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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended September30, 2007

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT

For the transition period from ___________ to _____________

Commission file number 000-24911

BRAINTECH, INC.(Exact
name of small business issuer as specified in its charter)

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

930 West 1stStreet, Unit #102, North Vancouver,
B.C., Canada V7P 3N4(Address of principal executive offices)

(604) 988-6440(Issuers telephone number)

N/A(Former name, former address and former
fiscal year, if changed since last report)

Check whether the issuer: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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 [ ]

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [ ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date:

45,047,335 common shares issued and outstanding as of
November 13, 2007.

Transitional Small Business Disclosure Format (Check one): Yes [
] No [X]

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Braintech, Inc.

Form 10-QSB

TABLE OF CONTENTS

|PART I. FINANCIAL INFORMATION |                                                                  
|----------------------------- | -----------------------------------------------------------------
|Item 1.                       | Financial
      Statements                                       
|Item 2.                       | Management's Discussion and
      Analysis                       
|Item 3                        | Controls and Procedures                                          
|PART II. OTHER INFORMATION    | 19                                                               
|Item 1.                       | Legal Proceedings                                                
|Item 2.                       | Unregistered Sales of Equity
      Securities and Use of Proceeds
|Item 3.                       | Defaults upon
      Senior Securities                            
|Item 4.                       | Submission of Matters to a
      Vote of Securities Holders      
|Item 5.                       | Other Information                                                
|Item 6.                       | Exhibits                                                         

2



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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 as at September 30, 2007 (unaudited) and December 31, 2006;

(ii) Condensed Consolidated Statements
of Operations (unaudited) for the three and nine months ended September 30, 2007
and 2006;

(iii) Condensed Consolidated Statement
of Stockholders' Deficiency (unaudited) for the nine months ended September 30,
2007;

(iv) Condensed Consolidated Statements
of Cash Flows (unaudited) for the nine months ended September 30, 2007 and 2006;
and

(v) Notes to Condensed Consolidated Financial
  Statements (unaudited) for the nine months ended September 30, 2007 and 2006.



3

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Condensed Consolidated Financial Statements
  
  (Expressed in United States dollars)

BRAINTECH, INC.

Nine months ended September 30, 2007
  and 2006 
  Three months ended September 30, 2007 and 2006 
  (Unaudited  Prepared by Management)



F-1

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|BRAINTECH, INC.                      
|-------------------------------------
|                                     
|Condensed Consolidated Balance Sheets
|(Expressed in United States dollars) 

|                                                            |   | September 30, |   |   | December
      31, |  
|----------------------------------------------------------- | - | ------------- | - | - | ------------------ | -
|                                                            |   | 2007          |   |   | 2006               |  
|                                                            |   | (unaudited)   |   |   |                    |  
|                                                            |   |               |   |   |                    |  
|**Assets**                                                  |   |               |   |   |                    |  
|                                                            |   |               |   |   |                    |  
|Current assets:                                             |   |               |   |   |                    |  
|Cash and cash equivalents                                   | $ | 787,262       |   | $ | 16,950             |  
|Accounts receivable                                         |   | 1,090,557     |   |   | 1,224,010          |  
|Inventory                                                   |   | 9,418         |   |   | 10,297             |  
|Prepaid expenses                                            |   | 86,013        |   |   | 47,930             |  
|                                                            |   | 1,973,250     |   |   | 1,299,187          |  
|                                                            |   |               |   |   |                    |  
|Fixed assets                                                |   | 45,816        |   |   | 29,373             |  
|                                                            |   |               |   |   |                    |  
|                                                            | $ | 2,019,066     |   | $ | 1,328,560          |  
|                                                            |   |               |   |   |                    |  
|                                                            |   |               |   |   |                    |  
|                                                            |   |               |   |   |                    |  
|**Liabilities and Stockholders Equity (Deficiency)**       |   |               |   |   |                    |  
|                                                            |   |               |   |   |                    |  
|Current liabilities:                                        |   |               |   |   |                    |  
|Accounts payable                                            | $ | 74,764        |   | $ | 260,415            |  
|Accrued liabilities                                         |   | 460,354       |   |   | 317,387            |  
|Deferred leasehold
      inducements (note 3)               |   | 19,483        |   |   | 30,155             |  
|Deferred revenue (note 4)                                   |   | 497,103       |   |   | 197,383            |  
|Due to related party                                        |   | 125,608       |   |   | 112,874            |  
|Current portion of bank loan (note 5)                       |   | 1,540,000     |   |   | 490,000            |  
|                                                            |   | 2,717,312     |   |   | 1,408,214          |  
|                                                            |   |               |   |   |                    |  
|Bank loan (note 5)                                          |   | 722,837       |   |   | 1,982,837          |  
|                                                            |   |               |   |   |                    |  
|Total liabilities                                           |   | 3,440,149     |   |   | 3,391,051          |  
|                                                            |   |               |   |   |                    |  
|Stockholders equity (deficiency):                          |   |               |   |   |                    |  
|Common stock (note 6):                                      |   |               |   |   |                    |  
|Authorized:
      200,000,000 shares, with $0.001 par value |   |               |   |   |                    |  
|Issued: 37,017,335
      shares                             |   | 37,017        |   |   | 30,732             |  
|(December 31, 2006
       30,732,433)                      |   |               |   |   |                    |  
|Additional paid-in capital                                  |   | 26,155,863    |   |   | 23,930,944         |  
|Accumulated deficit                                         |   | (27,613,963   | ) |   | (26,024,167        | )
|                                                            |   | (1,421,083    | ) |   | (2,062,491         | )
|                                                            |   |               |   |   |                    |  
|                                                            | $ | 2,019,066     |   | $ | 1,328,560          |  

See accompanying notes to consolidated financial statements.

F-2

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

|                                              |   | Nine Months Ended |   |   | Three Months Ended |  
|--------------------------------------------- | - | ----------------- | - | - | ------------------ | -
|                                              |   | September 30      |   |   | September 30       |  
|                                              |   | 2007              |   |   | 2006               |  
|                                              |   |                   |   |   |                    |  
|Sales                                         | $ | 2,205,854         |   | $ | 692,505            |  
|Cost of sales                                 |   | 173,307           |   |   | 37,234             |  
|                                              |   |                   |   |   |                    |  
|Gross margin                                  |   | 2,032,547         |   |   | 655,271            |  
|                                              |   |                   |   |   |                    |  
|Operating expenses:                           |   |                   |   |   |                    |  
|Research
      and development                |   | 429,206           |   |   | 517,555            |  
|Selling, general and administration           |   | 1,638,308         |   |   | 1,668,271          |  
|                                              |   | 2,067,514         |   |   | 2,185,826          |  
|                                              |   |                   |   |   |                    |  
|Operating income/(loss)                       |   | (34,967           | ) |   | (1,530,555         | )
|                                              |   |                   |   |   |                    |  
|Non-operating:                                |   |                   |   |   |                    |  
|Interest income                               |   | 1,251             |   |   | 274                |  
|Interest
      expense - other                |   | -                 |   |   | (4,274             | )
|Financing expenses                            |   |                   |   |   |                    |  
|Interest on convertible debentures            |   | -                 |   |   | (133,905           | )
|Accretion of convertible debentures           |   | -                 |   |   | (481,209           | )
|Fair value of warrants issued on              |   |                   |   |   |                    |  
|conversion of debentures                      |   | -                 |   |   | (9,772             | )
|Interest on bank loan                         |   | (131,484          | ) |   | (655               | )
|Fair value of equity issued as                |   |                   |   |   |                    |  
|compensation to bank loan guarantors          |   | (1,327,241        | ) |   | -                  |  
|Bank loan guarantee expenses                  |   | (7,355            | ) |   | -                  |  
|Fair value of warrants issued on              |   |                   |   |   |                    |  
|settlement of debentures                      |   | -                 |   |   | (452,375           | )
|Fair value of equity issued as                |   |                   |   |   |                    |  
|compensation
      for financing services     |   | (90,000           | ) |   | -                  |  
|                                              |   | (1,554,829        | ) |   | (1,081,916         | )
|                                              |   |                   |   |   |                    |  
|Net income/(loss) for the period              | $ | (1,589,796        | ) | $ | (2,612,471         | )
|                                              |   |                   |   |   |                    |  
|Income/(loss) per share information:          |   |                   |   |   |                    |  
|Basic                                         | $ | (0.05             | ) | $ | (0.11              | )
|Diluted                                       | $ | (0.05             | ) | $ | (0.11              | )
|                                              |   |                   |   |   |                    |  
|                                              |   |                   |   |   |                    |  
|Weighted average number of shares outstanding |   |                   |   |   |                    |  
|Basic                                         |   | 34,109,250        |   |   | 24,442,699         |  
|Diluted                                       |   | 34,109,250        |   |   | 24,442,699         |  

See accompanying notes to condensed consolidated financial statements.

