APPLIED ENERGETICS, INC.
For the period ended Mar 31, 2026. Filed May 14, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 14, 2026
AERGStored price and day change unavailable
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-12.
0001213900-25-109366
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-14.
0001213900-26-056008
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 76 previous paragraphs and 54 current paragraphs.
13 unchanged; 17 reworded; 24 added; 43 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
Overview
Current report
AE owns and protects intellectual property that is integral and necessary for the development of Ultrashort Pulse (“USP™”) Lasers, Laser Guided Energy (“LGE®”) and Direct Discharge Electrical products for military and commercial applications. AE currently owns 26 patents and an additional nine Government Sensitive Patent Applications (“GSPA”). These GSPA’s are held under secrecy orders of the US government and allow the company greatly extended protection rights, including having no expiration date until such time as they are no longer classified after which they will have the normal 20-year patent protection. The company also has two pending patent applications and one provisional patent application which is undergoing conversion to its non-provisional form. We continue to file patent applications as we deem appropriate to protect our intellectual property and enhance our competitive advantage. We conduct research and development efforts under contracts and on an internal basis as we move toward product development and testing.
Current report
During the past several years, substantially all of our operating revenues were derived from contracts with DoW agencies and a major research university. Along with the performance of these contracts, we have conducted internal research and development efforts, building a team of scientists and engineers and establishing our testing facilities in the Battle Lab. We have also begun testing products in remote testing field locations, some of them private and some of them run by government agencies or universities. During the past year, our efforts in this area have been focused on preparing for and conducting these tests and preparing product demonstrations.
Current report
AE continues to expand its technical capabilities and administrative capacity with the addition of employees, consultants and contractors, and agreements with leading laser and optics universities in the country. AE also works with a team of contractors to strengthen our compliance, IT, technical staff, human resources and public relations.
Current report
Recent Developments and Trends
Current report
During the first half of 2025, we were continuing work on two contracts with the Office of Naval Research (ONR), but both contracts were subsequently closed. Also, through November 14, 2025, we were continuing work on a Phase II Small Business Technology Transfer (STTR) contract with the U.S. Army. In the fourth quarter of 2025, we completed work on this contract and received full payment from the customer.
Current report
During the three months ended March 31, 2025, we recognized revenues as we performed services under these contracts and recorded related costs under cost of revenues. During the three months ended March 31, 2026, on the other hand, the company was no longer performing services under these contracts so recorded no revenues or costs with respect to them. However, the company has continued working on related technologies as part of its ongoing internal research and development program.
Current report
Costs under these firm fixed fee contracts were affected by supply chain disruptions, and shortages of items like semiconductor chips, and related systemic issues, and general inflation. These supply issues similarly affect any internal research and development programs, and we anticipate that they will continue for at least the near term. Micro-electronic and semiconductor chip shortages are still impacting supply chains, and as such, can impact our ability to develop our technology in a timely manner and to execute and deliver technology to meet demands of our prospective customers. Certain optical transmitting components are also in short supply. The ongoing conflict in the Middle East is also putting upward pressure on shipping expenses for all of these products. Expenditures associated with internal research and development, such as supplies, equipment, and components, are recorded as expenses rather than cost of revenues.
Current report
During the quarter ended March 31, 2026, the company has continued its work on the design and integration of USP technologies onto the Kord Firefly platform and has extended this work into the second quarter. With recent upgrades and advances to the FIREFLYTM system, the company looks to continue integration into the updated platform.
Current report
During the fourth quarter of 2025 and the first quarter of 2026, the company began conducting field tests of certain of its lasers. To do so, it has made arrangements to use existing testing facilities maintained by third parties, including a private entity and a research university. The costs and availability of these testing facilities vary, depending on prior reservations and the minimum length of time needed for each field test. To facilitate these testing outings and make the time spent in the field more efficient, the company purchased an ATC Command/Response Trailer which is outfitted with a ramp door for access to the laser being tested, air conditioning for climate control, a generator, and workstations to enable the team to make adjustments to the lasers being tested in real time in the field. Our team has conducted several such field tests, in one of which, we completely disabled the sensor on a drone at a range that meets specifications provided to us by prospective customers.
Current report
Certain mitigating factors could blunt any potential impact of these changes on our industry. The DoW and others in the administration have indicated that funding for innovation and novel technologies will continue to be a priority, and directed energy has been discussed as part of this trend. Also, many of the cuts are being challenged in court and, in some cases, reversed either because of judicial rulings or policy reversals. However, it is difficult to predict precisely where funds will be cut or allocated, and even a general reduction in force can make administrative functions, such as finalizing contracts and government payment processing, challenging. These factors could severely impact our cash flows and our ability to continue operating.
Current report
Geo-political events continue to affect our business. In particular, the ongoing military action in the Middle East has restricted the flow of oil and liquid natural gas worldwide and is driving up the price of goods and services which include supplies, materials and equipment which we need for our business. Also, certain economic events and policies, such as tariffs and embargoes, tend to be inflationary and contribute to drive up costs.
Current report
For fiscal year 2026, which started on October 1, 2025, the National Defense Authorization Act (NDAA) was delayed, but on December 18, 2025, the-president signed the 2026 NDAA into law (P.L.-119-60). The NDAA sets defense spending policies, while the separate appropriations bills comprising the federal budget fund government spending, including spending on defense and homeland security. This impacts all proposals under review by the DoW. The federal government experienced a funding gap beginning on October 1, 2025—the start of FY2026—and ending when the Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026 (P.L. 119-37), was signed into law on November 12, 2025. On February 3, 2026, the president signed the Consolidated Appropriations Act, 2026 (P.L. 119-75). This bill included Defense Appropriations, and all previously unfunded agencies except for Homeland Security.
