----------------
         Income/(loss) for the period                    (4,570.18)                  (0.97)
                                                    ==================       =================
</TABLE>

<TABLE>
<CAPTION>
         Sales                                                 Three Months Ended
                                                    -----------------------------------------
                                                         March 31               March 31             %
                                                           2009                   2008             Change
                                                    -------------------      ----------------    -----------

<S>                                                            <C>                <C>             <C>
                                                               $25,913            $1,105,965      (97.7%)
</TABLE>

<PAGE>

Our decrease in sales year over year is attributable to the expiration of the
ABB Exclusive Global Channel Partner Agreement. During the three month period
ended March 31, 2008, we invoiced $1,247,000 for software licenses delivered for
installation in manufacturing plants. Of this amount, we deferred $176,565 for
future recognition in accordance with the American Institute of Certified Public
Accountant's Statement of Position (SOP) 97-2. We also recorded $5,282 for
engineering and other services and $30,248 of previously deferred revenue.
During the three month period ended March 31, 2009, we did not deliver any
software licenses. Our only revenue was $25,913 for the recognition of
previously deferred revenue.

<TABLE>
<CAPTION>
         Research and Development Expenses                                          Three Months Ended
                                                                         -----------------------------------------
                                                                              March 31               March 31             %
                                                                                2009                   2008             Change
                                                                         -------------------      ----------------    -----------

<S>                                                                                <C>                   <C>           <C>
                                                                                   $156,153              $175,132      (10.8%)
</TABLE>

Research and development expenditures decreased $18,979, or 10.80%, from
$175,132 for the three month period ended March 31, 2008, to $156,153 for the
three month period ended March 31, 2009. The decrease was mainly due to a
reduction of research and development personnel in the North Vancouver office. A
reduction in stock option expense also contributed to the decrease in research
and development expenditures. During the three month period ended March 31, 2008
we incurred $9,792 in stock option expense compared to nil for the three month
period ended March 31, 2009. A decrease in the Precarn funding grant received
partially offset the decrease in research and development expenditures. During
the three month period ended March 31, 2008 we received a grant of $40,190
compared to a grant of $17,471 received during the three month period ended
March 31, 2009. In addition there was an increase in travel expenditures
attributable to research and development from nil in 2008 to $19,516 in 2009.

Effective April 1, 2009, we vacated our North Vancouver research and development
facility and we are in the process of transferring all of our research and
development activities to our offices in McLean, Virginia and Pontiac Michigan.

<TABLE>
<CAPTION>
         Selling, General and Administrative Expenses                               Three Months Ended
                                                                         -----------------------------------------
                                                                              March 31               March 31             %
                                                                                2009                   2008             Change
                                                                         -------------------      ----------------    -----------
<S>                                                                              <C>                     <C>            <C>
                                                                                 $1,028,728              $792,701       29.8%
</TABLE>

Selling, general and administrative (SG&A) expenses increased $236,027, or
29.8%, from $792,701 for the three month period ended March 31, 2008, to
$1,028,728 for the three month period ended March 31, 2009. Stock option expense
increased $26,593 from $78,256 for the three month period ended March 31, 2008
to $104,849 for the month period ended March 31, 2009. Wages and benefits
increased $181,979 from $371,101 to $553,080 resulting from an increase in our
administration and sales staff from the opening of our offices in McLean,
Virginia and Pontiac, Michigan. Accounting, legal and patent expenses decreased
$1,477 from $101,545 to $100,068, trade show and marketing expenses decreased
$38,772 from $115,383 to $76,611, and office and miscellaneous expenses
increased $67,704 from $126,416 to $194,120.

<TABLE>
<CAPTION>
         Interest and Financing Expenses                                           Three Months Ended
                                                                        -----------------------------------------
                                                                             March 31               March 31              %
                                                                               2009                   2008              Change
                                                                        --------------------     ----------------     -----------
<S>                                                                                 <C>                  <C>           <C>
                                                                                    $23,043              $31,857       (27.7%)
</TABLE>

Interest and financing expenses decreased $8,814, or 27.7% from $31,857 for the
three month period ended March 31, 2008, to $23,043 for the three month period
ended March 31, 2009. The interest on the bank loan decreased $4,812 from
$25,902 for the three month period ended March 31, 2008, to $21,090 for the
three month period ended March 31, 2009. The decrease was mainly due to the
reduction in the principal amount of the bank loan and due to a slight reduction
in the interest rate.


<PAGE>

Liquidity and Capital Resources

Cash Flows

During the three month period ended March 31, 2009 we financed our research and
development activities, our selling, general and administrative activities, our
investment in fixed assets, and the repayment of our bank loan using cash
provided by our operations and by using cash provided from cash reserves. At
March 31, 2009 we had cash and cash equivalents of $2,051,169, a decrease of
$395,369 from cash and cash equivalents of $2,446,538 at December 31, 2008.

Operating activities used cash of $91,092 for the three month period ended March
31, 2009 and provided cash of $371,692 for the three month period ended March
31, 2008. Cash used by operating activities during the three period ended March
31, 2009 resulted from a net loss of $1,184,273, a decrease in deferred revenue
of $25,913, offset by non-cash amortization expenses of $8,050, non-cash loss on
disposition of fixed assets of $2,316, non-cash stock option expenses of
$104,849, non-cash compensation for services rendered of $1,248, a decrease in
current assets of $967,948, and an increase in current liabilities of $34,683.

Investing activities used cash of $21,153 during the three month period ended
March 31, 2009 and $17,838 during the three month period ended March 31, 2008
for the purchase of fixed assets.

