APPLIED ENERGETICS' Losses Mount Amid Revenue Plunge, Going Concern Doubt

TL;DR

**AERGP is bleeding cash and revenue, making it a high-risk bet with substantial doubt about its future.**

AI Summary

APPLIED ENERGETICS, INC. (AERGP) reported a significant decline in revenue for the six months ended June 30, 2025, dropping to $280,088 from $914,878 in the prior year, a 69.49% decrease. This led to a substantial increase in net loss, which widened to $6,891,415 for the six months ended June 30, 2025, compared to $4,672,329 for the same period in 2024, representing a 47.48% increase in loss. Operating expenses surged, with general and administrative expenses rising to $5,432,847 from $4,660,410, selling and marketing expenses increasing to $968,044 from $151,776, and research and development expenses growing to $659,225 from $118,703. The company's cash and cash equivalents increased to $865,679 as of June 30, 2025, from $164,812 at December 31, 2024, primarily due to $6,004,250 in proceeds from the sale of common stock. Despite an increase in working capital to $221,896, the company's substantial net loss and negative cash flows from operations of $4,127,663 raise substantial doubt about its ability to continue as a going concern. Strategic outlook involves exploring additional equity financing and relying on anticipated revenues from government contracts, though no assurance is given.

Why It Matters

This filing is critical for investors as APPLIED ENERGETICS, INC. (AERGP) faces significant financial distress, evidenced by a nearly 70% revenue drop and a 47% increase in net loss. The 'going concern' warning signals high risk, indicating the company may struggle to meet its obligations without further capital. For employees, this raises job security concerns, while customers might question the company's long-term viability and ability to deliver on contracts. In a competitive market, AERGP's struggles could benefit rivals, as its ability to source supplies is also threatened by global trade conditions and geopolitical events.

Risk Assessment

Risk Level: high — The company incurred a net loss of $6,891,415 and negative cash flows from operations of $4,127,663 for the six months ended June 30, 2025. These conditions, coupled with limited contract activity and reliance on future capital raises, raise 'substantial doubts about the company's ability to continue as a going concern for one year from the date the financial statements are issued.'

Analyst Insight

Investors should exercise extreme caution or consider divesting AERGP shares given the 'going concern' warning, significant revenue decline, and increasing losses. Monitor closely for successful equity financing or substantial government contract wins, as these are critical for the company's survival.

Financial Highlights

debt To Equity

1.08

revenue

$280,088

operating Margin

-2457.34%

total Assets

$3,531,171

total Debt

$1,831,658

net Income

-$6,891,415

eps

-$0.03

gross Margin

60.23%

cash Position

$865,679

revenue Growth

-69.49%

Revenue Breakdown

Key Numbers

• $280,088 — Revenue for six months ended June 30, 2025 (Decreased by 69.49% from $914,878 in 2024)
• $6,891,415 — Net loss for six months ended June 30, 2025 (Increased by 47.48% from $4,672,329 in 2024)
• $4,127,663 — Net cash used in operating activities for six months ended June 30, 2025 (Increased from $2,670,374 in 2024, indicating worsening operational cash burn)
• $865,679 — Cash and cash equivalents as of June 30, 2025 (Increased from $164,812 at December 31, 2024, primarily due to equity financing)
• $6,004,250 — Proceeds from sale of common stock for six months ended June 30, 2025 (Crucial for liquidity, up from $4,171,601 in 2024)
• $221,896 — Working capital as of June 30, 2025 (Positive, but insufficient to offset significant losses and cash burn)
• 218,590,816 — Common shares outstanding as of June 30, 2025 (Increased from 213,860,508 at December 31, 2024, indicating dilution)
• $1,151,563 — Purchase of equipment for six months ended June 30, 2025 (Significant increase from $55,435 in 2024, indicating capital expenditure)
• 9.250% — Interest rate on new premium financing note (Fixed rate for the $160,000 loan entered into on June 12, 2025)

Key Players & Entities

• APPLIED ENERGETICS, INC. (company) — Registrant and primary entity in the filing
• North Star Power Engineering, Inc. (company) — Wholly owned subsidiary of Applied Energetics, Inc.
• SEC (regulator) — Securities and Exchange Commission, governing body for filings
• Oakwood D&O Insurance (company) — Provider of premium financing for insurance policies
• Delaware (regulator) — State of incorporation for Applied Energetics, Inc.
• Tucson, Arizona (person) — Location of company headquarters

