<PAGE>


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


                                   FORM 10-QSB


/X/       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                  For The Quarterly Period ended MARCH 31, 2000

/ /       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

          For the transition period from ---------------------------


                                 BRAINTECH, INC.
             -------------------------------------------------------
             (Exact name of Registrant as specified in its charter)



         NEVADA        .                            .          98-0168932   .
------------------------       ----------------------     -------------------

(State or jurisdiction          (Commission File          (IRS Employer
of incorporation)                Number)                  Identification No.)


          930 WEST 1ST ST. #102, NORTH VANCOUVER, B.C., CANADA, V7P 3N4
                    (Address of Principal Executive offices)


Issuer/ /s Telephone Number: (604) 988-6440



           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                      None

           SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                         Common Stock, $0.001 par value
                                (Title of Class)

<PAGE>

Check 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 past 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
             ---------                                     ----------


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 45,589,333 Common shares, par value
$0.001, as at May 11, 2000.


Transitional Small Business Disclosure Format (check one):

         Yes                                                  No       X
             ----------                                          -------------


                           Index to Exhibits on Page 6


                                       ii
<PAGE>


                                 BrainTech, Inc.
                                   Form 10-QSB
                                TABLE OF CONTENT S


                                                                 Page


PART I.  FINANCIAL INFORMATION

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

Item 2.           Management's Discussion and
                  Analysis or Plan of Operation.....................1

PART II.  OTHER INFORMATION

Item 1.           Legal Proceedings.................................4

Item 2.           Changes in Securities and Use of Proceeds.........5

Item 3.           Defaults upon Senior Securities...................6

Item 4.           Submission of Matters to a Vote of
                  Securities Holders................................6

Item 5.           Other Matters.....................................6

Item 6.           Exhibits and Reports on Form 8-K..................6


                                      iii
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

Each of the following items are contained in our Consolidated Financial
Statements and are set forth herein.

       (i)  Consolidated Balance Sheets as of March 31, 2000 and December 31,
       2000;

       (iii) Consolidated Statements of Operations for the three month periods
       ended March 31, 1999 and 2000;

       (iv) Statements of Stockholders' Deficit for the period beginning January
       3, 1994 and ending March 31, 2000;

       (v) Consolidated Statements of Cash Flows for the three month periods
       ended March 31, 1999 and 2000; and

       (vi) Notes to Consolidated Financial Statements.


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

OVERVIEW

BrainTech, Inc. was incorporated in 1987. Since the first quarter of 1994, our
principal business has been the development of automated vision systems and
hardware and software products used in automated vision systems.

As of March 31, 2000 we have incurred an aggregate deficit of approximately
$7,317,369 during the development stage. We may continue to incur significant
additional operating losses as our product development, research and
development, and marketing efforts continue. Operating losses may fluctuate
from quarter to quarter as a result of differences in the timing of expenses
incurred and revenue recognised.

RESULTS OF OPERATIONS

We believe that our limited history of revenue generation and recent business
developments make the prediction of future results of operations difficult, and,
accordingly, that our operating results should not be relied upon as an
indication of future performance.


                                       1
<PAGE>

THREE MONTH PERIOD ENDED MARCH 31, 2000 COMPARED WITH THE THREE MONTH PERIOD
ENDED MARCH 31, 1999

During the three month period ended March 31, 2000, we recorded revenue from
operations of $69,886. This amount included:

(a)      $58,429 for a brake shoe sorting and inspection system developed for
         Satisfied Brake Products Inc.; and
(b)      $11,387 for the Wizmaster program developed for Sideware Systems Inc.

We recorded no revenue from operations during the three month period ended March
31, 1999.

Cost of sales for the three month period ended March 31, 2000 were $31,199.
This amount consisted of:

(a)      $26,105 paid to a systems integrator working on the Satisfied Brake
         Products Inc. project; and
(b)      approximately $5,000 for equipment for our transmission casing
         inspection project with ABB.

As we had no revenue during the three month period ended March 31,1999, we
recorded no cost of sales during that period either.

Research and development expenses for the three month period ended March 31,
2000 were $151,027, compared with $123,492 for the three month period ended
March 31, 1999. Salaries allocated to research and development decreased from
approximately $98,000 for the three month period ended March 31, 1999 to
approximately $90,000 for the three month period ended March 31, 2000.
Payments to North Shore Circuit Design for work on the IMPAC accelerator
board increased from approximately $20,000 to approximately $47,000.

Selling, general, and administrative expenses decreased from $229,338 for the
three month period ended March 31, 1999 to $215,512 for the three month period
ended March 31, 2000. Several factors contributed to the change. The principal
factors were as follows:

(a)      Legal expenses increased from $18,800 to $56,400, principally due to
         the cost of filing a registration statement under the Securities Act of
         1933, and the cost of preparing proxy materials for our shareholders'
         meeting.
(b)      Filing and transfer fees increased from $687 to $11,307, principally as
         a result of fees paid on the filing of a registration statement under
         the Securities Act of 1933.
(c)      During the three month period ended March 31, 1999 we incurred a
         foreign exchange loss of $46,595. The comparative figure for 2000 was
         $18,903. Our foreign exchange losses result principally from adjusting
         entries made in


                                       2
<PAGE>

         respect of transactions recorded in United States dollars, but actually
         carried out in Canadian dollars.
(d)      During the three month period ended March 31, 1999 we paid $12,238 for
         public relations services. There were no similar payments during the
         three month period ended March 31, 2000.
(e)      Travel and promotion expenses decreased from $23,127 to $10,331,
         principally as a result of reduced trade show participation.