During the three month period ended March 31, 2009, financing activities
provided cash of $17,500 as a result of selling shares of our capital stock and
used cash of $300,624 for repayment of the bank loan. During the three month
period ended March 31, 2008 financing activities and used cash of $330,000 for
repayment of the bank loan.

As previously stated, our loan with Royal Bank of Canada ("RBC"), which is
payable in full on July 11, 2009, poses an enormous risk to investors. This loan
has an outstanding balance of approximately $1.6 million as of May 14, 2009. We
do not have the resources to pay off this loan. As we approach this July 11,
2009 maturity date for our RBC loan, we are continuing our relentless sales
efforts while sharply cutting costs, seeking a refinancing or extension of the
maturity date from RBC, and exploring other sources of financing, but there is
no guarantee that we will be successful. Unless RBC agrees to refinance or
extend the maturity date, or we obtain debt or equity financing from another
source sufficient to pay this loan, we will default on our loan, RBC and/or the
LC Providers may foreclose, and investors will lose their entire investment.

Bank Loan and Loan Guarantee

On October 23, 2006 the Company completed a transaction redeeming all of its
previously outstanding secured convertible debentures. To facilitate the
transaction, a bank loan of $2,473,000 amortized over 18 months commencing June
2007 was obtained from the Royal Bank of Canada (the "2006 RBC Loan Agreement").
A general security agreement covering all of the Company's personal and
intangible property, including intellectual property, has been pledged as
collateral.

As additional security, the Royal Bank required that standby letters of credit
securing the full amount of the loan be provided. Certain accredited investors
(the "LC Providers") agreed to provide the letters of credit as financing to the
bank in order to enable the loan and as compensation the Company agreed to issue
one Unit for each one dollar pledged as security for the bank loan. Each Unit
consists of two shares of the common stock of the Company, three share purchase
warrants, each warrant entitling the holder to purchase one additional share of
common stock at a price of $0.30 per share for a period of five years; and one
and one-half share purchase warrants, each whole warrant entitling the holder to
purchase one additional share of common stock at a price of $0.50 per share for
a period of five years. Our CEO is the provider of the largest letter of credit
and is the Managing Member of the LC Providers. A general security agreement
covering all of the Company's personal and intangible property, including
intellectual property has been pledged as security to the LC Providers. The
general security agreement pledged to the LC Providers is subordinate to the
general security agreement pledged to the Royal Bank. In the event the Company
defaults on the loan and the letters of credit are called by the Royal Bank, the
Company will pay 10% annual interest to the LC Providers for the balance of the
outstanding letters of credit. In the event that the letters of credit are drawn
down by the Royal Bank or upon any other specified default by the Company, the
Company will then require and accept the resignations of the then current
directors of the Company and appoint the LC Providers as member of a new Board
of Directors. The Board of Directors will immediately decide upon and approve
appropriate compensation for the Managing Member and decide upon the management
of the Company. In any case where the letters of credit are drawn by the Royal
Bank to any level, the Company will immediately appoint the Managing Member as
the manager of the Company's assets with full power under the LC Providers'
general security agreement with the Company to take such action as is necessary
to recover the amounts due to the LC Providers and manage the business and
affairs of the Company, in the best overall interests of the LC Providers. The
Managing Member has formed a committee of the three largest LC Providers,
Frederick Weidinger (our CEO and largest shareholder), Owen Jones (a director
and second largest shareholder), and Kenneth Brooks (a shareholder) ("LC
Providers Committee") to assist him in his role as Managing Member of the LC
Providers. The LC Provider Committee will operate by unanimous vote.


<PAGE>

A total of $2,450,000 letters of credit were obtained to secure the bank loan
and accordingly the Company has issued 4,900,000 common shares, 7,350,000
warrants exercisable at $0.30 and 3,675,000 warrants exercisable at $0.50. As
further compensation, the exercise price of 332,500 share purchase warrants
previously held by certain LC Providers has been reduced from $1.00 to $0.30 per
share and the term of those warrants has been extended by 24 months to expire
May 2, 2010. The Company has also agreed to reimburse the LC Providers for all
banking fees incurred in establishing and maintaining the letters of credit.

Of the letters of credit, $2,150,000 was received October 23, 2006 and,
accordingly, 4,300,000 common shares were issued, 6,450,000 warrants were
exercisable at $0.30 and 3,225,000 warrants were exercisable at $0.50. On
October 23, 2006 $1,376,000 was recorded as an expense on account of the fair
value of the common shares issuance and $2,350,617 on account of the fair value
of the warrant issuance. The fair value of the common shares was calculated
using the closing market price of the common stock on October 23, 2006 ($0.32)
and the fair value of the warrants was calculated using the Black-Scholes
valuation model and the following assumptions: dividend yield 0%, expected
volatility 167%, risk-free interest rate 4.90%, and an expected term of two
years.

The remaining $300,000 of the letters of credit was received February 5, 2007
and, accordingly, 600,000 common shares were issued, 900,000 warrants were
exercisable at $0.30 and 450,000 warrants were exercisable at $0.50. On February
5, 2007, $180,000 was recorded as an expense on account of the fair value of the
common shares issuance and $302,835 on account of the fair value of the warrant
issuance. The fair value of the common shares was calculated using the closing
market price of the common stock on February 5, 2007 ($0.30) and the fair value
of the warrants was calculated using the Black-Scholes valuation model and the
following assumptions: dividend yield 0%, expected volatility 165%, risk-free
interest rate 4.92%, and an expected term of two years.