F-3

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|BRAINTECH, INC.                                                             
|----------------------------------------------------------------------------
|                                                                            
|Condensed Consolidated Statements of Stockholders Equity
      (Deficiency)
|(Unaudited  Prepared by Management)                                        
|(Expressed in United States dollars)                                        

|                                                            |  | Common stock |  |   |        |  |   |                 |   |   | Total       |  
|----------------------------------------------------------- |  | ------------ |  | - | ------ |  | - | --------------- | - | - | ----------- | -
|                                                            |  | Number       |  |   |        |  |   | Additional      |   |   | Accumulated |  
|                                                            |  | of shares    |  |   | Amount |  |   | paid-in capital |   |   | deficit     |  
|                                                            |  |              |  |   |        |  |   |                 |   |   |             |  
|Balance, December 31, 2006                                  |  | 30,732,433   |  | $ | 30,732 |  | $ | 23,930,944      |   | $ | (26,024,167 | )
|                                                            |  |              |  |   |        |  |   |                 |   |   |             |  
|Common stock transactions                                   |  |              |  |   |        |  |   |                 |   |   |             |  
|(net of share issue costs)                                  |  |              |  |   |        |  |   |                 |   |   |             |  
|Shares issued for
      cash                                |  |              |  |   |        |  |   |                 |   |   |             |  
|(net of subscriptions received in 2006)                     |  | 3,664,902    |  |   | 3,665  |  |   | 598,339         |   |   | -           |  
|Shares issued for
      services rendered                   |  | 265,000      |  |   | 265    |  |   | 95,135          |   |   | -           |  
|Shares issued to bank loan guarantors                       |  | 2,325,000    |  |   | 2,325  |  |   | 993,675         |   |   | -           |  
|Shares issued for
      finders fees                       |  | 30,000       |  |   | 30     |  |   | (30             | ) |   | -           |  
|Cash paid for finders fees                                 |  | -            |  |   | -      |  |   | (4,020          | ) |   | -           |  
|Fair value of warrants issued to bank loan
      guarantors |  | -            |  |   | -      |  |   | 331,241         |   |   | -           |  
|Fair value of stock options expensed                        |  |              |  |   |        |  |   | 210,579         |   |   | -           |  
|Loss for the period                                         |  | -            |  |   | -      |  |   | -               |   |   | (1,589,796  | )
|                                                            |  |              |  |   |        |  |   |                 |   |   |             |  
|Balance, September 30, 2007                                 |  | 37,017,335   |  | $ | 37,017 |  | $ | 26,155,863      |   | $ | (27,613,963 | )

See accompanying notes to consolidated financial statements.

F-4

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

|                                                                |   | Nine months ended September 30 |  
|--------------------------------------------------------------- | - | ------------------------------ | -
|                                                                |   | 2007                           |  
|                                                                |   |                                |  
|Cash flows from operations:                                     |   |                                |  
|Loss for the period                                             | $ | (1,589,796                     | )
|Items not involving
      cash:                                 |   |                                |  
|Amortization                                                    |   | 15,732                         |  
|Shares
      issued for services rendered                       |   | 95,400                         |  
|Fair value
      of stock-based compensation                    |   | 210,579                        |  
|Accretion
      of convertible debentures                       |   | -                              |  
|Fair value
      of warrants issued on conversion of debentures |   | -                              |  
|Fair
      value of warrants issued on settlement of debentures |   | -                              |  
|Fair value
      of warrants and common shares issued           |   |                                |  
|as compensation to loan guarantors                              |   | 1,327,241                      |  
|Changes in non-cash operating working
      capital:            |   |                                |  
|Accounts
      receivable                                       |   | 133,453                        |  
|Inventory                                                       |   | 879                            |  
|Prepaid
      expenses                                          |   | (38,083                        | )
|Accounts payable
      and accrued liabilities                  |   | (42,684                        | )
|Due
      to related party                                      |   | 12,734                         |  
|Accrued interest
      on convertible debentures                |   | -                              |  
|Deferred
      leasehold inducements                            |   | (10,672                        | )
|Deferred revenue                                                |   | 299,720                        |  
|Net cash provided by (used in)
      operations                 |   | 414,503                        |  
|                                                                |   |                                |  
|Cash flows from investments:                                    |   |                                |  
|Purchase of fixed assets                                        |   | (32,175                        | )
|Net cash used in investments                                    |   | (32,175                        | )
|                                                                |   |                                |  
|Cash flows from financing:                                      |   |                                |  
|Common shares
      issued, net of issue costs                  |   | 597,984                        |  
|Decrease
      in amount due to related party                   |   | -                              |  
|Common share
      subscriptions received                       |   | -                              |  
|Proceeds
      from bank loan                                   |   |                                |  
|Repayment of
      bank loan                                    |   | (210,000                       | )
|Redemption
      of debentures                                  |   | -                              |  
|Net cash provided by (used in) financing                        |   | 387,984                        |  
|                                                                |   |                                |  
|Increase (decrease) in cash and cash equivalents                |   | 770,312                        |  
|                                                                |   |                                |  
|Cash and cash equivalents,
      beginning of period            |   | 16,950                         |  
|                                                                |   |                                |  
|Cash and cash equivalents,
      end of period                  | $ | 787,262                        |  
|                                                                |   |                                |  
|Supplemental information:                                       |   |                                |  
|Non-cash financing:                                             |   |                                |  
|Shares and
      warrants issued on conversion of               |   |                                |  
|convertible debentures                                          |   | -                              |  
|Shares issued
      for services rendered                       | $ | 95,400                         |  
|Warrants
      issued on settlement of debentures               |   | -                              |  
|Shares and warrants issued to bank loan guarantors              | $ | 1,327,241                      |  

See accompanying notes to consolidated financial statements.

F-5

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|BRAINTECH, INC.                                     
|----------------------------------------------------
|                                                    
|Notes to Condensed Consolidated Financial Statements
|(Unaudited  Prepared by Management)                
|(Expressed in United States dollars)                
|                                                    
|Nine months ended September 30, 2007 and 2006       
|                                                    

|1. | Description of business and future operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Braintech, Inc. (the Company)
        together with its wholly owned subsidiary, Braintech Canada, Inc. is a
        high tech development company, developing advanced software for the vision
        guidance of robotic systems. All sales of its products and services are
        made in this industry segment. In the nine months ended September 30,
        2007, 99% of sales revenue (2006  100%) was generated from ABB Inc.
        (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 has generated only small
        amounts of revenues and is continuing to develop its business. Operations
        to date have been primarily financed by equity transactions. The Companys
        future operations and its continuation as a going concern are dependent
        upon its ability to raise additional capital, increase sales of its products
        by leveraging its Exclusive Global Channel Partner Agreement with ABB,
        generating positive cash flows from operations and ultimately attaining
        profitability. There can be no assurances that appropriate financings
        having favourable economic terms will be available as required.                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | Based on its current financial position, the
        Company believes that its present and anticipated cash resources from
        operations and equity financing will be sufficient to pay ongoing cash
        operating expenses throughout 2007 and 2008. The minimum revenue commitments
        by ABB pursuant to the Exclusive Global Channel Partner Agreement dated
        May 5, 2006 should result in positive operating income and positive cash
        flow for 2007 and 2008. There can be no assurance that an equity financing
        can be obtained as anticipated and there can be no assurance that ABB
        will fulfill its minimum revenue commitments. If the Company cannot do
        either, 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|2. | Basis of presentation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-6



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|BRAINTECH, INC.                                     
|----------------------------------------------------
|                                                    
|Notes to Condensed Consolidated Financial Statements
|(Unaudited  Prepared by Management)                
|(Expressed in United States dollars)                
|                                                    
|Nine months ended September 30, 2007 and 2006       
|                                                    

|2. | Basis of presentation (continued):
|-- | ----------------------------------
|   |                                   
|   | (b)                               
|   |                                   
|   |                                   
|   |                                   
|   | (c)                               
|   |                                   
|   |                                   
|   |                                   
|   | (d)                               
|   |                                   
|   |                                   
|   |                                   
|   |                                   

F-7



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|BRAINTECH, INC.                                     
|----------------------------------------------------
|                                                    
|Notes to Condensed Consolidated Financial Statements
|(Unaudited  Prepared by Management)                
|(Expressed in United States dollars)                
|                                                    
|Nine months ended September 30, 2007 and 2006       
|                                                    

|2. | Basis of presentation (continued):
|-- | ----------------------------------
|   |                                   
|   | (d)                               
|   |                                   
|   |                                   
|   |                                   
|   |                                   
|   |                                   
|   |                                   

| |                         |  | Nine Months Ended | 
| | ----------------------- |  | ----------------- | 
| |                         |  | September 30,     | 
| |                         |  | 2007              | 
| | Expected life (years)   |  | 2.0               | 
| | Risk free interest rate |  | 4.70%             | 
| | Expected volatility     |  | 168%              | 
| | Dividend yield          |  | 0%                | 

As of September 30, 2007, the unrecorded
  deferred stock based compensation balance related to stock options was $697,421
  and will be recognized over an estimated weighted average amortization period
  of 1.59 years (2006 - $160,478, 0.95 years).

| | (e) | Deferred leasehold inducements:                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                     
| |     | Leasehold inducements are deferred and amortized to
        reduce rent expense on a straight-line basis over the term of the lease.