PLAN OF OPERATION

On March 26, 2000 we entered into an Alliance Agreement with ABB Flexible
Automation Group, Inc., part of the Canadian division of the ABB Group. Under
the Alliance Agreement we have agreed to co-operate with ABB Flexible Automation
Group, Inc. in identifying, developing, and pursuing business opportunities
which combine the expertise and technology of the two companies. Either party,
upon becoming aware of such an opportunity, will notify the other, and the
parties will co-operate in preparing proposals, specifications, and contracts.
Either party terminate the Alliance Agreement on 120 days notice.

We received an initial purchase order from ABB Flexible Automation Group, Inc.
to develop a vision system to identify and sort automobile transmission casing
parts. The price for the vision system was approximately $18,000. We completed
and installed the system in May 2000.

We believe that our Alliance Agreement with ABB represents our best prospect for
securing additional sales, and we intend to concentrate our efforts on advancing
our relationship with ABB.

We also intend to continue our investigation into potential applications for the
IMPAC accelerator board. Through North Shore Circuit Design of Austin Texas, we
are developing a preliminary version of a software application which will
conduct data lookup and searching operations using the IMPAC board. We expect
that that preliminary software application will become available for testing and
research purposes within the next two weeks. Once we have received that
software, we expect to begin testing the IMPAC board for potential applications.
Readers are cautioned that our investigation into potential applications for the
IMPAC board are at a preliminary stage. We have no assurance that we will be
able to identify or develop any application for the IMPAC board which can
profitably exploited.

We are also developing enhancements to the Wizmaster program which we developed
for Sideware Systems Inc.

We currently employ 5 full time and 9 part time officers or employees. Our
current monthly salary costs are approximately $35,000.


                                       3
<PAGE>

During the three month period ended March 31, 2000 our average monthly cash
expenses were approximately $120,000 per month, inclusive of salaries and
benefits. However, certain expenses during that period, such as legal expenses
for the preparation of shareholder meeting materials, will not be repeated
during the remainder of the current fiscal year. We expect that with our current
work force, our average monthly expenses will be approximately $100,000 per
month for the balance of this fiscal year.

As at May 11, 2000 our cash balance was approximately $725,000. Accordingly,
with our present work force, we expect that we have sufficient cash on hand to
pay operating expenses for substantially all of the remainder of this fiscal
year. We do not plan to increase our work force significantly unless we are able
to generate significant sales. Our best prospect for doing so is through our
alliance with ABB.

We have not at any time been able to generate sufficient revenue from sales of
our products or services to sustain ongoing operations, and we do not have an
established record of sales or established distribution channels for our
products or services. In order to continue as a going concern, we will have to
begin generating significant sales revenue.


PART II.  OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

We are involved in the following material court proceedings.

1.       JMF MANAGEMENT INC. ET AL V. BRAINTECH, INC. ET AL, BRITISH COLUMBIA
         SUPREME COURT ACTION NO. C990550

On February 1, 1999 JMF Management Inc. and Manfred Kurschner commenced legal
proceedings against us and TechWest Management Inc. Mr. Kurschner is our former
Manager of Investor Relations and JMF Management Inc. is Mr. Kurschner's
personal management company. The Plaintiffs claim approximately $100,000 in
damages for alleged breach of a stock option agreement and approximately $7,500
alleged to be owing pursuant to a consulting agreement. We have filed a defence
and counterclaim. Our counterclaim claims damages for breach of fiduciary duty
and negligence. No depositions have been conducted in the action and no trial
date has been set. The outcome of the action is uncertain.

2.       CACTUS CONSULTANTS CO. LTD. V. BRAINTECH, INC. ET AL, BRITISH COLUMBIA
         SUPREME COURT ACTION NO. C991377

On March 16, 1999 Cactus Consultants Co. Ltd., Crystal Securities Inc., and
Elmswell Investments Inc. commenced legal proceedings against us and certain of
our present and former directors. The Plaintiffs claim $606,000 as damages for
breach of contract and conversion of stock certificates. Our records show that
during the fiscal year ending


                                       4
<PAGE>

December 31, 1995, a total of 3,000,000 shares of common stock were subscribed
at a price of $0.25 per share, and that we received $606,000 of the subscription
amount. Prior to December 31, 1998 we recorded $606,000 as "subscriptions
received" on our financial statements. Subsequent to the commencement of court
action, we have recorded the same amount as "amounts in dispute". We have filed
a defence and counterclaim alleging that the plaintiffs and Jan Olivier, a
former promoter of our company, caused share certificates to be issued to the
plaintiffs improperly, and caused our funds to be used for unauthorized and
improper purposes.

The action has been set for trial in July 2001. In addition, on March 9, 2000,
the Plaintiffs served an application for summary trial. The summary trial
procedure permits a party to try to obtain a streamlined, expedited trial, and
thus to achieve an earlier verdict. If successful, the application for summary
trial could result in a determination of the case well in advance of the
scheduled trial date in July 2001. Note date has yet been set for the summary
trial hearing. The outcome of this action is uncertain.

3.       BRAINTECH, INC. V. JOHN KOSTIUK, DISTRICT COURT OF HARRIS COUNTY ACTION
         96-55978; BRITISH COLUMBIA SUPREME COURT ACTION C972736 - COURT OF
         APPEAL ACTION CA024459

On May 7, 1997 we obtained judgment for damages in the amount of $300,000 in
legal proceedings commenced in the District Court of Harris County in the State
of Texas against John Kostiuk, a resident of British Columbia, for defamatory
and injurious statements which Mr. Kostiuk caused to be published about us over
the Internet. On April 2, 1998 we obtained a judgement of the Supreme Court of
British Columbia enforcing the Texas judgment.