Current report
Critical Accounting Policies
Current report
Use of Estimates
Current report
The preparation of consolidated financial statements in conformity with United States generally accepted accounting principles requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management bases its assumptions on historical experiences and on various other inputs and estimates that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. In addition, management considers the basis and methodology used in developing and selecting these estimates, the trends in and amounts of these estimates, specific matters affecting the amount of and changes in these estimates, and any other relevant matters related to these estimates, including significant issues concerning accounting principles and financial statement presentation. Such estimates and assumptions could change in the future as more information becomes known which could impact the amounts reported and disclosed herein.
Current report
Share-Based Payments
Current report
Stock-based compensation cost is measured at grant date, based on the fair value of the award and is recognized as an expense over the requisite service period.
Current report
The fair value of each option grant is estimated at the date of grant using the Black-Scholes-Merton option valuation model. We make the following assumptions relative to this model: (i) the annual dividend yield is zero as we do not pay dividends on our common stock, (ii) the weighted-average expected life is based on a midpoint scenario, where the expected life is determined to be half of the time from grant to expiration, after taking into account the vesting period, (iii) the risk free interest rate is based on the U.S. Treasury security rate for the expected life, and (iv) the volatility is based on the level of fluctuations in our historical share price for a period approximately equal to the weighted-average expected life.
Current report
General and administrative expenses increased by approximately $673,000 to approximately $3,283,000 for the three months ended March 31, 2026, compared to approximately $2,610,000 for the three months ended March 31, 2025, primarily due to an increase in salaries and employee benefits of approximately $320,000, as well as an increase in stock based compensation of approximately $356,000.
Current report
Selling and marketing expenses decreased by approximately $147,000 to approximately $172,000 for the three months ended March 31, 2026, compared to approximately $319,000 for the three months ended March 31, 2025, due to a decrease of approximately $122,000 in professional fees and a decrease in payroll and related expenses of approximately $36,000 offset by an increase in marketing expenses of approximately $12,000.
Current report
At March 31, 2026, the company had total current assets of approximately $4,649,000 and total current liabilities of approximately $937,000 resulting in working capital of approximately $3,712,000. At March 31, 2026, we had approximately $4,064,000 of cash and cash equivalents, a decrease of approximately $2,372,000 from approximately $6,436,000 at December 31, 2025.
Current report
Additionally, international, macroeconomic events, including the military action in the Middle East, the Russian military action in Ukraine and related economic sanctions around the globe could impact the company’s ability to source necessary supplies and equipment which could materially and adversely affect our ability to continue as a going concern. These events may also impair our ability to raise capital, including as a result of increased market volatility, or decreased market liquidity, which also affects the company’s ability to continue as a going concern. Third-party financing may become unavailable on terms acceptable to the company or at all. The impact of such events on the world economy and the specific impact on the company’s financial position and results of operations are difficult to predict. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Current report
Budgeting for upcoming expenses and costs of supplies and equipment needed to perform our existing, and any future, grants or contracts requires that we estimate factors such as inflation and geo-political events that affect such expenses and costs. Although inflation generally moderated in 2024 and 2025, recent events in the Middle East appeared to be driving it back up during the first quarter of 2026 through the current date. In addition, the cost of labor continues to increase across certain sectors of the US and global economy which may drive up our general and administrative expenses as well as the cost of personnel, particularly given the highly skilled nature of this work. Inflation has also impacted the price of supplies and materials we must purchase. In addition, geo-political events have further limited the number of countries from which we can source certain supplies and equipment. These limitations can range from outright prohibitions to strong discouragement based on potentially sensitive information. We continually monitor these events and the markets for needed supplies in order to make the best estimates possible, both in our internal budgeting and in any bids or proposals we submit.
Removed paragraphs (43)
Previous report
Applied Energetics, Inc., (sometimes referred to as the “company”) is a corporation organized and existing under the laws of the State of Delaware. Our executive office is located at 9070 S. Rita Road, Suite 1500, Tucson, Arizona 85747, (520) 628-7415. Our website is www. appliedenergetics.com.
Previous report
Applied Energetics, Inc. specializes in the development and manufacture of advanced high-performance lasers and optical systems and integrated guided energy systems for prospective defense, national security, industrial, biomedical, and scientific customers worldwide.
Previous report
Technology, Capabilities, and Patents
Previous report
The Applied Energetics scientific team is continuously innovating and expanding our patent portfolio to cover these technological breakthroughs and further enhance our suite of solutions for threat disruption for the Department of Defense, the intelligence community, and for commercial, biomedical and space applications with optical sources operating from the deep ultraviolet to the far infrared portions of the electromagnetic spectrum.
Previous report
Applied Energetics has developed, successfully demonstrated and holds all crucial intellectual property rights to a dynamic directed energy technology called Laser Guided Energy (LGE®) and Laser Induced Plasma Channel (LIPC®). LGE and LIPC are technologies that can be used in a new generation of high-tech directed energy systems. Applied Energetics’ LGE and LIPC technologies are wholly owned by Applied Energetics and protected by one or more of Applied Energetics’ 27 issued patents and 9 Government Sensitive Patent Applications (GSPA). These GSPA’s are held under secrecy orders of the US government, providing the company with extended protection rights. The company also has nine pending patent applications. We continue to file patent applications as we deem appropriate to protect our intellectual property and enhance our competitive advantage.