F-8



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|BRAINTECH, INC.                                     
|----------------------------------------------------
|                                                    
|Notes to Condensed Consolidated Financial Statements
|(Unaudited  Prepared by Management)                
|(Expressed in United States dollars)                
|                                                    
|Nine months ended September 30, 2007 and 2006       
|                                                    

|2. | Basis of presentation (continued):
|-- | ----------------------------------
|   |                                   
|   | (f)                               
|   |                                   
|   |                                   
|   |                                   
|   |                                   
|   |                                   
|   |                                   
|   |                                   
|   | (g)                               
|   |                                   
|   |                                   
|   |                                   
|   |                                   
|   |                                   
|3. | Deferred leasehold inducements:   

| |                              |   | Nine Months Ended September 30 |  
| | ---------------------------- | - | ------------------------------ | -
| |                              |   | 2007                           |  
| | Balance, beginning of period | $ | 30,155                         |  
| | Amortization                 |   | (14,334                        | )
| | Foreign exchange adjustment  |   | 3,662                          |  
| | Balance, end of period       | $ | 19,483                         |  

F-9



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|BRAINTECH, INC.                                     
|----------------------------------------------------
|                                                    
|Notes to Condensed Consolidated Financial Statements
|(Unaudited  Prepared by Management)                
|(Expressed in United States dollars)                
|                                                    
|Nine months ended September 30, 2007 and 2006       
|                                                    

|4. | Deferred revenue:
|-- | -----------------

| |                                                          |   | Nine Months Ended September 30 |  
| | -------------------------------------------------------- | - | ------------------------------ | -
| |                                                          |   | 2007                           |  
| | Balance, beginning of period                             | $ | 197,383                        |  
| | Revenue invoiced and deferred for future recognition     |   | 370,297                        |  
| | Previously deferred revenue recognized in current period |   | (70,577                        | )
| | Balance, end of period                                   | $ | 497,103                        |  

|5. | Bank loan and loan guarantee:
|-- | -----------------------------

On October 23, 2006 the Company
  completed a series of transactions redeeming all of the outstanding Secured
  Convertible Debentures. To facilitate the transaction, the Company obtained
  a bank loan of up to $2,500,000 from the Royal Bank of Canada. The loan is repayable
  as to interest only at the rate of Libor plus 1.50% until June 30, 2007. Monthly
  principal payments plus interest at the rate of Libor plus 1.50% are due as
  follows: June 30, 2007 to December 31, 2007, $70,000; January 31, 2008 to May
  31, 2008, $110,000; June 30, 2008 to November 30, 2008, $195,000; December 31,
  2008, remaining balance due.

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 to the bank 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 (2) shares of the common stock of the Company; three (3) share purchase
  warrants, each warrant entitling the holder to purchase one (1) additional share
  of common stock at a price of $0.30 per share for a period of five (5) years;
  and one and one-half (11⁄2) share purchase warrants, each warrant entitling
  the holder to purchase one (1) additional share of common stock at a price of
  $0.50 per share for a period of five (5) years. A general security agreement
  covering all of the Companys real, personal and intangible property has
  been pledged as security to the LC Providers.

A total of $2,450,000 letters
  of credit have been obtained to secure the bank loan and accordingly 4,900,000
  common shares, 7,350,000 warrants exercisable at $0.30 and 3,675,000 warrants
  exercisable at $0.50 have been issued. As further compensation, the exercise
  price of 312,500 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, so that they now expire May 2, 2010. $2,150,000
  of the letters of credit were received October 23, 2006 and, accordingly, we
  issued 4,300,000 common shares, 6,450,000 warrants exercisable at $0.30 and
  3,225,000 warrants exercisable at $0.50.

On October 23, 2006 we recorded as an
  expense, $1,376,000 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 option valuation model and the following
  assumptions: dividend yield 0%, expected volatility 167%, risk-free interest
  rate 4.90%, and an expected term of two (2) years.

F-10

---

|BRAINTECH, INC.                                     
|----------------------------------------------------
|                                                    
|Notes to Condensed Consolidated Financial Statements
|(Unaudited  Prepared by Management)                
|(Expressed in United States dollars)                
|                                                    
|Nine months ended September 30, 2007 and 2006       
|                                                    

|5. | Bank loan and loan guarantee (continued):
|-- | -----------------------------------------

$300,000 of the letters of credit
  were received February 5, 2007 and, accordingly, we issued 600,000 common shares,
  900,000 warrants exercisable at $0.30 and 450,000 warrants exercisable at $0.50.
  On February 5, 2007 we recorded as an expense, $180,000 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 option
  valuation model and the following assumptions: dividend yield 0%, expected volatility
  165%, risk-free interest rate 4.92%, and an expected term of two (2) 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, the Company determined that the penalty provision clauses applied
  and the Company agreed to issue one additional common share to the LC Providers
  that delivered letters of credit on or before October 23, 2006. Owen Jones,
  the Companys CEO and a director and James Speros, an independent director,
  both of whom delivered letters of credit on or before October 23, 2007, elected
  not to participate in the additional share issuance. Accordingly, on August
  10, 2007, the Company issued 1,625,000 common shares at a deemed price 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 exercisable for a period of three
  years. On March 22, 2007 we 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 option
  valuation model and the following assumptions: dividend yield 0%, expected volatility
  165%, risk-free interest rate 4.58%, and an expected term of two (2) 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 has been extended by 36 months, so that
  they now expire January 18, 2011.

The Companys Chief Executive
  Officer provided $400,000 in letters of credit and also pledged a portion of
  the cash collateral. The Chief Executive Officer received no compensation for
  providing his portion of the cash collateral.

F-11

---

|BRAINTECH, INC.                              
|---------------------------------------------
|                                             
|Notes to Consolidated Financial Statements   
|(Expressed in United States dollars)         
|                                             
|Nine months ended September 30, 2007 and 2006
|                                             

|6. | Common stock:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On January 16, 2007 the Company issued 1,895,000 units
        at $0.20 per unit in a private placement representing subscription proceeds
        of $379,000. $259,000 of the subscription proceeds was received prior
        to December 31, 2006. Each unit comprises one common share and one share
        purchase warrant. Each share purchase warrant has a three (3) year term
        and is exercisable at any time into one common share at a price of $0.25
        per share. A finders fee of 30,000 units and $1,500 was paid in
        conjunction with this private placement.                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On February 5, 2007 the Company issued 300,000 units
        as compensation for the provision of letters of credit securing the bank
        loan (note 4). Each Unit consists of two (2) shares of the common stock
        of the Company; three (3) share purchase warrants, each warrant entitling
        the holder to purchase one (1) additional share of common stock at a price
        of $0.30 per share for a period of five (5) years; and one and one-half
        (11⁄2) share purchase warrants, each warrant entitling the holder to
        purchase one (1) additional share of common stock at a price of $0.50
        per share for a period of five (5) years.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On February 21, 2007 the Company issued 275,000 units
        at $0.20 per unit in a private placement representing subscription proceeds
        of $55,000. Each unit comprises one common share and one share purchase
        warrant. Each share purchase warrant has a three (3) year term and is
        exercisable at any time into one common share at a price of $0.25 per
        share.                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On March 22, 2007 the Company issued 265,000 common
        shares at a deemed price of $0.36 per share for services rendered. Of
        these shares, 250,000 were issued to a director of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On June 18, 2007 the Company issued 1,304,286 units
        at $0.28 per unit in a private placement representing subscription proceeds
        of $365,200. Each unit comprises one common share and one share purchase
        warrant. Each share purchase warrant has a three (3) year term and is
        exercisable at any time into one common share at a price of $0.30 per
        share. A finders fee of $2,520 was paid in conjunction with this
        private placement.                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|7. | Stock options:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | A summary of the Companys stock option activity
        is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

| |                             |  |           |   |   | Weighted       | 
| | --------------------------- |  | --------- | - | - | -------------- | 
| |                             |  | Number    |   |   | average        | 
| |                             |  | of shares |   |   | exercise price | 
| |                             |  |           |   |   |                | 
| | Balance, December 31, 2006  |  | 3,396,000 |   | $ | 0.48           | 
| | Options granted             |  | 2,410,000 |   | $ | 0.45           | 
| | Options exercised           |  | (137,000  | ) | $ | 0.35           | 
| | Vested options expired      |  | (272,000  | ) | $ | 0.61           | 
| | Unvested options forfeited  |  | (25,000   | ) | $ | 0.46           | 
| |                             |  |           |   |   |                | 
| | Balance, September 30, 2007 |  | 5,372,000 |   | $ | 0.46           | 

Of those outstanding at September 30,
  2007, 4,429,500 are exercisable (December 31, 2006  2,847,250), having
  a weighted average exercise price of $0.43 (December 31, 2006 - $0.47) .

F-12

---

|BRAINTECH, INC.                              
|---------------------------------------------
|                                             
|Notes to Consolidated Financial Statements   
|(Expressed in United States dollars)         
|                                             
|Nine months ended September 30, 2007 and 2006
|                                             

|7. | Stock options (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company has reserved 1,500,000 common shares pursuant
        to the 1997 Stock Option Plan, 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. Subject to the requirements of any stock exchange on which the Companys
        shares are listed, 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 1997 and 2000 plans 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.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|8. | Share purchase warrants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | A summary of the Companys share purchase warrant
        activity is as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

| |                                      |  |            |   |   |                |  |  | Weighted          | 
| | ------------------------------------ |  | ---------- | - | - | -------------- |  |  | ----------------- | 
| |                                      |  |            |   |   | Weighted       |  |  | average remaining | 
| |                                      |  | Number     |   |   | average        |  |  | contractual life  | 
| |                                      |  | of shares  |   |   | exercise price |  |  | (years)           | 
| |                                      |  |            |   |   |                |  |  |                   | 
| | Balance, December 31, 2006           |  | 20,176,509 |   | $ | 0.37           |  |  | 3.62              | 
| | Warrants granted                     |  |            |   |   |                |  |  |                   | 
| | Private placement                    |  | 3,474,286  |   | $ | 0.27           |  |  | 2.86              | 
| | Finders
      fee                   |  | 30,000     |   | $ | 0.25           |  |  | 2.50              | 
| | Compensation to bank loan guarantors |  | 1,450,000  |   | $ | 0.36           |  |  | 4.46              | 
| | Warrants expired                     |  | (50,000    | ) | $ | 0.50           |  |  | -                 | 
| | Warrants exercised                   |  | (53,616    | ) | $ | 0.25           |  |  | -                 | 
| |                                      |  |            |   |   |                |  |  |                   | 
| |                                      |  |            |   |   |                |  |  |                   | 
| | Balance, September
      30, 2007    |  | 25,027,179 |   | $ | 0.34           |  |  | 3.09              | 