Effective October 31, 1998 Sideware Systems Inc. purchased a 50% interest in the
judgment for a purchase price of $136,000. Our agreement with Sideware Systems
Inc. provided that the purchase price would be adjusted depending on the benefit
ultimately received by Sideware Systems Inc. On March 18, 1999 the British
Columbia Court of Appeal reversed the judgment of the British Columbia Supreme
Court, rendering the judgment unenforceable against any assets of John Kostiuk
in British Columbia. Subsequent to the decision of the British Columbia Court of
Appeal, we returned the $136,000 paid by Sideware Systems Inc. On March 9, 2000
the Supreme Court of Canada dismissed our application for leave to appeal from
the Court of Appeal for British Columbia, thus ending the proceedings in Canada.

Our Texas judgment is enforceable in the United States, but as far as we are
aware, Mr. Kostiuk has no assets there. The Texas judgment is not enforceable in
British Columbia, where Mr. Kositiuk lives. Accordingly, our prospects for any
recovery on the judgment are negligible.


ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS


                                       5
<PAGE>

Not applicable.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

Not applicable.

ITEM 5.           OTHER MATTERS

Not applicable.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K


INDEX TO EXHIBITS



     NUMBER                                               EXHIBIT
     ------                                               -------

     3.1(1)       Articles of Incorporation, dated February 27, 1987
     3.2(1)       Articles of Amendment, dated July 14,1998
     3.3(1)       Articles of Amendment, dated June 28, 1990
     3.4(1)       Articles Of Amendment of the Company, dated February 8, 1993
     3.5(1)       Articles of Amendment of the Company, dated April 6, 1993
     3.6(1)       Articles of Amendment of the Company, dated December 6, 1993
     3.7(1)       By-Laws of the Company
     4.1(1)       Specimen Stock Certificate
     4.2(1)       1997 Stock Option Plan
     4.3(1)       2000 Stock Option Plan
     5.1(1)       Opinion of William K. Ziering, Attorney-at-Law

    10.1(1)       License Agreement between the Company and Willard W. Olson,
                  dated January 5, 1995.

    10.2(1)       Product Development Agreement between the Company and United
                  Technologies Microelectronic Systems Inc., dated July 6, 1998.

    10.3(1)       Manufacturing and Sales Agreement between the Company and
                  United Technologies Microelectronic Systems Inc., dated
                  July 6, 1998.
    10.4(1)       Operating Agreement between the Company and Sideware Systems
                  Inc., dated November 1, 1995

    10.5(1)       Cost Sharing and Allocation Agreement between the Company and
                  Sideware Systems Inc.

    10.6(1)       Assignment of Lease and Modification of Lease Agreement dated
                  August


                                       6
<PAGE>


                  17, 1998 between HOOPP Realty Inc., Techwest
                  Management Inc., Sideware Systems Inc., and BrainTech, Inc.

    10.7(1)       Software Development and License Agreement dated
                  September 20, 1999 between the Company and Sideware
                  Systems Inc.

    10.8(1)       Lease effective as of July 1, 1999 between the Company,
                  Techwest Management Inc., Sideware Systems Inc. and Pacific
                  Centre Leaseholds Ltd.

    10.9(1)       Assignment Agreement effective as of July 1, 1999 between the
                  Company, Techwest Management Inc., Sideware Systems Inc., and
                  SJM Management Ltd.

    10.10(1)      Agreement between the Company, Mercator Robotec Inc. and
                  Satisfied Brake Products Inc.

     10.11        Alliance Agreement dated March 26, 2000 between the Company
                  and ABB Flexible Automation Group Inc.

      11.1        Computation of net loss per share

    21.1(1)       Subsidiaries of the Registrant

      27.1        Summary Financial Data for the three month period ended March
                  31, 2000.

(1)      Exhibit already on file.

During the period covered by this Quarterly Report we filed one Report on Form
8-K dated March 30, 2000.


                                       7
<PAGE>


SIGNATURES

In accordance with Section 13 of the Securities Exchange Act of 1934, the
registrant caused this Quarterly Report to be signed on its behalf by the
undersigned, thereunto duly authorized.


Dated: May 15, 2000                 BrainTech, Inc.


                                            "Grant Sutherland"

                                            ------------------------------------
                                            W. Grant Sutherland
                                            Director
                                            Chairman of the Board of Directors
                                            Chief Financial Officer


                                       8
<PAGE>










                  Consolidated Financial Statements of

                  BRAINTECH, INC.
                  (A Development Stage Enterprise)
                  (Expressed in U.S. Dollars)

                  Three months ended March 31, 2000 and 1999
                  Period from inception on January 3, 1994 to March 31, 2000

                  (Unaudited)


<PAGE>


BRAINTECH, INC.
(A Development Stage Enterprise)

Consolidated Balance Sheets
(Expressed in U.S. Dollars)


<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                                March 31,         December 31,
                                                                                     2000                 1999
---------------------------------------------------------------------------------------------------------------
                                                                               (Unaudited)
<S>                                                                        <C>                  <C>

Assets

Current assets:
     Cash and cash equivalents                                             $      930,861       $      431,390
     Accounts receivable                                                           22,889               16,189
     Inventory                                                                      3,369                3,369
     Due from related companies (note 4(a))                                          -                  13,644
     Prepaid expenses                                                              21,350                7,392
---------------------------------------------------------------------------------------------------------------
                                                                                  978,469              471,984

Due from directors and officers (note 4(b))                                          -                  10,130

Fixed assets (note 5)                                                             137,378              134,210
---------------------------------------------------------------------------------------------------------------

                                                                           $    1,115,847       $      616,324
---------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Deficit

Current liabilities:
     Accounts payable and accrued liabilities                              $       78,025       $       87,710
     Due to related companies (note 4(a))                                            -                  21,506
---------------------------------------------------------------------------------------------------------------
                                                                                   78,025              109,216

