Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2024

☐ 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)

9070 S. Rita Road, Suite 1500 Tucson, Arizona		85747
(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), (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

Large accelerated filer:	☐	Accelerated filer:	☐
Non-accelerated filer:	☐	Smaller reporting company:	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the exchange act. ☐

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

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class		Trading Symbol(s)		Name of Each Exchange on Which Registered
Common Stock, par value $0.001 per share		AERG		OTCQB

As of August 12, 2024, there were 213,645,824 shares of the issuer’s common stock, par value $0.001 per share, outstanding.

APPLIED ENERGETICS, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Unaudited Financial Statements	1

	Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	1

	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (Unaudited)	2

	Condensed Consolidated Statements of Stockholders’ Equity for the six months ended June 30, 2024 and 2023 (Unaudited)	3

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and 2023 (Unaudited)	4

	Notes to Condensed Consolidated Unaudited Financial Statements	5

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

ITEM 4.	Controls and Procedures	23

PART II. OTHER INFORMATION

ITEM 1.	Legal Proceedings	24

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

ITEM 5	Other Information	24

ITEM 6.	Exhibits	25

SIGNATURES		26

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2024			2023
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	2,793,973		$	1,319,526
Accounts receivable, net		211,177			567,792
Other assets		296,488			148,338
Total current assets		3,301,638			2,035,656

Long-term assets
Property and equipment - net		386,077			434,563
Right of use asset - operating		959,692			1,054,736
Security deposit		17,004			17,004
Total long-term assets		1,362,773			1,506,303
Total assets	$	4,664,411		$	3,541,959

Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	221,368		$	312,958
Notes payable		141,977			-
Due to related parties		50,000			50,000
Operating lease liability - current		191,526			166,927
Deferred Revenue		-			308,908
Accrued expenses		45,282			40,510
Accrued dividends		48,079			48,079
Total current liabilities		698,232			927,382

Long-term liabilities
Operating lease liability - non-current		894,264			994,491
Total long-term liabilities		894,264			994,491
Total liabilities		1,592,496			1,921,873

Stockholders' Equity
Series A convertible preferred stock, $.001 par value, 2,000,000 shares authorized and 13,602 shares issued and outstanding at June 30, 2024 and December 31, 2023 (Liquidation preference $340,050 and $340,050, respectively)		14			14
Common stock, $.001 par value, 500,000,000 shares authorized; 213,645,821 and 211,236,688 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		213,646			211,237
Additional paid-in capital		118,344,878			112,223,129
Accumulated deficit		(115,486,623	)		(110,814,294	)
Total stockholders' equity		3,071,915			1,620,086

Total Liabilities and Stockholders' Equity	$	4,664,411		$	3,541,959

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

APPLIED ENERGETICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	FOR THE THREE MONTHS ENDED JUNE 30,						FOR THE SIX MONTHS ENDED JUNE 30,
	2024			2023			2024			2023

Revenue	$	780,643		$	559,945		$	914,878		$	1,046,623
Cost of revenue		384,208			177,168			658,640			318,440

Gross profit		396,435			382,777			256,238			728,183

Operating expenses
General and administrative		2,343,511			2,066,642			4,660,410			4,181,909
Selling and marketing		76,216			94,465			151,776			203,355
Research and development		37,923			52,756			118,703			112,736
Total operating expenses		2,457,650			2,213,863			4,930,889			4,498,000

Operating loss		(2,061,215	)		(1,831,086	)		(4,674,651	)		(3,769,817	)

Other income/(expense)
Other income		265			14,771			2,322			15,482
Interest expense		-			(1,909	)		-			(1,909	)
Total other income/(expense)		265			12,862			2,322			13,573

Loss before provision for income taxes		(2,060,950	)		(1,818,224	)		(4,672,329	)		(3,756,244	)

Provision for income taxes		-			-			-			-

Net loss		(2,060,950	)		(1,818,224	)		(4,672,329	)		(3,756,244	)

Preferred stock dividends		(8,501	)		(8,501	)		(17,003	)		(17,003	)

Net loss attributable to common stockholders	$	(2,069,451	)	$	(1,826,725	)	$	(4,689,329	)	$	(3,773,247	)

Net loss attributable to common stockholders per common share - basic and diluted	$	(0.01	)	$	(0.01	)	$	(0.02	)	$	(0.02	)

Weighted average number of common shares outstanding		212,607,537			211,033,255			211,962,257			210,976,434

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

APPLIED ENERGETICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023

(Unaudited)

	Preferred Stock				Common Stock						Additional Paid- In			Accumulated			Total Stockholders' (Deficit)
	Shares		Amount		Shares			Amount			Capital			Deficit			Equity
Balance at December 31, 2023		13,602	$	14		211,236,688		$	211,237		$	112,223,129		$	(110,814,294	)	$	1,620,086
Stock-based compensation		-		-		-			-			955,730			-			955,730
Common stock issued on exercise of options		-		-		60,000			60			12,540			-			12,600
Common stock issued on exercise of warrants		-		-		66,000			66			3,894			-			3,960
Common stock issued for settlement of restricted stock units		-		-		11,666			12			(12	)		-			-
Common stock withheld to cover income tax withholding obligations		-		-		(3,715	)		(4	)		(7,515	)		-			(7,519	)
Net loss for the period ended March 31, 2024		-		-		-			-			-			(2,611,379	)		(2,611,379	)
Balance at March 31, 2024		13,602	$	14		211,370,639		$	211,371		$	113,187,766		$	(113,425,673	)	$	(26,522	)
Stock-based compensation		-		-		-			-			920,847			-			920,847
Common stock issued on exercise of options		-		-		280,000			280			60,720			-			61,000
Common stock issued on exercise of warrants		-		-		99,000			99			5,840			-			5,939
Issuance of common stock under the market offering		-		-		1,896,182			1,896			4,169,705			-			4,171,601
Net loss for the period ended June 30, 2024		-		-		-			-			-			(2,060,950	)		(2,060,950	)
Balance at June 30 ,2024		13,602	$	14		213,645,821		$	213,646		$	118,344,878		$	(115,486,623	)	$	3,071,915

	Preferred Stock				Common Stock				Additional Paid-In		Accumulated			Total Stockholders' (Deficit)
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance at December 31, 2022		13,602	$	14		210,848,671	$	210,849	$	108,830,982	$	(103,463,859	)	$	5,577,986
Stock-based compensation		-		-		-		-		758,187		-			758,187
RSU restricted stock		-		-		9,584		10		21,075		-			21,085
Common stock issued on exercise of options		-		-		175,000		175		16,575		-			16,750
Net loss for the period ended March 31, 2023		-		-		-		-		-		(1,938,020	)		(1,938,020	)
Balance at March 31, 2023		13,602	$	14		211,033,255	$	211,034	$	109,626,819	$	(105,401,879	)	$	4,435,988
Stock-based compensation		-		-		-		-		845,677		-			845,677
Net loss for the period ended June 30, 2023		-		-		-		-		-		(1,818,224	)		(1,818,224	)
Balance at June 30, 2023		13,602	$	14		211,033,255	$	211,034	$	110,472,496	$	(107,220,103	)	$	3,463,441

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

APPLIED ENERGETICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	For the Six Months Ended June 30,
	2024			2023
Cash Flows From Operating Activities
Net loss	$	(4,672,329	)	$	(3,756,244	)
Adjustments to reconcile net loss to net cash used in operating activities:
Noncash stock-based compensation expense		1,876,577			1,624,949
Amortization of ROU assets		95,044			57,632
Depreciation and amortization		103,921			53,375
Amortization of prepaid assets		109,445			640,042
Changes in assets and liabilities:
Accounts receivable		356,615			117,656
Prepaid and deposits		(68,293	)		(742,035	)
ROU liabilities		(75,628	)		(47,471	)
Deferred Revenue		(308,908	)		-
Accounts payable		(91,590	)		(11,947	)
Accrued expenses and compensation		4,772			(4,331	)
Net cash used in operating activities		(2,670,374	)		(2,068,374	)

Cash Flows From Investing Activities
Purchase of equipment		(55,435	)		(70,631	)
Net cash used in investing activities		(55,435	)		(70,631	)

Cash Flows From Financing Activities
Repayment on note payable		(47,325	)		(451,847	)
Proceeds from sale of common stock		4,171,601			155,541
Tax withholdings related to net share settlement of RSU's		(7,519	)		-
Proceeds from the exercise of stock options and warrants		83,499			16,750
Net cash provided by financing activities		4,200,256			(279,556	)

Net change in cash and cash equivalents		1,474,447			(2,418,561	)

Cash and cash equivalents, beginning of year		1,319,526			5,640,308
Cash and cash equivalents, at end of period	$	2,793,973		$	3,221,747

Supplemental disclosure of cash flow information
Cash paid for interest	$	-		$	1,909
Cash paid for taxes	$	-		$	-

Non-cash investing and financing activities
Insurance financing for prepaid insurance	$	189,302		$	175,435

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

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

NOTE 1 – ORGANIZATION OF BUSINESS, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of Applied Energetics, Inc. and its wholly owned subsidiary North Star Power Engineering, Inc. (“North Star”) (collectively, “company,” “Applied Energetics,” “we,” “our” or “us”). All intercompany balances and transactions have been eliminated.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions for Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for any future periods. The December 31, 2023, balance sheet information was derived from the audited financial statements as of that date. The interim unaudited condensed consolidated financial statements should be read in conjunction with the company’s audited consolidated financial statements contained in our Annual Report on Form 10-K.

Going Concern

For the six months ended June 30, 2024, the company incurred a net loss of $4,672,329, had negative cash flows from operations of $2,670,374 and may incur additional future losses due to limited contract activity. At June 30, 2024, the company had total current assets of $3,301,638 and total current liabilities of $698,232, resulting in working capital surplus of $2,603,406. At June 30, 2024, the company had cash of $2,793,973.