Of the warrants outstanding at September
  30, 2007, 5,961,324 were held by the Companys Chief Executive Officer
  (December 31, 2006  4,741,324).

|9. | Commitments:
|-- | ------------

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

| | Year ending December
      31: |   |         | 
| | ------------------------------ | - | ------- | 
| | 2007                           | $ | 56,775  | 
| | 2008                           |   | 151,400 | 
| |                                |   |         | 
| |                                | $ | 208,175 | 

F-13



---



|BRAINTECH, INC.                              
|---------------------------------------------
|                                             
|Notes to Consolidated Financial Statements   
|(Expressed in United States dollars)         
|                                             
|Nine months ended September 30, 2007 and 2006
|                                             

|10. | Registration statement:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On April 20, 2007 the Company filed a Form SB-2 Registration
        Statement under the Securities Act of 1933. The registration statement
        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 37,671,753
        shares that may be resold were acquired by the selling stockholders in
        various private placement offerings, as payment for services rendered,
        as repayment of promissory notes, as finders fees, as consideration
        pursuant to a debenture settlement arrangement, and as compensation for
        the provision of letters of credit. All of these transactions were exempt
        from the registration requirements of the Securities Act of 1933. On May
        11, 2007 the United States Securities and Exchange Commission declared
        the Registration Statement to be effective.                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|11. | Subsequent events:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On October 22, 2007, the Company entered into an employment
        agreement with Frederick Weidinger pursuant to which Mr. Weidinger would
        become the Companys Chief Executive Officer and Chairman of the
        Board of Directors. In order to compensate Mr. Weidinger and to provide
        the means for Mr. Weidinger to attract senior level executives to his
        management team, the Company created the 2007 Bonus Stock and Bonus Stock
        Option Incentive Plan (the Bonus Plan). The Bonus Plan provides
        for the issuance of up to 30 Million (30,000,000) shares of the Companys
        common stock. The aggregate amount of stock to be issued as Bonus Stock
        is not to exceed 20 Million (20,000,000) shares and the aggregate number
        of shares to be issued pursuant to the exercise of Bonus Stock Options
        is not to exceed 10 Million (10,000,000) shares (the Bonus Securities).
        The granting of Bonus Securities will usually be subject to certain milestones
        and in the event that Bonus Securities are granted prior to the achievement
        of those specified milestones, such Bonus Securities will be subject to
        escrow restrictions. On October 22, 2007, Mr. Weidinger was granted 8,000,000
        shares of Bonus Stock of which 7,000,000 were subject to certain milestones
        and as such are being held in escrow pending completion of the milestones.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | On October 22, 2007, Mr. Weidinger was granted options
        to purchase 3 Million (3,000,000) shares of the Companys common
        stock at an exercise price of $0.42 per share. Of these options 2 Million
        (2,000,000) vested immediately and 1 Million (1,000,000) will vest on
        the achievement of a certain milestone.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-14

---



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS

This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. Forward-looking statements deal with our current plans,
intentions, beliefs and expectations and are statements of future economic
performance. Statements containing terms like "believes", "does not believe",
"plans", "expects", "intends", "estimates", "anticipates", and other phrases of
similar meaning are considered to imply uncertainty and are forward-looking
statements.

Forward-looking statements involve known and unknown risks and
uncertainties 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,
including those stated under the heading "Risk Factors". 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.

We cannot guarantee our future results, levels of activity,
performance or achievements. Neither we nor any other person assumes
responsibility for the accuracy and completeness of these forward-looking
statements. We are under no duty to update any of the forward-looking statements
after the date of this report.

Where we say "we", "us", "our", or "the Company", we mean
Braintech Inc. and our subsidiary, Braintech Canada, Inc.

OVERVIEW

We were incorporated in Nevada on March 4, 1987 under the name
Tome Capital Inc. We changed our name to Nevada Manhattan Mining Inc. on August
15, 1988, then back to Tome Capital Inc. on July 5, 1990, to Offshore Reliance
Ltd. on February 19, 1003, to Cozy Financial Corporation on April 20, 1993 and
to Braintech, Inc. on January 3, 1994.

We have one wholly-owned subsidiary. Braintech Canada, Inc. was
incorporated in British Columbia Canada on March 30, 1994 under the name
Brainware Systems Inc. Brainware Systems Inc. changed its name to Braintech
Canada, Inc. on September 19, 2001. Braintech Canada, Inc. carries out our
research and development activities, employs our technical and managerial
personnel, and carries on our sales activities.

We are in the business of developing technologies and products
used in machine or "computerized vision guidance systems. Machine vision is the
application of electronic imaging, image processing, and image analysis
techniques to applications in the manufacturing industries for the purpose of
control (process control, quality control, machine control, and robot control).
Since entering into a strategic alliance with ABB Inc. in March, 2000, we have
focused on the development and implementation of vision guidance systems for
robots used in the automobile manufacturing industry. ABB Inc., which is based
in Europe and employs over 165,000 people in more than 100 countries, is a major
supplier of industrial robots and manufacturing automation systems.

Effective February 1, 2004, we entered into an Exclusive
Channel Partner Agreement with ABB Inc. whereby we agreed to work together to
develop and market vision guided robotic systems to ABBs North American
automotive customers. Early successes convinced ABB to create a marketing
strategy centered on a brand called TrueView. TrueView Vision Guided Robotics
systems fully integrate our technology. In January 2005, we expanded the scope
of our February 1, 2004 exclusive channel partner agreement to allow ABB to
market TrueView in the European Economic Union and to sub-license TrueView to
their business partners on a worldwide basis.

On May 5, 2006 we entered into a new Exclusive Global Channel
  Partner Agreement with ABB for the licensing of our vision guided robotics technologies
  and software products. The stated purpose of the agreement is to allow ABB to
  establish a leadership position in the global automobile and general manufacturing
  vision guided robotics

4

---

markets by strategically marketing the TrueView family of
vision guided robotic systems as their global standard. As part of the new
Exclusive Global Channel Partner Agreement, ABB has agreed to guarantee a
minimum purchase of our eVF runtime licenses totaling US$10,500,000 for the
period ending December 31, 2008. The minimum guarantees are allocated on an
annual basis as follows: 2006 - $1,500,000; 2007 - $3,500,000; 2008 -
$5,500,000. In addition to the purchase commitments, ABB Inc. has agreed to
provide US$300,000 for research and development of a vision guided robotic bin
picking technology. In exchange for ABB Inc. entering into this agreement and
for providing the purchase and research commitments, we have granted ABB Inc. an
exclusive global channel partner license for the use of our software products in
the automotive market and in specified general industry markets. As at November
13, 2007, ABB has fulfilled all of its commitments regarding the Exclusive
Global Channel Partner Agreement.

In addition to supplying vision guided robotic systems to ABB
Inc., we have provided them with upgrades for previously installed systems, we
have held training seminars for their technical staff and we have provided
engineering services to assist them in the design of vision guided robotic
systems. We expect this type of revenue to continue especially in light of our
new Exclusive Global Channel Partner Agreement.

Our principal product is eVisionFactory (eVF). eVF is a
comprehensive software environment used in the design, development, operation,
and support of vision guided robotic systems. We use the eVF environment and its
array of comprehensive components to develop the custom vision guided robotic
systems that we sell for use in industrial automation situations. We have also
developed comprehensive training procedures that allow other users, such as
integrators and channel partners, to develop customized vision guided robotic
systems. eVF consists of two principal elements, a development environment and
an Internet based service and support system (CoBuss). The Internet based
service and support system is still in the development stage and will be
released separately.

On October 22, 2007, we entered into an Employment Agreement
with Frederick Weidinger pursuant to which Mr. Weidinger would become our Chief
Executive Officer and Chairman of our Board of Directors. The base salary for
Mr. Weidinger is US$258,000 per year and he will be entitled to receive
performance cash bonuses at the discretion of the Board of Directors. Also under
the agreement, Mr. Weidinger is entitled to recommend for appointment, and the
Directors have agreed to appoint, two nominees of Mr. Weidinger to our Board of
Directors and in preparation for our 2008 annual general meeting, we have agreed
to increase the size of our Board of Directors to seven and allow Mr. Weidinger
to nominate an additional director who has experience in the defense industry in
the United States.

In order to compensate Mr. Weidinger and to provide the means
for Mr. Weidinger to attract senior level executives to his management team, the
Company created the 2007 Bonus Stock and Bonus Stock Option Incentive Plan (the
Bonus Plan). The Bonus Plan provides for the issuance of up to 30,000,000
shares of the Companys common stock. The aggregate amount of stock to be issued
as Bonus Stock is not to exceed 20,000,000 shares and the aggregate number of
shares to be issued pursuant to the exercise of Bonus Stock Options is not to
exceed 10,000,000 shares (the Bonus Securities). The granting of Bonus
Securities will usually be subject to certain milestones and in the event that
Bonus Securities are granted prior to the achievement of those specified
milestones, such Bonus Securities will be subject to escrow restrictions.