Amounts in dispute (note 8(b))                                                    606,000              606,000
---------------------------------------------------------------------------------------------------------------
                                                                                  684,025              715,216

Stockholders' deficit:
     Common stock (note 6):
       Authorized:  50,000,000 shares, with $0.001 par value
       Issued:  45,589,333 shares (1999 - 41,338,333)                              45,589               41,228
     Additional paid-in capital (note 6(c))                                     7,764,528            6,910,323
     Accumulated deficit                                                          (58,800)             (58,800)
     Deficit accumulated during the development stage                          (7,319,495)          (6,991,643)
---------------------------------------------------------------------------------------------------------------
                                                                                  431,822              (98,892)

Future operations (note 2)
Contingencies (note 8)
Commitments (note 9)

---------------------------------------------------------------------------------------------------------------
                                                                           $    1,115,847       $      616,324
---------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.

On behalf of the Board:


        "Owen Jones"          President         "Grant Sutherland"      Chairman
-----------------------------             -----------------------------


<PAGE>


BRAINTECH, INC.
(A Development Stage Enterprise)

Consolidated Statements of Operations
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                      Period from
                                                     inception on
                                                  January 3, 1994                 Three Months Ended March 31,
                                                      to March 31,                ----------------------------
                                                              2000                   2000                 1999
---------------------------------------------------------------------------------------------------------------
                                                       (Unaudited)            (Unaudited)          (Unaudited)
<S>                                               <C>                      <C>                  <C>

Sales                                                $     127,396         $       69,886       $         -
Cost of sales                                               61,204                 31,199                 -
---------------------------------------------------------------------------------------------------------------

Gross margin                                                66,192                 38,687                 -

Expenses:
     Consulting and contractors                            736,561                   -                   4,045
     Research and development                            1,870,028                151,027              123,492
     Selling, general and administrative (note 10)       4,618,424                215,512              229,388
     Non-operating expenses:
         Loss on disposal of fixed assets                   26,054                   -                    -
         Write-down of investments                         100,000                   -                    -
         Write-down of intangible assets                    17,189                   -                    -
         Write-down of organization costs                   17,431                   -                    -
---------------------------------------------------------------------------------------------------------------
                                                         7,385,687                366,539              356,925
---------------------------------------------------------------------------------------------------------------

Loss for the period                                  $  (7,319,495)        $     (327,852)      $     (356,925)
---------------------------------------------------------------------------------------------------------------

Loss per share information:
     Basic and diluted                               $      (0.29)         $       (0.01)       $       (0.01)
---------------------------------------------------------------------------------------------------------------

Weighted average number of common
   shares outstanding                                   24,953,163             44,153,926           30,566,888
---------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Consolidated Statements of Stockholders' Deficit
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                                                                             Deficit
                                                                                                         accumulated
                                                                           Additional                     during the
                                                                Common        paid-in      Accumulated   development
                                                  Shares         stock        capital          deficit         stage
----------------------------------------------------------------------------------------------------------------------
                                              (Unaudited)   (Unaudited)    (Unaudited)      (Unaudited)   (Unaudited)
<S>                                           <C>           <C>          <C>             <C>            <C>

Balance, January 3, 1994                      17,400,000    $   17,400   $   1,039,271   $   (58,800)   $        -

Loss for the period                                 -             -               -             -          (1,006,716)
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994                    17,400,000        17,400       1,039,271       (58,800)      (1,006,716)

Loss for the period                                 -             -               -             -            (748,310)
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995                    17,400,000        17,400       1,039,271       (58,800)      (1,755,026)

Common stock transactions (net of issue costs):
Issued for cash at $.1895 per share              950,000           950         173,440          -                -
Issued for cash at $.25 per share                733,333           733         183,167          -                -
Issued for cash at $.20 per share              3,000,000         3,000         592,500          -                -
Shares issued for services rendered            1,200,000         1,200         238,800          -                -
Loss for the period                                 -             -               -             -            (959,945)
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996                    23,283,333        23,283       2,227,178       (58,800)      (2,714,971)

Common stock transactions (net of issue costs):
Issued for cash at $.20 per share              2,000,000         2,000         396,991          -                -
Issued for cash at $.15 per share              1,000,000         1,000         148,279          -                -
Shares issued for services rendered              300,000           300          59,700          -                -
Compensatory benefit of employee stock options      -             -            200,000          -                -
Loss for the period                                 -             -               -             -            (930,042)
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997                    26,583,333        26,583       3,032,148       (58,800)      (3,645,013)

Common stock transactions (net of issue costs):
Issued for cash at $.25 per share              1,600,000         1,600         398,400          -                -
Issued for cash at $.20 per share              2,188,000         2,188         435,412          -                -
Compensatory benefit of employee stock options      -             -            927,800          -                -
Loss for the period                                 -             -               -             -          (2,110,556)
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1998                    30,371,333        30,371       4,793,760       (58,800)      (5,755,569)

Common stock transactions (net of issue costs):
Issued for cash at $.15 per share              9,800,000         9,800       1,433,950          -                -
Issued for cash at $.20 per share                157,000           157          31,243          -                -
Issued for cash at $.60 per share              1,010,000         1,010         604,990          -                -
Common stock subscriptions                          -             -            110,270          -                -
Subscriptions receivable                            -             (110)        (65,890)         -                -
Compensatory benefit of employee stock options      -             -              2,000          -                -
Loss for the period                                 -             -               -             -          (1,236,074)
----------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1999                    41,338,333        41,228       6,910,323       (58,800)      (6,991,643)

Common stock transactions (net of issue costs):
Issued for cash at $.20 per share              3,966,000         3,966         788,315          -                -
Subscriptions received                              -              110          65,890          -                -
Stock issued on subscriptions                    285,000           285            -             -                -
Loss for the period                                 -             -               -             -            (327,852)
----------------------------------------------------------------------------------------------------------------------
Balance, March 31, 2000 (Unaudited)           45,589,333    $   45,589   $   7,764,528   $   (58,800)   $  (7,319,495)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.



