Applied Energetics

"Innovative Ultrafast Lasers and Particle Beam Systems"

Applied Energetics Reports third Quarter 2010 Financial Results


Third Quarter 2010 Financial Results Conference Call

TUCSON, Ariz. — November 8, 2010-- Applied Energetics, Inc., (NASDAQ: AERG), today reported summary financial results for the third quarter ended September 30, 2010. The Company will host a live conference call today, November 8, 2010 at 9:00 a.m. (Eastern Time).

Third Quarter and Year-to-Date 2010 Summary Financial Results

Revenue for the third quarter of 2010 increased about 74% to approximately $3.3 million, compared to approximately $1.9 million for the same period last year. Counter-IED (CIED) program revenue for the third quarter of 2010 increased by $1.8 million to $2.4 million as activities were focused on fulfilling our customers’ requirements under the $10.4 million contract modification received in January of 2010. Revenue from Laser Guided Energy™ (LGE) for the third quarter of 2010 decreased by $272,000 to $866,000, and the Ultrashort Pulse Laser product line had no revenue, a decrease of $116,000. Revenue for the third quarter of 2010 from High Voltage products increased by $17,000 to $27,000.

Net loss attributable to common stockholders for the third quarter of 2010 was $374,000, or $0.004 per basic and diluted common share, compared to the prior comparable period net loss attributable to common stockholders of $1.7 million or $0.02 per basic and diluted common share.

Revenue for the nine months ended September 30, 2010 was approximately $9.7 million, compared to approximately $6.2 million for the same period last year, an increase of 57%.

Net loss attributable to common stockholders for the nine months ended September 30, 2010 was $2.1 million, or $0.02 per basic and diluted common share, as compared to a net loss attributable to common stockholders of $8.0 million or $0.09 per basic and diluted common share for the same period last year. Net loss attributable to common stockholders included non-cash stock based compensation of $814,000 and $1.3 million for the 2010 and 2009 periods, respectively.

At September 30, 2010, the Company had approximately $9.1 million in cash and cash equivalents as compared to $9.8 million in cash, cash equivalents and a certificate of deposit at December 31, 2009.

At September 30, 2010, we had a backlog (workload remaining on signed contracts) of approximately $6.4 million, to be completed within the next twelve months.  

Joe Hayden, President & COO, commented, “Our third quarter and nine month results continue to show improvement in revenue and reduction in loss.

"We continue to support our US Marine Corps customers’ Counter-IED requirements in overseas operations and are making significant progress in developing a smaller version of the technology for installation on other military platforms and vehicles. This past quarter, we entered into a strategic teaming agreement with L-3 Interstate Electronics Corporation (“L-3 IEC”) for pursuit of additional CIED contracts which allows us to focus on technology development, the development of high voltage systems, systems integration and testing and field support for our customers. L-3 IEC provides expertise in electronics design and manufacturing, systems engineering, and configuration management. This relationship is already providing benefits as L-3 IEC is supporting the development of the next generation counter-IED system under our $10.4 million contract we received last January. We believe that this agreement positions us well as we seek to expand our CIED product line. We continue to look for other opportunities to team with established companies that can augment our capabilities to deliver integrated systems to our military customers."

"We also have continued the development and advancement of our LGE technology by working with our customer, the U.S. Army’s Research, Development and Engineering Command, supported by a $1.8 million increase in funding in June to our existing Army contract. This brings the total contract value to $4.9 million. Additionally, we completed a 300kV Electron Beam Gun system utilizing our Nested High Voltage Generator technology, which is waiting final acceptance from a major chemical manufacturer.

"In October, we hired a Vice President of Business Development whose office is based in the Washington, DC area to better serve our existing Government customers and develop new customers.

Conference Call

Applied Energetics will host a conference call on November 8, 2010, at 9:00 a.m. ET. Shareholders and other interested parties may participate in the conference call by dialing +1 888 680 0878 (domestic) or +1 617 213 4855 (international) and entering access code 49795160 , a few minutes before 9:00 a.m. ET on November 8, 2010. The call will also be broadcast live on the Internet at www.appliedenergetics.com

A replay of the conference call will be accessible two hours after its completion through November 15, 2010 by dialing +1 888 286 8010 (domestic) or +1 617 801 6888 (international) and entering access code 16160896. The call will also be archived for 30 days at www.appliedenergetics.com

About Applied Energetics, Inc.