On October 22, 2007, Mr. Weidinger was granted 8,000,000 shares
of Bonus Stock of which 7,000,000 were subject to certain milestones and as such
are being held in escrow pending completion of the milestones. In accordance
with the terms of the Bonus Plan and the Employment Agreement, Mr. Weidinger
purchased the 8,000,000 shares of Bonus Stock for the purchase price of $0.01
per share. In the event that an individual milestone is not achieved, we will
repurchase the related shares from Mr. Weidinger for the purchase price of $0.01
per share.

On October 22, 2007, Mr. Weidinger was granted options to
purchase 3,000,000 shares of the Companys common stock at an exercise price of
$0.42 per share. Of these options 2,000,000 vested immediately and 1,000,000
will vest on the achievement of a certain milestone.

The milestones and the Bonus Securities related to the
milestones are as follows:

Milestone
    Milestone Description
    Bonus Stock
    Bonus Stock Options


5



---

Execution of Employment Agreement
    1,000,000
    2,000,000Milestone 1
    May 1,
      2008  six month anniversary
    1,000,000Milestone 2
    Renewal or extension of ABB Agreement or other
      strategic agreement with industrial company
    1,000,000Milestone 3
    Establishment of an executive office in the Metro DC area
    1,000,000Milestone 4
    Establishment of a strategic relationship with
      a United States Federal Government Contractor/Integrator
    500,000Milestone 5
    Establishment of a strategic relationship with
      Microsoft or a manufacturing company in the consumer space
    500,000Milestone 6
    Listing of the Companys stock on either the
      AMEX or NASDAQ Stock Exchanges
    1,000,000
    1,000,000Milestone 7
    Achieving Gross Revenue of US$6,000,000 in a
      twelve month rolling period or less
    1,500,000Milestone 8
    Achieving Gross Revenue of US$10,000,000 in a
      twelve month rolling period or less
    500,000Total
    
    8,000,000
    3,000,000


We have not at any time been able to generate sufficient
revenue from sales of our products or services to sustain ongoing operations,
and other than our agreement with ABB Inc., we do not have any established
distribution channels for our services or products. From inception on January 3,
1994 to September 30, 2007, we have generated total revenues of only $6,835,602
and as of September 30, 2007, we have incurred an aggregate deficit of
$27,613,963. 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.

Unless we significantly expand our operations and incur
additional expenses, we believe that our present and anticipated cash resources
from operations and equity financing will be sufficient to pay our ongoing cash
operating expenses throughout 2007 and 2008. At our current level of activity,
the minimum revenue commitments by ABB pursuant to the Exclusive Global Channel
Partner Agreement dated May 5, 2006 should result in positive net earnings and
cash flow for 2007 and 2008. There can be no assurance that an equity financing
can be obtained as anticipated and there can be no assurance that ABB will
fulfil its minimum revenue commitments. If we cannot do either, there is a risk
that our company will fail. Our 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 our company be unable to
continue as a going concern.

Critical Accounting Policies and Changes to Existing
Accounting Policies

On December 12, 2001, the Securities and Exchange Commission
issued cautionary advice regarding the disclosure of critical accounting
policies. Critical accounting policies are those that our management believes
are both most important to the portrayal of our financial condition and results,
and that require difficult, subjective, or complex judgments, often as a result
of the need to make estimates about the effects of matters that involve
uncertainty.

We believe the critical accounting policies we use in
preparation of our financial statements are as follows:

Revenue Recognition

We follow the software revenue recognition rules outlined in
  the American Institute of Certified Public Accountants Statement of Position
  (SOP) 97-2. We recognize revenue when there is a persuasive evidence of a contract,
  delivery has occurred, the fee is fixed or determinable, collection is reasonably
  assured, and there are no substantive performance obligations remaining. Any
  cash received in advance of meeting these criteria is recorded

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as deferred revenue on our balance sheet. Changes in
contractual arrangements or customer relationships in the future could impact
the extent or timing of revenue recognition.

Income Taxes

Our financial statements reflect a full valuation allowance
against the net future income tax assets based on our assessment that we are not
more likely than not to be able to utilize certain deductions before their
expiry. Our assessment is based on a judgment of estimated loss before such
deductions. Changes in the timing of the recognition and amount of revenues and
expenses in the future may impact our ability to utilize these deductions.

Stock based Compensation

In December 2004, the Financial Accounting Standards Board (the
FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123R,
Share Based Payment. SFAS No. 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 expense over the requisite service period in the Companys
financial statements. Stock based compensation expense recognized during the
period is based on the value of the portion of the share based payment awards
that is ultimately expected to vest during the period. We estimate the fair
value of stock options using the Black-Scholes valuation model, consistent with
the provisions of SFAS No. 123R. The Black-Scholes valuation model requires the
input of highly subjective assumptions, including the options expected life,
the price volatility of the underlying stock, and the risk free interest rate.
The expected stock price volatility assumption was determined using historical
volatility of our common stock. The fair value of each option grant is estimated
on the date of grant using the Black-Scholes option valuation model and the fair
value is amortized on a straight line basis.

We adopted SFAS 123R effective January 1, 2006, using the
Modified Prospective Method. This method requires that awards granted, modified,
repurchased or cancelled in the quarter beginning after the adoption date use
the fair value method to recognize stock based compensation. Also any unvested
options, where compensation expense was amortized over the vesting period, and
was previously disclosed in the notes to financial statements as pro-forma,
shall now be expensed over the same amortization period.

Effects of Foreign Currency Exchange Rates and Inflation

While we record our financial statements in United States
dollars, many of our expenses are incurred in Canadian dollars. As a result,
fluctuations in the Canadian dollar exchange rate can affect our expenses, and
thus our profit or loss. During the nine months ended September 30, 2007 we
realized a foreign exchange loss of $23,138. The foreign exchange loss resulted
principally from transactions recorded in United States dollars for reporting
purposes, but actually carried out in Canadian dollars. As at the date of this
quarterly report, we have not engaged in exchange rate-hedging activities. To
the extent we implement such hedging activities in the future, we cannot assure
that we will be successful.

In the year ended December 31, 2006 and the nine months ended
September 30, 2007 inflation has had a limited impact on our operations.
However, there can be no assurance that inflation will not have a material
adverse effect on our results of operations in the future.

Quantitative and Qualitative Disclosures about Market
Risk

As at September 30, 2007 we have not entered into or acquired
financial instruments that have a material market risk. We have no financial
instruments for trading or other purposes or derivative or other financial
instruments with off balance sheet risk. All financial assets and liabilities,
except the bank loan, are due within the next twelve months and are classified
as current assets or liabilities in the consolidated balance sheet provided with
this report. The fair value of all financial instruments at September 30, 2007,
except the bank loan, approximate their carrying values.

To September 30, 2007, the majority of our cash costs have been
  realized or incurred in Canadian dollars. To date we have not entered into foreign
  currency contracts to hedge against foreign currency risks between the Canadian

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dollar or other foreign currencies and our reporting currency, the United States dollar.  Generally, however, we attempt to manage our risk of exchange rate fluctuations by maintaining sufficient net assets in Canadian dollars to retire our
liabilities as they come due.

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, our operating results should not be relied upon as an indication of future
performance.

The majority of our cash costs have been incurred in Canadian dollars. Our reporting currency is the United States dollar.  At the end of each reporting period, we translate our expenses incurred in Canadian dollars into United States dollars at the
average exchange rate for the period.  Fluctuations in the foreign exchange rate can have a substantial influence on reported expenses even though the actual expenditure has not increased or decreased to the same extent.

Nine-month period ended September 30, 2007 compared with the nine month period ended September 30, 2006.

The average exchange rate used to translate the Canadian Dollar into the United States Dollar for the nine month period ended September 30, 2007 was 1.10606. For the nine month period ended September 30, 2006, the average exchange was 1.13321. The
change in our operating expenses illustrates the effect fluctuating foreign exchange rates have on our reported results. We reported a decrease in operating expenses of $118,312 from $2,185,826 for the nine month period ended September 30,
2006, to $2,067,514 for the nine month period ended September 30, 2007. However, when adjusted for the change in the foreign exchange rate (that is, by excluding the effect of the change in exchange rates from the comparative periods
levels), the actual change in operating expense activity was a decrease of approximately $167,800.  The foreign exchange adjustment accounted for an increase of approximately $50,000 in the reported operating expenses.  We have isolated the
effect the fluctuating foreign exchange rate had on our reported results in the discussion below.

Revenue from operations for the nine month period ended September 30, 2007 was $2,205,854 (September 30, 2006 - $692,505). The amount of our revenues is calculated in accordance with the software revenue recognition rules outlined in the
American Institute of Certified Public Accountant's Statement of Position (SOP) 97-2 as discussed in the critical accounting policies section above.

During the nine month period ended September 30, 2007 we invoiced $2,426,055 for software licenses delivered for installation in automobile manufacturing plants.  Of this amount, we deferred $370,297 for future revenue recognition in
accordance with SOP 97-2.  We also recorded $77,069 for engineering services and $73,026 of previously deferred revenue.

Cost of sales for the nine month period ended September 30, 2007 was $173,307 or approximately 7.9% of revenue.

During the nine month period ended September 30, 2006 we invoiced $402,390 for software licenses delivered for installation in automobile manufacturing plants. Of this amount, we deferred $73,566 for future revenue recognition in accordance
with SOP 97-2. We also recorded $150,000 for research and development services related to the bin picking project, $89,421 for engineering services and $124,250 of previously deferred revenue.