Based on the company’s current business plan, it believes its cash balance as of the date of this filing, together with anticipated revenues from government contracts, will be sufficient to meet its anticipated cash requirements for the near term. However, the company may be unable to achieve its current business plan. Such conditions raise substantial doubts about the company’s ability to continue as a going concern for one year from the date the financial statements are issued.

The company’s existence depends upon management’s ability to develop profitable operations. Management is devoting substantially all of its efforts to developing the business and raising capital as needed. These efforts may not result in profitable operations or overcome liquidity concerns. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets, the amount or classification of liabilities or otherwise that might be necessary should the company be unable to continue as a going concern.

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

Trade conditions, such as exacerbated supplier shutdowns and delays, contribute to this uncertainty. Additionally, Russia’s military action in Ukraine, war in the Middle East, 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 its ability to continue as a going concern. In addition, the company’s ability to continue as a going concern may depend on its ability to raise capital, which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity. This may result in third-party financing being unavailable on terms acceptable to the company or at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

To further improve its liquidity position, the company’s management continues to explore additional equity financing through discussions with investment bankers and private investors. The company may be unsuccessful in its effort to secure additional equity financing. 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.

Applied Energetics, Inc. is a corporation organized and existing under the laws of the State of Delaware. Our headquarters are located at 9070 S. Rita Road Suite 1500, Tucson, Arizona, 85747, including office and laboratory space, and our telephone number is (520) 628-7415.

Use of Estimates

The preparation of unaudited condensed financial statements in conformity with accounting principles generally accepted in the United States of America 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 assumptions 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 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, carrying amounts of long-lived assets, valuation assumptions for share-based payments, effective borrowing rate determinations, valuation and calculation of measurements of income tax assets and liabilities.

Net Loss Attributable to Common Stockholders

Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for 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 dilutive common stock equivalents. Contingently issuable shares are included in the computation of basic loss per share when issuance of the shares is no longer contingent. The number of shares underlying warrants, options, restricted stock units and our Series A Convertible Preferred Stock, which were not included in the computation of earnings per share because the effect was antidilutive, was 30,969,228 and 28,743,060 for the six months ended June 30, 2024 and 2023, respectively.

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

Significant Concentrations and Risks

We maintain cash balances at a commercial bank, and, at times, balances exceed FDIC limits. As of June 30, 2024, $2,271,338 was uninsured.

NOTE 2 – NEW ACCOUNTING STANDARDS

The company has reviewed all issued accounting pronouncements. The company does not expect the adoption of any pronouncements to have an impact on its results of operations or financial position.

NOTE 3 – NOTES PAYABLE

Premium Financing

On March 12, 2024, the company entered into an agreement with Oakwood D&O Insurance to provide financing in the original principal amount of $189,302 for the insurance premium associated with two D&O policies. Both policies commenced March 12, 2024, and provided coverage for the next 15 months, expiring June 11, 2025. The loan bears interest at a fixed rate of 9.50% per annum, required the company to prepay $41,057 and appears on the balance sheet as a current asset. On April 12, 2024, the company made the first of twelve monthly principal and interest payment of $15,775 on the loan, the aggregate amount of principal and interest on which is $199,184. The last payment is scheduled to be made on March 12, 2025. As of June 30, 2024, the outstanding principal and interest balance on the note was $141,977 and was recorded as notes payable, a currently liability, in the company’s unaudited condensed consolidated balance sheet.

Notes Payable Reconciliation

The following reconciles notes payable as of June 30, 2024, and December 31, 2023:

	June 30, 2024			December 31, 2023
Beginning balance	$	-		$	400,000
Notes payable		189,302			155,541
Payments on notes payable		(47,325	)		(555,541	)
Total		141,977			-
Less-Notes payable – current		141,977			-
Notes payable – non-current	$	-		$	-

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

Future principal payments for the company’s notes payable as of June 30, 2024, are as follows:

2024, six months ended	$	94,652
2025		47,325
Thereafter		-
Total	$	141,977

The company’s note payable principal and interest balance of $141,977 is due within the next twelve months, in accordance with the terms of note payable.

NOTE 4 – DUE TO RELATED PARTIES

It has come to the board’s attention that on July 31, 2018, our now deceased CEO deposited $50,000 into the company’s account. Although it has been suggested that the funds may have been intended for use toward Mr. Dearmin’s healthcare, the board does not know for certain what the purpose of the funds were or the nature of any intended investment. Accordingly, the board is investigating the appropriate disposition of the funds which will likely be to the estate of Mr. Dearmin. Until such a determination is made, the board does not intend to use these funds for any corporate purpose. For reporting purposes, the company has treated the deposit as a due to related party.

NOTE 5 – STOCKHOLDERS’ EQUITY

Authorized Capital Stock

During the six months ended June 30, 2023, the company issued 100,000 shares of common stock upon the exercise of options at an exercise price of $0.07 a share, for proceeds in the amount of $7,000.

During the six months ended June 30, 2023, the company issued 75,000 shares of common stock upon the exercise of options at an exercise price of $0.13 a share, for proceeds in the amount of $9,750.

During the six months ended June 30, 2023, the company issued 9,584 shares of common stock with a grant date fair value of $21,085, pursuant to a restricted stock agreement dated May 2021.

During the six months ended June 30, 2024, the company completed the placement of 1,896,182 shares of its common stock, par value, $0.001 per share, in a private sale to individual purchasers at a price of $2.20 per share, for aggregate proceeds in the amount of $4,171,601

During the six months ended June 30, 2024, the company issued 180,000 shares of common stock upon the exercise of options at an exercise price of $0.07 a share, for proceeds in the amount of $12,600.

During the six months ended June 30, 2024, the company issued 60,000 shares of common stock upon the exercise of options at an exercise price of $0.35 a share, for proceeds in the amount of $21,000.

During the six months ended June 30, 2024, the company issued 100,000 shares of common stock upon the exercise of options at an exercise price of $0.40 a share, for proceeds in the amount of $40,000.

During the six months ended June 30, 2024, the company issued 165,000 shares of common stock upon exercise of warrants at an exercise price of $ 0.06 per share for proceeds in the amount of $9,899.

During the six months ended June 30, 2024, restricted stock units covering 11,666 shares of the company’s common stock vested. The company issued 11,666 and withheld 3,715 shares of common stock from the holder pursuant to their restricted stock unit agreement to cover its tax withholding obligation of $7,519.

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

Preferred Stock

As of June 30, 2024, and December 31, 2023, there were 13,602 shares of Series A Redeemable Convertible Preferred Stock (the “Series A Preferred Stock”) issued and outstanding, respectively. The company has not paid the dividends commencing with the quarterly dividend due August 1, 2013. Dividend arrearages as of June 30, 2024, including previously accrued dividends of $48,079 included in our balance sheet total approximately $379,628. Our Board of Directors suspended the declaration of the dividend, commencing with the dividend payable as of February 1, 2015, since we did not have a surplus (as such term is defined in the Delaware general corporation Law) as of December 31, 2014, until such time as we have a surplus or net profits for a fiscal year.

Our Series A Preferred Stock has a liquidation preference of $25.00 per Share. The Series A Preferred Stock bears dividends at the rate of 6.5% of the liquidation preference per share per annum, which accrues from the date of issuance, and is payable quarterly. Dividends may be paid in: (i) cash, (ii) shares of our common stock (valued for such purpose at 95% of the weighted average of the last sales prices of our common stock for each of the trading days in the ten trading day period ending on the third trading day prior to the applicable dividend payment date), provided that the issuance and/or resale of all such shares of our common stock are then covered by an effective registration statement and the company’s common stock is listed on a U.S. national securities exchange or the Nasdaq Stock Market at the time of issuance or (iii) any combination of the foregoing. If the company fails to make a dividend payment within five business days following a dividend payment date, the dividend rate shall immediately and automatically increase by 1% from 6.5% of the liquidation preference per offered share of Series A preferred stock to 7.5% of such liquidation preference. If a payment default shall occur on two consecutive dividend payment dates, the dividend rate shall immediately and automatically increase to 10% of the liquidation preference for as long as such payment default continues and shall immediately and automatically return to the Initial dividend rate at such time as the payment default is no longer continuing.

Each share of Series A Preferred Stock is convertible at any time at the option of the holder into a number of shares of common stock equal to the liquidation preference (plus any unpaid dividends for periods prior to the dividend payment date immediately preceding the date of conversion by the holder) divided by the conversion price (initially $12.00 per share, subject to adjustment in the event of a stock dividend or split, reorganization, recapitalization or similar event). If the closing sale price of the common stock is greater than 140% of the conversion price on 20 out of 30 trading days, the company may redeem the Series A Preferred Stock in whole or in part at any time through October 31, 2010, upon at least 30 days’ notice, at a redemption price, payable in cash, equal to 100% of the liquidation preference of the shares to be redeemed, plus unpaid dividends thereon to, but excluding, the redemption date, subject to certain conditions. In addition, beginning November 1, 2010, the company may redeem the Series A Preferred Stock in whole or in part, upon at least 30 days’ notice, at a redemption price, payable in cash, equal to 100% of the liquidation preference of the Series A Preferred Stock to be redeemed, plus unpaid dividends thereon to, but excluding, the redemption date, under certain conditions.

If a change of control occurs, each holder of shares of Series A Convertible Preferred Stock that are outstanding immediately prior to the change of control shall have the right to require the corporation to purchase, out of legally available funds, any outstanding shares of Series A Convertible Preferred Stock at the defined purchase price. The purchase price is defined as: per share of Preferred Stock, 101% of the liquidation preference thereof, plus all unpaid and accumulated dividends, if any, to the date of purchase thereof. The purchase price is payable, at the company’s option, (x) in cash, (y) in shares of the common stock at a discount of 5% from the fair market value of Common Stock on the Purchase Date (i.e. valued at a 95% discount of the Common Stock on the Purchase Date), or (z) any combination thereof.

