Applied Energetics

"Innovative Ultrafast Lasers and Particle Beam Systems"

Applied Energetics Reports Second Quarter 2011 Financial Results


TUCSON, Ariz. — August 9, 2011-- Applied Energetics, Inc., (NASDAQ: AERG), today reported summary financial results for the second quarter ended June 30, 2011. The Company will host a live conference call today, August 9 at 11:00 a.m. (Eastern Time).

Second Quarter and Year-to-Date 2011 Summary Financial Results

Revenue for the second quarter decreased by approximately $1.9 million to $1.0 million for the three months ended June 30, 2011 compared to $2.9 million for the three months ended June 30, 2010. Revenue decreased approximately $2.6 million to $3.8 million for the six months ended June 30, 2011 compared to $6.5 million for the six months ended June 30, 2010. These decreases were primarily the result of completion of the Company’s counter-IED (“C-IED”) related contracts with the US Marine Corp (“USMC”).

Net loss attributable to common shareholders for the three months ended June 30, 2011 was $1.6 million, or $0.02per basic and diluted common share, as compared to a net loss of $0.7 million or $0.01 per basic and diluted common share for the same period last year.

Net loss attributable to common shareholders for the six months ended June 30, 2011 was $3.0 million, or $0.03 per basic and diluted common share, as compared to a net loss of $1.8 million or $0.02 per basic and diluted common share for the same period last year.

At June 30, 2011, the Company had approximately $7.0 million in cash and cash equivalents as compared to $9.0 million in cash and cash equivalents at December 31, 2010.

At June 30, 2011, the Company had a backlog (workload remaining on signed contracts) of approximately $1.1 million, to be completed within the next twelve months.

Joe Hayden, President, commented, "The second quarter was challenging as we were impacted by the delay in the approval of the federal budget, and the inability of government organizations to solicit for, or issue, contracts without an approved budget. We have been proactive in conserving our cash resources by reducing staff and other cost saving measures. During the second quarter we focused on the completion of our new commercial application center for our laser product line, and another center for our HV product line. We believe that these unique facilities will provide potential industrial customers with the opportunity to see our new products in use, and to use these products to develop new industrial processes and capabilities."

Conference Call

Applied Energetics will host a conference call on August 9, 2011, at 11:00 a.m. ET. Shareholders and other interested parties may participate in the conference call by dialing +1 888 679 8040 (domestic) or +1 617 213 4851 (international) and entering access code 98584861, a few minutes before 11:00 a.m. ET on August 9, 2011. A link to the call can also be found on the Internet at www.appliedenergetics.com. A replay of the conference call will be accessible two hours after its completion through August 16 by dialing +1 888 286 8010 (domestic) or +1 617 801 6888 (international) and entering access code 81983436. The call will also be archived for 30 days at www.appliedenergetics.com.

About Applied Energetics, Inc.

Applied Energetics develops and manufactures applied energy systems for military and commercial applications. Through our efforts in developing our core technology, Laser Guided Energy ("LGE"), we have gained expertise and proprietary knowledge in high performance lasers, high-voltage electronics, advanced dynamic optics and atmospheric and plasma interactions. We apply these technologies to deliver innovative solutions to urgent military requirements, including neutralizing improvised explosive devices ("IEDs") and other high priority missions of U.S. and allied military forces. We have developed an effective and robust counter-IED ("C-IED") technology as a result of our research and development. Additionally, we develop and manufacture high voltage and ultra-short pulse ("USP") laser products for government and commercial customers for a range of applications. For more information about Applied Energetics, please visit www.appliedenergetics.com.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Certain statements contained in this News Release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, but are not limited to: the dependence on sales of a limited number of products and the uncertainty of the timing and magnitude of government funding and orders, dependence on sales to government customers; the uncertainty of patent protection; the uncertainty of strategic alliances; the uncertainty of management tenure; the impact of third-party suppliers' manufacturing constraints or difficulties; management's ability to achieve business performance objectives, market acceptance of, and demand for, the Company's products, and resulting revenues; development and testing of technology and products; manufacturing capabilities; impact of competitive products and pricing; litigation and other risks detailed in the Company's filings with the Securities and Exchange Commission. The words "looking forward," "believe," "may," "plan," "seek," "strategy," "demonstrate," "intend," "expect," "continue," "contemplate," "estimate," "anticipate," "will," "likely" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Applied Energetics undertakes no obligation to update any forward-looking statements contained in this news release.

