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EX-31.1 - EXHIBIT 31.1 - APPLIED ENERGETICS, INC.v311761_ex31-1.htm
EX-32.1 - EXHIBIT 32.1 - APPLIED ENERGETICS, INC.v311761_ex32-1.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended March 31, 2012

 

OR

 

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from __________ to __________

 

Commission File Number 001-14015

 

APPLIED ENERGETICS, INC.

 

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

77-0262908

(State or Other Jurisdiction of Incorporation or Organization)   (IRS Employer Identification Number)

 

3590 East Columbia Street    
Tucson, Arizona          85714
(Address of Principal Executive Offices)   (Zip Code)

 

Registrant’s telephone number, including area code (520) 628-7415

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer: ¨

Accelerated filer: ¨ Non-accelerated filer: ¨ Smaller reporting company: x

 

 

 

 

(Do not check if a smaller reporting company)  

 

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ¨ No x

 

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. As of May 2, 2012 there were 91,742,497 shares of the issuer's common stock, par value $.001 per share, outstanding.

 

 
 

 

APPLIED ENERGETICS, INC.

QUARTERLY REPORT ON FORM 10-Q

TABLE OF CONTENTS

 

 

PART I.  FINANCIAL INFORMATION  
   
ITEM 1. Condensed Consolidated Financial Statements  
       
    Condensed Consolidated Balance Sheets as of March 31, 2012 (Unaudited) and December 31, 2011 1
       
    Condensed Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011 (Unaudited) 2
       
    Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011 (Unaudited) 3
       
    Notes to Condensed Consolidated Financial Statements 4
       
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10
     
ITEM 4. Controls and Procedures 13
     
PART II.  OTHER INFORMATION  
   
ITEM 6. Exhibits 14
     
SIGNATURES   15

 

i
 

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

 

   March 31, 2012   December 31, 2011 
   (Unaudited)     
ASSETS          
Current assets          
Cash and cash equivalents  $2,624,962   $3,937,135 
Accounts receivable   93,543    494,744 
Inventory   141,304    141,676 
Prepaid expenses and deposits   172,627    249,215 
Other receivables   47,817    99,447 
Total current assets   3,080,253    4,922,217 
Long term receivables   205,313    205,313 
Property and equipment - net   2,286,618    2,366,180 
TOTAL ASSETS  $5,572,184   $7,493,710 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities          
Accounts payable  $133,670   $318,330 
Accrued expenses   210,247    415,880 
Short Term Financing   -    212,526 
Accrued compensation   219,505    293,671 
Customer deposits   -    49,046 
Billings in excess of costs   -    2,152 
Total current liabilities   563,422    1,291,605 
           
Total liabilities   563,422    1,291,605 
           
Commitments and contingencies - See Note 9          
           
Stockholders’ equity          
           
Series A Convertible Preferred Stock, $.001 par value, 2,000,000
  shares authorized;107,172 shares issued and outstanding at
  March 31, 2012  and at December 31, 2011
   107    107 
           
Common stock, $.001 par value, 500,000,000 shares authorized;
   91,670,192 shares issued and outstanding at March 31, 2012 and
   at December 31, 2011
   91,670    91,670 
Additional paid-in capital   79,196,587    79,155,518 
Accumulated deficit   (74,279,602)   (73,045,190)
Total stockholders’ equity   5,008,762    6,202,105 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $5,572,184   $7,493,710 

 

See accompanying notes to condensed consolidated financial statements (unaudited).

 

-1-
 

 

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 

    For the three months ended
March 31,
 
    2012     2011  
             
Revenue   $ 399,207     $ 2,816,578  
                 
Cost of revenue     365,067       2,672,114  
                 
Gross profit/(loss)     34,140       144,464  
                 
Operating expenses                
General and administrative     689,402       994,686  
Selling and marketing     399,565       324,840  
Research and development     134,788       186,201  
Total operating expenses     1,223,755       1,505,727  
                 
Operating loss     (1,189,615 )     (1,361,263 )
                 
Other (expense) income                
Interest expense     (1,651 )     (1,411 )
Interest income     393       1,248  
Total other (expense) income     (1,258 )     (163 )
                 
Net loss     (1,190,873 )     (1,361,426 )
                 
Preferred stock dividends     (43,539 )     (45,836 )
                 
Net loss attributable to common stockholders   $ (1,234,412 )   $ (1,407,262 )
                 
Net loss per common share – basic and diluted   $ (0.01 )   $ (0.02 )
                 
Weighted average number of shares outstanding, basic and diluted     91,670,192       91,058,783  

 

See accompanying notes to condensed consolidated financial statements (unaudited).