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

If the company pays all or a portion of the Purchase Price in Common Stock, no fractional shares of Common Stock will be issued; instead, the company will round the applicable number of shares of Common Stock up to the nearest whole number of shares; provided that the company may pay the Purchase Price (or a portion thereof), whether in cash or in shares of Common Stock, only if the company has funds legally available for such payment and may pay the Purchase Price (or a portion thereof) in shares of its Common Stock only if (i) the Common Stock is listed on a U.S. national securities exchange or the Nasdaq Stock Market at the time of issuance and (ii) a shelf registration statement covering the issuance by the company and/or resales of the Common Stock issuable as payment of the Purchase Price is effective on the Payment Date unless such shares are eligible for immediate resale in the public market by non-affiliates of the company.

Share-Based Payments

Effective November 12, 2018, the Board of Directors of Applied Energetics, Inc. adopted the 2018 Incentive Stock Plan. The plan provides for the allocation and issuance of stock, restricted stock purchase offers and options (both incentive stock options and non-qualified stock options) to officers, directors, employees and consultants of the company. The board reserved a total of 50,000,000 shares for possible issuance under the plan.

The company has, from time to time, also granted non-plan options and restricted stock units to certain officers, directors, employees and consultants. Total stock-based compensation expense for grants to officers, employees and consultants was $1,876,577 and $1,624,949 for the six months ended June 30, 2024, and 2023, respectively, which was charged to general and administrative expense.

The $1,876,577 stock-based compensation for the six months ended June 30, 2024, was comprised of $952,595 option expense and $923,982 expense from the vesting of the restricted stock units.

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

As of June 30, 2024, the company has $7,995,398 of unrecognized compensation cost related to unvested stock options granted and outstanding, net of estimated forfeitures. The cost is expected to be recognized on a weighted average basis over a period of approximately six years.

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

The following table summarizes the activity of our stock options for the six months ended June 30, 2024:

	Shares			Weighted Average Exercise Price			Weighted Average Contractual Term Outstanding		Intrinsic Value
Outstanding at December 31, 2023		26,195,434		$	0.64			9.37	$	226,821,848
Granted		-			-			-		-
Exercised		(340,000	)		(0.22	)		5.17		1,756,329
Forfeited or expired		-			-			-		-
Outstanding at June 30, 2024		25,855,434			0.65			5.51		228,578,177
Outstanding and exercisable at June 30, 2024		21,305,431			0.28			4.81		102,489,203

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

	Six Months Ended June 30,
	2024	2023
Assumptions:
Risk-free interest rate	1.26 – 1.30%	1.26 – 3.98%
Expected dividend yield	0%	0%
Expected volatility	111.62% – 112.6%	109.48 –111.62%
Expected life (in years)	6	6

The fair value of restricted stock and restricted stock units was estimated using the closing price of our common stock on the date of award and fully recognized upon vesting. Restricted stock activity for the six months ended June 30, 2024, was as follows:

	Restricted Stock Outstanding
	Shares			Weighted Average Fair Value per Share at Grant Date
Nonvested at December 31, 2023		3,480,454			2.15
Granted – restricted stock units and awards		-			-
Granted – performance-based stock units		-			-
Canceled		-			-
Vested		(11,666	)		6.75
Nonvested at June 30, 2024		3,468,788		$	2.15

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

As of June 30, 2024, and December 31, 2023, there was $4,257,602 and $5,181,584, respectively, in unrecognized stock- based compensation related to unvested restricted stock agreements, net of estimated forfeitures.

Warrant stock activity for the six months ended June 30, 2024, was as follows:

	Warrant Activity
				Weighted Average Exercise		Weighted Average remaining Contractual Term
	Shares			Price		(years)
Outstanding at December 31, 2023		1,750,000		$	0.0600		5.53
Granted		-			-		-
Exercised		(165,000	)		0.0600		5.03
Forfeited		-			-		-
Outstanding and exercisable at June 30, 2024		1,585,000		$	0.0600		5.03

	Warrants Outstanding						Warrants Exercisable
			Weighted Avg. Remaining		Weighted				Weighted
	Shares		Contractual Life in		Avg. Exercise		Shares		Avg. Exercise
Range of Exercise Prices	Outstanding		Years		Price		Exercisable		Price
$0.05 – $0.07		1,585,000		5.03	$	0.0600		1,585,000	$	0.0600
		1,585,000		5.03	$	0.0600		1,585,000	$	0.0600

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

NOTE 6 – REVENUE RECOGNITION

The company derives revenue from technical research detailing the findings of its investigations to its customers under contract for specific projects. Under Topic 606, revenue is recognized when control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred. A performance obligation is a contractual promise to transfer a distinct good or service to the customer and is the unit of account under Topic 606. The transaction price of a contract is allocated to distinct performance obligations and recognized as revenue when or as the performance obligations are satisfied. The company’s contracts require significant integrated services and are accounted for as a single performance obligation, and revenue is recognized by the company over the contract term at a fixed contract price.

During the six months ended June 30, 2024, the company modified its contract with a customer for changes in the contract specifications and requirements. The modification was for services that are not distinct from the existing contract due to the significant integration of services performed. The modification was accounted for as if it was part of the existing contract and a cumulative catch-up adjustment was recorded for the six months ended June 30, 2024.

Contract modifications are routine in the performance of our contracts. Contracts are often modified to account for changes in the contract specifications or requirements. In most instances, contract modifications are for goods or services that are not distinct, and, therefore, are accounted for as part of the existing contract.

The following table summarizes the company’s accounts receivable, net,

	June 30, 2024		December 31, 2023
Accounts receivable	$	211,177	$	153,029
Unbilled receivable		-		414,763
Total	$	211,177	$	567,792

Concentrations

During the three months ended June 30, 2024, three customers accounted for a total of $768,146 in revenue or 98% of revenue recognized. During the six months ended June 30, 2024, three customers accounted for a total of $902,382 in revenue or 99% of revenue recognized. As of June 30, 2024, the company has $211,177 or 100% of accounts receivable recorded as current assets on the balance sheet related to one customer. During the three and six months ended June 30, 2023, the company earned revenue from two contracts with two separate customers. One customer accounted for $973,356 or 93% of revenue recognized during the six-month period. As of June 30, 2023, the company has $162,226 or 69% of accounts receivable recorded as current assets on the balance sheet related to this customer.

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Operating Leases

In March 2021, the company signed a five-year lease for a 13,000 square foot laboratory/office space in Tucson. The initial base rent was $6.7626 per rentable square foot for year one and escalated to $ 9.2009 per rentable square foot in year two. It is to further escalate to $11.4806 per rentable square foot in year three, $13.1740 per rentable square foot in year four and $14.9306 per rentable square foot in year five, in addition to certain operating expenses and taxes.

On June 7, 2023, the company entered into an amendment to extend the term of the original lease from April 26, 2026 to July 31, 2028. Included in the lease amendment is extension space commencing on August 1, 2023. As of August 1, 2023, the Company has secured additional square footage in the amount of 9,805 rentable square feet (8,375 usable square feet). The initial base rent for expansion space was $9.10 per rentable square foot for year one, and escalated to $10.20 in year two, $11.30 in year three, $12.40 in year four and $13.50 in year five, plus certain operating expenses and taxes.

The company incurred lease expenses for its operating leases of $144,544 which was included in general and administrative expenses in the statements of operation for the period ended June 30, 2024. During the six months ended June 30, 2024, the company made cash lease payments in the amount of $125,128.

At June 30, 2024, the company had approximately $137,168 in future minimum lease payments due for the six months ended. The below table presents the future minimum lease payments due reconciled to lease liabilities.

	Operating Lease
For the six months ended June 30, 2024
2024, six months ended	$	137,168
2025		296,284
2026		324,429
2027		343,544
2028		205,111
Thereafter		-
Total undiscounted lease payments		1,306,536
Present value discount, less interest		220,746
Lease Liability	$	1,085,790

Guarantees

The company agrees to indemnify its officers and directors for certain events or occurrences arising as a result of the officers or directors serving in such capacity. The maximum amount of future payments that the company could be required to make under these indemnification agreements is unlimited. However, the company maintains a director’s and officer’s liability insurance policy that limits its exposure and enables it to recover a portion of any future amounts paid. As a result, it believes the estimated fair value of these indemnification agreements is minimal because of its insurance coverage, and it has not recognized any liabilities for these agreements as of June 30, 2024 and 2023.

APPLIED ENERGETICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2024

(Unaudited)

Litigation

On January 15, 2021, the company filed a complaint in the United States District Court, Southern District of New York, against Gusrae, Kaplan & Nusbaum and Ryan Whalen for malpractice and breach of New York Rules of Professional Conduct by both parties as former counsel to the company. On May 28, 2021, Gusrae, Kaplan & Nusbaum and Mr. Whalen filed a motion to dismiss the complaint. On June 25, 2021, the company filed an opposition to the motion. On July 13, 2021, Gusrae Kaplan & Nusbaum and Mr.Whalen filed their reply brief. On March 30, 2022, United States Magistrate Judge Debra Freeman signed an order denying the motion of GKN and Mr. Whalen to dismiss the company’s claim for malpractice and for rescission of the shares-for-fees agreement under which GKN and Whalen received 1,242,710 shares of the company’s common stock. The motion was partially granted as to the separate claim for violation of NYRPC 1.7 and 1.8 because the court found that it was duplicative of the malpractice claim. The parties have completed discovery, and the court has approved a summary judgment briefing schedule proposed by the parties. No trial date has been set.

On July 26, 2023, the company filed a complaint in the Superior Court of the State of Delaware against Gusrae Kaplan Nusbaum PLLC and Ryan Whalen, for malicious prosecution of a federal securities fraud lawsuit which was filed by these defendants against the company and certain of its directors, attorneys and their law firms and an outside consultant, in July 2019 in the United States District Court for the Southern District of New York. The complaint filed by the company alleges that the claims by these defendants against it were frivolous and prosecuted for the improper purpose of hindering the company’s prosecution of a then pending case against George Farley, the company’s former CEO, which was later settled. The complaint further alleges that the defendants prosecuted their claim with malice causing the company damages valued in excess of $40 million. On September 11, 2023, Gusrae, Kaplan & Nusbaum and Mr. Whalen filed a motion to dismiss the complaint. On October 25, 2023, the company filed an opposition to the motion. The court heard oral argument on the motion on January 19, 2024, and took the motion under submission. On April 16, 2024, the court granted the motion on the grounds of lack of personal jurisdiction over the defendants. The company filed a Notice of Appeal with the Supreme Court of the State of Delaware on May 2, 2024. The company filed its Opening Brief on July 17, 2024

As with any litigation, the company cannot predict the outcome with certainty, but the company expects to provide further updates on the status of the litigation as circumstances warrant.