<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                      Period from
                                                     inception on
                                                   January 3, 1994                Three Months Ended March 31,
                                                      to March 31,                ----------------------------
                                                              2000                   2000                 1999
---------------------------------------------------------------------------------------------------------------
                                                       (Unaudited)            (Unaudited)          (Unaudited)
<S>                                                <C>                     <C>                  <C>

Cash flows from operating activities:
     Loss for the period                           $    (7,319,495)        $     (327,852)      $     (356,925)
         Items not involving cash:
              Amortization                                  94,233                 14,275                5,220
              Bad debt                                      75,108                   -                    -
              Loss on disposal of fixed assets              26,054                   -                    -
              Write-down of investments                    100,000                   -                    -
              Write-down of intangible assets               17,189                   -                    -
              Write-down of organization costs              17,431                   -                    -
              Shares issued for services rendered          300,000                   -                    -
              Compensatory benefit of employee
                stock options                            1,129,800                   -                    -
     Changes in non-cash operating working capital:
         Inventory                                          (3,369)                  -                    -
         Accounts receivable                               (22,889)                (6,700)              (2,757)
         Prepaid expenses                                  (21,350)               (13,958)              (6,930)
         Accounts payable and accrued liabilities           64,493                 (9,685)             (23,542)
         Deferred revenue                                     -                   (21,506)                -
---------------------------------------------------------------------------------------------------------------
     Net cash used in operating activities              (5,542,795)              (365,426)            (384,934)

Cash flows from investing activities:
     Purchase of marketable securities                    (100,000)                  -                    -
     Purchase of fixed assets                             (256,606)               (17,443)             (16,298)
     Proceeds from notes receivable                       (130,181)                  -                    -
     Proceeds from disposal of real estate                 306,752                   -                    -
---------------------------------------------------------------------------------------------------------------
     Net cash used in investing activities                (180,035)               (17,443)             (16,298)

Cash flows from financing activities:
     Notes receivable                                       55,073                 10,130                 -
     Borrowings from directors and officers                  7,304                   -                    -
     Due to (from) related companies                       (11,626)                13,644               (4,374)
     Mortgages payable                                    (207,739)                  -                    -
     Share subscriptions received                          110,270                   -                (285,000)
     Subscriptions receivable                                 -                    66,000                 -
     Common shares issued, net of issue costs            6,456,297                792,566              660,000
---------------------------------------------------------------------------------------------------------------
     Net cash provided by financing activities           6,409,579                882,340              379,374
---------------------------------------------------------------------------------------------------------------

Increase (decrease) in cash and cash equivalents           686,749                499,471              (21,858)

Cash and cash equivalents, beginning of period             244,112                431,390               22,479
---------------------------------------------------------------------------------------------------------------

Cash and cash equivalents, end of period             $     930,861         $      930,861       $          621
---------------------------------------------------------------------------------------------------------------


Supplemental information:
     Cash paid for interest                          $       3,797         $         -          $         -
     Cash paid for taxes                             $        -            $         -          $         -
Non-cash financing activities:
     Shares issued for services rendered             $     300,000         $         -          $         -
---------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to consolidated financial statements.


<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements
(Unaudited)
(Expressed in U.S. Dollars)

Three months ended March 31, 2000 and 1999
Period from inception on January 3, 1994 to March 31, 2000
--------------------------------------------------------------------------------

1.   ORGANIZATION:

     Braintech, Inc. (the "Company") was incorporated on March 4, 1987 under the
     laws of the State of Nevada as Tome Capital, Inc. The Company initially was
     in the business of real estate development. On January 3, 1994, the Company
     changed its name to Braintech Inc. and began operations as a high tech
     development company, developing advanced video recognition software. All
     sales of its products and services are made in this industry segment.

2.   FUTURE OPERATIONS:

     During the three months ended March 31, 2000, the Company incurred a
     loss of $327,852 and used cash in operating activities of $365,426. From
     inception of the development stage on January 3, 1994, the Company has
     incurred cumulative losses of $7,319,495 and used cash for operating
     activities of $5,542,795.

     These 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.
     Operations to date have been primarily financed by equity transactions. The
     Company's future operations are dependent upon continued support by
     shareholders, the achievement of profitable operations and the successful
     completion of management's plan to obtain additional equity financing,
     although there can be no assurances that the Company will be successful.
     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.

3.   SIGNIFICANT ACCOUNTING POLICIES:

     (a) Basis of presentation:

         These consolidated financial statements are prepared in accordance with
         generally accepted accounting principles in the United States and
         present the financial position, results of operations and cash flows of
         the Company and its wholly-owned subsidiary Brainware Systems Inc.,
         incorporated under the Company Act of British Columbia on March 30,
         1994. All material intercompany balances and transactions have been
         eliminated.

         To December 31, 1999, for United States accounting and reporting
         purposes, the Company is considered to be in a development stage as
         it was devoting substantial efforts to developing its business
         operations. Commencement of the development stage is considered to
         have occurred on January 3, 1994 when the Company began operations
         as a high-technology development company.