 

-2-
 

 

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

 

   For the three months ended
March 31,
 
   2012   2011 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net loss  $(1,190,873)  $(1,361,426)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   79,562    91,680 
Loss on equipment disposal   -    97 
Provision for inventory reserves   -    (73,830)
Non-cash stock based compensation expense   41,069    91,590 
   Changes in assets and liabilities:          
Accounts receivable   401,201    450,911 
Other receivable   51,630    800 
Inventory   372    498,495 
Prepaid expenses, deposits and other assets   76,588    (42,712)
Accounts payable   (184,660)   47,965 
Billings in excess of costs   (2,152)   33,062 
Accrued expenses and deposits   (541,371)   (395,041)
Net cash used in operating activities   (1,268,634)   (658,409)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of land, building and equipment   -    (2,528)
Proceeds from disposal of equipment   -    3,400 
Net cash provided by investing activities   -    872 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Dividends paid (preferred stock)   (43,539)   - 
Exercise of stock options   -    1,575 
           
Net cash provided by (used in) financing activities   (43,539)   1,575 
           
Net decrease in cash and cash equivalents   (1,312,173)   (655,962)
           
Cash and cash equivalents, beginning of period   3,937,135    8,983,281 
           
Cash and cash equivalents, end of period  $2,624,962   $8,327,319 

 

See accompanying notes to condensed consolidated financial statements (unaudited).

 

-3-
 

 

1. BASIS OF PRESENTATION

 

The accompanying interim unaudited condensed consolidated financial statements include the accounts of Applied Energetics, Inc. and its wholly owned subsidiaries, Ionatron Technologies, Inc. and North Star Power Engineering, Inc. as of March 31, 2012 (collectively, "company," "Applied Energetics," "we," "our" or "us"). All intercompany balances and transactions have been eliminated. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented have been made. The results for the three month period ended March 31, 2012, may not be indicative of the results for the entire year. 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.

 

Recent Developments

 

The U.S. Government has significantly reduced defense spending and we do not anticipate receiving significant additional Government funding in the near future. We intend to continue to seek U.S. Government funding for our Laser Guided Energy (“LGE”), Laser Induced Plasma Channel (“LIPC”), counter- improvised explosive devices (“IED”) and high voltage laser technologies and USP systems. We have suspended the majority of our Government work due to the lack of Government funding. We are not investing company funds or resources to further develop and enhance our LGE, LIPC, counter-IED and high voltage technologies and systems. We continue to receive smaller research and development contracts and small orders from the Government and commercial customers. We will continue to develop and market our USP laser technologies and systems in commercial markets and protect our intellectual property rights. At March 31, 2012, our backlog of orders approximated $0.4 million.

 

As a result of the decrease in U.S. Government funding, we have significantly reduced our workforce to a level consistent with our expected operations.

 

We are considering strategic alternatives, including mergers, the acquisition of one or more businesses or technologies, and/or the disposition of one or more of our existing businesses.

 

We believe that we have sufficient funds for 2012 operations. Our continuance in business beyond 2012 is dependent on successful development of commercial customers, sales of our USP laser systems, obtaining profitable operations and additional financing necessary to fund our operations. Additional contracts from our Department of Defense customers, if available and substantial, will assist in funding our operations and contribute to our overall profitability.

 

The accompanying unaudited 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 quarter ended March 31, 2012, the company incurred a net loss of $1.2 million, had negative cash flows from operations of $1.3 million and may incur additional future losses due to the reduction in Government contract activity. These matters raise substantial doubt as to the company’s ability to continue as a going concern. 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.

 

USE OF ESTIMATES

 

The preparation of consolidated financial statements in conformity with United States Generally Accepted Accounting Principles (“GAAP”) 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 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. Significant estimates include revenue recognition under the percentage of completion method of contract accounting, estimating costs at completion on a contract, the valuation of inventory, carrying amount of long-lived assets, expected forfeiture rate on stock-based compensation and measurements of income tax assets and liabilities.

 

-4-
 

 

CASH AND CASH EQUIVALENTS

 

Cash equivalents are investments in money market funds or securities with an initial maturity of three months or less. These money market funds are invested in government and US treasury based securities.

 

FAIR VALUE OF CURRENT ASSETS AND LIABILITIES

 

The carrying amount of accounts receivable and accounts payable approximate fair value due to the short maturity of these instruments.