Previous report
As Applied Energetics looks toward the future, our corporate strategic roadmap builds upon the significant value of the company’s USP laser capabilities and key intellectual property, including LGE and LIPC, to offer our prospective partners, co-developers and system integrators a variety of next-generation ultrashort pulse and frequency-agile optical sources, from the ultraviolet to the far infrared portion of the electromagnetic spectrum, to address numerous challenges within the national security, biomedical, and advanced manufacturing market sectors.
Previous report
Recent Developments
Previous report
Effective October 3, 2025, Applied Energetics has appointed Dr. David Spence to serve as its Chief Product Officer. Dr. Spence, has more than 25 years of experience in the conception, design, and commercialization of advanced laser technologies across industrial, scientific, and defense markets. He has held leadership roles at Spectra-Physics, Newport Corporation, and most recently, was Senior Engineering Manager, Advanced Technology Development Group for MKS Instruments, where he directed cross-functional teams developing next-generation ultrashort pulse laser systems, nonlinear optical solutions, and diode-pumped solid-state amplifiers. Dr. Spence is also an Optica Fellow, holds over a dozen issued patents, and has authored numerous scientific publications. Dr. Spence holds a Ph.D. in Laser Physics from the University of St. Andrews in Scotland and a B.Sc. in Physics with First Class Honors from the University of Stirling.
Previous report
We have entered into an Executive Employment Agreement with Dr. Spence for a term of three years, renewable thereafter for sequential one-year periods. The agreement calls for (i) a cash salary of $250,000 per annum, payable monthly, and eligibility for a discretionary bonus, and (ii) incentive stock options to purchase up to 500,000 shares of our common stock at an exercise price of $1.71 per share which vest in four equal annual installments commencing on the first anniversary of the grant date.
Previous report
Effective October 1, 2025, we appointed two new members to serve on our Board of Advisors. For their services they are to receive compensation including a monthly cash stipend and/or stock options which are subject to vesting.
Previous report
On June 3, 2025, our Board of Directors expanded its number to seven members and appointed Christopher Donaghey, its President and CEO, and Scott Andrews to serve as new directors, effective immediately.
Previous report
On September 25, 2025, our board established an Audit Committee and a Compensation Committee. Members of both committees include Bradford Adamczyk, Michael Alber and Scott Andrews, with Mr. Andrews serving as Chairman of the Compensation Committee and Mr. Alber as Chairman of the Audit Committee.
Previous report
In early July, the company generated over 1 billion watts (1 gigawatt) of peak optical power at near-infrared wavelengths in a laboratory-scale ultrashort pulse laser (USPL) system, marking a significant milestone in its technological development. This achievement marks the latest in a rapidly accelerating series of performance milestones. Since December 2023, Applied Energetics has advanced its systems from hundreds of thousands of watts, to multi-megawatt levels in late 2024, to 25 million watts in April 2025, and 400 million watts in May 2025. Surpassing the gigawatt threshold demonstrates the scalability and maturity of Applied Energetics’ proprietary technology and solidifies its leadership in next generation directed energy capabilities. This breakthrough was achieved using our proprietary USPL architecture, developed entirely in-house and protected by a growing portfolio of patents.
Previous report
Ongoing Business Operations
Previous report
In the three months ended September 30, 2025, the company continued work relating to its strategic collaboration with Kord Technologies, Inc., a wholly owned subsidiary of KBR, to explore the potential development and integration of an advanced pulsed laser system with Kord’s FIREFLYTM High Energy Laser Weapon System (HELWS). The current phase of the project began in the first quarter of 2025 with the purchase of a specially modified Firefly HELWS unit from Kord which the company is using to work on the development and integration of its proprietary Ultrashort Pulse technology in its newly opened Battle Lab, with the assistance of Kord personnel under a related services agreement.
Previous report
Effective August 23, 2023, Applied Energetics executed a contract with the Department of the Navy, Office of Naval Research (ONR) with an aggregate contract price of $1.99 million payable over two years as the company performs its obligations under the contract. Under this contract, we have worked to develop a high-peak and high-average power USP optical system. The system is expected to demonstrate effects compatible with multiple Navy platforms and missions with an attractive size, weight, and power-cooling footprint. During the quarter ended June 30, 2025, the company was notified that no further funds are available for this contract and advised to stop work on it. Receipt of additional amounts under the contract, including for any work to be performed, is in doubt. The company intends to continue working in parallel on this technology as part of its ongoing internal research and development program.
Previous report
Effective May 15, 2023, Applied Energetics executed a Phase II Small Business Technology Transfer (STTR) contract with the U.S. Army at an aggregate contract price of $1.148 million payable over two years as the company performs its obligations thereunder, with the first year currently funded. The objective of this Phase II award is to further the development and testing of an IR laser system utilizing technologies that were investigated under the US Army Phase I STTR contract which the company was awarded in May 2022. This Phase II contract award follows a successful Phase I which established a computational concept with physical modeling and simulation to establish the feasibility of an IR laser system. Phase I was performed in collaboration with the James C. Wyant College of Optical Sciences at the University of Arizona. The company has continued its work under the contract, and provided all required reports, since its execution. On May 9, 2025, the company entered into a no-cost modification to continue work on the contract through November 14, 2025. The company also amended its related agreement with the University of Arizona consistent with this extension.