Cost of sales for the nine month period ended September 30, 2006 was $37,234 or approximately 5.4% of revenue.

We reported that research and development expenses decreased
  $88,349 from $517,555 for the nine month period ended September 30,
  2006 to $429,206 for the nine month period September 30, 2007. Stock option
  expense allocated to research and development was $32,500 for the nine month
  period ended September 30, 2006 and $5,409 for the nine month period ended
  September 30, 2007 and therefore accounted for $27,091 of the decrease.
  A Precarn funding grant of $83,090 was accrued to offset our expense during
  the nine month period ended September 30, 2007. No such accrual occurred during
  the nine month period ended September 30, 2006. After eliminating the stock
  option expense decrease and the funding grant decrease, the foreign exchange
  differential accounted for an

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increase of approximately $9,241, indicating that the actual
research and development activity increased approximately $31,100.

We reported that selling, general, and administrative expenses
decreased $29,963 from $1,668,271 for the nine month period ended September 30,
2006 to $1,638,308 for the nine month period ended September 30, 2007. The
foreign exchange differential accounted for an increase of approximately
$39,250, indicating an actual decrease in activity of approximately $69,200. The
principal factors contributing to the changes were as follows:

- Reported general and administrative salaries decreased approximately
  $56,300 from $707,600 to $763,900. The foreign exchange differential accounted
  for an increase of approximately $17,000, resulting in an actual decrease in
  activity of approximately $73,300. The actual decrease resulted from the
  decrease of our administrative staff by two employees.
- Stock option expense in the amount of $147,379 was recorded for the nine
  month period ended September 30, 2006 and $210,580 for the nine month period
  ended September 30, 2007 accounting for an increase of $30,701.
- Reported amortization expenses decreased approximately $1,900 from $17,600
  to $15,700. The foreign exchange differential was negligible.
- Reported legal expenses decreased approximately $14,400 from $131,200 to
  $116,800. The foreign exchange differential accounted for an increase of
  approximately $2,800, resulting in an actual decrease in activity of
  approximately $17,200. The actual decrease is principally a result of a
  decrease in patent application and registration expenses.
- Reported accounting expenses increased approximately $7,900 from $20,700 to
  $28,600. The foreign exchange differential accounted for an increase of
  approximately $700, resulting in an actual increase in activity of
  approximately $7,200. The actual increase related to a general increase in the
  cost of accounting, auditing, and tax services.
- Reported travel and marketing expenditures decreased approximately $58,500
  from $262,400 to $206,900. The foreign exchange differential accounted for a
  increase of approximately $4,900, resulting in an actual decrease in activity
  of approximately $63,400. The individual components of the reported decrease
  are as follows: investor relations decreased $165,800 from $213,200 to
  $47,400, travel increased $12,000 from $29,400 to $41,400, trade shows
  increased from nil to $100,900 and marketing materials decreased from $1,100
  to Nil.
- Reported rent and premises cost increased approximately $14,600 from
  $175,500 to $190,100. The foreign exchange differential accounted for an
  increase of approximately $4,600, resulting in an actual increase in activity
  of approximately $10,000.

Three month period ended September 30, 2007 compared with
  the three month period ended September 30, 2006.

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The average exchange rate used to translate the Canadian Dollar
into the United States Dollar for the three month period ended September 30,
2007 was 1.04719. For the three month period ended September 30, 2006 the
average exchange rate was 1.12121. The change in our operating expenses
illustrates the effect fluctuating foreign exchange rates have on our reported
results. We reported an increase in operating expenses of $85,407 from $630,545
for the three month period ended September 30, 2006 to $715,952 for the three
month period ended September 30, 2007. However, when adjusted for the change in
the foreign exchange rate (that is, by excluding the effect of the change in
exchange rates from the comparative periods levels), the actual change in
operating expense activity was an increase of approximately $38,100. The foreign
exchange adjustment accounted for an increase of approximately $47,300 in the
reported operating expenses. We have isolated the effect the fluctuating foreign
exchange rate had on our reported results in the discussion below.

Revenue from operations for the three month period ended
September 30, 2007 was $936,919 (September 30, 2006 - $131,958). The amount of
our revenues is calculated in accordance with the software revenue recognition
rules outlined in the American Institute of Certified Public Accountant's
Statement of Position (SOP) 97-2 as discussed in the critical accounting
policies section above.

During the three month period ended September 30, 2007 we
invoiced $988,436 for software licenses delivered for installation in automobile
manufacturing plants. Of this amount, we deferred $142,567 for future revenue
recognition in accordance with SOP 97-2. We also recorded $61,864 for
engineering services and $29,186 of previously deferred revenue.

Cost of sales for the three month period ended September 30,
2007 was $73,413 or approximately 7.8% of revenue.

During the three month period ended September 30, 2006 we
invoiced $88,913 for software licenses delivered for installation in automobile
manufacturing plants. Of this amount, we deferred $17,781 for future revenue
recognition in accordance with SOP 97-2. We also recorded $24,698 for
engineering services and $36,128 of previously deferred revenue.

Cost of sales for the three month period ended September 30,
2006 was $8,663 or approximately 6.6% of revenue.

We reported that research and development expenses decreased
$25,951 from $165,938 for the three month period ended September 30, 2006 to
$139,987 for the three month period September 30, 2007. Stock option expense
allocated to research and development was $10,543 for the three month period
ended September 30, 2006 and Nil for the three month period ended September 30,
2007 and therefore accounted for $10,543 of the decrease. A Precarn funding
grant of $28,720 was accrued to offset our expense during the three month period
ended September 30, 2007. No such accrual occurred during the three month period
ended September 30, 2006. After eliminating the stock option expense decrease
and the funding grant decrease, the foreign exchange differential accounted for
an increase of approximately $9,200, indicating that the actual research and
development activity increased approximately $22,500.

We reported that selling, general, and administrative expenses
increased $111,358 from $464,607 for the three month period ended September 30,
2006 to $575,965 for the three month period ended September 30, 2007. The
foreign exchange differential accounted for a increase of approximately $38,000,
indicating an actual increase in activity of approximately $73,300. The
principal factors contributing to the changes were as follows:

- Reported general and administrative salaries decreased $11,100 from $246,789
      to $235,719. The foreign exchange differential accounted for an increase
      of approximately $15,600, resulting in an actual decrease in activity of
      approximately $26,700. The actual decrease resulted from the decrease of
      our administrative staff by two employees.
- Stock option expense in the amount of $49,930 was reported for the three
      month period ended September 30, 2006 and $114,925 for the three month period
      ended September 30, 2007 accounting for an increase of $64,995.

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- Reported amortization expenses increased approximately $1,300 from $5,200
  to $6,500. The foreign exchange differential accounted for an increase of
  approximately $400, resulting in an actual increase of approximately $900.
- Reported legal expenses increased approximately $13,700 from $47,400 to
  $61,100. The foreign exchange differential accounted for an increase of
  approximately $4,000, resulting in an actual increase in activity of
  approximately $9,700. The actual increase is principally a result of an
  increase in patent application and registration expenses.
- Reported accounting expenses increased approximately $100 from $7,900 to
  $8,000. The foreign exchange differential accounted for a increase of
  approximately $500, resulting in an actual decrease in activity of
  approximately $400. The actual decrease related to a general decrease in the
  cost of accounting and auditing services.
- Reported travel and marketing expenditures increased approximately $12,000
  from $15,100 to $27,100. The foreign exchange differential accounted for an
  increase of approximately $1,800, resulting in an actual increase in activity
  of approximately $10,200. The individual components of the reported increase
  are as follows: investor relations increased $6,300 from $7,000 to $13,300,
  travel increased $2,600 from $4,300 to $6,900, and trade show expense
  increased from nil to $1,500.
- Reported rent and premises cost increased approximately $8,900 from $58,500
  to $67,400. The foreign exchange differential accounted for an increase of
  approximately $4,400, resulting in an actual increase in activity of
  approximately $4,500.

Liquidity and Capital Resources

Working Capital and Operations

As of September 30, 2007, we had $787,262 in cash and cash
equivalents and a working capital deficit of $744,062 and as of September 30,
2006, we had $30,169 in cash and cash equivalents and a working capital deficit
of $2,665,495.

Our cash position as at November 13, 2007 is approximately
$400,000 and our trade accounts receivable are approximately $1,000,000.

We estimate that, at our current level of operation, our cash
expenses are approximately $275,000 per month. We base this estimate on the
following data:

- As at November 13, 2007, we have 20 employees and our salary costs are
  approximately $185,000 per month. For the first nine months of 2007, our
  average monthly cash expenditures for general, overhead and administration,
  exclusive of salary costs, were approximately $90,000 per month. We expect
  that our general overhead and administrative costs, exclusive of salary costs,
  will remain constant over the next six months.
- We do not expect to incur significant capital expenditures during the
  remainder of 2007 or 2008 unless they result from an increase in our level of
  operation.
- Our Exclusive Global Channel Partner Agreement dated May 5, 2006 with ABB
  Inc. provides for a minimum purchase guarantee of our eVF Runtime Licenses
  totalling US$10,500,000 for the period ending December 31, 2008. The minimum
  purchase guarantees are allocated on an annual basis as follows: 2006 -
  $1,500,000; 2007 - $3,500,000; 2008 - $5,500,000. As at August 10, 2007, ABB
  has fulfilled all of its commitments regarding the Exclusive Global Channel
  Partner Agreement.