The company may, from time to time, be involved in legal proceedings arising from the normal course of business.

Related Party

In January 2023, the company made a $25,000 tax-deductible donation to Silicon Valley Defense Group (SVDG), a 501(c)(3) organization of which Christopher Donaghey, our Chief Financial and Operating Officer, is a founder and member of the Board of Directors. As its objective, SVDG “seeks to align and connect the people, capital, and ideas that will ensure allied democracies retain a durable techno-security advantage.”

NOTE 8 – SUBSEQUENT EVENTS

The company’s management has evaluated subsequent events occurring after June 30, 2024, the date of our most recent balance sheet, through the date our financial statements were issued.

Subsequent to the six months ended June 30, 2024, Restricted Stock Units covering 150,000 shares of the company’s common stock vested. The company withheld a portion of these shares of common stock from the holders pursuant to their restricted stock unit agreements to cover its tax withholding obligation.

Subsequent to the six months ended June 30, 2024, the Company exercised its option to lease more than 5,000 square feet of additional space at the University of Arizona Tech Park. With this expansion, the Company will occupy approximately 26,000 sq. ft. of space at the Arizona Tech Park. The company took the option to lease this additional space under the June 7, 2023, amendment (the “2023 Amendment”) to its Lease Agreement with Campus Research Corporation, as Landlord.

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 the 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, 2023.

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, performance or achievements to be materially different from any future results, performance 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, for the year ended December 31, 2023. 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.

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. www. appliedenergetics.com

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.

Technology, Capabilities, and Patents

Applied Energetics, Inc. is recognized as a global 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 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.

The Applied Energetics scientific team is continuously innovating with an eye toward 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.

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’ 25 issued patents and 11 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.

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.

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.

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.

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.

Recent Developments

On July 3, 2024, Applied Energetics, Inc. exercised its option to lease more than 5,000 square feet of additional space at the University of Arizona Tech Park to support the company’s investment in a new Battle Lab and laser manufacturing capacity to ensure it has the critical infrastructure in place to fulfill both current and possible future priority U.S. military programs. With this expansion, the Company will occupy approximately 26,000 sq. ft. of space at the Arizona Tech Park. The company took the option to lease this additional space under the June 7, 2023, amendment (the “2023 Amendment”) to its Lease Agreement with Campus Research Corporation, as Landlord.

The new space is a high bay, light industrial facility that is expected to host Applied Energetics’ Battle Lab to support laser system testing against relevant targets and emerging threats. The Battle Lab is expected to enable technology maturation and be the venue for customer and partner demonstrations under realistic and controlled conditions. The facility, as planned, will also provide the capability to manufacture, integrate, and test advanced lasers as Applied Energetics makes its anticipated transition of its technology to the next stage of its lifecycle.

During July 2024, the company’s Board of Directors, in consultation with counsel, embarked on a comprehensive review and revision to the company’s By-laws resulting, on July 17, 2024, in the board’s adoption of the company’s First Amended and Restated By-laws. The amended By-laws effect revisions to update several by-law provisions to reflect the company’s current business, operations and conduct of its corporate affairs. These include conduct of stockholder meetings, titles and functions of officers, and board classification, the last of which will require approval of the stockholders before taking effect. Other revisions are intended to correspond with certain changes in Delaware law, including with respect to indemnification, and to modernize the by-laws to allow for such items as conduct of remote stockholder meetings. A few revisions are ministerial such as that pertaining to the company’s address of record in the State of Delaware.

Effective March 12, 2024, the grant previously awarded to Applied Energetics, Inc. from a U.S. Department of Defense customer has been transitioned into a contract. The original grant had a two-year period of performance. The new contract supersedes the May 2022 grant and carries 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 ends November 11, 2025. The company intends to provide additional information in a Current Report on Form 8-K upon approval from the government agency.

On March 5, 2024, Applied Energetics entered into an Employment Agreement with James Harrison, PhD, pursuant to which Dr. Harrison is to serve as Director of New Product Innovation, commencing on April 3, 2024. In this new role, Dr. Harrison’s responsibilities are to include setting a vision and strategy that supports and accelerates the entire development lifecycle of optical and laser products, from conceptualization to commercialization. His work involves collaboration with leaders across business development, operations, and research and development to drive the company’s strategic goal of providing cutting-edge laser and optical products to national security and commercial customers. For his services, the company has agreed to pay Dr. Harrison a cash salary of $200,000 per year.

Dr. Harrison is an experienced professional in the area of laser sources including design, manufacturing, program management and business development, with an emphasis on semiconductor and solid-state lasers. With more than 30 years of experience in opto-electronic sources, Dr. Harrison has demonstrated experience designing, building and scaling products that drive business growth and deliver customers innovative new technologies. He has held global leadership positions in engineering and research and development with tier-1 suppliers of photonics devices, where his responsibilities included providing substantial support for volume manufacturing of semiconductor lasers and packaged sources.

Effective February 11, 2024, Applied Energetics entered into a Memorandum of Understanding (MOU) with BluGlass Limited, a global supplier of gallium nitride (GaN) lasers to the national security, quantum and manufacturing industries, to collaborate and explore joint business opportunities that advance Applied Energetics’ laser and optical systems innovations and BluGlass’s expertise in GaN-based laser diode technologies.

Any resultant new laser capabilities and optical systems will be based on existing and emerging technologies currently under development within the companies. Under the MoU, the companies intend to collaborate to develop innovative solutions in technology areas critical to emerging national security and commercial markets, including new laser wavelengths and higher performance, yielding more efficient and cost-effective products. The MOU sets out the framework for collaboration, however, it is not a definitive agreement with commercial terms and timelines.

Effective August 23, 2023, Applied Energetics executed a contract with the Department of the Navy, Office of Naval Research with an aggregate contract price of $1.99 million payable over two years as the company performs its obligations under the contract. The objective of the contract is 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. The company’s continuing development efforts in collaboration with ONR signify the importance of sustained development and maturation of USP-based directed energy systems to support the Navy’s technological priorities.

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.

Ongoing Business Development Activities

Over the past few years, we have submitted multiple proposals to, and attended briefings with, various defense and other government agencies who have expressed an interest in our technology and applications. We believe that our efforts in this area of development have begun to produce 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.

Applied Energetics was a founding consortium member of the Tech Hub proposal submitted under the title of Tulsa Hub for Equitable and Trustworthy Autonomy (THETA). On October 23, 2023, President Biden announced the designation of the inaugural 31 Tech Hubs and the THETA program was one of the 31entities selected as part of the historic $500 million investment in economic competitiveness and national security. The proposal submitted specifies that THETA will emphasize the development of UAS and counter-UAS (CUAS), artificial intelligence (AI), and cybersecurity technologies. As such, Applied Energetics anticipates working closely with the Unmanned Systems Research Institute (USRI) and the Oklahoma Aerospace Institute for Research and Education (OAIRE), both at Oklahoma State University, to partner on the UAS and counter-UAS technology research supporting the THETA TechHub. On July 2, 2024 the Biden-Harris administration and the US EDA announced the award of approximately $51 million to the THETA consortium, the highest amount awarded in this announcement. THETA was one of 12 Tech Hubs awarded funding out of the 31 regions to receive “Tech Hub” designations last fall. Applied Energetics is looking forward to contributing to the CUAS portion of the THETA program.

For fiscal year 2024, which started on October 1, 2023, the National Defense Authorization Act (NDAA) was delayed and finally approved on December 22, 2023 (HR 2670), but the Defense Appropriations bill was not approved at that time. The NDAA sets defense spending policies, and the appropriations bills fund government spending. This impacts all proposals under review by the Department of Defense. On September 30, 2023, President Biden signed a Continuing Resolution (CR), HR 5860, which extended the government operations through November 17, 2023, and he then signed three further CRs, including HR 6363 on November 11, 2023 extending through January 19, 2024, HR 2872 extending through March 1, 2024, and HR 7463, extending through March 8, 2024, as to four of the 12 annual budget bills, and through March 22, 2024 for the remaining eight. On March 23, 2024, the Defense Appropriations Bill was passed and signed by President Biden which will ensure the US government is funded through September 30, 2024 and that new government contracts can be funded during the 2024 fiscal year.

Strategic Plan and Analysis

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 are also contemplating adding 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.

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 very 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 partnership 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. Our desire is to work on programs jointly where the strengths of each organization can assist in escalating knowledge and delivery of systems to the government sponsors and to train the next generation of scientists and engineers to work in the directed energy fields.

We have continued to execute our business development plans, further our research and development program and submit filings for intellectual property and proposals for grants and contracts. During the past several years, we continued to submit proposals and have been engaged in meetings on a continuous basis with various agencies and departments both remotely and in person in Washington, DC and at various other government facilities. Having received a significant research grant and several contracts during the past two fiscal years, we believe the interest in our technology and applications remains high, and we continue to submit proposals for all appropriate opportunities and share our vision of the disruptive capabilities of USP optical sources for both near- and far-term threats and dual-use commercial applications.

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 $17.8billion globally by 2028. 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. 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.

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 on 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. 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.