The agreement governing the LC Providers and the Loan Guarantee terms required
that the Company file a Registration Statement such that the securities issued
to the LC Providers would qualify for resale pursuant to the Registration
Statement. The Agreement contained penalty provisions if the Company did not
file a Registration Statement, and if the Registration Statement did not become
effective, within certain time provisions. Upon review, it was determined that
the penalty provision clauses applied and, in accordance with the terms of the
penalty provisions, the Company issued one additional common share to the LC
Providers that delivered letters of credit on or before October 23, 2006. On
August 10, 2007, the Company issued 1,625,000 common shares at a fair value of
$0.48 per share.

Prior to the receipt of the final letters of credit, cash collateral had been
pledged by accredited investors to allow the Royal Bank of Canada to fund the
total amount of the loan. The receipt of the final letters of credit allowed for
the release of the cash collateral. As compensation for pledging the cash
collateral, on March 22, 2007 the Company issued to one of the accredited
investors 100,000 common shares and 100,000 share purchase warrants exercisable
at $0.30 for a period of three years. On March 22, 2007 the Company recorded as
an expense, $36,000 on account of the fair value of the common shares issuance
and $28,406 on account of the fair value of the warrant issuance. The fair value
of the common shares was calculated using the closing market price of the common
stock on March 22, 2007 ($0.36) and the fair value of the warrants was
calculated using the Black-Scholes valuation model and the following
assumptions: dividend yield 0%, expected volatility 165%, risk-free interest
rate 4.58%, and an expected term of two years. As further compensation, the
exercise price of 1,008,548 share purchase warrants previously held by the
accredited investor was reduced from $0.60 to $0.30 per share and the term of
those warrants was extended by 36 months to expire January 18, 2011.

On September 17, 2008, the Company entered into a letter agreement with the
Royal Bank of Canada dated July 29, 2008 (the "2008 RBC Loan Agreement"). The
2008 RBC Loan Agreement provides for a $250,000 revolving demand facility and a
$2,405,000 non-revolving term loan and supersedes and cancels the 2006 RBC
Agreement. Immediately prior to funding under the 2008 RBC Loan Agreement,
$1,197,837 remained outstanding under the 2006 RBC Loan Agreement. The remaining
balance under the 2006 RBC Loan Agreement was rolled into the $2,405,000 funded
under the 2008 RBC Loan Agreement. The term loan is repayable in 24 equal
installments of $108,208 principal plus monthly accrued interest with the first
payment due on October 11, 2008. The term loan balance as of December 31, 2008
is $2,104,376. The maturity date for the term loan is July 11, 2009. Interest is
calculated at the floating 30 day LIBOR rate plus 1.50%.

The Company's obligations under the 2008 RBC Loan Agreement are collateralized
by a general security agreement covering all of the Company's personal and
intangible property, including intellectual property of the Company and its
subsidiary, Braintech Canada, Inc., and the irrevocable and unconditional
standby letters of credit which were previously pledged by the LC Providers as
security under the 2006 RBC Loan Agreement which were renewed and extended. The
LC Providers' security arrangement remains in place as described earlier in this
section.


<PAGE>

On September 26, 2008, as compensation for extending the letters of credit as
described above, the Company issued an aggregate of 10,375,000 common share
purchase warrants, each of which entitle the holder to purchase one share of the
Company's common stock at $0.30 per share for a period of five years, to the LC
Providers. Additionally, on September 29, 2008, the Company issued an aggregate
of 4,150,000 shares of the Company's common stock to the LC Providers. Each LC
Provider received two shares of common stock and five share purchase warrants
exercisable at $0.30 per share for each dollar of letter of credit provided.

The Company has recorded an expense of $1,814,055 related to the share purchase
warrants issued as compensation to the LC Providers and an expense of $626,650
related to the common shares issued to the LC Providers at $0.151 per share. The
fair value of the common shares was calculated using the closing market price of
the common stock on September 29, 2008 ($0.151) and the fair value of the
warrants was calculated using the Black-Scholes valuation model and the
following assumptions: dividend yield 0%, expected volatility 190%, risk-free
interest rate 2.11%, and an expected term of two years.

As previously stated, we are attempting to renegotiate the maturity date of the
2008 RBC Loan Agreement. In addition, one LC Provider who is also a director,
has asked to have his letter of credit released and to be removed as an LC
Provider, while three of our employees have posted new letters of credit in
order to become LC Providers, and another LC Provider has increased the amount
of his letter of credit. In connection with these changes and with our strategic
move of our operations to the United States, in March 2009 RBC recorded a new
Security Agreement in Nevada, our state of incorporation. In addition, on April
21, 2009, RBC offered a loan amendment increasing the interest rate and
increasing the revolving portion of the loan from $250,000 to $500,000. RBC did
not offer to refinance or extend the maturity date in this amendment, but we are
continuing to negotiate any possible extension or refinancing with RBC. We
signed this amendment on May 5, 2009, and our CEO also acknowledged the
amendment as Managing Member of the LC Providers. As a formality, on May 5,
2009, we asked the LC Providers to also acknowledge the amendment. RBC, however,
subsequently took the position that the amendment will not become effective
until it is acknowledged by all of the LC Providers individually. We intend to
follow up with the LC Providers to request their acknowledgement. In any case,
however, the May 5, 2009 amendment does not extend the maturity date beyond its
current maturity date of July 11, 2009.

Recent Accounting Pronouncements

In May 2008, the FASB issued Statement No. 162, "The Hierarchy of Generally
Accepted Accounting Principles". SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of non-governmental entities that are
presented in conformity with GAAP in the United States. It is effective 60 days
following the SEC's approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, "The Meaning of Present Fairly in Conformity With
Generally Accepted Accounting Principles". The adoption of this statement is not
expected to have a material effect on the Company's consolidated financial
statements.