FAQ

Risk Factors

• Going Concern Doubt [high — financial]: The company incurred a net loss of $6,891,415 and had negative operating cash flows of $4,127,663 for the six months ended June 30, 2025. Despite an increase in cash to $865,679, primarily from equity financing, these factors raise substantial doubt about its ability to continue as a going concern.
• Revenue Decline [high — operational]: Revenue decreased by 69.49% to $280,088 for the six months ended June 30, 2025, from $914,878 in the prior year. This significant drop indicates a severe contraction in business activity.
• Surging Operating Expenses [high — operational]: Total operating expenses increased to $7,060,116 from $4,930,889 year-over-year. Notably, General and Administrative expenses rose to $5,432,847, Selling and Marketing to $968,044, and R&D to $659,225, exacerbating the net loss.
• Increased Net Loss [high — financial]: The net loss widened by 47.48% to $6,891,415 for the six months ended June 30, 2025, compared to $4,672,329 in the same period last year, driven by the revenue decline and increased expenses.
• Dilution from Equity Issuance [medium — financial]: Common shares outstanding increased to 218,590,816 as of June 30, 2025, from 213,860,508 at December 31, 2024. This dilution is a result of the company's reliance on equity financing to maintain liquidity.
• Increased Capital Expenditures [medium — financial]: Purchase of equipment significantly increased to $1,151,563 for the six months ended June 30, 2025, from $55,435 in the prior year, adding to cash outflows.
• Reliance on Future Financing [high — financial]: The company's strategic outlook relies on exploring additional equity financing and anticipated revenues from government contracts, neither of which is guaranteed, highlighting ongoing financial uncertainty.

Industry Context

Applied Energetics operates in a sector that often relies on government contracts and technological innovation. The competitive landscape can be challenging, with companies needing to secure funding and demonstrate technological viability to succeed. Trends may include shifts in government spending priorities and advancements in related technologies.

Regulatory Implications

As a company potentially involved with government contracts, Applied Energetics may be subject to specific procurement regulations and compliance requirements. Changes in government policy or funding could directly impact its revenue streams and operational stability.

What Investors Should Do

1. Monitor future equity financing rounds closely.
2. Scrutinize government contract pipeline and award status.
3. Assess the sustainability of increased operating expenses.
4. Evaluate the company's ability to manage cash burn.

Key Dates

• 2025-06-30: End of Period for 10-Q Filing — Reflects a period of significant revenue decline, increased losses, and reliance on equity financing.
• 2025-06-12: New Premium Financing Note Entered — Indicates the company is utilizing debt financing, albeit for a specific purpose with a fixed interest rate of 9.250% on $160,000.
• 2025-06-30: Cash and Cash Equivalents — Increased to $865,679 from $164,812 at year-end 2024, primarily due to $6,004,250 in proceeds from stock sales, crucial for near-term liquidity.
• 2025-06-30: Common Shares Outstanding — Increased to 218,590,816, reflecting dilution from equity issuances to fund operations.
• 2024-06-30: Prior Year Period End — Provides a baseline for comparison, showing a substantial decrease in revenue and an increase in net loss for the current period.

Glossary

Going Concern

An accounting assumption that a business will continue to operate for the foreseeable future. If substantial doubt exists, it must be disclosed. (The company's financial condition raises substantial doubt about its ability to continue as a going concern.)

Accumulated Deficit

The cumulative net losses of a company since its inception, less any net gains. It represents a negative retained earnings balance. (The company has a significant accumulated deficit of $126,880,667 as of June 30, 2025, reflecting its history of losses.)

Working Capital

The difference between current assets and current liabilities, indicating a company's short-term financial health and operational liquidity. (While positive at $221,896, it is insufficient to cover the company's substantial losses and cash burn.)

Stock-based compensation

Compensation provided to employees in the form of stock options or shares, recognized as an expense. (A significant non-cash expense ($2,154,764 for six months ended June 30, 2025) that impacts net loss but not cash flow from operations directly.)

ROU asset

Right-of-Use asset, representing the right to use an asset for a specified period, typically related to leases. (Amortization of ROU assets is a non-cash expense impacting net loss.)

Year-Over-Year Comparison

Compared to the prior year's six-month period, Applied Energetics has experienced a dramatic 69.49% decrease in revenue, falling to $280,088. This revenue contraction, coupled with a significant surge in operating expenses across all categories (G&A, S&M, R&D), has led to a 47.48% increase in net loss, reaching $6,891,415. While cash has increased due to equity financing, the overall financial health has deteriorated, with operating cash burn worsening and substantial doubt cast on the company's ability to continue as a going concern.

