Applied Energetics

"Innovative Ultrafast Lasers and Particle Beam Systems"

Applied Energetics Reports First Quarter 2011 Financial Results

TUCSON, Ariz. — May 10, 2011-- Applied Energetics, Inc., (NASDAQ: AERG), today reported summary financial results for the first quarter ended March 31, 2011. The Company will host a live conference call today, May 10 at 11:00 a.m. (Eastern Time).

First Quarter 2011 Summary Financial Results

Revenue for the first quarter of 2011 decreased about 22.2% to approximately $2.8 million, compared to approximately $3.6 million for the same period last year. Counter-IED (CIED) program revenue for the first quarter of 2011 decreased by $454,000 to $1.7 million as we completed our field operational support and focus on the more compact version of this technology. Revenue from Laser Guided Energy (LGE) decreased by $130,000 to $707,000, and revenue from High Voltage products increased by $226,000 to $233,000 for the first quarter of 2011, respectively. Revenues for the Ultrashort Pulse Laser product line had a decrease of $420,000 to $146,000 for the first quarter of 2011.

Net loss attributable to common stockholders for the first quarter of 2011 was $1.4 million, or $0.02 per basic and diluted common share, compared to the prior comparable period net loss attributable to common stockholders of $1.0 million or $0.01 per basic and diluted common share.

At March 31, 2011, the Company had approximately $8.3 million in cash and cash equivalents as compared to $9.0 million in cash and cash equivalents at December 31, 2010.

At March 31, 2011, the Company had a backlog (workload remaining on signed contracts) of approximately $1.2 million, to be completed within the next twelve months.

Joe Hayden, President, commented, “The first quarter was challenging as expected due to the delays in approving a Federal budget. We have recently had several significant achievements as our more compact version of our counter-IED technology completed Government testing last Friday, and we have recently completed testing with our Transportable Demonstrator ultrashort pulse laser system in Hawaii. Our continued ability to perform and deliver on our contracts will be critical to our success in an increasingly competitive Federal budget environment. Additionally, our efforts to develop commercial business for our ultrashort pulse laser and high voltage technologies are beginning to show results as potential customers are requesting information, demonstrations and visits to our facilities to see these new products. The Commercial Applications Centers we are building for these technologies are scheduled to begin operations in the 3rd Quarter of this year.”

Conference Call

Applied Energetics will host a conference call on May 10, 2011, at 11:00 a.m. ET. Shareholders and other interested parties may participate in the conference call by dialing +1 888 680 0893 (domestic) or +1 617 213 4859 (international) and entering access code 10944380, a few minutes before 11:00 a.m. ET on May 10, 2011. A link to the call can also be found on the Internet at A replay of the conference call will be accessible two hours after its completion through May 17 by dialing +1 888 286 8010 (domestic) or +1 617 801 6888 (international) and entering access code 30392537. The call will also be archived for 30 days at Investor Relations

About Applied Energetics, Inc.

Applied Energetics develops and manufactures applied energy systems for military and commercial applications. Through our efforts in developing our core technology, Laser Guided Energy ("LGE"), we have gained expertise and proprietary knowledge in high performance lasers, high-voltage electronics, advanced dynamic optics and atmospheric and plasma interactions. We apply these technologies to deliver innovative solutions to urgent military requirements, including neutralizing improvised explosive devices ("IEDs") and other high priority missions of U.S. and allied military forces. We have developed an effective and robust counter-IED ("CIED") technology as a result of our research and development. Additionally, we develop and manufacture high voltage and ultra-short pulse ("USP") laser products for government and commercial customers for a range of applications. For more information about Applied Energetics, please visit

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995:

Certain statements contained in this News Release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, but are not limited to: the dependence on sales of a limited number of products and the uncertainty of the timing and magnitude of government funding and orders, dependence on sales to government customers; the uncertainty of patent protection; the uncertainty of strategic alliances; the uncertainty of management tenure; the impact of third-party suppliers' manufacturing constraints or difficulties; management's ability to achieve business performance objectives, market acceptance of, and demand for, the Company's products, and resulting revenues; development and testing of technology and products; manufacturing capabilities; impact of competitive products and pricing; litigation and other risks detailed in the Company's filings with the Securities and Exchange Commission. The words "looking forward," "believe," “may,” “plan,” “seek,’ “strategy,” "demonstrate," "intend," "expect," “continue,” "contemplate," "estimate," "anticipate," “will,” "likely" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. Applied Energetics undertakes no obligation to update any forward-looking statements contained in this news release.

Financial Table

Balance Sheets Consolidated Statements Of Operations

Balance Sheets

 March 31, 2011  December 31, 2010
 Current assets   
 Cash and cash equivalents   $ 8,327,319      $ 8,983,281  
 Accounts receivable   1,571,381    2,022,292  
 Inventory   258,881    683,546  
 Prepaid expenses and deposits   408,218    365,506  
 Other receivables   53,117    48,717  
 Total current assets   10,618,916      12,103,342  
 Long term receivables - net   205,313      205,313  
 Property and equipment - net   2,415,165      2,507,814  
 Other assets   10,000      10,000  
 TOTAL ASSETS   $ 13,249,394      $ 14,826,469  
 Current liabilities   
 Accounts payable   $ 917,974      $ 870,009  
 Accrued expenses   597,432    1,005,682  
 Accrued compensation   621,835    507,341  
 Customer deposits   24,997    126,282  
 Billings in excess of costs   39,567      6,505  
  Total current liabilities   2,201,805    2,515,819  
 Total liabilities   2,201,805    2,515,819  
 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, 2011
  and at December 31, 2010
  107      107  
 Common stock, $.001 par value, 125,000,000 shares authorized;
  91,153,770 shares issued and outstanding at March 31, 2011 and
  91,068,357 shares issued and outstanding at December 31, 2010
  91,153      91,068  
 Additional paid-in capital   78,882,637      78,738,520  
 Accumulated deficit   (67,926,308)     (66,519,045) 
 Total stockholders’ equity   11,047,589      12,310,650  
 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 13,249,394      $ 14,826,469  

Statements Of Operations

  For the three months ended
 March 31,
 2011 2010
 Revenue  $ 2,816,578      $ 3,594,778  
 Cost of revenue   2,672,114     3,368,676  
 Gross profit   144,464     226,102  
 Operating expenses   
 General and administrative   994,686     1,077,232  
 Selling and marketing   324,840      71,654  
 Research and development   186,201      32,862  
 Total operating expenses   1,505,727     1,181,748  
 Operating loss   (1,361,263)    (955,646) 
 Other (expense) income   
 Interest expense   (1,411)     (1,667) 
 Interest income   1,248      2,462  
  Total other   (163)     795  
 Net loss (1,361,426)    (954,851) 
 Preferred stock dividends   (45,836)   (57,984) 
 Net loss attributable to common stockholders   $ (1,407,262)    $ (1,012,835) 
 Net loss per common share – basic and diluted   $ (0.02)     $ (0.01) 
 Weighted average number of shares outstanding, basic and diluted   91,058,783     89,000,884