Previous report
Effective March 12, 2024, a grant previously awarded to the company from the Department of the Navy, Office of Naval Research, was transitioned into a contract. The original grant from May 2022 had a two-year period of performance. The new contract superseded the grant with a ceiling value of $1,217,535 under a base period of performance through November 11, 2024 and a 12-month unfunded option period that was to end November 11, 2025. On September 4, 2024, the company received a funding increase on this contract of $237,647 which brought the total funding on the contract to $1,455,182. Under this contract, we have worked to accelerate the development and testing of Infrared (IR) optical technology with an ultrashort pulse laser (USPL) system. The overall objective is to advance and ruggedize optical technologies that can be fielded on a variety of USMC platforms and are able to operate in harsh conditions. During the quarter ended June 30, 2025, the company was notified that funding has ceased for this contract. The contract is still in effect, and no stop-work order was received. The company has ceased recording revenue for this contract, and receipt of additional amounts under it is in doubt. The company intends to continue working in parallel on this technology as part of its ongoing internal research and development program.
Previous report
Business Development Activities
Previous report
We continue to submit proposals to, and attend briefings with, various defense and other government agencies who have expressed an interest in our technology and applications. Our efforts in this area of development have produced some results. In addition to the contracts which we have been awarded, our team has been invited to, and completed, multiple briefings focused on our capabilities and submissions. We intend to continue developing and submitting proposals and to be available to attend on-site briefings. We have also engaged in discussions with private entities and academic institutions with the objective of possibly collaborating on one or more projects. Some of these could result in further customer agreements or other opportunities to grow our business.
Previous report
The National Defense Authorization Act (NDAA), which sets defense spending policies, is currently delayed for the federal government fiscal year 2026, which started on October 1, 2025. Moreover, the appropriations bills comprising the federal budget, which fund government spending, have not yet been passed by Congress. This impacts all proposals under review by the Department of Defense (DoD) as parts of the U.S. government are “unfunded” and operating under a government shutdown. Although certain mandatory programs and “excepted” activities continue to be funded, none of the programs for which we might submit proposals would fall under these exceptions.
Previous report
The House and Senate reached a potential deal, on November 9, 2025, for a Continuing Resolution (CR) that would extend government funding through a specified date, which itself is being negotiated. The House initially passed a CR to keep the government funded until November 21. However, the Senate advanced a new agreement that includes a CR to fund the government through January 30, 2026, with the addition of three full-year appropriations bills (appropriations for the Veterans Affairs Department, Agriculture Department and the legislative branch). All other agencies would operate at their fiscal 2025 levels under the CR. Until a Continuing Resolution is adopted by both houses, many programs for which we or our prospective strategic partners have submitted proposals will remain unfunded and be unable to move forward.
Previous report
In addition, the current administration has established the Department of Government Efficiency (DOGE) whose mission is to sharply reduce federal spending. In February 2025, President Trump stated that he has directed DOGE to review defense spending for possible waste, fraud and abuse. The administration has also indicated that it may pursue significant reductions to the U.S. defense budget, if both Russia and China would agree to similar cuts in their respective national security spending. The potential impact on the company of DOGE and possible cuts to the defense and national security industries, if any, is uncertain. Notwithstanding these budgetary concerns, the administration and Pentagon have indicated an interest in continuing to fund innovative defense related technologies, including in the area of directed energy.
Previous report
Strategic Plan and Analysis
Previous report
The core of our strategy has been to continue growing our management and science teams with highly qualified individuals. This has driven our recruitment efforts in the areas of R&D, science, modeling and simulation, marketing and finance. We have recently added, and are also contemplating adding additional, members to our Board of Directors and our Board of Advisors. Our board and leadership team have worked to align key innovations with our roadmap to encourage and enable internal filing for a broad, strategic, and robust intellectual property portfolio and continue surveying the literature for acquisitions of parallel intellectual property to that end. We also intend to pursue strategic corporate acquisitions in related fields and technology. The company’s management continues to explore any favorable equity financing opportunities.
Previous report
Our goal with the Applied Energetics Strategic Plan is to increase the energy, peak power and frequency agility of USP optical sources while decreasing the size, weight, and cost of these systems. We are in the process of developing this breadth of very high peak power USP lasers and additional optical sources that have a broad range of applicability for threat disruption for the Department of Defense, commercial, and biomedical applications, such as biophotonic illumination and imaging. Although the historical market for Applied Energetics’ LGE and USP technology is the U.S. Government, the USP technologies are expected to provide numerous platforms for commercial additive and subtractive manufacturing and biomedical and imaging markets, creating a substantially larger market for our products to address. Since 2020, the Applied Energetics team has been able to develop partnerships and teaming arrangements with the three leading laser and optics institutes in the United States, namely, the University of Arizona, the University of Central Florida, and the University of Rochester Laboratory for Laser Energetics.
Previous report
As with many government contractors, we have experienced recent challenges with funding of our contracts by the DoD. While we continue to pursue contracts with DoD and other government agencies, we simultaneously conduct research and development of our technology on an internal basis and focus on strategic partnerships with other entities. Our goal is to continue to accelerate the technology readiness level of our solutions to be able to submit more proposals and be prepared to conduct more customer and partner demonstrations of our technology in our recently opened Battle Lab. Under the current state of cutbacks in government funding both by individual agencies and DOGE, we cannot be certain that any such contracts will be forthcoming.