Key Financial Figures

• $0.001 — ich Registered Common Stock, par value $0.001 per share AERG OTCQB As of August 12,

Filing Documents

• ea0252534-10q_applied.htm (10-Q) — 650KB
• ea025253401ex31-1_applied.htm (EX-31.1) — 10KB
• ea025253401ex32-1_applied.htm (EX-32.1) — 5KB
• 0001213900-25-075742.txt ( ) — 4747KB
• aerg-20250630.xsd (EX-101.SCH) — 43KB
• aerg-20250630_cal.xml (EX-101.CAL) — 34KB
• aerg-20250630_def.xml (EX-101.DEF) — 234KB
• aerg-20250630_lab.xml (EX-101.LAB) — 442KB
• aerg-20250630_pre.xml (EX-101.PRE) — 257KB
• ea0252534-10q_applied_htm.xml (XML) — 510KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Unaudited Financial Statements 1 Condensed Consolidated Balance Sheets as of June 30, 2025 (Unaudited) and December 31, 2024 1 Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2025 and 2024 (Unaudited) 2 Condensed Consolidated Statements of Stockholders' Equity for the six months ended June 30, 2025 and 2024 (Unaudited) 3 Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024 (Unaudited) 4 Notes to Condensed Consolidated Unaudited Financial Statements 5 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 18 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 26 ITEM 4.

Controls and Procedures

Controls and Procedures 26

OTHER INFORMATION

PART II. OTHER INFORMATION ITEM 1.

Legal Proceedings

Legal Proceedings 27 ITEM 1A. Risk Factors (Not applicable.) ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 27 ITEM 3. Defaults Upon Senior Securities (Not applicable.) ITEM 4. Mine Safety Disclosures (Not applicable.) ITEM 5 Other Information 27 ITEM 6. Exhibits 27

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APPLIED ENERGETICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS June 30, December 31, 2025 2024 (unaudited) Assets Current assets Cash and cash equivalents $ 865,679 $ 164,812 Accounts receivable, net - 335,839 Other assets 350,876 164,128 Total current assets 1,216,555 664,779 Long-term assets Property and equipment - net 1,351,863 314,503 Right of use asset – operating lease 945,749 1,074,583 Security deposits 17,004 17,004 Total long-term assets 2,314,616 1,406,090 Total assets $ 3,531,171 $ 2,070,869 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 383,050 $ 258,481 Notes payable 144,000 47,325 Due to related parties 50,000 50,000 Operating lease liability - current 251,446 265,380 Accrued expenses 118,084 63,153 Accrued dividends 48,079 48,079 Total current liabilities 994,659 732,418 Long-term liabilities Operating lease liability - non-current 836,999 945,704 Total long-term liabilities 836,999 945,704 Total liabilities 1,831,658 1,678,122 Stockholders' Equity Series A convertible preferred stock, $ .001 par value, 2,000,000 shares authorized and 13,602 shares issued and outstanding at March 31, 2025 and December 31, 2024 (Liquidation preference $ 340,050 and $ 340,050 , respectively) 14 14 Common stock, $ .001 par value, 500,000,000 shares authorized; 218,250,816 and 213,860,508 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively 218,591 213,861 Additional paid-in capital 128,361,575 120,168,124 Accumulated deficit ( 126,880,667 ) ( 119,989,252 ) Total stockholders' equity 1,699,513 392,747 Total Liabilities and Stockholders' Equity $ 3,531,171 $ 2,070,869 See accompanying notes to condensed consolidated

financial statements (unaudited)

financial statements (unaudited). 1 APPLIED ENERGETICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) FOR THE THREE MONTHS ENDED JUNE 30, FOR THE SIX MONTHS ENDED JUNE 30, 2025 2024 2025 2024 Revenue $ 70,335 $ 780,643 $ 280,088 $ 914,878 Cost of revenue 47,490 384,208 111,404 658,640 Gross profit 22,845 396,435 168,684 256,238 Operating expenses General and administrative 2,823,159 2,343,511 5,432,847 4,660,410 Selling and marketing 649,260 76,216 968,044 151,776 Research and development 336,178 37,923 659,225 118,703 Total operating expenses 3,808,597 2,457,650 7,060,116 4,930,889 Operating loss ( 3,785,752 ) ( 2,061,215 ) ( 6,891,432 ) ( 4,674,651 ) Other income/(expense) Other income 3 265 17 2,322 Interest expense - - - - Total other income/(expense) 3 265 17 2,322 Loss before provision for income taxes ( 3,785,749 ) ( 2,060,950 ) ( 6,891,415 ) ( 4,672,329 ) Provision for income taxes - - - - Net loss ( 3,785,749 ) ( 2,060,950 ) ( 6,891,415 ) ( 4,672,329 ) Preferred stock dividends ( 8,501 ) ( 8,501 ) ( 17,003 ) ( 17,003 ) Net loss attributable to common stockholders $ ( 3,794,250 ) $ ( 2,069,451 ) $ ( 6,908,418 ) $ ( 4,689,332 ) Net loss attributable to common stockholders per common share - basic and diluted $ ( 0.02 ) $ ( 0.01 ) $ ( 0.03 ) $ ( 0.02 ) Weighted average number of common shares outstanding 218,426,641 212,607,537 217,975,767 211,962,257 See accompanying notes to condensed consolidated