Results of Operations

Comparison of Operations for the Three Months Ended June 30, 2024 and 2023:

	2024			2023
Revenue	$	780,643		$	559,945
Cost of revenue		(384,208	)		(177,168	)
General and administrative		(2,343,511	)		(2,066,642	)
Selling and marketing		(76,216	)		(94,465	)
Research and development		(37,923	)		(52,756	)
Other income		265			14,771
Interest income (expense)		-			(1,909	)
Net loss	$	(2,060,950	)	$	(1,818,224	)

Revenue

Revenue increased by $220,698 to approximately $780,643 for the three months ended June 30, 2024 from $559,945 for the three months ended June 30, 2023. The increase in revenue represents two additional contracts that we received and commenced performing in August 2023 and June 2024.

Cost of Revenue

Cost of revenue increased by $207,040 to approximately $384,208 for the three months ended June 30, 2024 from $177,168 for the three months ended June 30, 2023. This increase was primarily attributable to an increase in the cost of materials, supplies and direct labor cost incurred in connection with the increased revenues.

General and Administrative

General and administrative expenses increased by $276,869 to approximately $2,343,511 for the three months ended June 30, 2024, compared to approximately $2,066,642 for the three months ended June 30, 2023, primarily due to an increase in salaries and employee benefits of approximately $182,000 mainly due to non-cash compensation, an increase in software and licenses of approximately $25,000, and an increase in depreciation expense of approximately $23,000.

Selling and Marketing

Selling and marketing expenses decreased by $18,249 to approximately $76,216 for the three months ended June 30, 2024, compared to approximately $94,465 for the three months ended June 30, 2023, primarily due to the continuation of business development activities through our Master Services Agreement with Westpark Advisors as well as other consultants in this field.

Research and Development

Research and development expenses decreased by $14,833 to approximately $37,923 for the three months ended June 30, 2024, compared to approximately $52,756 for the three months ended June 30, 2023, primarily due to a decrease in labor cost being transferred to direct labor contracts.

Net Loss

Our operations for the three months ended June 30, 2024, resulted in a net loss of approximately $2,060,950 an increase of approximately $242,726 compared to the approximately $1,818,224 net loss for the three months ended June 30, 2023, primarily due an increase in general and administrative expense partially offset by a decrease in research and development expense and in selling and marketing expenses.

Comparison of Operations for the Six Months Ended June 30, 2024 and 2023:

	2024			2023
Revenue	$	914,878		$	1,046,623
Cost of revenue		(658,640	)		(318,440	)
General and administrative		(4,660,410	)		(4,181,909	)
Selling and marketing		(151,776	)		(203,355	)
Research and development		(118,703	)		(112,736	)
Other income		2,322			15,482
Interest income (expense)		-			(1,909	)
Net loss	$	(4,672,329	)	$	(3,756,244	)

Revenue

Revenue decreased by $131,745 to approximately $914,878 for the six months ended June 30, 2024 from $1,046,623 for the six months ended June 30, 2023. The decrease in revenue was primarily the result of a contract modification which resulted in a decrease in the contract’s price and an increase in the contract’s term, offset by additional one year continuation for an existing contract and new contract in June 2024.

Cost of Revenue

Cost of revenue increased by $340,200 to approximately $658,640 for the six months ended June 30, 2024 from $318,440 for the six months ended June 30, 2023. This increase was primarily attributable to an increase in the cost of materials, supplies and direct labor cost incurred in connection with recent contract modifications.

General and Administrative

General and administrative expenses increased by $478,501 to approximately $4,660,410 for the six months ended June 30, 2024, compared to approximately $4,181,909 for the six months ended June 30, 2023, primarily due to an increase in salaries and employee benefits of approximately $600,000 mainly due to non-cash compensation, an increase in software and licenses of approximately $30,000, an increase in depreciation expense of approximately $50,000, partially offset by a decrease of approximately $252,000 in professional and consulting expenses.

Selling and Marketing

Selling and marketing expenses decreased by $51,579 to approximately $151,776 for the six months ended June 30, 2024, compared to approximately $203,355 for the six months ended June 30, 2023, primarily due to the continuation of business development activities through our Master Services Agreement with Westpark Advisors as well as other consultants in this field.

Research and Development

Research and development expenses increased by $5,967 to approximately $118,703 for the six months ended June 30, 2024, compared to approximately $112,736 for the six months ended June 30, 2023, primarily due to an increase in labor cost associated with continued development of our USP laser technologies.

Net Loss

Our operations for the six months ended June 30, 2024, resulted in a net loss of approximately $4,672,329 an increase of approximately $916,085 compared to the approximately $3,756,244 net loss for the six months ended June 30, 2023, primarily due an increase in general and administrative expense and research and development expense partially offset by a decrease in selling and marketing expenses.

Liquidity and Capital Resources

The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the six months ended June 30, 2024, the company incurred a net loss of approximately $4,672,329, had negative cash flows from operations of approximately $2,670,374 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, 2023, 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.

At June 30, 2024, the company had total current assets of $3,301,638 and total current liabilities of $698,232 resulting in a working capital surplus of $2,603,406. At June 30, 2024, we had $2,793,973 of cash and cash equivalents, an increase of $1,474,447 from $1,319,526 at December 31, 2023.

During the first six months of 2024, the net cash outflow from operating activities was $2,670,374. This amount was comprised primarily of our net loss of $4,672,329 offset by non-cash stock-based compensation expense of $1,876,577, depreciation and amortization of $103,921, amortization of ROU assets of $95,044 and amortization of prepaid assets of $109,445, and cash used from changes in assets and liabilities of ($183,032) from the increase in accounts receivable of $356,615 and accrued expenses and compensation of $4,772 offset by the net decrease in prepaids and deposits of $68,293 operating lease liabilities of $75,628, deferred revenue of $308,908 and a decrease in accounts payable of $91,590.

During the first six months of 2024, the net cash outflow from investing activities was $55,435. This was for the purchase of equipment.

During the first six months of 2024, the net cash inflow from financing activities was $4,200,256. This amount consisted of $4,171,601 in proceeds from stock subscriptions, $83,499 from the exercise of options and warrants, which were offset by $7,519 of tax withholdings related to the share settlement of RSUs, offset by $47,325 from the repayments on notes payable.

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 government contracts, 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.

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.

On May 10, 2024, the company completed the placement of 1,896,182 shares of its common stock, par value, $0.001 per share, in a private sale to individual purchasers at a price of $2.20 per share, for aggregate proceeds in the amount of $4,171,601 All of the purchasers are accredited, sophisticated investors, and the issuance of the shares was not in connection with any public offering in accordance with Section 4(a)(2) of the Securities Act of 1933.

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 June 30, 2024. Based on that evaluation, our Principal Executive Officer has concluded that our disclosure controls and procedures as of June 30, 2024, are not 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.

Changes in Internal Controls Over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

As with any litigation, the company cannot predict the outcome with certainty, but the company expects to provide further updates on the status of the litigation as circumstances warrant.

The company may, from time to time, be involved in legal proceedings arising from the normal course of business.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The company has reported all information pertaining to issuances of equity securities sold during the period covered by this Quarterly Report on Form 10-Q in previously filed report on Forms 10-K, 10-Q and 8-K.

ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Arrangements

The Rule 10b5-1 Plan previously established by Bradford T. Adamczyk, our Executive Chairman, expired in accordance with its own terms as of July 15, 2024. Mr. Adamczyk has established a new Rule 10b5-1 Plan which is to take effect under its terms as of August 16, 2024 and is to continue in effect through October 14, 2025.

The Rule 10b5-1 Plan previously established by Adamczyk Family 2021 LLC, an entity controlled by Bradford T. Adamczyk, the company’s Executive Chairman, expired in accordance with its own terms as of July 15, 2024. The Adamczyk Family 2021 LLC has established a new Rule 10b5-1 Plan which is to take effect under its terms as of August 16, 2024 and is to continue in effect through October 14, 2025.

The Rule 10b5-1 Plan previously established by Gregory J. Quarles, the company’s President and Chief Executive Officer, expired in accordance with its own terms as of July 15, 2024. Dr. Quarles has established a new Rule 10b5-1 Plan which is to take effect under its terms as of August 16, 2024 and is to continue in effect through October 14, 2025.

The Rule 10b5-1 Plan previously established by Mary P. O’Hara, our General Counsel and CLO, expired in accordance with its own terms as of July 15, 2024. Ms. O’Hara has not established a replacement plan as of the date of filing of this report on Form 10-Q.

ITEM 6. EXHIBITS

EXHIBIT NUMBER		DESCRIPTION
23		Consent of RBSM LLP *
31.1		Certification of Chief Executive Officer Pursuant to Exchange Act Rule 13a-14(a).
31.2		Certification of Chief Financial Officer Pursuant to Exchange Act Rule 13a-14(a).
32.1		Principal Executive Officer Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		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		Inline XBRL Instance Document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Incorporated by reference to Exhibit 23.1 to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

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/ Gregory J. Quarles
		Gregory J. Quarles, President and Chief Executive Officer

	By:	/s/ Christopher Donaghey
		Christopher Donaghey, Chief Financial Officer and Chief Operating Officer

Date: August 12, 2024

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EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE

PURSUANT TO RULE 15d-14

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory J Quarles, the President and Chief Executive Officer of Applied Energetics, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Applied Energetics Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Gregory J. Quarles
Gregory J. Quarles
President and Chief Executive Officer

Date: August 12, 2024

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL

ACCOUNTING OFFICER

PURSUANT TO RULE 15d-14

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher Donaghey, the Chief Financial Officer of Applied Energetics, Inc., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Applied Energetics Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ Christopher Donaghey
Christopher Donaghey
Chief Financial Officer

Date: August 12, 2024

EXHIBIT 32.1

CERTIFICATION OF

PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing by Applied Energetics, Inc. (the “company”) of its Quarterly Report on Form 10-Q for the six months ended June 30, 2024 (the “Report”) I, Gregory J. Quarles, President and Chief Executive Officer of the company, certify pursuant to 18 U.S.C. Section. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(i)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the company.