We expect that interest payments on our bank loan will total
  approximately $155,000 during the year ending December 31, 2007 and approximately
  $85,000 during the year ending December 31, 2008. We are scheduled to make principal

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payments totalling $420,000 during the year ending December 31,
2007 and $2,052,837 during the year ending December 31, 2008. Unless we
experience significant growth in activity and expenditures during 2008, we
expect that the minimum purchase commitments by ABB during 2007 and 2008
($3,500,000 and $5,500,000 respectively) will be sufficient to service these
debt requirements and produce a positive cash flow during 2007 and 2008.

Financing Activities

Because our business has not been profitable we have been
required to finance the development of our products, to pay the costs of
marketing those products, and to cover operating losses by way of equity
financing. From January 1, 2005 to November 13, 2007 we obtained financing as
follows:

Bank Loan and Loan Guarantee

On October 23, 2006 we completed a transaction redeeming all of
our outstanding secured convertible debentures. To facilitate the transaction,
we arranged a bank loan of up to $2,500,000 from the Royal Bank of Canada. The
loan is repayable as to interest only at the rate of Libor plus 1.50% until June
30, 2007. Monthly principal payments plus interest at the rate of Libor plus
1.50% are due as follows: June 30, 2007 to December 31, 2007, $70,000; January
31, 2008 to May 31, 2008, $110,000; June 30, 2008 to November 30, 2008,
$195,000; December 31, 2008, remaining balance due. We anticipate that the
minimum purchases guaranteed in accordance with the ABB Exclusive Global Channel
Partner Agreement will provide sufficient cash flow to service these interest
and principal payments.

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 to the bank and as
compensation we agreed to issue one Unit for each one dollar pledged as security
for the bank loan. Each Unit consists of two (2) shares of our common stock,
three (3) share purchase warrants, each warrant entitling the holder to purchase
one (1) additional share of common stock at a price of $0.30 per share for a
period of five (5) years; and one and one-half (11⁄2) share purchase warrants,
each whole warrant entitling the holder to purchase one (1) additional share of
common stock at a price of $0.50 per share for a period of five (5) years. A
general security agreement covering all of our real, personal and intangible
property has been pledged as security to the LC Providers.

A total of $2,450,000 letters of credit have been obtained to
secure the bank loan and accordingly we have 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 312,500 share purchase
warrants previously held by certain LC Providers have been reduced from $1.00 to
$0.30 per share and the term of those warrants has been extended by 24 months,
so that they now expire May 2, 2010.

$2,150,000 of the letters of credit were received October 23,
2006 and, accordingly, we issued 4,300,000 common shares, 6,450,000 warrants
exercisable at $0.30 and 3,225,000 warrants exercisable at $0.50. On October 23,
2007 we recorded as an expense, $1,376,000 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 option
valuation model and the following assumptions: dividend yield 0%, expected
volatility 167%, risk-free interest rate 4.90%, and an expected term of two (2)
years.

$300,000 of the letters of credit were received February 5, 2007
  and, accordingly, we issued 600,000 common shares, 900,000 warrants exercisable
  at $0.30 and 450,000 warrants exercisable at $0.50. On February 5, 2007 we recorded
  as an expense, $180,000 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 option valuation model and the following
  assumptions: dividend yield 0%, expected volatility 165%, risk-free interest
  rate 4.92%, and an expected term of two (2) years.

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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, the
Company determined that the penalty provision clauses applied and the Company
agreed to issue one additional common share to the LC Providers that delivered
letters of credit on or before October 23, 2006. Owen Jones, a director and
former Chief Executive Officer and James Speros, an independent director, both
of whom delivered letters of credit on or before October 23, 2007, elected not
to participate in the additional share issuance. Accordingly, on August 8, 2007,
the Company issued 1,625,000 common shares at a deemed price 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 we 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 we 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 option valuation model and the following
assumptions: dividend yield 0%, expected volatility 165%, risk-free interest
rate 4.58%, and an expected term of two (2) years. As further compensation, the
exercise price of 1,008,548 share purchase warrants previously held by the
accredited investor were reduced from $0.60 to $0.30 per share and the term of
those warrants has been extended by 36 months, so that they now expire January
18, 2011.

Owen Jones, a director and former Chief Executive Officer
pledged a portion of the cash collateral and received no compensation for
providing his portion of the cash collateral.

Private Placements

At directors meetings held October 13, 2004 and December 21,
2004, approval was given to a private placement of 1,750,000 units at a price of
$0.40 per unit for gross proceeds of $700,000. Each unit comprises one share and
one-half (1/2) share purchase warrant. Each whole warrant has a five (5) year
term and is exercisable at any time into one common share at a price of $0.50
per share. The private placement closed on various dates between December 1,
2004 and March 4, 2005. In conjunction with this private placement, we paid
$32,880 and issued 24,500 units as finders fees.

At a directors meeting held March 10, 2005, approval was given
to a private placement of up to 1,875,000 units at a price of $0.80 per unit for
total proceeds of $1,500,000. Each unit comprises one common share and one
half-share (1/2) share purchase warrant. Each whole warrant has a three (3) year
term and is exercisable at any time into one common share at a price of $1.00
per share. On May 3, 2005 we closed $1,307,000 of the private placement. In
conjunction with this portion of the private placement, we paid $39,210 and
issued 52,500 shares as finders fees.

At a directors meeting held October 5, 2005, approval was
given to a private placement of up to 6,000,000 units at a price of $0.50 per
unit for total proceeds of $3,000,000. Each unit comprises one common share and
one share purchase warrant. Each share purchase warrant entitles the holder to
purchase one additional share for two (2) years at US$0.60 per share. On January
23, 2006 we issued 1,008,548 units on account of this private placement.

At a directors meeting held May 30, 2006, approval was given
to a private placement of up to $3,000,000. The financing term sheet executed to
implement the private placement offered 10,000,000 units at $0.30 per unit. Each
Unit comprises one common share and one share purchase warrant. Each share
purchase warrant entitles the holder to purchase one additional share for three
(3) years at US$0.50 per share. On August 30, 2006 we issued 1,549,332 units on
account of this private placement representing $464,800.

By directors consent resolution dated November 24, 2006, approval
  was given to a private placement of up to $1,200,000. The financing term sheet
  executed to implement the private placement offered 6,000,000 units at $0.20
  per unit. Each Unit comprises one common share and one share purchase warrant.
  Each share purchase warrant

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entitles the holder to purchase one additional share for three
(3) years at US$0.25 per share. On January 16, 2007 we issued 1,895,000 units on
account of this private placement representing $379,000. We also paid $1,500 and
issued 30,000 units as a finders fee on account of this private placement. On
February 21, 2007 we issued 275,000 units on account of this private placement
representing $55,000.

At a directors meeting held March 22, 2007, approval was given
to a private placement of up to $756,000. The financing term sheet executed to
implement the private placement offered 2,700,000 units at $0.28 per unit. Each
Unit comprises one common share and one share purchase warrant. Each share
purchase warrant entitles the holder to purchase one additional share for three
(3) years at US$0.30 per share. On June 18, 2007 we issued 1,304,286 units on
account of this private placement representing gross proceeds of $365,200. A
finders fee of $2,520 was paid in conjunction with this private placement.

Employee Stock Options

The exercise of 192,000 employee stock options has generated
$59,400 from January 1, 2005 to November 13, 2007.

Bonus Stock Grant

In accordance with the terms of his Employment Agreement (see
above), on October 22, 2007, Mr. Weidinger purchased 8,000,000 shares of common
stock for the purchase price of $0.01 per share generating $80,000.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources that is
material to stockholders.

Going Concern Statement

Due to the uncertainty of our ability to meet our current
operating and capital expenses, in their report on our consolidated audited
financial statements for the year ended December 31, 2006, our independent
registered public accounting firm included an explanatory paragraph regarding
concerns about our ability to continue as a going concern. Our consolidated
audited financial statements contained additional note disclosures describing
the circumstances that led to this disclosure by our independent registered
public accounting firm.

There is substantial doubt about our ability to continue as a
going concern as the continuation of our business is dependent upon obtaining
further financing, successful and sufficient market acceptance of our software
products, the continuing successful development of our computerized vision
systems and, finally, achieving a profitable level of operations. The issuance
of additional equity securities by us could result in a significant dilution in
the equity interests of our current stockholders. Obtaining commercial loans,
assuming those loans would be available, will increase our liabilities and
future cash commitments.

There are no assurances that we will be able to obtain further
funds required for our continued operations. We are pursuing various financing
alternatives to meet our immediate and long-term financial requirements. There
can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis,
we will not be able to proceed with our expansion program and may not be able to
meet our other obligations as they become due.

RISK FACTORS

An investment in our common stock involves a number of very significant
  risks. You should carefully consider the following risks and uncertainties in
  addition to other information in this quarterly report in evaluating our company

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and its business before purchasing shares of our common stock.
Our business, operating results and financial condition could be seriously
harmed due to any of the following risks. You could lose all or part of your
investment due to any of these risks.

We may require additional funds to achieve our current
business strategy. Our inability to obtain such financing will inhibit our
ability to expand or even maintain our business operations.

We may need to raise additional funds through public or private
debt or sale of equity to achieve our current business strategy. The financing
we need may not be available when needed. Even if this financing is available,
it may be on terms that we deem unacceptable or 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 will
inhibit our ability to implement our business strategy, and as a result, could
require us to diminish or suspend our business strategy and possibly cease our
operations. If we are unable to obtain financing on reasonable terms, we could
be forced to delay, scale back or cease our operations, which could put your
investment dollars at significant risk.