 

-5-
 

 

2. ACCOUNTS RECEIVABLE

 

Accounts receivable consists of the following:

 

   March 31, 2012   December 31, 2011 
           
Contracts receivable  $92,758   $494,395 
Costs and estimated earnings on uncompleted contracts   785    349 
Accounts receivable, net   93,543    494,744 
           
Short term  receivable (contract retention)   47,817    47,817 
Long term  receivable (contract retention)   205,313    205,313 
   $346,673   $747,874 

 

Contracts receivable are expected to be collected within a year.

 

Costs and Estimated Earnings on Uncompleted Contracts

 

   March 31, 2012   December 31, 2011 
           
Costs incurred on uncompleted contracts  $5,634,262   $33,898,851 
Estimated earnings   435,381    2,563,744 
           
Total billable costs and estimated earnings   6,069,643    36,462,595 
Less:          
Billings to date   6,068,858    36,464,398 
           
Total  $785   $(1,803)
           
Included in accompanying balance sheet:          
           
Unbilled costs and estimated earnings on uncompleted contracts included in accounts receivable  $785   $349 
Billings in excess of costs and estimated earnings on uncompleted contracts   -    (2,152)
           
Total  $785   $(1,803)

 

 

 

 

-6-
 

3. INVENTORY

 

Our inventories consist of the following:

 

   March 31, 2012   December 31, 2011 
Raw materials  $85,139   $81,303 
Work-in-process   56,165    60,373 
           
Total  $141,304   $141,676 

 

4. PROPERTY AND EQUIPMENT

 

Our property and equipment consist of the following:

 

   March 31, 2012   December 31, 2011 
           
Land  $410,728   $410,728 
           
Buildings and improvements, leasehold improvements   2,278,264    2,278,264 
           
Equipment   2,339,853    2,339,853 
           
Furniture   250,751    250,751 
           
Software   801,498    801,498 
           
Total   6,081,094    6,081,094 
           
Less accumulated depreciation and amortization   (3,794,476)   (3,714,914)
           
Net property and equipment  $2,286,618   $2,366,180 

 

We review long-lived assets, including intangible assets subject to amortization, for possible impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

 

We assess the recoverability of such long-lived assets by determining whether the amortization of the balances over their remaining lives can be recovered through undiscounted future operating cash flows. The amount of impairment, if any, is measured based on projected discounted future operating cash flows. The assessment of the recoverability of long-lived assets will be impacted if estimated future operating cash flows are not achieved. We conducted an impairment test for property and equipment in March 2012 for the December 31, 2011 reporting period and concluded that the carrying value of these assets is recoverable through expected future operating cash flows.

 

5. SHARE-BASED COMPENSATION

 

Share-Based Compensation – Employees and Directors

 

For the three months ended March 31, 2012 and 2011, share-based compensation expense totaled approximately $41,000 and $92,000, respectively.

 

 

-7-
 

 

There was no related income tax benefit recognized because our deferred tax assets are fully offset by a valuation allowance.

 

As of March 31, 2012, $45,000 of total unrecognized compensation cost related to options to purchase shares is expected to be recognized over a weighted average period of approximately 1.47 years.

 

As of March 31, 2012, $144,000 of total unrecognized compensation cost related to restricted stock and restricted stock units is expected to be recognized over a weighted average period of approximately 1.82 years.

 

We determine the fair value of share-based awards at their grant date, using a Black-Scholes-Merton Option-Pricing Model applying the assumptions in the following table:

 

    Three Months Ended March 31,
    2012   2011
Expected life (years)                        -      2.5 years
Dividend yield                        -     0.0%
Expected volatility                        -     93.6%
Risk free interest rates                        -     0.85%
Weighted average fair value of options at grant date                        -     $0.46

 

During the three months ended March 31, 2012, 18,634 shares of restricted stock were forfeited, no options to purchase shares were granted or exercised, and options to purchase 999,259 shares were forfeited.

 

6. SIGNIFICANT CUSTOMERS

 

Approximately 99% and 95% of revenues for the three-month periods ended March 31, 2012 and 2011, respectively, are generated from either the U.S. Government or contractors to the U.S. Government.