This certificate is being made for the exclusive purpose of compliance by the chief executive officer of Applied Energetics, Inc. with the requirements of Section 906 of the Sarbanes-Oxley Act of 2002 and may not be used for any other purposes. A signed original of this written statement required by Section 906 has been provided to Applied Energetics, Inc. and will be retained by Applied Energetics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Gregory J. Quarles
Gregory J. Quarles
President and Chief Executive Officer

Date: August 12, 2024

EXHIBIT 32.2

CERTIFICATION OF PRINCIPAL

ACCOUNTING OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing by Applied Energetics, Inc. (the “company”) of its Quarterly Report on Form 10-Q for the six months ended June 30, 2024 (the “Report”) I, Christopher Donaghey, Chief Financial Officer of the company, certify pursuant to 18 U.S.C. Section. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that:

(i)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the company.

/s/ Christopher Donaghey
Christopher Donaghey
Chief Financial Officer

Date: August 12, 2024

Cover - shares	6 Months Ended
Cover - shares	Jun. 30, 2024	Aug. 12, 2024
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Amendment Flag	false
Document Period End Date	Jun. 30, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Entity Information [Line Items]
Entity Registrant Name	APPLIED ENERGETICS, INC.
Entity Central Index Key	0000879911
Entity File Number	001-14015
Entity Tax Identification Number	77-0262908
Entity Incorporation, State or Country Code	DE
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Shell Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Contact Personnel [Line Items]
Entity Address, Address Line One	9070 S. Rita Road
Entity Address, Address Line Two	Suite 1500
Entity Address, City or Town	Tucson
Entity Address, State or Province	AZ
Entity Address, Postal Zip Code	85747
Entity Phone Fax Numbers [Line Items]
City Area Code	(520)
Local Phone Number	628-7415
Entity Listings [Line Items]
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	AERG
Security Exchange Name	NONE
Entity Common Stock, Shares Outstanding		213,645,824

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 2,793,973	$ 1,319,526
Accounts receivable, net	211,177	567,792
Other assets	296,488	148,338
Total current assets	3,301,638	2,035,656
Property and equipment - net	386,077	434,563
Right of use asset - operating	959,692	1,054,736
Security deposit	17,004	17,004
Total long-term assets	1,362,773	1,506,303
Total assets	4,664,411	3,541,959
Current liabilities
Accounts payable	221,368	312,958
Notes payable	141,977
Operating lease liability - current	191,526	166,927
Deferred Revenue		308,908
Accrued expenses	45,282	40,510
Accrued dividends	48,079	48,079
Total current liabilities	698,232	927,382
Operating lease liability - non-current	894,264	994,491
Total long-term liabilities	894,264	994,491
Total liabilities	1,592,496	1,921,873
Stockholders' Equity
Common stock, $.001 par value, 500,000,000 shares authorized; 213,645,821 and 211,236,688 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	213,646	211,237
Additional paid-in capital	118,344,878	112,223,129
Accumulated deficit	(115,486,623)	(110,814,294)
Total stockholders' equity	3,071,915	1,620,086
Total Liabilities and Stockholders' Equity	4,664,411	3,541,959
Related parties
Current liabilities
Due to related parties	50,000	50,000
Series A convertible preferred stock
Stockholders' Equity
Series A convertible preferred stock, $.001 par value, 2,000,000 shares authorized and 13,602 shares issued and outstanding at June 30, 2024 and December 31, 2023 (Liquidation preference $340,050 and $340,050, respectively)	$ 14	$ 14

Condensed Consolidated Balance Sheets (Parentheticals) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Common stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	213,645,821	211,236,688
Common stock, shares outstanding	213,645,821	211,236,688
Series A convertible preferred stock
Series A convertible preferred stock, par value (in Dollars per share)	$ 0.001	$ 0.001
Series A convertible preferred stock, shares authorized	2,000,000	2,000,000
Series A convertible preferred stock, shares issued	13,602	13,602
Series A convertible preferred stock, shares outstanding	13,602	13,602
Series A convertible preferred stock, liquidation preference (in Dollars)	$ 340,050	$ 340,050

Condensed Consolidated Statements Of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
Revenue	$ 780,643	$ 559,945	$ 914,878	$ 1,046,623
Cost of revenue	384,208	177,168	658,640	318,440
Gross profit	396,435	382,777	256,238	728,183
Operating expenses
General and administrative	2,343,511	2,066,642	4,660,410	4,181,909
Selling and marketing	76,216	94,465	151,776	203,355
Research and development	37,923	52,756	118,703	112,736
Total operating expenses	2,457,650	2,213,863	4,930,889	4,498,000
Operating loss	(2,061,215)	(1,831,086)	(4,674,651)	(3,769,817)
Other income/(expense)
Other income	265	14,771	2,322	15,482
Interest expense		(1,909)		(1,909)
Total other income/(expense)	265	12,862	2,322	13,573
Loss before provision for income taxes	(2,060,950)	(1,818,224)	(4,672,329)	(3,756,244)
Provision for income taxes
Net loss	(2,060,950)	(1,818,224)	(4,672,329)	(3,756,244)
Preferred stock dividends	(8,501)	(8,501)	(17,003)	(17,003)
Net loss attributable to common stockholders	$ (2,069,451)	$ (1,826,725)	$ (4,689,329)	$ (3,773,247)
Net loss attributable to common stockholders per common share - basic (in Dollars per share)	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.02)
Weighted average number of common shares outstanding, basic (in Shares)	212,607,537	211,033,255	211,962,257	210,976,434

Condensed Consolidated Statements Of Operations (Unaudited) (Parentheticals) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Income Statement [Abstract]
Net loss attributable to common stockholders per common share - diluted	$ (0.01)	$ (0.01)	$ (0.02)	$ (0.02)
Weighted average number of common shares outstanding, diluted	212,607,537	211,033,255	211,962,257	210,976,434

Condensed Consolidated Statements of Changes in Stockholders’ (Deficit) Equity (Unaudited) - USD ($)	Preferred Stock	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2022	$ 14	$ 210,849	$ 108,830,982	$ (103,463,859)	$ 5,577,986
Balance (in Shares) at Dec. 31, 2022	13,602	210,848,671
Stock-based compensation			758,187		758,187
RSU restricted stock		$ 10	21,075		21,085
RSU restricted stock (in Shares)		9,584
Common stock issued on exercise of options		$ 175	16,575		16,750
Common stock issued on exercise of options (in Shares)		175,000
Net loss				(1,938,020)	(1,938,020)
Balance at Mar. 31, 2023	$ 14	$ 211,034	109,626,819	(105,401,879)	4,435,988
Balance (in Shares) at Mar. 31, 2023	13,602	211,033,255
Balance at Dec. 31, 2022	$ 14	$ 210,849	108,830,982	(103,463,859)	5,577,986
Balance (in Shares) at Dec. 31, 2022	13,602	210,848,671
Net loss					(3,756,244)
Balance at Jun. 30, 2023	$ 14	$ 211,034	110,472,496	(107,220,103)	3,463,441
Balance (in Shares) at Jun. 30, 2023	13,602	211,033,255
Balance at Mar. 31, 2023	$ 14	$ 211,034	109,626,819	(105,401,879)	4,435,988
Balance (in Shares) at Mar. 31, 2023	13,602	211,033,255
Stock-based compensation			845,677		845,677
Net loss				(1,818,224)	(1,818,224)
Balance at Jun. 30, 2023	$ 14	$ 211,034	110,472,496	(107,220,103)	3,463,441
Balance (in Shares) at Jun. 30, 2023	13,602	211,033,255
Balance at Dec. 31, 2023	$ 14	$ 211,237	112,223,129	(110,814,294)	1,620,086
Balance (in Shares) at Dec. 31, 2023	13,602	211,236,688
Stock-based compensation			955,730		955,730
Common stock issued on exercise of options		$ 60	12,540		12,600
Common stock issued on exercise of options (in Shares)		60,000
Common stock issued on exercise of warrants		$ 66	3,894		3,960
Common stock issued on exercise of warrants (in Shares)		66,000
Common stock issued for settlement of restricted stock units		$ 12	(12)
Common stock issued for settlement of restricted stock units (in Shares)		11,666
Common stock withheld to cover income tax withholding obligations		$ (4)	(7,515)		(7,519)
Common stock withheld to cover income tax withholding obligations (in Shares)		(3,715)
Net loss				(2,611,379)	(2,611,379)
Balance at Mar. 31, 2024	$ 14	$ 211,371	113,187,766	(113,425,673)	(26,522)
Balance (in Shares) at Mar. 31, 2024	13,602	211,370,639
Balance at Dec. 31, 2023	$ 14	$ 211,237	112,223,129	(110,814,294)	1,620,086
Balance (in Shares) at Dec. 31, 2023	13,602	211,236,688
Net loss					(4,672,329)
Balance at Jun. 30, 2024	$ 14	$ 213,646	118,344,878	(115,486,623)	3,071,915
Balance (in Shares) at Jun. 30, 2024	13,602	213,645,821
Balance at Mar. 31, 2024	$ 14	$ 211,371	113,187,766	(113,425,673)	(26,522)
Balance (in Shares) at Mar. 31, 2024	13,602	211,370,639
Stock-based compensation			920,847		920,847
Issuance of common stock under the market offering		$ 1,896	4,169,705		4,171,601
Issuance of common stock under the market offering (in Shares)		1,896,182
Common stock issued on exercise of options		$ 280	60,720		61,000
Common stock issued on exercise of options (in Shares)		280,000
Common stock issued on exercise of warrants		$ 99	5,840		5,939
Common stock issued on exercise of warrants (in Shares)		99,000
Net loss				(2,060,950)	(2,060,950)
Balance at Jun. 30, 2024	$ 14	$ 213,646	$ 118,344,878	$ (115,486,623)	$ 3,071,915
Balance (in Shares) at Jun. 30, 2024	13,602	213,645,821