During the first quarter of fiscal 2009, we adopted the following accounting
standards:

In December 2007, the Financial Accounting Standards Board ("FASB") issued
Statement No. 160, "Noncontrolling Interests in Consolidated Financial
statements" ("SFAS 160"). This new standard requires all entities to report
noncontrolling (minority) interests in subsidiaries in the same way as equity in
the consolidated financial statements. Moreover, SFAS 160 eliminates the
diversity that currently exists in accounting for transactions between an entity
and noncontrolling interests by requiring they be treated as equity
transactions. SFAS 160 is effective for fiscal years beginning after December
15, 2008 and as such, we adopted these provisions effective January 1, 2009. The
adoption of SFAS 160 did not have an impact on the financial statements.

In March 2008, FASB issued Statement No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133,"
("SFAS 161"). This new standard requires enhanced disclosures for derivative
instruments, including those used in hedging activities. It is effective for
fiscal years and interim periods beginning after November 15, 2008 and as such,
we adopted these provisions effective January 1, 2009. The adoption of SFAS 161
did not have an impact of the financial statements.

Item 3.    Quantitative and Qualitative Disclosures about Market Risk

Not applicable. The Company is a smaller reporting company, and smaller
reporting companies are not required to file the quantitative and qualitative
disclosures about market risk.


<PAGE>

Item 4T.   Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the
end of the period covered by this Quarterly Report on Form 10-Q, March 31, 2009,
we have carried out an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. This evaluation
was carried out under the supervision and with the participation of the
Company's management, including the Company's principal executive officer and
principal financial and accounting officer. Based upon that evaluation, the
Company's principal executive officer and the Company's principal financial and
accounting officer concluded that the Company's disclosure controls and
procedures are effective as of the end of the period covered by this report.

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Securities Exchange Act of 1934 is recorded,
processed, summarized and reported, within the time period specified in the
Securities and Exchange Commission's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in our reports filed under the
Securities Exchange Act of 1934 is accumulated and communicated to management,
including our president and chief executive officer as appropriate, to allow
timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate control over
financial reporting for the Company. Internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Internal
controls over financial reporting includes those policies and procedures that:
(i) pertain to the maintenance of records that in reasonable detail accurately
and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of
the Company are being made only in accordance with authorizations of management
and directors of the Company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition
of the Company's assets that could have a material effect on the financial
statements.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluations of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

Our management identified no changes in our internal controls over financial
reporting that occurred during our most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting.


                           PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

The Company may, from time to time, be subject to claims and legal proceedings
brought against it in the normal course of business. Such matters are subject to
many uncertainties. Management believes that adequate provisions have been made
in the accounts where required and the ultimate resolution of such contingencies
will not have a material adverse effect on the financial position of the
Company. However, we are not able to predict the outcome of the pending legal
proceedings listed below, or other legal proceedings, to which we may become
subject in the normal course of business or estimate the amount or range of any
possible loss we might incur if we do not prevail in the final, non-appealable
determinations of such matters. Therefore, the Company has no current accruals
for these potential contingencies. The Company cannot provide assurance that the
legal proceedings listed here, or other legal proceedings not listed here, will
not have a material adverse impact on our financial condition or results of
operations.


<PAGE>

As previously reported in Forms 8-K filed during the first quarter, on February
10, 2009, Babak Habibi, formerly our Chief Technology Officer, initiated an
action in the Supreme Court of British Columbia against Braintech Canada, Inc.
and Braintech, Inc. Mr. Habibi claimed that he had "good reason" to resign and
secured a Garnishing Order before Judgment for $336,045.73 (Canadian) claiming
entitlement to that amount under his employment agreement. The Company asserted
that Mr. Habibi improperly garnished these funds and that he lacked "good
reason" to resign and that no severance was due. On March 30, 2009, we filed a
lawsuit in the Circuit Court of Fairfax County, Virginia against Mr. Habibi for,
inter alia, misappropriation of trade secrets, tortious interference with our
contractual and banking relations, and tortious interference with business
expectancy relating to our employees. While the Company felt very strongly that
it had meritorious defenses against Mr. Habibi's claim and strong arguments for
its claim against Mr. Habibi, nevertheless, for economic reasons, in light of
the legal costs to proceed, the Company decided to agree to Mr. Habibi's request
to negotiate a settlement; and accordingly, on April 18, 2009 the Company,
Braintech Canada and Mr. Habibi settled all these matters as follows (currency
is Canadian unless otherwise indicated):

1.   The Company paid Mr. Habibi $70,000;

2.   The Company entered into a Consultancy Agreement with Mr. Habibi whereby
     (i) Mr. Habibi will make himself available to Braintech for limited
     consulting services at the mutual discretion of Mr. Habibi and the Company,
     (ii) Mr. Habibi will not provide similar consulting or other services to
     certain specified competitors or establish a competing business with the
     Company for a 33 month period, (iii) the Company will pay Mr. Habibi
     $10,000 monthly for three months and $5,000 monthly for 30 months for a
     total of $180,000 over a 33 month period, and (iv) as security for payment,
     the Company will initially place in escrow with its transfer agent
     1,500,000 shares of its common stock and these shares will be returned to
     the Company in 50,000 share increments as payments are made.

3.   In June 2001, Mr. Habibi had acquired 133,334 shares from the Company which
     were placed in escrow, in exchange for a $100,000 USD non-recourse
     Promissory Note. Under the existing terms of the 2001 Note, if Mr. Habibi
     had failed to pay, the Company's remedy would have been to cancel the
     shares. As part of the settlement of the litigation, Mr. Habibi requested,
     and the Company agreed to, cancellation of the Note and release of the
     shares to Mr. Habibi, worth approximately $16,000 USD at the time of
     settlement.