Previous report
Through our analysis of the market, and in discussions with potential customers, we remain convinced that customers are becoming more receptive and interested in directed energy technologies. According to the US Department of Defense fiscal budgets from 2017 through 2023, its directed energy spending grew from approximately $500 million in 2017 to over $1.695 billion in 2023, an increase of nearly 240%. Market analysis and projections have estimated that this directed energy sector is anticipated to reach $32.1 billion globally by 2033. We continue to be optimistic about our future and the growing opportunities in directed energy applications, especially since this growth to nearly $1.7 B annually is being accomplished without a recognized Program of Record (POR) for directed energy platforms. We believe that once these technologies are funded in production for a POR, or are approved to be integrated on fielded platforms in volumes to effect threat reduction, these DOD budgets for directed energy will grow exponentially larger to support the technology insertion. Notwithstanding the funding cuts at the ONR as described above, the Applied Energetics team anticipates a continuation of strong funding for the directed energy community. With our existing patent portfolio, and through further advancements of our technologies, we believe we have the substantial building blocks needed to become a significant and successful developer in the USP marketplace. These innovations could play a significant role in the efforts from the new administration to implement the Golden Dome for America program by advancing directed energy and other integrated technological solutions for missile and other threat protection for the country. Estimated budget requirements would exceed $50B annually.
Previous report
Our research and development programs depend on our ability to procure the necessary optical and fabricated materials, components, electronics and other supplies. A significant, prolonged increase in inflation could negatively impact the cost of materials and components, which could be a particular problem with respect to our fixed fee contracts. Within the current geopolitical context, there are ongoing embargos of exports from some global suppliers of various materials that are used in electronics and some diode and laser materials, which can have negative effects on technology supply chains. This, coupled with tariffs and other trade disruptions, could significantly impair our ability to source necessary supplies and equipment when and in quantities needed. We continuously monitor potential supply chain issues and supplier liquidity and work with our supply base to ensure adequate sources of materials at reasonable costs. In some instances, we depend upon a single source of supply, but we are developing multiple sources, both internal to AE and externally where possible to mitigate the risk. In some cases, we must comply with specific procurement requirements, which can limit the suppliers and subcontractors we may utilize.
Previous report
General and administrative expenses increased by approximately $917,000 to approximately $3,375,000 for the three months ended September 30, 2025, compared to approximately $2,457,000 for the three months ended September 30, 2024. The increase was primarily driven by an increase in payroll and related fees of approximately $257,000, and an increase in non-cash compensation of approximately $528,000.
Previous report
Selling and marketing expenses increased by approximately $110,000 to approximately $196,000 for the three months ended September 30, 2025, compared to approximately $86,000 for the three months ended September 30, 2024, primarily due to an increase in business development costs as well as costs related to demonstrations of our technology to potential customers and joint venture partners.
Previous report
Revenue
Previous report
Cost of Revenue
Previous report
General and Administrative
Previous report
General and administrative expenses increased by approximately $1,690,000 to approximately $8,807,000 for the nine months ended September 30, 2025, compared to approximately $7,118,000 for the nine months ended September 30, 2024. The increase was primarily driven by an increase in non-cash compensation of approximately $806,000, an increase in payroll and related costs of approximately $372,000, an increase in professional fees of approximately $213,000, and an increase in materials and supplies of approximately $193,000.
Previous report
Selling and Marketing
Previous report
Selling and marketing expenses increased by approximately $926,000 to approximately $1,164,000 for the nine months ended September 30, 2025, compared to approximately $238,000 for the nine months ended September 30, 2024, primarily due to an increase of approximately $663,000 related to the development and installation of the Battle Lab and related demonstrations of our technology as well as an increase of approximately $189,000 for labor and the increase in business development activities.
Previous report
Research and Development
Previous report
Research and development expenses increased by approximately $926,000 to approximately $1,115,000 for the nine months ended September 30, 2025, compared to approximately $189,000 for the nine months ended September 30, 2024, primarily due to an increase in labor costs of approximately $602,000 and material cost of approximately $324,000 associated with continued development of our USP laser technologies and programs which remain in place as we continue to work on them.
Showing the first 40 of 43 passages. Open the source sections for the rest.
Reworded paragraphs (17)
Previous wording
Applied Energetics, Inc. is a global leader in developing ultrashort pulse lasers as the next generation optical sources exhibiting ever-increasing output energy, peak power and frequency agility while also providing decreased size, weight, and cost of these systems for customers. Applied Energetics utilizes patented, dual-use technologies to advance critical industries. Leveraging our proprietary fiber-based architecture and wavelength- and pulse-agility capability, our Ultrashort Pulse (USP) technology can enable users to achieve specific effects across different use cases with an unmatched blend of size, weight, and power attributes. While initially designed to meet the emerging needs and priorities for the national security community, our directed energy technology also has commercial applications in both the biomedical and advanced manufacturing industries.
Current wording
Applied Energetics, Inc. is a leader in developing the next generation optical sources exhibiting ever-increasing output energy, peak power and frequency agility while also providing decreased size, weight, and cost of these systems for customers. Applied Energetics utilizes patented, dual-use technologies to advance critical industries. Leveraging our proprietary fiber-based architecture and wavelength- and pulse-agility capability, our USP technology can enable users to achieve specific effects across different use cases with an unmatched blend of size, weight, and power attributes. While initially designed to meet the emerging needs and priorities for the national security community, our directed energy technology also has potential commercial applications in both the biomedical and advanced manufacturing industries.