Financial Table

Balance Sheets Statements of Operations Statements of Operations YTD

Balance Sheets

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
    
 June 30, 2011  December 31, 2010
 (Unaudited)  
 ASSETS   
 Current assets   
 Cash and cash equivalents   $ 6,950,451      $ 8,983,281  
 Accounts receivable   527,464    2,022,292  
 Inventory   259,302    683,546  
 Prepaid expenses and deposits   152,293    365,506  
 Other receivables   47,945    48,717  
 Total current assets   7,937,455      12,103,342  
 Long term receivables - net   205,313      205,313  
 Property and equipment - net   2,426,514      2,507,814  
 Other assets   -      10,000  
 TOTAL ASSETS   $ 10,569,282      $ 14,826,469  
    
 LIABILITIES AND STOCKHOLDERS’ EQUITY     
 Current liabilities   
 Accounts payable   $ 245,645      $ 870,009  
 Accrued expenses   234,850    1,005,682  
 Accrued compensation   480,359    507,341  
 Customer deposits   42,954    126,282  
 Billings in excess of costs   1,614      6,505  
  Total current liabilities   1,005,422    2,515,819  
    
 Total liabilities   1,005,422    2,515,819  
    
 Commitments and contingencies - See Note 9    
    
 Stockholders’ equity   
 Series A Convertible Preferred Stock, $.001 par value, 2,000,000 shares
  authorized;107,172 shares issued and outstanding at June 30, 2011
  and at December 31, 2010
  107      107  
 Common stock, $.001 par value, 125,000,000 shares authorized;
  91,371,191 shares issued and outstanding at June 30, 2011 and
  91,068,357 shares issued and outstanding at December 31, 2010
  91,371      91,068  
 Additional paid-in capital   79,040,055      78,738,520  
 Accumulated deficit   (69,567,673)     (66,519,045) 
 Total stockholders’ equity   9,563,860      12,310,650  
 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 10,569,282      $ 14,826,469  

Statements Of Operations

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
    
  For the three months ended
 June 30,
 2011 2010
    
 Revenue  $ 1,022,765      $ 2,879,932  
    
 Cost of revenue   927,728     2,794,693  
    
 Gross profit   95,037      85,239  
    
 Operating expenses   
 General and administrative   903,884     525,354  
 Selling and marketing   341,060     232,699  
 Research and development   445,588      3,658  
 Total operating expenses   1,690,532     761,711  
    
 Operating loss   (1,595,495)    (676,472) 
    
 Other (expense) income   
 Interest expense   (928)     (1,667) 
 Interest income   892      2,110  
  Total other   (36)     443  
    
 Net loss   (1,595,531)   (676,029) 
    
 Preferred stock dividends   (45,834)   (57,557) 
 Deemed dividend from induced conversion of
  Series A Preferred Stock
  -    (11,478) 
    
 Net loss attributable to common stockholders $ (1,641,365) $ (745,064)
    
 Net loss per common share – basic and diluted   $ (0.02)     $ (0.01) 
    
 Weighted average number of shares outstanding, basic and diluted   91,096,836     89,687,321  

Statements Of Operations YTD

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
    
  For the six months ended
 June 30,
 2011 2010
    
 Revenue  $ 3,839,343      $ 6,474,709  
    
 Cost of revenue   3,599,842     6,163,369  
    
 Gross profit   239,501     311,340  
    
 Operating expenses   
 General and administrative   1,898,570     1,602,586  
 Selling and marketing   665,901     304,353  
 Research and development   631,788      36,520  
 Total operating expenses   3,196,259     1,943,459  
    
 Operating loss   (2,956,758)    (1,632,119) 
    
 Other (expense) income   
 Interest expense   (2,339)     (3,334) 
 Interest income   2,140      4,572  
 Other      -  
  Total other   (199)     1,238  
    
 Net loss   (2,956,957)   (1,630,881) 
    
 Preferred stock dividends   (91,669)   (115,541) 
 Deemed dividend from induced conversion of
  Series A Preferred Stock
  -      (11,478) 
    
 Net loss attributable to common stockholders $ (3,048,626)$ (1,757,900)
    
 Net loss per common share – basic and diluted   $ (0.03)     $ (0.02) 
    
 Weighted average number of shares outstanding, basic and diluted   91,076,429     89,281,990