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 $6,835,602 in revenues since our
incorporation to September 30, 2007 and we expect to incur operating losses in
the future. Our net loss from inception on January 3, 1994 to September 30, 2007
was $27,613,963. We had cash in the amount of $787,262 as of September 30, 2007.
We estimate our average monthly cash operating expenses to be approximately
$275,000 each month. We cannot provide assurances that we will be able to
successfully develop our business. 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 on our audited financial
statements, dated February 28, 2007. If we are unable to continue as a going
concern, investors will likely lose all of their investments in our company.

Most of our assets and some of our directors and officers
are outside the United States, with the result that it may be difficult for
investors to enforce within the United States any judgments obtained against us
or any of our directors or officers.

Most of our assets are located outside the United States and we
do not currently maintain a permanent place of business within the United
States. In addition, some of our directors and 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 us 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.

We are authorized to issue up to 200,000,000 common shares, of
which 45,047,335 are issued and outstanding as of November 13 2007. 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 more 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

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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 plan to rely on a single channel partner to distribute and generate sales of our products.  If our channel partner is unsuccessful in distributing and generating sales of our products, or if the relationship with our channel partner is
terminated and we are unable to find a suitable replacement, our business may fail and investors may lose their entire investment.

We plan to rely solely on ABB Inc. to purchase our products and distribute them to end users.  If ABB is unsuccessful in generating sales of our products, or if the relationship with ABB is terminated and we are unsuccessful in establishing a
relationship with an alternative channel partner who offers to purchase and distribute our products for similar prices, our results of operations could be adversely affected, our business may fail and investors may lose their entire investment.

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.

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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 45,047,335 shares of common stock issued and outstanding as of November 13, 2007. On April
20, 2007 we filed a registration statement under the Securities Act of 1933. The registration statement 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. On May 11, 2007, this registration statement was declared effective and the selling stockholders may resell up to 37,671,753 shares of our common stock, representing 84% of our current
issued and outstanding shares.  The 13,977,494 shares registered by this registration statement are included in the number of our issued and outstanding common shares as of November 13, 2007, shown above. Any significant downward pressure on the
price of our common stock as the selling stockholders 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.

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 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 increase our revenues. 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.

Rapid technological changes in the 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 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 our 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 companywill
  need to come through the appreciation of the price of our common stock. There
  can be no assurance that the price of our common stock will increase.

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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.

FINRA 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
  Financial Industry Regulatory Authority (FINRA) 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, FINRA believes that
  there is a high probability that speculative low priced securities will not
  be suitable for at least some customers. FINRA 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 3. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this report, being September 30, 2007, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive
officer and our principal financial officer concluded that our disclosure controls and procedures are effective as of the end of the period covered by this report. There have been no changes in our internal controls over financial reporting that
occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Disclosure controls and procedures are controls and other
  procedures that are designed to ensure that information required to be disclosed
  in our company's reports filed or submitted under the Securities Exchange Act
  of 1934 is recorded, processed, summarized and reported, within the time periods
  specified in the Securities and Exchange

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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
Exchange Act is accumulated and communicated to management, including our
president and chief executive officer as appropriate, to allow timely decisions
regarding required disclosure.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material, active or pending legal proceedings
against us, nor are we involved as plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered beneficial shareholder are an adverse
party or has a material interest adverse to us.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS

There were no sales of our unregistered equity securities
during the quarter ended September 30, 2007 that have not been disclosed in a
current report on Form 8-K prior to the filing of this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

INDEX TO EXHIBITS

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(5) | Restated Articles of
      Incorporation of the Company dated June 1, 2000
|3.8(1) | By-Laws of the Company                                                    
|3.9(6) | Amendment to By-Laws of the
      Company                                 
|4.1(1) | Specimen Stock Certificate                                                

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|4.2(2)    | 1997 Stock Option
        Plan                                                                                                          
|--------- | ----------------------------------------------------------------------------------------------------------------------------------------
|4.3(2)    | 2000 Stock Option Plan                                                                                                                  
|4.4(4)    | Amended 2000
        Stock Option Plan dated November 1, 2000                                                                           
|10.1(4)   | Agreement for Escrow of Share
        Certificate & Promissory Note between Edward White and the Company
        dated February 27, 2001
|10.2(5)   | Agreement for
        Escrow of Share Certificate and Promissory Note between Babak Habibi and
        the Company dated June 21, 2001  
|10.3(7)   | License Agreement with Marubeni
        Corporation                                                                                     
|10.4(8)   | Certificate of
        Reverse Stock Split                                                                                              
|10.5(9)   | Corporate Governance Committee
        Charter                                                                                          
|10.6(9)   | Audit Committee
        Charter                                                                                                         
|10.7(9)   | Compensation Committee Charter                                                                                                          
|10.8(9)   | Code of Business
        Conduct and Ethics for Directors, Officers and Employees                                                       
|10.9(9)   | Corporate Governance Guidelines                                                                                                         
|10.10(10) | Loan Agreement                                                                                                                          
|10.11(10) | General Security Agreement                                                                                                              
|10.12(10) | Service Agreement
        with Elite Financial Communications Group                                                                     
|10.13(10) | 2003 Stock Option Plan                                                                                                                  
|10.14(11) | Lease Agreement
        dated July 30, 2003 between Hoop Realty and Braintech Canada, Inc.                                              
|10.15(12) | ABB Exclusive Channel Partner
        Agreement for Licensing of Braintechs Technologies                                               
|10.16(13) | ABB Exclusive
        Channel Partner Agreement for Licensing of Braintechs Technologies                                               
|10.17(14) | Marketing Communications Services
        Agreement with Baldacci Communications, LLC,                                                  
|10.18(15) | ABB Exclusive
        Global Channel Partner Agreement for Licensing of Braintechs Technologies                                        
|10.19(16) | Form of Loan Guarantee and Subscription
        Agreement                                                                               
|10.20(16) | General Security
        Agreement dated October 18, 2006                                                                               
|10.21(17) | 2007 Bonus Stock and Bonus Stock
        Option Incentive Plan                                                                          
|10.22(17) | Employment Agreement
        with Edward White                                                                                          
|10.23(17) | Employment Agreement with Owen
        Jones                                                                                            
|10.24(17) | Employment Agreement
        with Frederick Weidinger                                                                                   
|11.1*     | Computation
        of net loss per share                                                                                               
|31.1*     | Certificate
        of Owen L.J. Jones pursuant to Sec 302 of the Sarbanes-Oxley Act of 2002                                            
|31.2*     | Certificate
        of Edward A. White pursuant to Sec 302 of the Sarbanes-Oxley Act of 2002                                            
|32.1*     | Certificate
        of Owen L.J. Jones pursuant to Sec 906 of the Sarbanes-Oxley Act of 2002                                            
|32.2*     | Certificate
        of Edward A. White pursuant to Sec 906 of the Sarbanes-Oxley Act of 2002                                            

* Filed herewith 
  (1) Exhibit already on file - exhibit to our Form 10-SB registration statement
  filed September 25, 1998.
  (2) Exhibit already on file - exhibit to our Schedule 14A proxy information
  filed March 1, 2000. 
  (3) Exhibit already on file - exhibit to our Form S-1 registration statement
  filed February 11, 2000. 
  (4) Exhibit already on file - exhibit to our Form 10-KSB for the year ended
  December 31, 2000. 
  (5) Exhibit already on file - exhibit to our Form S-1/A registration statement
  filed July 3, 2001. 
  (6) Exhibit already on file - exhibit to our Form 10-KSB for the year ended
  December 31, 2001 
  (7) Exhibit already on file - exhibit to our Form 8-K filed July 5, 2002. 
  (8) Exhibit already on file  exhibit to our Form 8-K filed September 9,
  2002. 
  (9) Exhibit already on file  exhibit to our Form 10KSB for the year ended
  December 31, 2002.

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|(10) Exhibit already on file  exhibit to our Form 10QSB
      covering the quarter ended March 31, 2003.    
|-------------------------------------------------------------------------------------------------------------
|(11) Exhibit already on file  exhibit to our Form 10QSB
      covering the quarter ended September 30, 2003.
|(12) Exhibit already on file - exhibit to our Form 8-K
      filed March 9, 2004.                            
|(13) Exhibit already on file - exhibit to our Form 8-K
      filed January 19, 2005.                         
|(14) Exhibit already on file - exhibit to our Form 8-K
      filed March 3, 2005.                            
|(15) Exhibit already on file  exhibit to our Form 10QSB
      covering the quarter ended March 31, 2006.    
|(16) Exhibit already on file - exhibit to our Form 8-K
      filed October 26, 2006.                         
|(17) Exhibit already on file - exhibit to our Form 8-K
      filed October 31, 2007.                         
|(17) Exhibit already on file - exhibit to our Form 8-K
      filed October 31, 2007.                         
|(17) Exhibit already on file - exhibit to our Form 8-K
      filed October 31, 2007.                         
|(17) Exhibit already on file - exhibit to our Form 8-K
      filed October 31, 2007.                         

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SIGNATURES

In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersign,
thereunto duly authorized

BRAINTECH, INC.

|By: /s/ Owen L. J.
      Jones | 
|------------------------------ | 
|Owen L .J. Jones               | 
|Director                       | 
|(Principal Executive Officer)  | 
|Date: November 13, 2007        | 

|By: /s/ Edward A.
      White | 
|----------------------------- | 
|Edward A. White               | 
|Secretary/Treasurer           | 
|(Principal Financial Officer) | 
|Date: November 13, 2007       | 

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