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash Flows From Operating Activities
Net loss	$ (4,672,329)	$ (3,756,244)
Adjustments to reconcile net loss to net cash used in operating activities:
Noncash stock-based compensation expense	1,876,577	1,624,949
Amortization of ROU assets	95,044	57,632
Depreciation and amortization	103,921	53,375
Amortization of prepaid assets	109,445	640,042
Changes in assets and liabilities:
Accounts receivable	356,615	117,656
Prepaid and deposits	(68,293)	(742,035)
ROU liabilities	(75,628)	(47,471)
Deferred Revenue	(308,908)
Accounts payable	(91,590)	(11,947)
Accrued expenses and compensation	4,772	(4,331)
Net cash used in operating activities	(2,670,374)	(2,068,374)
Cash Flows From Investing Activities
Purchase of equipment	(55,435)	(70,631)
Net cash used in investing activities	(55,435)	(70,631)
Cash Flows From Financing Activities
Repayment on note payable	(47,325)	(451,847)
Proceeds from sale of common stock	4,171,601	155,541
Tax withholdings related to net share settlement of RSU's	(7,519)
Proceeds from the exercise of stock options and warrants	83,499	16,750
Net cash provided by financing activities	4,200,256	(279,556)
Net change in cash and cash equivalents	1,474,447	(2,418,561)
Cash and cash equivalents, beginning of year	1,319,526	5,640,308
Cash and cash equivalents, at end of period	2,793,973	3,221,747
Supplemental disclosure of cash flow information
Cash paid for interest		1,909
Cash paid for taxes
Non-cash investing and financing activities
Insurance financing for prepaid insurance	$ 189,302	$ 175,435

Organization of Business, Going Concern and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2024

Organization of Business, Going Concern and Summary of Significant Accounting Policies [Abstract]

ORGANIZATION OF BUSINESS, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – ORGANIZATION OF BUSINESS, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Going Concern

Use of Estimates

Net Loss Attributable to Common Stockholders

Significant Concentrations and Risks

We maintain cash balances at a commercial bank, and, at times, balances exceed FDIC limits. As of June 30, 2024, $2,271,338 was uninsured.

New Accounting Standards

6 Months Ended

Jun. 30, 2024

New Accounting Standards [Abstract]

NEW ACCOUNTING STANDARDS

NOTE 2 – NEW ACCOUNTING STANDARDS

The company has reviewed all issued accounting pronouncements. The company does not expect the adoption of any pronouncements to have an impact on its results of operations or financial position.

Notes Payable

6 Months Ended

Jun. 30, 2024

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 3 – NOTES PAYABLE

Premium Financing

Notes Payable Reconciliation

The following reconciles notes payable as of June 30, 2024, and December 31, 2023:

	June 30, 2024			December 31, 2023
Beginning balance	$	-		$	400,000
Notes payable		189,302			155,541
Payments on notes payable		(47,325	)		(555,541	)
Total		141,977			-
Less-Notes payable – current		141,977			-
Notes payable – non-current	$	-		$	-

Future principal payments for the company’s notes payable as of June 30, 2024, are as follows:

2024, six months ended	$	94,652
2025		47,325
Thereafter		-
Total	$	141,977

The company’s note payable principal and interest balance of $141,977 is due within the next twelve months, in accordance with the terms of note payable.

Due to Related Parties

6 Months Ended

Jun. 30, 2024

Due to Related Parties [Abstract]

DUE TO RELATED PARTIES

NOTE 4 – DUE TO RELATED PARTIES

Stockholders’ Equity

6 Months Ended

Jun. 30, 2024

Stockholders’ Equity [Abstract]

STOCKHOLDERS’ EQUITY

NOTE 5 – STOCKHOLDERS’ EQUITY

Authorized Capital Stock

During the six months ended June 30, 2023, the company issued 100,000 shares of common stock upon the exercise of options at an exercise price of $0.07 a share, for proceeds in the amount of $7,000.

During the six months ended June 30, 2023, the company issued 75,000 shares of common stock upon the exercise of options at an exercise price of $0.13 a share, for proceeds in the amount of $9,750.

During the six months ended June 30, 2023, the company issued 9,584 shares of common stock with a grant date fair value of $21,085, pursuant to a restricted stock agreement dated May 2021.

During the six months ended June 30, 2024, the company issued 180,000 shares of common stock upon the exercise of options at an exercise price of $0.07 a share, for proceeds in the amount of $12,600.

During the six months ended June 30, 2024, the company issued 60,000 shares of common stock upon the exercise of options at an exercise price of $0.35 a share, for proceeds in the amount of $21,000.

During the six months ended June 30, 2024, the company issued 100,000 shares of common stock upon the exercise of options at an exercise price of $0.40 a share, for proceeds in the amount of $40,000.

During the six months ended June 30, 2024, the company issued 165,000 shares of common stock upon exercise of warrants at an exercise price of $ 0.06 per share for proceeds in the amount of $9,899.

Preferred Stock

Share-Based Payments

The $1,876,577 stock-based compensation for the six months ended June 30, 2024, was comprised of $952,595 option expense and $923,982 expense from the vesting of the restricted stock units.

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

The following table summarizes the activity of our stock options for the six months ended June 30, 2024:

	Shares			Weighted Average Exercise Price			Weighted Average Contractual Term Outstanding		Intrinsic Value
Outstanding at December 31, 2023		26,195,434		$	0.64			9.37	$	226,821,848
Granted		-			-			-		-
Exercised		(340,000	)		(0.22	)		5.17		1,756,329
Forfeited or expired		-			-			-		-
Outstanding at June 30, 2024		25,855,434			0.65			5.51		228,578,177
Outstanding and exercisable at June 30, 2024		21,305,431			0.28			4.81		102,489,203

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

	Six Months Ended June 30,
	2024	2023
Assumptions:
Risk-free interest rate	1.26 – 1.30%	1.26 – 3.98%
Expected dividend yield	0%	0%
Expected volatility	111.62% – 112.6%	109.48 –111.62%
Expected life (in years)	6	6

	Restricted Stock Outstanding
	Shares			Weighted Average Fair Value per Share at Grant Date
Nonvested at December 31, 2023		3,480,454			2.15
Granted – restricted stock units and awards		-			-
Granted – performance-based stock units		-			-
Canceled		-			-
Vested		(11,666	)		6.75
Nonvested at June 30, 2024		3,468,788		$	2.15

Warrant stock activity for the six months ended June 30, 2024, was as follows:

	Warrant Activity
				Weighted Average Exercise		Weighted Average remaining Contractual Term
	Shares			Price		(years)
Outstanding at December 31, 2023		1,750,000		$	0.0600		5.53
Granted		-			-		-
Exercised		(165,000	)		0.0600		5.03
Forfeited		-			-		-
Outstanding and exercisable at June 30, 2024		1,585,000		$	0.0600		5.03

	Warrants Outstanding						Warrants Exercisable
			Weighted Avg. Remaining		Weighted				Weighted
	Shares		Contractual Life in		Avg. Exercise		Shares		Avg. Exercise
Range of Exercise Prices	Outstanding		Years		Price		Exercisable		Price
$0.05 – $0.07		1,585,000		5.03	$	0.0600		1,585,000	$	0.0600
		1,585,000		5.03	$	0.0600		1,585,000	$	0.0600

Revenue Recognition

6 Months Ended

Jun. 30, 2024

Revenue Recognition [Abstract]

REVENUE RECOGNITION

NOTE 6 – REVENUE RECOGNITION

The following table summarizes the company’s accounts receivable, net,

	June 30, 2024		December 31, 2023
Accounts receivable	$	211,177	$	153,029
Unbilled receivable		-		414,763
Total	$	211,177	$	567,792

Concentrations

Commitments and Contingencies

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Operating Leases

	Operating Lease
For the six months ended June 30, 2024
2024, six months ended	$	137,168
2025		296,284
2026		324,429
2027		343,544
2028		205,111
Thereafter		-
Total undiscounted lease payments		1,306,536
Present value discount, less interest		220,746
Lease Liability	$	1,085,790

Guarantees

Litigation

As with any litigation, the company cannot predict the outcome with certainty, but the company expects to provide further updates on the status of the litigation as circumstances warrant.

The company may, from time to time, be involved in legal proceedings arising from the normal course of business.

Related Party

Subsequent Events

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 8 – SUBSEQUENT EVENTS

The company’s management has evaluated subsequent events occurring after June 30, 2024, the date of our most recent balance sheet, through the date our financial statements were issued.

Pay vs Performance Disclosure - USD ($)	3 Months Ended				6 Months Ended
Pay vs Performance Disclosure - USD ($)	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (2,060,950)	$ (2,611,379)	$ (1,818,224)	$ (1,938,020)	$ (4,672,329)	$ (3,756,244)

Insider Trading Arrangements	3 Months Ended
Insider Trading Arrangements	Jun. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false
Bradford T. Adamczyk [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	The Rule 10b5-1 Plan previously established by Bradford T. Adamczyk, our Executive Chairman, expired in accordance with its own terms as of July 15, 2024. Mr. Adamczyk has established a new Rule 10b5-1 Plan which is to take effect under its terms as of August 16, 2024 and is to continue in effect through October 14, 2025.
Name	Bradford T. Adamczyk
Title	Executive Chairman
Expiration Date	July 15, 2024
Adamczyk Family 2021 LLC [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	The Rule 10b5-1 Plan previously established by Adamczyk Family 2021 LLC, an entity controlled by Bradford T. Adamczyk, the company’s Executive Chairman, expired in accordance with its own terms as of July 15, 2024. The Adamczyk Family 2021 LLC has established a new Rule 10b5-1 Plan which is to take effect under its terms as of August 16, 2024 and is to continue in effect through October 14, 2025.
Name	Adamczyk Family 2021 LLC
Title	Executive Chairman
Expiration Date	July 15, 2024
Gregory J. Quarles [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	The Rule 10b5-1 Plan previously established by Gregory J. Quarles, the company’s President and Chief Executive Officer, expired in accordance with its own terms as of July 15, 2024. Dr. Quarles has established a new Rule 10b5-1 Plan which is to take effect under its terms as of August 16, 2024 and is to continue in effect through October 14, 2025.
Name	Gregory J. Quarles
Title	President and Chief Executive Officer
Expiration Date	July 15, 2024
Mary P. O’Hara [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement	The Rule 10b5-1 Plan previously established by Mary P. O’Hara, our General Counsel and CLO, expired in accordance with its own terms as of July 15, 2024. Ms. O’Hara has not established a replacement plan as of the date of filing of this report on Form 10-Q.
Name	Mary P. O’Hara
Title	General Counsel and CLO
Expiration Date	July 15, 2024