financial statements (unaudited)

financial statements (unaudited). 2 APPLIED ENERGETICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND 2024 (Unaudited) Preferred Stock Common Stock Additional Paid-In Accumulated Total Stockholders' (Deficit) Shares Amount Shares Amount Capital Deficit Equity Balance at December 31, 2024 13,602 $ 14 213,860,508 $ 213,861 $ 120,168,124 $ ( 119,989,252 ) $ 392,747 Stock-based compensation - - - - 912,593 - 912,593 Common stock issued on exercise of options - - 30,000 30 11,970 - 12,000 Issuance of common stock under the market offering - - 4,272,334 4,272 5,999,978 - 6,004,250 Common stock issued for settlement of restricted stock units - - 11,667 12 ( 12 ) - - Common stock withheld to cover income tax withholding obligations - - ( 3,693 ) ( 4 ) ( 2,729 ) - ( 2,733 ) Common stock issued for consulting services - - 80,000 80 79,120 - 79,200 Net loss for the period ended March 31, 2025 - - - - - ( 3,105,666 ) ( 3,105,666 ) Balance at March 31, 2025 13,602 $ 14 218,250,816 $ 218,251 $ 127,169,044 $ ( 123,094,918 ) $ 4,292,391 Stock-based compensation - - - - 1,098,971 - 1,098,971 Common stock issued on exercise of options - - 210,000 210 26,690 - 26,900 Common stock issued on exercise of warrants - - 50,000 50 2,950 - 3,000 Common stock issued for consulting services - - 80,000 80 63,920 - 64,000 Net loss for the period ended June 30, 2025 - - - - - ( 3,785,749 ) ( 3,785,749 ) Balance at June 30, 2025 13,602 $ 14 218,590,816 $ 218,591 $ 128,361,575 $ ( 126,880,667 ) $ 1,699,513 Preferred Stock Common Stock Additional Paid- In Accumulated Total Stockholders' (Deficit) Shares Amount Shares Amount Capital Deficit Equity Balance at December 31, 2023 13,602 $ 14 211,236,688 $ 211,237 $ 112,223,129 $ ( 110,814,294 ) $ 1,62

financial statements (unaudited)

financial statements (unaudited). 3 APPLIED ENERGETICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) FOR THE SIX MONTHS ENDED June 30, 2025 2024 Cash Flows From Operating Activities Net loss $ ( 6,891,415 ) $ ( 4,672,329 ) Adjustments to reconcile net loss to net cash used in operating activities: Noncash stock-based compensation expense 2,154,764 1,876,577 Amortization of ROU assets 128,834 95,044 Depreciation and amortization 114,203 103,921 Amortization of prepaid assets 38,393 109,445 Changes in assets and liabilities: Accounts receivable 335,839 356,615 Prepaid and deposits ( 65,141 ) ( 68,293 ) Operating lease liabilities, net ( 122,639 ) ( 75,628 ) Deferred Revenue - ( 308,908 ) Accounts payable 124,568 ( 91,590 ) Accrued expenses and compensation 54,931 4,772 Net cash used in operating activities ( 4,127,663 ) ( 2,670,374 ) Cash Flows From Investing Activities Purchase of equipment ( 1,151,563 ) ( 55,435 ) Net cash used in investing activities ( 1,151,563 ) ( 55,435 ) Cash Flows From Financing Activities Repayment on notes payable ( 63,325 ) ( 47,325 ) Proceeds from sale of common stock 6,004,250 4,171,601 Tax withholdings related to net share settlement of RSU's ( 2,733 ) ( 7,519 ) Proceeds from the exercise of stock options and warrants 41,900 83,499 Net cash provided by financing activities 5,980,093 4,200,256 Net change in cash and cash equivalents 700,867 1,474,447 Cash and cash equivalents, beginning of year 164,812 1,319,526 Cash and cash equivalents, at end of period $ 865,679 $ 2,793,973 Supplemental disclosure of cash flow information Cash paid for interest $ 686 $ - Cash paid for taxes $ - $ - Non-cash investing and financing activities Insurance financing for prepaid insurance $ 160,000 $ 189,302 See accompanying notes to condensed consolidated

financial statements (unaudited)

financial statements (unaudited). 4 APPLIED ENERGETICS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2025 (Unaudited) NOTE 1 – ORGANIZATION OF BUSINESS, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Applied Energetics, Inc. and its wholly owned subsidiary North Star Power Engineering, Inc. ("North Star") (collectively, "company," "Applied Energetics," "we," "our" or "us"). All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information, the instructions for Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for any future periods. The December 31, 2024, balance sheet information was derived from the audited financial statements as of that date. The interim unaudited condensed consolidated financial on Form 10-K. Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the six months ended J

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