On February 13, 2009 two other former employees, released as part of a reduction
in force by Braintech Canada, Inc., after receiving full salary pay, statutory
severance payments, time-bank payments, accrued vacation payments and signing
full releases, instituted claims in the Provincial Court of British Columbia
(small claims court) for common law entitlement. Each claim is for $25,000
(Canadian). The Company disputes the plaintiffs' claims and believes that it has
meritorious defenses and intends to vigorously defend these actions. Management
believes that any potential loss associated with the above matters is neither
probable nor reasonably estimable at this time and accordingly has not accrued
any amounts for any potential loss.

On February 6, 2009, the Company filed a lawsuit in the U.S. District Court for
the Eastern District of Michigan, Southern Division, against Adil Shafi for
rescission of the acquisition of Shafi, Inc. and Shafi Innovations, Inc. On
April 22, 2009, Shafi filed a First Amended Counterclaim asserting eight causes
of action against the Company and its CEO, Frederick Weidinger. The Company
believes that Mr. Shafi's claims are groundless both as to the Company and Mr.
Weidinger. In a letter dated May 7, 2009, the law firm representing the Company
and Mr. Weidinger advised Mr. Shafi and his counsel that Mr. Shafi added Mr.
Weidinger as a third-party defendant solely for improper purposes, and demanded
that Mr. Shafi dismiss the Weidinger claims within 21 days, or the Company will
file a Motion to Dismiss and seek all available sanctions, including but not
limited to costs and attorney fees, against Mr. Shafi and his counsel. Mr.
Weidinger has not benefited in any way from the Shafi transaction, nor acted
improperly in any way with respect to the Shafi transaction. While the Company
has initiated this action and is vigorously pursuing it, the final outcome,
which the Company believes will be favorable, cannot now be determined. This
matter is subject to inherent uncertainties and management's view may change in
the future.

Item 1A.    Risk Factors

We operate in a rapidly changing environment that involves a number of risks and
uncertainties, some of which are beyond our control. Before deciding to
purchase, hold or sell our common stock, you should carefully consider the risks
described below in addition to the other cautionary statements and risks
described elsewhere and the other information contained in this Quarterly Report
on Form 10-Q and our other filings with the SEC, including our subsequent
reports on Forms 10-Q and 8-K. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we currently deem immaterial or which are similar to those
faced by other companies in our industry or business in general may also affect
our business operations. If any of these known or unknown risks or uncertainties
actually occurs with material adverse effects on us, our business, financial
condition, results of operations and/or liquidity could be seriously harmed. In
that event, the market price for our common stock will likely decline and you
may lose all or part of your investment.


<PAGE>

There is substantial doubt about our ability to continue as a going concern.

Our independent registered public accounting firm has issued an opinion on our
consolidated financial statements for the years ended December 31, 2008 and 2007
that states that the consolidated financial statements were prepared assuming we
will continue as a going concern and further states that our recurring losses
from operations raise substantial doubt about our ability to continue as a going
concern. Our plans concerning these matters are addressed in this Form 10-Q and
in Note 1 to the accompanying unaudited condensed consolidated financial
statements. Our future is dependent on our ability to address these matters. If
we fail to do so for any reason, we may not be able to continue as a going
concern, our business may fail and investors may lose their entire investment.

We may not be able to renew our Bank Loan with the Royal Bank of Canada ("RBC"),
which is payable in full on July 11, 2009. Our inability to renew our loan with
RBC or someone else will trigger a default under the RBC Loan Agreement.

As of March 31, 2009 the Company had a balance of $1,803,752 outstanding on a
bank loan of $2,473,000 dated July 29, 2008 and maturing July 11, 2009 from RBC
(the "RBC Loan"). A general security agreement covering all of the Company's
personal and intangible property, including intellectual property, has been
pledged as collateral. Standby letters of credit securing the full amount of the
RBC Loan provided by certain accredited investors (the "LC Providers") were
required by the bank in order to enable the RBC Loan, and the LC Providers also
have a general security agreement covering all of the Company's assets. If we
are unable to renew the RBC Loan or refinance the loan with another institution,
investors will lose their entire investment.

If we are not able to renew the RBC Loan or refinance it elsewhere, RBC may call
on certain standby letters of credit securing the loan triggering a default
under the LC Providers' general security agreement with the Company which could
result in investors losing their entire investment in the Company.

A general security agreement, which is subordinate to the general security
agreement of RBC, covering all of the Company's personal and intangible
property, including intellectual property was pledged as security to the LC
Providers in December 2006 and in September 2008. In the event the Company
defaults on the RBC Loan and the standby letters of credit are called by the
Royal Bank of Canada, the Managing Member of the LC Provider group has full
power to take such action as is necessary to recover the amounts due to the LC
Providers and manage the business and affairs of the Company, in the best
overall interests of the LC Providers. Our CEO, who is our largest shareholder,
is also the provider of the largest letter of credit and is the Managing Member
of the LC Providers. His interests and the interests of the other LC Providers
may conflict with the interests of the other holders of Braintech's common
stock. The Managing Member has formed a committee of the three largest LC
Providers, Frederick Weidinger (our CEO and largest shareholder), Owen Jones (a
director and second largest shareholder), and Kenneth Brooks (a shareholder)
("LC Providers Committee") to assist him in his role as Managing Member of the
LC Providers. The LC Provider Committee will operate by unanimous vote.
Investors may lose their entire investment if RBC draws on the standby letters
of credit.

We have almost exclusively relied on a single channel partner, ABB, to
distribute and generate sales of our products. Our agreement with ABB expired on
December 31, 2008. If we are unable to promptly enter into relationships with
new customers or new channel partners, our business may fail and investors may
lose their entire investment.

