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

TL;DR

**AERGP is bleeding cash and revenue, making it a highly speculative bet with a clear going concern risk.**

AI Summary

APPLIED ENERGETICS, INC. (AERGP) reported a significant increase in net loss for the nine months ended September 30, 2025, reaching $10,888,076, up from $7,047,014 in the prior year, representing a 54.5% increase. Revenue dramatically decreased to $389,072 for the nine months ended September 2025, a substantial drop from $1,662,598 in the same period of 2024, indicating a 76.6% decline. Operating expenses surged to $11,086,850 for the nine months ended September 2025, compared to $7,544,852 in 2024, driven by increases in general and administrative, selling and marketing, and research and development costs. The company's cash and cash equivalents improved to $1,332,225 as of September 30, 2025, from $164,812 at December 31, 2024, largely due to $8,966,697 in financing activities, including $6,004,250 from common stock sales and $2,999,997 from deferred equity financing. Property and equipment, net, increased significantly to $1,300,594 from $314,503, reflecting substantial investments in Battle Lab Equipment and other assets. The company explicitly states substantial doubt about its ability to continue as a going concern due to recurring losses and negative operating cash flows, despite current working capital of $895,225.

Why It Matters

This filing reveals a company in a precarious financial state, with a massive revenue decline of 76.6% and a 54.5% increase in net loss, raising significant red flags for investors. The explicit 'going concern' warning signals high risk, indicating that AERGP may struggle to meet its obligations without further capital. For employees, this could mean job insecurity, while customers might face uncertainty regarding product development and support. In the broader market, AERGP's struggles highlight the challenges faced by smaller, R&D-intensive companies, especially those reliant on government contracts, in a competitive and volatile economic environment.

Risk Assessment

Risk Level: high — The company explicitly states 'substantial doubts about the company's ability to continue as a going concern' due to a net loss of $10,888,076 and negative cash flows from operations of $6,617,654 for the nine months ended September 30, 2025. Revenue plummeted by 76.6% to $389,072, while operating expenses surged by 47% to $11,086,850, indicating severe operational challenges.

Analyst Insight

Investors should exercise extreme caution and consider divesting, as the 'going concern' warning and significant financial deterioration suggest a high probability of further share price erosion or even bankruptcy. New investors should avoid AERGP until a clear path to profitability and sustainable operations is demonstrated, backed by concrete contract wins and reduced operating expenses.

Financial Highlights

debt To Equity

N/A

revenue

$389,072

operating Margin

N/A

total Assets

$4,016,026

total Debt

$4,746,204

net Income

-$10,888,076

eps

-$0.05

gross Margin

57.6%

cash Position

$1,332,225

revenue Growth

-76.6%

Revenue Breakdown

Key Numbers

• $10.89M — Net Loss (Increased by 54.5% for the nine months ended September 30, 2025, compared to $7.05M in 2024.)
• $389K — Revenue (Decreased by 76.6% for the nine months ended September 30, 2025, from $1.66M in 2024.)
• $11.09M — Total Operating Expenses (Increased by 47% for the nine months ended September 30, 2025, from $7.54M in 2024.)
• $6.62M — Net Cash Used in Operating Activities (Increased from $3.73M in 2024, indicating worsening operational cash burn.)
• $1.33M — Cash and Cash Equivalents (Increased from $164,812 at December 31, 2024, primarily due to financing activities.)
• $2.99M — Deferred Equity Financing (New long-term liability as of September 30, 2025, indicating future equity issuance.)
• $1.30M — Property and Equipment - Net (Increased significantly from $314,503 at December 31, 2024, reflecting capital investments.)
• $895K — Working Capital (Positive at September 30, 2025, but insufficient to offset going concern doubts.)
• 223,447,852 — Common Shares Outstanding (As of November 11, 2025, indicating potential dilution from equity raises.)
• 9.25% — Interest Rate (Fixed rate on the $160,000 premium financing note payable.)