Previous wording
Our UltraShort Pulse Lasers (USP) are designed to provide:
Current wording
Our USP lasers are designed to provide:
Previous wording
Applied Energetics’ directed energy technologies are vastly different from conventional directed energy systems, i.e. Applied Energetics’ proprietary fiber-based architecture is a key differentiator for our most recent technology demonstrators. Compared with traditional continuous wave laser technologies with their larger footprints, AE’s architecture enables orders of magnitude size-weight-power reductions on all deliverables, creating powerful, dual-use and agile systems that can fit a host of platforms while delivering very high-intensity, ultrashort pulses of light to the required target. This unique directed energy solution allows extremely high peak power and energy, with target and effects tunability, and is effective against a wide variety of potential targets.
Current wording
Applied Energetics’ directed energy technologies are vastly different from conventional directed energy systems. Our proprietary fiber-based architecture is a key differentiator for our most recent technology demonstrators. Compared with traditional continuous wave laser technologies, with their larger footprints, AE’s architecture enables orders of magnitude size-weight-power reductions on all deliverables, for powerful, dual-use and agile systems that can fit a host of platforms while delivering very high-intensity, ultrashort pulses of light to the required target. This unique directed energy solution allows extremely high peak power and energy, with target and effects tunability, and is effective against a wide variety of potential targets.
Previous wording
Applied Energetics’ unique optical fiber-based laser architectures also enable unmatched wavelength agility as well as pulse duration agility. Using innovative and highly specialized frequency shifting techniques, wavelengths can be custom tuned from the deep ultraviolet to the far infrared. In addition, temporal outputs can be adjusted from continuous wave to sub-picoseconds. The technology enables the customer to adjust the lasers’ operating parameters, ultimately creating more flexibility to change wavelength and pulse width. This feature allows for optimization of laser performance for defense or commercial applications.
Current wording
Applied Energetics’ optical fiber-based laser architectures also enable unmatched wavelength agility as well as pulse duration agility. Using innovative and highly specialized frequency shifting techniques, wavelengths can be custom tuned from the deep ultraviolet to the far infrared. In addition, temporal outputs can be adjusted from continuous wave to sub-picoseconds. The technology enables the customer to adjust the lasers’ operating parameters, ultimately creating more flexibility to change wavelength and pulse width. This feature allows for optimization of laser performance for defense or commercial applications.
Previous wording
Our proprietary USP laser technology provides a significantly more compact solution than current continuous wave laser platforms while still delivering high peak power. Continuous wave laser systems are typically used to heat a target and, during continuous illumination, this heat transfer leads to melting or charring of the material. Using continuous wave output powers that now exceed 100 kilowatts (1kW = 1000 watts), it can take anywhere from seconds to minutes to impact a target. By contrast, Applied Energetics has delivered USP lasers to national security users that exceed five terawatts (1 TW = 1 trillion watts) in peak power, with the difference being that this peak power from a USP laser is delivered in a pulse that is less than a trillionth of a second. During this short pulse duration, and having such a high peak intensity, near-instantaneous ablation of the surface of the threat takes place. The net results of our innovative USP approaches are highly effective lasers with mountable footprints that require only a fraction of the size and weight of other-directed energy technologies.
Current wording
Our proprietary USP laser technology provides a significantly more compact solution than current continuous wave laser platforms while still delivering high peak power. Continuous wave laser systems are typically used to heat a target and, during continuous illumination, this heat transfer leads to melting or charring of the material. Using continuous wave output powers that now exceed 100 kilowatts (1kW = 1000 watts), it can take anywhere from seconds to tens of seconds to impact a target. By contrast, Applied Energetics has delivered USP lasers to national security users that exceed five terawatts (1 TW = 1 trillion watts) in peak power, with the difference being that this peak power from a USP laser is delivered in a pulse that is less than a trillionth of a second. During this short pulse duration, and having such a high peak intensity, near-instantaneous ablation of the surface of the threat takes place. The net result of our innovative USP approaches is highly effective lasers capable of jamming, damaging, and destroying certain surveillance and reconnaissance sensors with mountable footprints that require only a fraction of the size, weight, and power requirements of other-directed energy technologies. We believe the combination of both low size and weight, along with power characteristics of wavelength and pulse duration agility will help us achieve our vision statement of “Directed Energy, Anywhere.”
Previous wording
Effective May 17, 2025, the company received a Requisition from the University of Rochester in the amount of $181,639. This is part of a contractual arrangement with the university in the approximate amount of $250,000 to support its Laboratory for Laser Energetics (LLE) for ongoing efforts to explore pulsed laser technologies. Work on the contract commenced on July 10, 2025 with a meeting at Applied Energetics headquarters in Tucson, AZ with Dr. Jon Zuegel, Laser Development and Engineering Division Director and a Senior Scientist at the LLE to discuss the research to be provided by the company. We have completed work under the Requisition and are working with the university to plan and commence work on the next phase.