We historically relied almost exclusively on the Robotics Division of ABB Inc.
to purchase our products and to sell and distribute them to end users pursuant
to an Exclusive Global Channel Partner Agreement entered into in May 2006. This
Channel Partner Agreement expired in accordance with its terms on December 31,
2008. Under this agreement, ABB accumulated approximately $8 million of unsold
inventory of vision licenses which we have agreed they may continue selling
notwithstanding the agreement's expiration on December 31, 2008. We will receive
no further revenue under this agreement. If we are unable to promptly enter into
relationships with new customer or new channel partners, our business may fail
and investors may lose their entire investment.

We require additional funds to survive as a company. Our inability to obtain
such financing could result in foreclosure.

We may need to raise additional funds through public or private debt or sale of
equity. The financing we need may not be available when needed. Even if this
financing is available, it may be on terms that are materially adverse to your
interests with respect to dilution of book value, dividend preferences,
liquidation preferences, or other terms. Our inability to obtain financing could
require us to cease our operations, which could result in investors losing their
entire investment.


<PAGE>

We have a history of losses and have a significant deficit, which raises
substantial doubt about our ability to continue as a going concern.

We have generated only approximately $12.6 million in revenues since the
inception of our current operations January 3, 1994 and we expect to incur
operating losses in the future. Our net loss from inception of our current
operations in 1994 to March 31, 2009 was approximately $38.6 million. We had
cash in the amount of $2,051,169 as of March 31, 2009. We estimate that without
further funding or new revenue, our cash resources will be insufficient to repay
our RBC loan on its maturity date of July 11, 2009. These circumstances raise
substantial doubt about our ability to continue as a going concern as described
in an explanatory paragraph to our independent auditors' report dated March 26,
2009 on our audited financial statements for the years ended December 31, 2008
and 2007. If we are unable to continue as a going concern, investors may lose
all of their investments in our Company.

A portion of our assets, one of our directors and one of our officers are
located outside the United States, which may make it difficult for investors to
enforce any judgments obtained against us or any of our directors or officers in
the United States.

A portion of our assets are located outside the United States. In addition, one
of our directors and one of our officers are nationals and/or residents of
countries other than the United States, and all or a substantial portion of such
persons' assets are located outside the United States. As a result, it may be
difficult for investors to enforce within the United States any judgments
obtained against the Company or our officers or directors, including judgments
predicated upon the civil liability provisions of the securities laws of the
United States or any state thereof. Consequently, you may be effectively
prevented from pursuing remedies under U.S. federal securities laws against
them.

Because we can issue additional common shares, purchasers of our common stock
may incur immediate dilution and may experience further dilution.

The Board of Directors is authorized to issue up to 200,000,000 common shares,
of which 60,162,245 are issued and outstanding as of May 14, 2009. Our board of
directors has the authority to cause our Company to issue additional shares of
common stock without the consent of any of our shareholders. Consequently, our
shareholders may experience significant dilution in their ownership of our
Company in the future.

We may lose our competitiveness if we are not able to protect our proprietary
technology and intellectual property rights against infringement, and any
related litigation may be time-consuming and costly.

Our success and ability to compete depends to a significant degree on our
proprietary technology. If any of our competitors copy or otherwise gain access
to our proprietary technology or develop similar products independently, we may
not be able to compete as effectively. The measures we have implemented to
protect our proprietary technology and other intellectual property rights are
currently based upon a combination of provisional patent applications, patents,
trademarks and trade secrets. These measures, however, may not be adequate to
prevent the unauthorized use of our proprietary technology and our other
intellectual property rights. Further, the laws of foreign countries may provide
inadequate protection of such intellectual property rights. We may need to bring
legal claims to enforce or protect such intellectual property rights. Any
litigation, whether successful or unsuccessful, may result in substantial costs
and a diversion of our Company's resources. In addition, notwithstanding our
rights to our intellectual property, other persons may bring claims against us
alleging that we have infringed on their intellectual property rights or claims
that our intellectual property rights are not valid. Any claims against us, with
or without merit, could be time consuming and costly to defend or litigate,
divert our attention and resources, result in the loss of goodwill associated
with our business or require us to make changes to our products.

We have revised our business strategy to include new employees, new markets, new
technologies, and new products. If we are unsuccessful in penetrating new
markets, developing new technologies and products, our business may fail and
investors may lose their entire investment.

We have no operating history in these new markets and our new technologies and
products are new to these markets. As a result, it is difficult for us to
accurately forecast our future operating performance and the performance of our
new technologies and products and the revenues it will generate. Our prospects
must be considered in light of the risks, delays, expenses and difficulties
frequently encountered by companies embarking into new markets with new
technologies and products. Currently we are finding that it is very difficult to
introduce our products into these new sales markets and that we have a
significantly longer than normal sales cycle. Many of these factors are beyond
our control, including unanticipated operational, research and business
development expenses, employment costs, administrative expenses, legal expenses
and technology costs. In addition, as a result of the current economic
situation, we are finding that our potential industrial assembly customers do
not have available capital budgets. We cannot assure our investors that our
revised business strategy will materialize or prove successful. Furthermore, we
may need to raise additional funds through public or private debt or sale of
equity to execute our revised business strategy. There can be no assurance that
any additional financing will be available to us or that adequate funds will be
available when needed or on terms that are acceptable to us. The inability to
secure additional financing would prevent us from succeeding with our new
business strategy which would result in the loss of your investment.


<PAGE>

Acquisitions could prove difficult to integrate, disrupt our business, dilute
stockholder value and consume resources that are necessary to sustain our
business.