<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 2
(Unaudited)
(Expressed in U.S. Dollars)

Three months ended March 31, 2000 and 1999
Period from inception on January 3, 1994 to March 31, 2000
--------------------------------------------------------------------------------

3.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     (b) Cash and cash equivalents:

         Cash and cash equivalents include highly liquid investments, such as
         term deposits, having terms to maturity of three months or less at the
         date of acquisition and that are readily convertible to contracted
         amounts of cash.

     (c) Research and development costs:

         Research and development costs are expensed as incurred.

     (d) Inventory:

         Inventory is valued at the lower of cost and net realizable value
         with cost being determined on a first-in-first-out basis. Cost is
         defined as the cost paid to third parties for materials plus other
         applicable direct costs.

     (e) Revenue recognition:

         The Company recognizes revenue when title has passed to the customer,
         the collectibility of the consideration is reasonably assured and the
         Company has no significant remaining performance obligations. An
         allowance for estimated future returns is recorded at the time revenue
         is recognized.

         Cash received in advance of meeting the revenue recognition criteria is
         recorded as deferred revenue.

     (f) Fixed assets:

         Fixed assets are carried at cost less accumulated amortization.
         Amortization is calculated annually as follows:

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------
         Asset                                                                      Basis                 Rate
---------------------------------------------------------------------------------------------------------------
         <S>                                                            <C>                        <C>

         Furniture and fixtures                                         declining-balance                  20%
         Computer equipment                                             declining-balance                  30%
         Trade show assets                                              declining-balance                  20%
         Computer software                                                  straight-line                  50%
         Leasehold improvements                                             straight-line           lease term
---------------------------------------------------------------------------------------------------------------
</TABLE>

     (g) Use of estimates:

         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reporting period. Actual amounts may differ
         from these estimates.



<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 3
(Unaudited)
(Expressed in U.S. Dollars)

Three months ended March 31, 2000 and 1999
Period from inception on January 3, 1994 to March 31, 2000
--------------------------------------------------------------------------------

3.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     (h) Foreign currency:

         The functional currency of the Company and all of its operations is
         the United States dollar. Monetary assets and liabilities
         denominated in a foreign currency have been translated into United
         States dollars at rates of exchange in effect at the balance sheet
         date. Non-monetary assets and liabilities, and revenue and expense
         items are translated at rates prevailing when they were acquired or
         incurred. Exchange gains and losses are included in operations.

     (i) Stock-based compensation:

         The Company has elected to apply the provision of Accounting
         Principles Board Opinion No. 25, "Accounting for Stock Issued to
         Employees" ("APB 25"), and related interpretations in accounting for
         its stock options granted to employees. Under APB 25, compensation
         expense is only recorded to the extent that the exercise price is
         less than fair value on the date of grant. The Company has adopted
         the disclosure-only provisions of Statement of Financial Accounting
         Standards 123, "Accounting for Stock-Based Compensation" ("SFAS
         123"). If option grants are made to non-employees, compensation
         expense will be recognized equal to its fair value over the vesting
         period.

     (j) Income taxes:

         The Company follows the asset and liability method of accounting for
         income taxes. Deferred tax assets and liabilities are recognized based
         on the estimated future tax consequences attributable to differences
         between the financial statement carrying amounts of existing assets and
         liabilities and their respective tax basis. Deferred tax assets and
         liabilities are measured using enacted tax rates in effect for the year
         in which those temporary differences are expected to be recovered or
         settled. The effect on deferred tax assets and liabilities of a change
         in tax rates is recognized in income in the period that includes the
         enactment date. When the likelihood of realization of a deferred tax
         asset is not considered to be more likely than not, a valuation
         allowance is provided.


<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 4
(Unaudited)
(Expressed in U.S. Dollars)

Three months ended March 31, 2000 and 1999
Period from inception on January 3, 1994 to March 31, 2000
--------------------------------------------------------------------------------

3.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):

     (k) Concentration of credit risk:

         Financial instruments that potentially subject the Company to
         significant concentrations of credit risk consist principally of cash
         equivalents.

         The Company maintains cash equivalents with various financial
         institutions located in Canada and the United States. The Company's
         policy is to limit the exposure at any one financial institution and to
         invest solely in highly liquid investments that are readily convertible
         to contracted amounts of cash.

     (l) Loss per share:

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

         As the effect of outstanding options is anti-dilutive, diluted loss per
         share does not differ from basic loss per share.

     (m) Comprehensive income:

         Net income for the Company is the same as comprehensive income.

     (n) Unaudited interim financial information:

         The financial information as at March 31, 2000 and for the three
         months ended March 31, 2000 and 1999 is unaudited however, such
         financial information reflects all adjustments (consisting of normal
         recurring adjustments) which are necessary for a fair presentation
         of the results for the periods presented.

4. RELATED PARTY BALANCES AND TRANSACTIONS:

     (a) Due to (from) related companies:

         TechWest Management Inc. ("TechWest"), which is under the control of
         common directors, is responsible for making regular payments to
         suppliers on behalf of the Company and Sideware Systems Inc.
         ("Sideware"), which is also under the control of common directors. Cash
         is advanced to TechWest by the Company and Sideware to cover these
         expenses. TechWest then allocates 80% of the expenses to Sideware and
         20% to the Company. Amounts due to (from) related companies result from
         these intercompany expense allocations and cash advances. The amounts
         due to (from) related companies are as follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                                March 31,         December 31,
                                                                                     2000                 1999
---------------------------------------------------------------------------------------------------------------
                                                                              (Unaudited)
         <S>                                                               <C>                  <C>

         Netmedia Systems Inc.                                             $         -          $       (2,126)
         TechWest Management Inc.                                                    -                  23,632
---------------------------------------------------------------------------------------------------------------

                                                                           $         -          $       21,506
---------------------------------------------------------------------------------------------------------------
</TABLE>

         During the period, the Company recorded sales of $11,387 to Sideware.