Key Players & Entities

• APPLIED ENERGETICS, INC. (company) — Registrant
• North Star Power Engineering, Inc. (company) — Wholly owned subsidiary
• SEC (regulator) — Securities and Exchange Commission
• Oakwood D&O Insurance (company) — Insurance provider for premium financing
• $10,888,076 (dollar_amount) — Net loss for nine months ended September 30, 2025
• $389,072 (dollar_amount) — Revenue for nine months ended September 30, 2025
• $11,086,850 (dollar_amount) — Total operating expenses for nine months ended September 30, 2025
• $6,617,654 (dollar_amount) — Net cash used in operating activities for nine months ended September 30, 2025
• $1,332,225 (dollar_amount) — Cash and cash equivalents at September 30, 2025
• $2,999,997 (dollar_amount) — Proceeds received in advance of equity issuance

FAQ

Risk Factors

• Going Concern Uncertainty [high — financial]: The company has incurred substantial net losses of $10,888,076 for the nine months ended September 30, 2025, and negative operating cash flows of $6,617,654. Despite positive working capital of $895,225, these recurring losses raise substantial doubt about its ability to continue as a going concern.
• Deteriorating Operating Cash Flow [high — financial]: Net cash used in operating activities increased from $3,734,000 in the nine months ended September 30, 2024, to $6,617,654 in the same period of 2025. This worsening cash burn rate exacerbates liquidity concerns.
• Significant Revenue Decline [high — financial]: Revenue plummeted by 76.6% to $389,072 for the nine months ended September 30, 2025, compared to $1,662,598 in the prior year. This drastic reduction in sales is a primary driver of the increased net loss.
• Surging Operating Expenses [high — financial]: Total operating expenses increased by 47% to $11,086,850 for the nine months ended September 30, 2025, from $7,544,852 in the prior year. This increase, driven by G&A, S&M, and R&D, outpaced the declining revenue, widening the operating loss.
• Dependence on Financing Activities [medium — financial]: The company's cash position improved to $1,332,225 due to $8,966,697 in financing activities, including $6,004,250 from common stock sales and $2,999,997 from deferred equity financing. This highlights a reliance on external capital rather than operational generation.
• Increased Investment in Assets [medium — financial]: Property and equipment, net, increased significantly to $1,300,594 from $314,503, reflecting substantial investments. While potentially strategic, these capital expenditures add to cash outflow during a period of operational distress.
• Potential Shareholder Dilution [medium — financial]: With 223,447,852 common shares outstanding as of November 11, 2025, and ongoing reliance on equity financing, there is a significant risk of further dilution for existing shareholders.
• SEC Filings and Compliance [low — regulatory]: As a publicly traded company, Applied Energetics is subject to SEC regulations and reporting requirements. Failure to comply or misstatements in filings could lead to regulatory scrutiny, fines, or delisting.

Industry Context

Applied Energetics operates in a sector that often involves long development cycles and significant R&D investment, such as advanced materials or energy technologies. The competitive landscape likely includes established players and emerging startups, requiring continuous innovation and efficient capital management. The current economic climate may also impact demand for new technologies and the availability of funding.

Regulatory Implications

As a publicly traded entity, Applied Energetics is subject to SEC regulations, including stringent disclosure requirements. The company's going concern warning necessitates clear communication with investors and regulators regarding its financial stability and future plans. Any missteps in financial reporting or compliance could lead to severe penalties.

What Investors Should Do

1. Monitor cash burn and runway closely.
2. Evaluate the sustainability of operating expenses.
3. Assess the viability of the current business plan.
4. Consider the risk of dilution from future equity raises.

Key Dates

• 2025-09-30: Nine Months Ended — Reported a net loss of $10.89M on revenue of $389K, with operating expenses at $11.09M. Cash position improved to $1.33M due to financing.
• 2024-09-30: Nine Months Ended — Reported a net loss of $7.05M on revenue of $1.66M, with operating expenses at $7.54M. Cash position was $1.61M.
• 2024-12-31: Year End — Reported cash and cash equivalents of $164,812 and total assets of $2,070,869.

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 explicitly states substantial doubt about its ability to continue as a going concern due to recurring losses and negative cash flows.)

Deferred Equity Financing

Represents proceeds received in advance of an equity issuance. It is a liability until the equity is formally issued. (A new long-term liability of $2,999,997 was recognized, indicating future equity issuance and potential dilution.)

Accumulated Deficit

The cumulative net losses of a company since its inception, less any net earnings. A negative balance indicates the company has lost more money than it has earned. (The accumulated deficit grew to $130,851,824 as of September 30, 2025, reflecting the company's history of losses.)