In August 2008 we completed the acquisition of Shafi and we may acquire other
companies in the future. An acquisition may result in unforeseen operating
difficulties and expenditures. In particular, we may encounter difficulties
assimilating or integrating the technologies, products, personnel or operations
of the acquired organizations, particularly if the key personnel of the acquired
company choose not to work for us, and we may have difficulty retaining the
customers of any acquired business due to changes in management and ownership.
Acquisitions may also disrupt our ongoing business, divert our resources and
require significant management attention that would otherwise be available for
ongoing development of our business. We cannot provide assurance that the
anticipated benefits of any acquisition, investment or business relationship
would be realized or that we would not be exposed to unknown liabilities.
Moreover, we may become involved in legal disputes relating to acquisitions. In
connection with one or more of these transactions, we may:

     o    issue additional equity securities that would dilute the ownership of
          our stockholders;

     o    use cash that we may need in the future to operate our business;

     o    incur or assume debt on terms unfavorable to us or that we are unable
          to repay;

     o    incur large charges or substantial liabilities;

     o    encounter difficulties retaining key employees of an acquired company
          or integrating diverse business cultures;

     o    become involved in legal disputes; and

     o    become subject to adverse tax consequences, substantial depreciation
          or deferred compensation charges.

For example, in our acquisition of Shafi, the consideration we paid consisted of
shares of our common stock, which diluted the ownership of our existing
stockholders. Moreover, we are currently in litigation to rescind the Shafi
acquisition. See Item 1 of Part II of this Form 10-Q ("Legal Proceedings") and
note 3 to our financial statements.

A decline in the price of our common stock could affect our ability to raise
further working capital and adversely impact our ability to continue operations.

A prolonged decline in the price of our common stock could result in a reduction
in the liquidity of our common stock and a reduction in our ability to raise
capital. Because a portion of our continued operations will be financed through
the sale of equity securities, a decline in the price of our common stock could
be especially detrimental to our liquidity and our operations. Such reductions
may force us to reallocate funds from other planned uses and may have a
significant negative effect on our business plan and operations, including our
ability to develop new products and continue our current operations. If our
stock price declines, we can offer no assurance that we will be able to raise
additional capital or generate funds from operations sufficient to meet our
obligations. If we are unable to raise sufficient capital in the future, we may
not be able to have the resources to continue our normal operations.

The market price for our common stock may also be affected by our ability to
meet or exceed expectations of analysts or investors. Any failure to meet these
expectations, even if minor, may have a material adverse effect on the market
price of our common stock.

Our common stock is illiquid and the price of our common stock may be negatively
impacted by factors which are unrelated to our operations.

Our common stock currently trades on a limited basis on the OTC Bulletin Board.
Trading of our stock through the OTC Bulletin Board is frequently thin and
highly volatile. There is no assurance that a sufficient market will develop in
our stock, in which case it could be difficult for shareholders to sell their
stock. The market price of our common stock could fluctuate substantially due to
a variety of factors, including market perception of our ability to achieve our
planned growth, quarterly operating results of our competitors, trading volume
in our common stock, changes in general conditions in the economy and the
financial markets or other developments affecting our competitors or us. In
addition, the stock market is subject to extreme price and volume fluctuations.
This volatility has had a significant effect on the market price of securities
issued by many companies for reasons unrelated to their operating performance
and could have the same effect on our common stock.


<PAGE>

We operate in a highly competitive industry. Many of our competitors have
greater financial, technical, sales and marketing resources, better name
recognition and a larger customer base than ours. Our failure to compete
effectively in the areas of hiring qualified personnel, product line and price
may adversely affect our ability to generate revenue.

The market for vision guided robotics and vision guidance is subject to frequent
product introductions with improved price and/or performance characteristics.
Even if we are able to introduce products which meet customer requirements in a
timely manner, there can be no assurance that our existing and new products will
gain enough market acceptance to allow us to execute a timely sales contract
with one or more new customers. Many of our competitors have greater financial,
technical, sales and marketing resources, better name recognition and a larger
customer base than ours. They may be better able to attract qualified personnel
than we will. In addition, many of our large competitors may offer customers a
broader product line, which may provide a more comprehensive solution than our
current solutions. Competitors' products may add features, increase performance
or sell at lower prices. We cannot predict whether our products will compete
successfully with such new or existing competing products. Increased competition
in the industry could result in significant price competition, reduced profit
margins or loss of market share, any of which could have a material adverse
effect on our ability to generate revenues and successfully operate our
business. If we go out of business, investors will lose their entire investment.

The sale of a substantial number of shares of our common stock into the public
market may result in significant downward pressure on the price of our common
stock and could affect the ability of our stockholders to realize the current
trading price of our common stock.

The sale of a substantial number of shares of our common stock in the public
market could cause a reduction in the market price of our common stock. We had
60,162,245 shares of common stock issued and outstanding as of May 15, 2009. On
April 20, 2007 we filed a registration statement under the Securities Act of
1933. This registration statement, declared effective on May 11, 2007, relates
to the resale by certain selling stockholders of up to 13,977,494 shares of
common stock and 23,694,259 shares of common stock issuable to security holders
upon exercise of share purchase warrants. The 13,977,494 shares registered by
this registration statement are included in the number of our issued and
outstanding common shares as of May 15, 2009, shown above. Upon the exercise of
the outstanding warrants an additional 23,694,259 shares will also be
outstanding and further dilute your interest as a shareholder. Furthermore, in
connection with the acquisition of Shafi, we issued shares of our common stock,
and agreed to register those shares for resale. Any significant downward
pressure on the price of our common stock as the selling stockholders under one
or more registration statements sell the shares of our common stock could
encourage short sales by the selling stockholders or others. Any such short
sales could place further downward pressure on the price of our common stock. If
the price of our common stock goes down, investors could lose most of the value
of their investments.