 

7. NET LOSS PER SHARE

 

Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period before giving effect to stock options, stock warrants, restricted stock units and convertible securities outstanding, which are considered to be dilutive common stock equivalents. Diluted net loss per common share is calculated based on the weighted average number of common and potentially dilutive shares outstanding during the period after giving effect to convertible preferred stock, stock options, warrants and restricted stock units. Contingently issuable shares are included in the computation of basic loss per share when issuance of the shares is no longer contingent. Due to the losses from continuing operations for the three months ended March 31, 2012 and 2011, basic and diluted loss per common share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

 

-8-
 

 

Potentially dilutive securities not included in the diluted loss per share calculation, due to net losses from continuing operations, were as follows:

 

   Three Months Ended March 31, 
   2012   2011 
         
Options to purchase common shares   2,824,001    4,135,505 
Warrants to purchase common shares   -    923,272 
Unvested restricted stock units   224,001    325,636 
Convertible preferred stock   107,172    107,172 
           
Total potentially dilutive securities   3,155,174    5,491,585 

 

8. DIVIDENDS

 

As of March 31, 2012, we had 107,172 shares of our 6.5% Series A Convertible Preferred Stock outstanding. A dividend was declared and paid in cash on May 1, 2012 to the holders of record as of April 15, 2012.

 

Dividends on Preferred Stock are accrued when the amount and kind of the dividend is determined and are payable quarterly on the first day of February, May, August and November, in cash or shares of common stock, at the discretion of the company.

 

9. COMMITMENTS AND CONTINGENCIES

 

LITIGATION

 

On December 14, 2011, NewOak Capital Markets LLC ("NewOak"), formerly known as J. Giordano Securities, LLC, the placement agent for our October 2005 private placement of preferred stock, filed a lawsuit in the United States District Court for the Southern District of New York against the Registrant and two former officers and directors. NewOak alleges that the Registrant made material misrepresentations prior to the October 2005 private placement concerning the development of its counter-IED products.

 

On February 9, 2012, the litigation with NewOak was dismissed with prejudice on February 16, 2012 pursuant to a settlement agreement which required the payment of $200,000. The $200,000 payment was accrued as of December 31, 2011, net of insurance proceeds of $50,000. The $200,000 payment was made on February 10, 2012.

 

We may from time to time be involved in legal proceedings arising from the normal course of business. As of the date of this report, we have not received notice of any other legal proceedings.

 

-9-
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Our discussion and analysis of the financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related disclosures included elsewhere herein and in Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of our Annual Report on Form 10-K for the year ended December 31, 2011.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the securities laws. Forward-looking statements include all statements that do not relate solely to the historical or current facts, and can be identified by the use of forward looking words such as "may", "believe", "will", “would”, “could”, “should”, "expect", "project", "anticipate", “estimates", “possible”, "plan", "strategy", "target", "prospect" or "continue" and other similar terms and phrases. These forward looking statements are based on the current plans and expectations of our management and are subject to a number of uncertainties and risks that could significantly affect our current plans and expectations, as well as future results of operations and financial condition and may cause our actual results, performances or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. Important factors that could cause our actual results to differ materially from our expectations are described in Item 1A. (Risk Factors) of our Annual Report on Form 10-K, as amended, for the year ended December 31, 2011. In making these forward-looking statements, we claim the protection of the safe-harbor for forward-looking statements contained in the Private Securities Reform Act of 1995. Although we believe that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to have been correct. We do not assume any obligation to update these forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting such forward-looking statements.

 

OVERVIEW

 

Applied Energetics, Inc. (“company”, “Applied Energetics”, “we”, “our” or “us”) designs, develops and manufactures solid state Ultra Short Pulse (USP”) lasers for commercial applications and applied energy systems for military applications. Through our technology development efforts, we have gained expertise and proprietary knowledge in high performance lasers and high-voltage electronics.

 

We believe our proprietary USP laser systems, which are a commercial adaptation of our prior military development activities, offer better performance for high pulse energy and high average power compared to commercially available USP lasers for micromachining. Micromachining applications include drilling, cutting, and engraving metals, composites and ceramics. During the third quarter of 2011, we completed our USP laser application center. This new application center enables potential customers and strategic partners to use, test and validate the capabilities our USP laser systems for their individual needs and try new and emerging applications prior to purchasing our USP lasers systems. In addition, we have entered into a cooperative work agreement with Laser Light Technologies, a leading contract manufacturer in the commercial micromachining market, to jointly develop USP lasers and processes for the laser micromachining market. We have provided a USP system to them for use in their manufacturing facility developing commercial micromachining applications.

 

Additionally, we develop and manufacture high-voltage systems for government and commercial customers for a range of applications.