Stock-based compensation

Non-cash expense recognized for equity awards granted to employees and others, such as stock options and restricted stock units. (Significant non-cash expense ($3,661,622 for nine months ended Sep 30, 2025) that reduces net loss but does not impact cash flow from operations directly.)

ROU asset

Right-of-Use asset, representing the right to use an asset (like property) for a specified period, typically under a lease agreement. (Amortization of ROU assets is a non-cash expense impacting operating results but not cash flow.)

Year-Over-Year Comparison

Compared to the nine months ended September 30, 2024, Applied Energetics has seen a dramatic 76.6% decrease in revenue, falling from $1.66M to $389K. This revenue collapse has led to a 54.5% increase in net loss, reaching $10.89M. Concurrently, operating expenses have surged by 47% to $11.09M, widening the operational deficit. While cash has increased significantly due to financing activities, the core operational performance has deteriorated substantially, intensifying going concern risks.

Key Financial Figures

• $0.001 — ich Registered Common Stock, par value $0.001 per share AERG OTCQB As of November 1

Filing Documents

• ea0264527-10q_applied.htm (10-Q) — 713KB
• ea026452701ex31-1_applied.htm (EX-31.1) — 10KB
• ea026452701ex32-1_applied.htm (EX-32.1) — 5KB
• 0001213900-25-109366.txt ( ) — 4988KB
• aerg-20250930.xsd (EX-101.SCH) — 45KB
• aerg-20250930_cal.xml (EX-101.CAL) — 34KB
• aerg-20250930_def.xml (EX-101.DEF) — 244KB
• aerg-20250930_lab.xml (EX-101.LAB) — 458KB
• aerg-20250930_pre.xml (EX-101.PRE) — 263KB
• ea0264527-10q_applied_htm.xml (XML) — 546KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 1 ITEM 1. Condensed Consolidated Unaudited Financial Statements 1 Condensed Consolidated Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024 1 Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 (Unaudited) 2 Condensed Consolidated Statements of Stockholders' Equity(Deficit) for the nine months ended September 30, 2025 and 2024 (Unaudited) 3 Condensed Consolidated Statements of Cash Flows for the nine months ended September 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 19 ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 28 ITEM 4.

Controls and Procedures

Controls and Procedures 28

OTHER INFORMATION

PART II. OTHER INFORMATION 29 ITEM 1.

Legal Proceedings

Legal Proceedings 29 ITEM 1A. Risk Factors (Not applicable.) 29 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 29 ITEM 3. Defaults Upon Senior Securities (Not applicable.) 29 ITEM 4. Mine Safety Disclosures (Not applicable.) 29 ITEM 5 Other Information 29 ITEM 6. Exhibits 29

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APPLIED ENERGETICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September 30, December 31, 2025 2024 (unaudited) Assets Current assets Cash and cash equivalents $ 1,332,225 $ 164,812 Accounts receivable, net 108,984 335,839 Other assets 377,988 164,128 Total current assets 1,819,197 664,779 Long-term assets Property and equipment - net 1,300,594 314,503 Right of use asset – operating lease 879,231 1,074,583 Security deposit 17,004 17,004 Total long-term assets 2,196,829 1,406,090 Total assets $ 4,016,026 $ 2,070,869 Liabilities and Stockholders' Equity Current liabilities Accounts payable $ 274,140 $ 258,481 Note payable 96,000 47,325 Due to related parties 50,000 50,000 Operating lease liability - current 196,271 265,380 Accrued expenses 259,482 63,153 Accrued dividends 48,079 48,079 Total current liabilities 923,972 732,418 Long-term liabilities Operating lease liability - non-current 822,235 945,704 Deferred Equity Financing 2,999,997 - Total long-term liabilities 3,822,232 945,704 Total liabilities 4,746,204 1,678,122 Commitments and contingencies Stockholders' (Deficit) Equity Series A convertible preferred stock, $ .001 par value, 2,000,000 shares authorized and 13,602 shares issued and outstanding at September 30, 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; 219,410,928 and 213,860,508 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 219,480 213,861 Additional paid-in capital 129,902,152 120,168,124 Accumulated deficit ( 130,851,824 ) ( 119,989,252 ) Total stockholders' (deficit) equity ( 730,178 ) 392,747 Total Liabilities and Stockholders' Equity $ 4,016,026 $ 2,070,869 See accompanying notes to condensed consolidated

financial statements (unaudited)