Rapid technological changes in the machine vision and vision guided robotics
industry could render our products non-competitive or obsolete and consequently
affect our ability to generate revenues, causing us to go out of business and
investors to lose their entire investment.

The machine vision and vision guided robotics industry is characterized by
rapidly changing technology and evolving industry standards. We believe that our
success will depend in part on our ability to develop our products or enhance
our current products and to introduce improved products promptly into the
market. We can make no assurance that our technology will not become obsolete
due to the introduction of alternative technologies by competitors. If we are
unable to continue to develop and introduce new products to meet technological
changes and changes in market demands, our business and operating results,
including our ability to generate revenues, could be adversely affected. If we
go out of business, investors will lose their entire investment.

We do not intend to pay dividends and there will be less ways in which you can
make a gain on any investment in Braintech Inc.

We have never paid any cash dividends and currently do not intend to pay any
dividends for the foreseeable future. Because we do not intend to declare
dividends, any gain on an investment in our Company will need to come through
appreciation of the price of our common stock. There can be no assurance that
the price of our common stock will increase.


<PAGE>

Trading of our stock may be restricted by the SEC's penny stock regulations,
which may limit a stockholder's ability to buy and sell our stock.

The Securities and Exchange Commission has adopted regulations which generally
define "penny stock" to be any equity security that has a market price (as
defined) less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. Our securities are covered by the penny
stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
"accredited investors". The term "accredited investor" refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.

NASD sales practice requirements may also limit a stockholder's ability to buy
and sell our stock.

In addition to the "penny stock" rules described above, the National Association
of Securities Dealers (NASD) has adopted rules that require that in recommending
an investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, the NASD believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The NASD requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable

Item 3.    Defaults upon Senior Securities

Not applicable

Item 4.    Submission of Matters to a Vote of Security Holders

Not applicable

Item 5.    Other Information

Not applicable

Item 6.    Exhibits

     The following is an index of the exhibits included in this report or
incorporated herein by reference.

<PAGE>

                                    Exhibits

Number         Exhibit
------         -------

3.1(1)         Restated Articles of Incorporation of the Company dated June 1,
               2000

3.2(2)         By-Laws of the Company

3.3(3)         Amendment to By-Laws of the Company

10.1(4)        Executive Employment Agreement with Stock Purchase and Stock
               Option Provisions, dated as of January 28, 2009, by and between
               the Company and Jerry Osborn

10.2(5)        Amendment to Employment Contract effective as of December 31,
               2008 by and between the Company and Owen Jones.

10.3(6)        Settlement Agreement by and between the Company and Babak
               Habibi dated as of April 18, 2009

10.4(6)        Consultancy Agreement by and between the Company and Babak
               Habibi dated as of April 18, 2009

10.5(6)        Escrow Agreement by and between the Company, Babak Habibi and
               Colonial Stock Transfer Company, Inc. dated as of April 18, 2009.

10.6*          Employment Contract by and between the Company and Babak Habibi
               dated as of June 26, 2007.

10.7(7)        Form of Loan Guarantee and Subscription Agreement between the
               Company and the providers of letters of credit as security for
               the Company's loan with Royal Bank of Canada

10.8(8)        General Security Agreement dated as of October 18, 2006
               between the Company and the providers of letters of credit

10.9*          Security Agreement between the Company and Royal Bank of Canada
               dated as of March 27, 2009

10.10*         Credit Agreement dated as of July 29, 2008 between the Company
               and Royal Bank of Canada.

31.1*          Certificate of the Principal Executive Officer pursuant to Sec
               302 of the Sarbanes-Oxley Act of 2002

31.2*          Certificate of Principal Financial and Accounting Officer
               pursuant to Sec 302 of the Sarbanes-Oxley Act of 2002

32.1*          Certificate of Principal Executive Officer pursuant to Sec 906
               of the Sarbanes-Oxley Act of 2002

32.2*          Certificate of Principal Financial and Accounting Officer
               pursuant to Sec 906 of the Sarbanes-Oxley Act of 2002

Exhibits filed herewith are designated with an asterisk (*)

(1)  Exhibit incorporated by reference to Exhibit 3.7 of Form S-1 filed on May
     2, 2001.

(2)  Exhibit incorporated by reference to Exhibit 3.7 of Form 10-SB filed on
     September 25, 1998.

(3)  Exhibit incorporated by reference to Exhibit 3.9 of Form 10-KSB for the
     year ended December 31, 2001 filed on March 29, 2002.

(4)  Exhibit incorporated by reference to Exhibit 10.1 of Form 8-K filed on
     February 4, 2009.

(5)  Exhibit incorporated by reference to Exhibit 10.22 of Form 10-K filed on
     March 31, 2009.

(6)  Exhibit incorporated by reference to Exhibits 10.1, 10.2 and 10.3 of Form
     8-K filed on April 23, 2009.

(7)  Exhibit incorporated by reference to Exhibit 10.1 of Form 8-K filed on
     October 23, 2006.

(8)  Exhibit incorporated by reference to Exhibit 10.3 of Form 8-K filed on
     October 23, 2006.


<PAGE>

                                   SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

BRAINTECH, INC. (the Registrant)

Signature                      Title                                   Date
---------                      -----                                   ----

/s/ Frederick Weidinger                                            May 15, 2009
-------------------------      Chief Executive Officer,
Frederick Weidinger            (Principal Executive Officer)


/s/ Edward A. White                                                May 15, 2009
-------------------------      Treasurer,
Edward A. White                (Principal Financial and Accounting Officer)