 

-10-
 

 

RESULTS OF OPERATIONS

 

COMPARISON OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011:

 

   2012   2011 
Revenue  $399,207   $2,816,578 
Cost of revenue   365,067    2,672,114 
General and administrative   689,402    994,686 
Selling and marketing   399,565    324,840 
Research and development   134,788    186,201 
Other (expense) income:          
Interest expense   (1,651)   (1,411)
Interest income   393    1,248 
           
Net loss  $(1,190,873)  $(1,361,426)

 

REVENUE

 

Revenue decreased by approximately $2.4 million to $399,000 for the three months ended March 31, 2012 compared to $2.8 million for the three months ended March 31, 2011. Revenues from the C-IED product line decreased by $1.7 million to $0 as we completed all deliverables and testing required in the second quarter of 2011, LGE revenues decreased by $495,000 to $212,000, Laser revenues decreased by $146,000 to $0 and High Voltage revenues decreased by $45,000 to $187,000 for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.

 

COST OF REVENUE

 

Cost of revenue includes manufacturing labor, benefits and overhead, and an allocation of allowable general and administration and research and development costs in accordance with the terms of our government contracts.

 

Cost of revenue decreased by approximately $2.3 million to $365,000 for the three months ended March 31, 2012, compared to $2.7 million for the three months ended March 31, 2011. The decrease in cost of revenue is directly tied to the decrease in sales activity of approximately 86%. Cost of revenue as a percentage of revenue remained relatively constant.

 

GENERAL AND ADMINISTRATIVE

 

General and administrative expenses decreased approximately $305,000 to $689,000 for the three months ended March 31, 2012 compared to $995,000 for the three months ended March 31, 2011. Salaries and wages decreased by approximately $882,000, professional services decreased by approximately $487,000, supplies and building related expenses decreased by approximately $105,000, recruiting expense decreased by approximately $95,000, and non-cash compensation costs decreased by approximately $51,000. Offsetting these reductions in operating expenses totaling approximately $1.6 million was a decrease in absorption of labor and overheads of approximately $1.3 million previously charged to government contracts. Cost saving measures were instituted throughout 2011 and the beginning of 2012 to compensate for the decrease in government revenues, including a reduction of our workforce, exiting our leased facilities, and reductions in other operating expenses.

 

SELLING AND MARKETING

 

Selling and marketing expenses increased by $75,000 to $400,000 for the three months ended March 31, 2012 compared to $325,000 for the three months ended March 31, 2011. The increase in sales and marketing expenses is mostly tied to increases in business development expenses of $137,000 associated with the introduction of our new products into the commercial market and participation in trade shows. These increases were partially offset by decreases in marketing expenses of $49,000 tied to headcount reductions and bid and proposal expenses of $13,000.

 

-11-
 

 

RESEARCH AND DEVELOPMENT

 

Research and development expenses decreased by $51,000 to $135,000 during the three months ended March 31, 2012 as compared to $186,000 for the three months ended March 31, 2011. During the first quarter of 2012, we completed the development of our ultrafast laser prototype. We expect our research and development efforts to decline as we do not intend to invest our own funds on further development and advancement of our LGE, LIPC, counter-IED and high voltage technologies.

 

INTEREST INCOME AND INTEREST EXPENSE

 

Net interest income for the three months ended March 31, 2012 was lower by approximately $1,000 as compared to the three months ended March 31, 2011 due to a lower cash balance.

 

NET LOSS

 

Our operations for the three months ended March 31, 2012 resulted in a net loss of approximately $1.2 million, a decrease of approximately $171,000 compared to the $1.4 million loss for the three months ended March 31, 2011.

 

BACKLOG OF ORDERS

 

At March 31, 2012, we had a backlog (workload remaining on signed contracts) of approximately $0.4 million, to be completed within the next twelve months.

 

-12-
 

 

ITEM 4. CONTROLS AND PROCEDURES

 

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

 

Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2012. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures as of March 31, 2012 are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

 

During the three months ended March 31, 2012, there was no significant change in our internal controls over financial reporting that has materially affected or which is reasonably likely to materially affect our internal controls over financial reporting.

 

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PART II – OTHER INFORMATION

 

ITEM 6. EXHIBITS

 

EXHIBIT
NUMBER
DESCRIPTION
   
31.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32.1 Principal Executive Officer and Principal Financial Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
   
101.INS XBRL Instance Document
   
101.SCH XBRL Schema Document
   
101.CAL XBRL Calculation Linkbase Document
   
101.LAB XBRL Label Linkbase Document
   
101.PRE XBRL Presentation Linkbase Document

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

APPLIED ENERGETICS, INC.

 

 

By /s/ Joseph C. Hayden                              

Joseph C. Hayden

President, Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer

 

 

Date: May 11, 2012

 

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