financial statements (unaudited). 1 APPLIED ENERGETICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) FOR THE THREE MONTHS ENDED SEPTEMBER 30, FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 2024 2025 2024 Revenue $ 108,984 $ 747,720 $ 389,072 $ 1,662,598 Cost of revenue 53,409 508,709 164,813 1,167,349 Gross profit 55,575 239,011 224,259 495,249 Operating expenses General and administrative 3,374,558 2,457,321 8,807,405 7,117,731 Selling and marketing 196,326 86,398 1,164,370 238,174 Research and development 455,850 70,244 1,115,075 188,947 Total operating expenses 4,026,734 2,613,963 11,086,850 7,544,852 Operating loss ( 3,971,159 ) ( 2,374,952 ) ( 10,862,591 ) ( 7,049,603 ) Other income/(expense) Other income 2 267 19 2,589 Interest expense - - - - Total other income/(expense) 2 267 19 2,589 Loss before provision for income taxes ( 3,971,157 ) ( 2,374,685 ) ( 10,862,572 ) ( 7,047,014 ) Provision for income taxes - - - - Net loss ( 3,971,157 ) ( 2,374,685 ) ( 10,862,572 ) ( 7,047,014 ) Preferred stock dividends ( 8,501 ) ( 8,501 ) ( 25,504 ) ( 25,504 ) Net loss attributable to common stockholders $ ( 3,979,658 ) $ ( 2,383,186 ) $ ( 10,888,076 ) $ ( 7,072,518 ) Net loss attributable to common stockholders per common share - basic and diluted $ ( 0.02 ) $ ( 0.01 ) $ ( 0.05 ) $ ( 0.03 ) Weighted average number of common shares outstanding 219,030,041 213,753,429 218,352,950 212,565,838 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 NINE MONTHS ENDED SEPTEMBER 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 ) Shares 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 Shares 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 Stock-based compensation - - - - 1,366,257 - 1,366,257 Shares issued for consulting services - - 95,000 95 140,506 - 140,601 Common stock issued on exercise of options - - 577,292 577 48,733 - 49,310 Common stock issued for settlement of

financial statements (unaudited)

financial statements (unaudited). 3 APPLIED ENERGETICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025 2024 Cash Flows From Operating Activities Net loss $ ( 10,862,572 ) $ ( 7,047,014 ) Adjustments to reconcile net loss to net cash used in operating activities: Noncash stock-based compensation expense 3,661,622 2,855,676 Amortization of ROU assets 195,352 152,192 Depreciation and amortization 195,539 161,167 Amortization of prepaid assets 51,250 167,035 Changes in assets and liabilities: Accounts receivable 226,855 377,349 Prepaid and deposits ( 105,110 ) ( 56,534 ) Operating lease liabilities, net ( 192,578 ) ( 127,428 ) Deferred Revenue - ( 288,690 ) Accounts payable 15,659 38,392 Accrued expenses and compensation 196,329 33,855 Net cash used in operating activities ( 6,617,654 ) ( 3,734,000 ) Cash Flows From Investing Activities Purchase of equipment ( 1,181,630 ) ( 55,435 ) Net cash used in investing activities ( 1,181,630 ) ( 55,435 ) Cash Flows From Financing Activities Repayment on note payable ( 111,325 ) ( 94,651 ) Proceeds from sale of common stock 6,004,250 4,171,601 Proceeds received in advance of equity issuance 2,999,997 - Proceeds from the exercise of stock options and warrants 91,210 83,499 Tax withholdings related to net share settlement of RSU's ( 17,435 ) ( 82,299 ) Net cash provided by financing activities 8,966,697 4,078,150 Net change in cash and cash equivalents 1,167,413 288,715 Cash and cash equivalents, beginning of year 164,812 1,319,526 Cash and cash equivalents, at end of period $ 1,332,225 1,608,241 Supplemental disclosure of cash flow information Cash paid for interest $ 4,117 4,941 Cash paid for taxes $ - $ - $ - Non-cash investing and financing activities Insurance financing for prepaid insurance $ 160,000 $ 189,302 Implementation of ASC 84

financial statements (unaudited)

financial statements (unaudited). 4 APPLIED ENERGETICS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 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 statements should be read in conjunction with the company's audited consolidated financial statements contained in our Annual Report 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 nine months e

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