     (b) Due from directors and officers:

         The amounts due from directors and officers represent cash advances
         provided to current directors and officers of the Company.


<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 5
(Unaudited)
(Expressed in U.S. Dollars)

Three months ended March 31, 2000 and 1999
Period from inception on January 3, 1994 to March 31, 2000
--------------------------------------------------------------------------------

4. RELATED PARTY BALANCES AND TRANSACTIONS (CONTINUED):

     (c) Transactions with directors and officers:

         During the three month period ended March 31, 2000, the Company was
         charged $73,808 (March 31, 1999 - $52,849) for management and
         consulting services provided by directors and officers. These charges
         are included in selling, general and administrative expenses.

5.   FIXED ASSETS:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                              Accumulated             Net book
     MARCH 31, 2000 (Unaudited)                                  Cost        amortization                value
---------------------------------------------------------------------------------------------------------------
     <S>                                                <C>                  <C>                  <C>
     Furniture and fixtures                             $      23,726        $      6,495         $     17,231
     Computer equipment                                        85,345              30,025               55,320
     Trade show assets                                         17,306               3,622               13,684
     Computer software                                         51,196              40,457               10,739
     Leasehold improvements                                    49,654               9,250               40,404
---------------------------------------------------------------------------------------------------------------

                                                        $     227,227        $     89,849         $    137,378
---------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                                              Accumulated             Net book
     DECEMBER 31, 1999                                           Cost        amortization                value
---------------------------------------------------------------------------------------------------------------
     <S>                                                <C>                  <C>                  <C>

     Furniture and fixtures                             $      22,945        $      5,320         $     17,625
     Computer equipment                                        80,745              23,771               56,974
     Trade show assets                                         13,307               2,851               10,456
     Computer software                                         50,795              36,898               13,897
     Leasehold improvements                                    41,992               6,734               35,258
---------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------
                                                        $     209,784        $     75,574         $    134,210
---------------------------------------------------------------------------------------------------------------
</TABLE>


6.   COMMON STOCK:

     (a) Of the shares issued at March 31, 2000, 6,595,000 shares (December 31,
         1999 - 12,595,000) are subject to trading restrictions. These include
         the 1,500,000 shares retained by the Company, as described in note
         6(b).

     (b) 5,500,000 shares were issued for technology in 1993 and recorded at a
         par value of $5,500. 1,500,000 shares have been retained by the Company
         because the development of the technology has not been completed.
         The 1,500,000 shares are included in the total outstanding number of
         shares of 45,589,333 disclosed in the statements of stockholders'
         deficit.


<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 6
(Unaudited)
(Expressed in U.S. Dollars)

Three months ended March 31, 2000 and 1999
Period from inception on January 3, 1994 to March 31, 2000
--------------------------------------------------------------------------------

6.   COMMON STOCK (CONTINUED):

     (c) Additional paid-in capital arises on the issuance of common shares at a
         price in excess of par value.

     (d) Stock options:

         The Company has reserved 7,500,000 common shares pursuant to a stock
         option plan. The Company has also reserved an additional 7,500,000
         common shares, subject to shareholder approval, pursuant to a new stock
         option plan. Options to purchase common shares of the Company may be
         granted by the Board of Directors and vest immediately.

         Stock option activity during the three months ended March 31, 2000 is
         as follows:

<TABLE>
<CAPTION>
         --------------------------------------------------------------------------------------------------------
                            Weighted
                             average    Weighted   Outstanding                                      Outstanding
                            exercise     average  December 31,                         Forfeited/     March 31,
         Expiry dates          price  fair value          1999     Granted  Exercised     expired          2000
         --------------------------------------------------------------------------------------------------------
                                                                                                    (Unaudited)
         <S>                <C>       <C>          <C>             <C>      <C>        <C>          <C>

         December 16, 2002     $0.20       $0.19     4,012,000        -     2,529,000        -        1,483,000
         May 13, 2003          $0.20       $0.76     1,103,000        -       802,000        -         301,000
         July 2, 2003          $0.20       $0.77       125,000        -       125,000        -             -
         April 19, 2004        $0.20       $0.16       965,000        -       310,000        -          655,000
         November 25, 2004     $0.20       $0.18       200,000        -       200,000        -             -
         --------------------------------------------------------------------------------------------------------

                                                     6,405,000        -     3,966,000         -       2,439,000
         --------------------------------------------------------------------------------------------------------
</TABLE>

         Stock option activity during the three month period ended March 31,
         1999 is as follows:

<TABLE>
<CAPTION>
         --------------------------------------------------------------------------------------------------------
                            Weighted
                             average    Weighted  Outstanding                                      Outstanding
                            exercise     average  December 31,                         Forfeited/     March 31,
         Expiry dates          price  fair value          1998     Granted  Exercised     expired          1999
         --------------------------------------------------------------------------------------------------------
                                                                                                    (Unaudited)
         <S>                <C>       <C>          <C>             <C>      <C>        <C>          <C>

         December 16, 2002     $0.20       $0.19     4,097,000        -           -           -       4,097,000
         May 13, 2003          $0.20       $0.76     1,210,000        -           -        35,000     1,175,000
         July 2, 2003          $0.20       $0.77       125,000        -           -          -          125,000
         --------------------------------------------------------------------------------------------------------

                                                     5,432,000        -           -        35,000     5,397,000
         --------------------------------------------------------------------------------------------------------
</TABLE>

         The weighted average fair value of options was calculated using the
         Black-Scholes option pricing formula.