Current wording
Effective May 17, 2025, the company received a requisition from the University of Rochester in the amount of $181,639. This is part of a contractual arrangement with the university in the approximate amount of $250,000 to support its Laboratory for Laser Energetics (LLE) for ongoing efforts to explore pulsed laser technologies. Work on the contract commenced on July 10, 2025 with a meeting at Applied Energetics headquarters in Tucson, AZ with Dr. Jon Zuegel, Laser Development and Engineering Division Director and a Senior Scientist at the LLE to discuss the research to be provided by the company. We completed work under the requisition and then worked with the University of Rochester to plan and commence work on the next phase. In April 2026, we were awarded a follow-on contract in excess of $240,000 to support Phase 1 of the program.
Previous wording
The current budgetary and deficit funding environment, continuing inflation, tariffs and other ongoing supply chain disruptions, the appropriations process, federal government shutdown, and DOGE, among other items, all continue to create significant short and long-term challenges and risks to the company and its business development endeavors. However, we remain optimistic that the innovative nature of our technology and its novel approach to addressable threats position the company for development, growth, and market opportunities.
Current wording
The current budgetary and deficit funding environment, continuing inflation, tariffs and other ongoing supply chain disruptions, the appropriations process, federal government shutdowns, and budget cuts, among other items, all continue to create significant short and long-term challenges and risks to the company and its business development endeavors. It is difficult to forecast the effect that any future tariffs will have on our ability to source raw materials, supplies, and equipment needed to continue our operations both for the performance of our ongoing contractual obligations and our internal research and development efforts. Moreover, the cuts to funding and reductions in federal government personnel can impact our cash flows and ability to continue operating. Many of these cuts are proposed to the Departments of War and Homeland Security budgets which are the focus of much of our business development efforts. However, we remain optimistic that the innovative nature of our technology and its novel approach to addressable threats position the company for development, growth, and market opportunities.
Previous wording
Revenue decreased by approximately $639,000 to approximately $109,000 for the three months ended September 30, 2025 from approximately $748,000 for the three months ended September 30, 2024. In April 2025, the company was notified by a customer that two of its active contracts were currently unfunded and remain unfunded, resulting in a decrease in revenue for the period. Although the contracts remain open, the company suspended all work until funding is secured in the future. Despite the suspension, the company continues to advance the underlying technology through its internal research and development efforts. Both the customer and the company are actively seeking alternative sources of funding, including from within the original contracting agency and other departments of the U.S. Department of Defense.
Current wording
Revenue decreased by approximately $210,000 to $0 for the three months ended March 31, 2026.from the three months ended March 31, 2025. In April 2025, the company was notified by a customer that two of its active contracts were currently unfunded and remain unfunded, resulting in a decrease in revenue for the period. Although the contracts remain open, the company suspended all work until funding is secured in the future. Despite the suspension, the company continues to advance the underlying technology through its internal research and development efforts. Both the customer and the company are actively seeking alternative sources of funding, including from within the original contracting agency and other departments of the U.S. Department of War.
Previous wording
Cost of revenue decreased by approximately $455,000 to approximately $53,000 for the three months ended September 30, 2025 from approximately $509,000 for the three months ended September 30, 2024. This decrease was primarily attributable to the suspension of funding of two contracts by a federal government customer . The cost of material, supplies and direct labor incurred were expensed to R&D while our programs and work remain active and in place.
Current wording
Cost of revenue decreased by approximately $64,000 to $0 for the three months ended March 31, 2026 from the three months ended March 31, 2025. This decrease was attributable to the unavailability of federal funds. The cost of material, supplies and direct labor incurred were expensed to R&D while our programs and work remain active and in place.
Previous wording
Research and development expenses increased by approximately $386,000 to approximately $456,000 for the three months ended September 30, 2025, compared to approximately $70,000 for the three months ended September 30, 2024, primarily due to an increase in labor costs of approximately $247,000 and an increase in material costs of approximately $139,000 associated with continued development of our USP laser technologies.
Current wording
Research and development expenses increased by approximately $52,000 to approximately $375,000 for the three months ended March 31, 2026, compared to approximately $323,000 for the three months ended March 31, 2025, primarily due to an increase in labor costs of $135,000 offset by a decrease in material costs of approximately $83,000 associated with continued development of our USP laser technologies.
Previous wording
Our operations for the three months ended September 30, 2025, resulted in a net loss of approximately $3,971,000 an increase of approximately $1,596,000 compared to a net loss of approximately $2,375,000 for the three months ended September 30, 2024, primarily due to a decrease in revenue as well as an increase in general and administrative expenses, selling and marketing and research and development expenses.
Current wording
Our operations for the three months ended March 31, 2026, resulted in a net loss of approximately $3,808,000 an increase of approximately $702,000 compared to a net loss of approximately $3,106,000 for the three months ended March 31, 2025, primarily due to an increase in general and administrative expense and research and development expenses partially offset by a decrease in selling and marketing expenses.
Previous wording
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 ended September 30, 2025, the company incurred a net loss of approximately $10,863,000, had negative cash flows from operations of approximately $6,617,654 and will likely incur additional future losses due to reduction in government contract activity and the expenses discussed under Results of Operations. In their report accompanying our financial statements for the year ended December 31, 2024, our independent auditors stated that our financial statements were prepared assuming that we would continue as a going concern and that they have substantial doubt as to our ability to do so for one year from the date the financial statements are issued based on our recurring losses from operations and need to raise additional capital. The financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should the company be unable to continue as a going concern.