Applied Energetics, Inc., based in Tucson, Arizona, specializes in development and manufacture of advanced high performance lasers, high voltage electronics, advanced optical systems, and integrated guided energy systems for defense, aerospace, industrial, and scientific customers worldwide. Applied Energetics pioneered the development of Laser Guided Energy(TM) (LGE(TM)) technology, and related solutions for defense and security 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 Statement of Operations Statement of Operations YTD

Balance Sheets

APPLIED ENERGETICS, INC. 
CONDENSED CONSOLIDATED BALANCE SHEETS  
     
 September 30, 2010  December 31, 2009 
 (Unaudited)    
 ASSETS    
 Current assets   
 Cash and cash equivalents   $ 9,107,418      $ 9,604,643   
 Short term investments   -      225,000   
 Accounts receivable   2,267,197     1,074,944   
 Inventory   769,970     785,479   
 Prepaid expenses and deposits   320,762     447,295   
 Other receivables   64,060     52,295   
 Total current assets   12,529,407      12,189,656   
 Securities available for sale - net   -      -   
 Long term receivables - net   205,313      205,313   
 Property and equipment - net   2,598,822      2,845,607   
 Intangible assets - net   -      -   
 Other assets   20,800      20,800   
 TOTAL ASSETS   $ 15,354,342      $ 15,261,376   
     
 LIABILITIES AND STOCKHOLDERS’ EQUITY      
 Current liabilities    
 Accounts payable   $ 801,171      $ 428,413   
 Estimated loss on uncompleted contract   -      -   
 Accrued expenses   408,321     313,448   
 Short term financing   -     214,834   
 Accrued compensation   626,579     505,188   
 Customer deposits   414,817     104,160   
 Billings in excess of costs   5,032      42,716   
 Current portion of capital lease obligations   -      -   
  Total current liabilities   2,255,920     1,608,759   
 Capital lease obligations   -      -   
 Deferred rent   -     0   
     
 Total liabilities   2,255,920     1,608,759   
     
 Commitments and contingencies     
     
 Stockholders’ equity    
 Series A Convertible Preferred Stock, $.001 par value, 2,000,000 shares
  authorized; 107,172 shares issued and outstanding at September 30, 2010
  and 135,572 shares issued and outstanding at December 31, 2009
  107      136   
 Common stock, $.001 par value, 125,000,000 shares authorized;
  90,928,147 shares issued and outstanding at September 30, 2010 and
  88,968,812 shares issued and outstanding at December 31, 2009
  90,928      88,969   
 Additional paid-in capital   78,507,296      76,931,065   
 Accumulated deficit   (65,499,909)     (63,367,553)  
 Accumulated other comprehensive loss   -      -   
 Total stockholders’ equity   13,098,422      13,652,617   
 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 15,354,342      $ 15,261,376   

Statements of Operations

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
    
  For the three months ended
 September 30,
 2010 2009
    
 Revenue  $ 3,260,087      $ 1,877,865  
    
 Cost of revenue   2,986,640     1,777,840  
    
 Gross profit   273,447     100,025  
    
 Operating expenses   
 General and administrative   412,496     1,348,446  
 Selling and marketing   135,013     132,386  
 Research and development   55,518      210,925  
 Total operating expenses   603,027     1,691,757  
    
 Operating loss   (329,580)    (1,591,732) 
    
 Other (expense) income   
 Interest expense   (1,111)     -  
 Interest income   2,074      8,388  
 Other      -  
  Total other   963      8,388  
    
 Net loss (328,617)    (1,583,344) 
    
 Preferred stock dividends   (45,839)   (76,941) 
 Deemed dividend from induced conversion of
  Series A Preferred Stock
  -    
    
 Net loss attributable to common stockholders   $ (374,456)    $ (1,660,285) 
    
 Net loss per common share – basic and diluted   $ (0.004)     $ (0.02) 
    
 Weighted average number of shares outstanding, basic and diluted   89,791,303     86,179,071  

Statements of Operations YTD

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
    
  For the nine months ended
 September 30,
 2010 2009
    
 Revenue  $ 9,734,797      $ 6,195,404  
    
 Cost of revenue   9,150,009     5,810,602  
    
 Gross profit   584,788     384,802  
    
 Operating expenses   
 General and administrative   2,015,082     6,609,231  
 Selling and marketing   439,366     561,410  
 Research and development   92,038     1,051,572  
 Total operating expenses   2,546,486     8,222,213  
    
 Operating loss   (1,961,698)    (7,837,411) 
    
 Other (expense) income   
 Interest expense   (4,446)     (19) 
 Interest income   6,646      56,222  
 Other      -  
  Total other   2,200      56,203  
    
 Net loss (1,959,498)    (7,781,208) 
    
 Preferred stock dividends   (161,380)   (187,093) 
 Deemed dividend from induced conversion of
  Series A Preferred Stock
  (11,478)     -  
    
 Net loss attributable to common stockholders   $ (2,132,356)   $ (7,968,301)
    
 Net loss per common share – basic and diluted   $ (0.02)     $ (0.09) 
    
 Weighted average number of shares outstanding, basic and diluted   89,179,404     86,186,310