         The Company has adopted the disclosure provisions of Statement of
         Financial Accounting Standards No. 123, "Accounting for Stock-based
         Compensation" ("FAS 123") but has elected to continue measuring
         compensation costs using the intrinsic value based method of
         accounting. Under the intrinsic value based method, employee stock
         option compensation is the excess, if any, of the quoted market value
         of the stock at the date of grant over the amount on optionee must pay
         to acquire stock.


<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 7
(Unaudited)
(Expressed in U.S. Dollars)

Three months ended March 31, 2000 and 1999
Period from inception on January 3, 1994 to March 31, 2000
--------------------------------------------------------------------------------

6.   COMMON STOCK (CONTINUED):

     (d) Stock options (continued):

         Had compensation cost been determined based on the fair value at the
         grant dates of the stock options and charged to earnings consistent
         with the measurement provision of FAS 123, the impact would be as
         follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                       Period from
                                                      inception on
                                                   January 3, 1994                 Three Months Ended March 31,
                                                      to March 31,                 ----------------------------
                                                              2000                   2000                 1999
---------------------------------------------------------------------------------------------------------------
                                                       (Unaudited)
         <S>                                      <C>                      <C>                  <C>

         Loss for the period, as reported         $     (7,319,498)        $     (327,852)      $     (292,486)
         Estimated fair value of option grants          (2,375,052)                  -                    -
---------------------------------------------------------------------------------------------------------------
                                                        (9,694,550)              (327,852)            (292,486)
         Less compensatory benefit included in
           selling, general and administrative
           expenses                                      1,129,800                   -                    -
---------------------------------------------------------------------------------------------------------------

         Pro forma loss                              $  (8,564,750)        $     (327,852)      $     (292,486)
---------------------------------------------------------------------------------------------------------------

         Loss per share                              $      (0.34)         $       (0.01)       $         0.01
---------------------------------------------------------------------------------------------------------------
</TABLE>

         The fair value of the stock option grants have been estimated using the
         Black-Scholes Option-Pricing model with the following assumptions:
         dividend yield - 0% (all periods), risk-free interest rate in 1999 -
         5.88%; 1998 - 6.0%; 1997 - 5.0%, expected option life - 5 years (all
         periods); expected volatility in 1999 - 120%; 1998 - 156%; 1997 - 70%.


7.   INCOME TAXES:

     The Company has non-capital loss carry forwards for income tax purposes of
     approximately $4,725,000 which are available to reduce taxable income of
     future years. The unrecorded benefit of these losses carried forward is
     approximately $2,120,000. The benefit has been fully offset by a valuation
     allowance due to the uncertainty of the realization of the benefits.

     The unrealized benefits of the carry forward losses expire as follows:

<TABLE>
              <S>                                                          <C>
              2010                                                         $       25,000
              2011                                                                972,500
              2012                                                              2,134,700
              2013                                                              1,246,400
              2014                                                                346,400
------------------------------------------------------------------------------------------

                                                                           $    4,725,000
------------------------------------------------------------------------------------------
</TABLE>


<PAGE>

BRAINTECH, INC.
(A Development Stage Enterprise)

Notes to Consolidated Financial Statements, page 8
(Unaudited)
(Expressed in U.S. Dollars)

Three months ended March 31, 2000 and 1999
Period from inception on January 3, 1994 to March 31, 2000
--------------------------------------------------------------------------------

8.   CONTINGENCIES:

     The Company is engaged in the following legal disputes:

     (a) On February 1, 1999, a former employee of the Company commenced legal
         proceedings against the Company claiming approximately $100,000 in
         damages for an alleged breach of a stock option agreement and
         approximately $7,500 alleged to be owing pursuant to a consulting
         agreement. The Company has filed a defence and counterclaim alleging
         breach of fiduciary duty and negligence. While the ultimate outcome is
         uncertain, management of the Company believes it will be successful in
         defending this action and accordingly no amount has been provided in
         these financial statements.

     (b) On March 16, 1999, three corporations commenced legal proceeding
         against the Company and certain of its present and former directors are
         claiming damages in the amount of $606,000 for breach of contract and
         conversion of stock certificates. The plaintiffs have not sought
         recovery of any shares of the Company. The Company has filed a defence
         and counterclaim alleging that the plaintiffs and a former promoter of
         the Company, caused share certificates of the defendant to be issued to
         the plaintiffs improperly, and caused funds of the Company to be used
         for unauthorized and improper purposes. In the previous year, the
         Company recorded the full amount of the $606,000 as a liability.

9.   COMMITMENTS:

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

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
     <S>                                                                                          <C>
     2000                                                                                         $    161,559
     2001                                                                                              222,812
     2002                                                                                              195,817
     2003                                                                                               95,605
---------------------------------------------------------------------------------------------------------------

                                                                                                  $    675,793
---------------------------------------------------------------------------------------------------------------
</TABLE>

     Eighty percent of these amounts are recoverable pursuant to an agreement
     with Sideware Systems Inc., a company with certain common shareholders and
     directors as the Company.

10. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:

     Selling, general and administrative expenses are comprised of the
     following:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------

                                                         Period from
                                                        inception on
                                                     January 3, 1994                  Three Months Ended March 31,
                                                         to March 31,                -----------------------------
                                                                2000                   2000                 1999
------------------------------------------------------------------------------------------------------------------
                                                         (Unaudited)            (Unaudited)          (Unaudited)
     <S>                                                  <C>                      <C>                  <C>

     Compensatory benefit of employee stock options       $ 1,129,800              $    -               $    -
     Salaries and benefits                                    919,454                 53,453               58,721
     Other                                                  2,569,170                162,059              170,667
------------------------------------------------------------------------------------------------------------------

                                                          $ 4,618,424              $ 215,512            $ 229,388
------------------------------------------------------------------------------------------------------------------
</TABLE>