Current wording
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 three months ended March 31, 2026, the company incurred a net loss of approximately $3,808,000, had negative cash flows from operations of approximately $2,296,000 and may incur additional future losses due to the possible reduction in government contract activity and the expenses discussed under Results of Operations. In their report accompanying our financial statements for the year ended December 31, 2025, our independent auditors stated that our financial statements were prepared assuming that we would continue as a going concern and that they have substantial doubt as to our ability to do so for one year from the date the financial statements are issued based on our recurring losses from operations and need to raise additional capital. The financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should the company be unable to continue as a going concern.
Previous wording
During the first nine months of 2025, the net cash outflow from operating activities was $6,617,654. This amount was comprised primarily of our net loss of $10,862,572, offset by non-cash stock-based compensation expense of $3,661,622, depreciation and amortization of $195,539, amortization of ROU assets of $195,352, amortization of prepaid assets of $51,250, and cash used from changes in assets and liabilities of $141,155 from the increase in accounts receivable of $226,855, increase in accounts payable of $15,659 and accrued expenses and compensation of $196,329 off set by the net decrease in prepaids and deposits of $105,110 and operating lease liabilities of $192,578.
Current wording
During the first three months of 2026, the net cash outflow from operating activities was approximately $2,296,000. This amount was comprised primarily of our net loss of approximately $3,808,000, offset by non-cash stock-based compensation expense of approximately $1,348,000, amortization of ROU assets of approximately $70,000, depreciation and amortization of approximately $88,000, and amortization of prepaid assets of approximately $51,000 as well as cash used from changes in assets and liabilities of approximately $46,000 due to a decrease in other assets of approximately $102,000, a decrease in the ROU liability of approximately $75,000 and offset by an increase in accounts payable and accrued liabilities of approximately $131,000.
Previous wording
During the nine months ended September 30, 2025, the net cash outflow from investing activities was $1,181,630. This was for the purchase of equipment.
Current wording
During the first three months of 2026, the net cash outflow from investing activities was approximately $43,000. This was for the purchase of equipment.
Previous wording
During the first nine months of 2025, the net cash inflow from financing activities was $8,966,697. This amount consisted of $9,004,247 in proceeds from stock subscriptions and $91,210 from the exercise of options and warrants, which were offset by $17,435 tax withholdings related to the share settlement of RSUs and $111,325 of repayment of an insurance premium loan.
Current wording
During the first three months of 2026, the net cash outflow from financing activities was approximately $32,000. This amount consisted of approximately $20,000 received from the exercise of options and warrants offset by approximately $4,700 tax withholdings related to the share settlement of RSUs and approximately $48,000 of repayment of an insurance premium loan.
Previous wording
Based on the company’s current business plan, we believe our cash balance as of the date of this report, along with revenue from our current contracts and proceeds from the recently completed sale of common stock, will be sufficient to meet the company’s anticipated cash requirements for the near term. However, we cannot be certain that the current business plan will be achievable. In addition, we recently received verbal notice that funding under two of the company’s contracts has been discontinued, as described under Results of Operations and Ongoing Business Activities. Although these contracts are still in effect, receipt of any additional funds under them is highly uncertain, which negatively affects our anticipated cash flows from operating activities.
Current wording
Based on the company’s current business plan, we believe our cash balance as of the date of this report will be sufficient to meet the company’s anticipated cash requirements for the near term. However, we cannot be certain that the current business plan will be achievable.
Previous wording
The company’s existence depends upon management’s ability to develop profitable operations. Management is devoting substantially all of its efforts to developing its business and raising capital, as needed, and cannot be certain that these efforts will be successful. Management’s business development efforts may not result in profitable operations. To fund its research and development and marketing efforts, the company’s management continues to explore possible financing opportunities through discussions with investment bankers and private investors. The company may not be successful in its effort to secure additional financing on terms it considers favorable. The accompanying consolidated financial statements do not include any adjustments that might result should the company be unable to continue as a going concern.
Current wording
The company’s existence depends upon management’s ability to develop profitable operations. Management is devoting significant time and effort to developing its business and raising capital, as needed, and cannot be certain that these efforts will be successful. Management’s business development efforts may not result in profitable operations. To fund its research and development and marketing efforts, the company’s management continues to explore possible financing opportunities through discussions with investment bankers and private investors. The company may not be successful in its effort to secure additional financing on terms it considers favorable. The accompanying consolidated financial statements do not include any adjustments that might result should the company be unable to continue as a going concern.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Comparison of Operations for the Nine months ended September 30, 2025 and 2024:
Previous report — wording carried elsewhere
Revenue decreased by approximately $1,274,000 to approximately $389,000 for the nine months ended September 30, 2025 from approximately $1,663,000 for the nine months ended September 30, 2024. In April 2025, we were notified by a customer that no further funds were available for two of our contracts , resulting in a decrease in revenue for the period. Although the contracts remain open, the we have been advised to stop work and accordingly have suspended all work under the contracts themselves. Despite the suspension, the company continues to advance the underlying technology through its internal research and development efforts. Both the customer and the company are actively seeking alternative sources of funding, including from within the original contracting agency and other departments of the U.S. Department of Defense.
Previous report — wording carried elsewhere
Cost of revenue decreased by approximately $1,002,536 to approximately $164,813 for the nine months ended September 30, 2025 from approximately $1,167,349 for the nine months ended September 30, 2024. This decrease was primarily attributable to the suspension of funding of two contracts by a federal government customer. The cost of material, supplies and direct labor incurred were expensed to R&D while our programs and work remain active and in place.