Accounting Policies, by Policy (Policies)	6 Months Ended
Accounting Policies, by Policy (Policies)	Jun. 30, 2024
Organization of Business, Going Concern and Summary of Significant Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Applied Energetics, Inc. and its wholly owned subsidiary North Star Power Engineering, Inc. (“North Star”) (collectively, “company,” “Applied Energetics,” “we,” “our” or “us”). All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions for Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for any future periods. The December 31, 2023, balance sheet information was derived from the audited financial statements as of that date. The interim unaudited condensed consolidated financial statements should be read in conjunction with the company’s audited consolidated financial statements contained in our Annual Report on Form 10-K.
Going Concern	Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the six months ended June 30, 2024, the company incurred a net loss of $4,672,329, had negative cash flows from operations of $2,670,374 and may incur additional future losses due to limited contract activity. At June 30, 2024, the company had total current assets of $3,301,638 and total current liabilities of $698,232, resulting in working capital surplus of $2,603,406. At June 30, 2024, the company had cash of $2,793,973. Based on the company’s current business plan, it believes its cash balance as of the date of this filing, together with anticipated revenues from government contracts, will be sufficient to meet its anticipated cash requirements for the near term. However, the company may be unable to achieve its current business plan. Such conditions raise substantial doubts about the company’s ability to continue as a going concern for one year from the date the financial statements are issued. The company’s existence depends upon management’s ability to develop profitable operations. Management is devoting substantially all of its efforts to developing the business and raising capital as needed. These efforts may not result in profitable operations or overcome liquidity concerns. The accompanying condensed consolidated financial statements do not include any adjustments relating to the recoverability of assets, the amount or classification of liabilities or otherwise that might be necessary should the company be unable to continue as a going concern. Trade conditions, such as exacerbated supplier shutdowns and delays, contribute to this uncertainty. Additionally, Russia’s military action in Ukraine, war in the Middle East, 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 its ability to continue as a going concern. In addition, the company’s ability to continue as a going concern may depend on its ability to raise capital, which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity. This may result in third-party financing being unavailable on terms acceptable to the company or at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. To further improve its liquidity position, the company’s management continues to explore additional equity financing through discussions with investment bankers and private investors. The company may be unsuccessful in its effort to secure additional equity financing. 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. Applied Energetics, Inc. is a corporation organized and existing under the laws of the State of Delaware. Our headquarters are located at 9070 S. Rita Road Suite 1500, Tucson, Arizona, 85747, including office and laboratory space, and our telephone number is (520) 628-7415.
Use of Estimates	Use of Estimates The preparation of unaudited condensed financial statements in conformity with accounting principles generally accepted in the United States of America 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 assumptions 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 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, carrying amounts of long-lived assets, valuation assumptions for share-based payments, effective borrowing rate determinations, valuation and calculation of measurements of income tax assets and liabilities.
Net Loss Attributable to Common Stockholders	Net Loss Attributable to Common Stockholders Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding for 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 dilutive common stock equivalents. Contingently issuable shares are included in the computation of basic loss per share when issuance of the shares is no longer contingent. The number of shares underlying warrants, options, restricted stock units and our Series A Convertible Preferred Stock, which were not included in the computation of earnings per share because the effect was antidilutive, was 30,969,228 and 28,743,060 for the six months ended June 30, 2024 and 2023, respectively.
Significant Concentrations and Risks	Significant Concentrations and Risks We maintain cash balances at a commercial bank, and, at times, balances exceed FDIC limits. As of June 30, 2024, $2,271,338 was uninsured.

Notes Payable (Tables)

6 Months Ended

Jun. 30, 2024

Notes Payable [Abstract]

Schedule of Reconciles Notes Payable

The following reconciles notes payable as of June 30, 2024, and December 31, 2023:

	June 30, 2024			December 31, 2023
Beginning balance	$	-		$	400,000
Notes payable		189,302			155,541
Payments on notes payable		(47,325	)		(555,541	)
Total		141,977			-
Less-Notes payable – current		141,977			-
Notes payable – non-current	$	-		$	-

Schedule of Future Principal Payments

Future principal payments for the company’s notes payable as of June 30, 2024, are as follows:

2024, six months ended	$	94,652
2025		47,325
Thereafter		-
Total	$	141,977

Stockholders’ Equity (Tables)

6 Months Ended

Jun. 30, 2024

Stockholders’ Equity [Abstract]

Schedule of Stock Option Activity

The following table summarizes the activity of our stock options for the six months ended June 30, 2024:

	Shares			Weighted Average Exercise Price			Weighted Average Contractual Term Outstanding		Intrinsic Value
Outstanding at December 31, 2023		26,195,434		$	0.64			9.37	$	226,821,848
Granted		-			-			-		-
Exercised		(340,000	)		(0.22	)		5.17		1,756,329
Forfeited or expired		-			-			-		-
Outstanding at June 30, 2024		25,855,434			0.65			5.51		228,578,177
Outstanding and exercisable at June 30, 2024		21,305,431			0.28			4.81		102,489,203

Schedule of Black-Scholes- Merton Option-Pricing Model Applying the Assumptions

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

	Six Months Ended June 30,
	2024	2023
Assumptions:
Risk-free interest rate	1.26 – 1.30%	1.26 – 3.98%
Expected dividend yield	0%	0%
Expected volatility	111.62% – 112.6%	109.48 –111.62%
Expected life (in years)	6	6

Schedule of Fair Value of Restricted Stock and Restricted Stock Units

	Restricted Stock Outstanding
	Shares			Weighted Average Fair Value per Share at Grant Date
Nonvested at December 31, 2023		3,480,454			2.15
Granted – restricted stock units and awards		-			-
Granted – performance-based stock units		-			-
Canceled		-			-
Vested		(11,666	)		6.75
Nonvested at June 30, 2024		3,468,788		$	2.15

Schedule of Warrant Stock Activity

Warrant stock activity for the six months ended June 30, 2024, was as follows:

	Warrant Activity
				Weighted Average Exercise		Weighted Average remaining Contractual Term
	Shares			Price		(years)
Outstanding at December 31, 2023		1,750,000		$	0.0600		5.53
Granted		-			-		-
Exercised		(165,000	)		0.0600		5.03
Forfeited		-			-		-
Outstanding and exercisable at June 30, 2024		1,585,000		$	0.0600		5.03

Schedule of Range Exercise Prices Warrants Outstanding and Exercisable

	Warrants Outstanding						Warrants Exercisable
			Weighted Avg. Remaining		Weighted				Weighted
	Shares		Contractual Life in		Avg. Exercise		Shares		Avg. Exercise
Range of Exercise Prices	Outstanding		Years		Price		Exercisable		Price
$0.05 – $0.07		1,585,000		5.03	$	0.0600		1,585,000	$	0.0600
		1,585,000		5.03	$	0.0600		1,585,000	$	0.0600

Revenue Recognition (Tables)

6 Months Ended

Jun. 30, 2024

Revenue Recognition [Abstract]

Schedule of Accounts Receivable, Net

The following table summarizes the company’s accounts receivable, net,

	June 30, 2024		December 31, 2023
Accounts receivable	$	211,177	$	153,029
Unbilled receivable		-		414,763
Total	$	211,177	$	567,792

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2024

Commitments and Contingencies [Abstract]

Schedule of Future Minimum Lease Payments

The below table presents the future minimum lease payments due reconciled to lease liabilities.

	Operating Lease
For the six months ended June 30, 2024
2024, six months ended	$	137,168
2025		296,284
2026		324,429
2027		343,544
2028		205,111
Thereafter		-
Total undiscounted lease payments		1,306,536
Present value discount, less interest		220,746
Lease Liability	$	1,085,790

Organization of Business, Going Concern and Summary of Significant Accounting Policies (Details) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2024	Mar. 31, 2024	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Organization of Business, Going Concern and Summary of Significant Accounting Policies [Abstract]
Net loss	$ (2,060,950)	$ (2,611,379)	$ (1,818,224)	$ (1,938,020)	$ (4,672,329)	$ (3,756,244)
Cash flows from operations					(2,670,374)	$ (2,068,374)
Current assets	3,301,638				3,301,638		$ 2,035,656
Current liabilities	698,232				698,232		$ 927,382
Working capital surplus	2,603,406				2,603,406
Cash	2,793,973				$ 2,793,973
Earning per share antidilutive (in Shares)					30,969,228	28,743,060
Cash balance was uninsured	$ 2,271,338				$ 2,271,338

Notes Payable (Details) - USD ($)	Apr. 12, 2024	Mar. 12, 2024	Jun. 30, 2024
Notes Payable [Line Items]
Bears interest rate			9.50%
Current asset			$ 41,057
Notes payable			141,977
Oakwood D&O Insurance [Member]
Notes Payable [Line Items]
Original principal amount		$ 189,302
Expiring date		Jun. 11, 2025
Principal and interest payment	$ 15,775
Principal and interest payment	$ 199,184
Notes payable			$ 141,977

Notes Payable (Details) - Schedule of Reconciles Notes Payable - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2024	Dec. 31, 2023
Schedule of Reconciles Notes Payable [Abstract]
Beginning balance		$ 400,000
Less-Notes payable – current	141,977
Notes payable – non-current
Notes payable	189,302	155,541
Payments on notes payable	(47,325)	(555,541)
Ending balance	$ 141,977

Notes Payable (Details) - Schedule of Future Principal Payments - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Schedule of Future Principal Payments [Abstract]
2024, six months ended	$ 94,652
2025	47,325
Thereafter
Total	$ 141,977

Due to Related Parties (Details)	Jul. 31, 2018 USD ($)
Related Party [Member]
Due to Related Parties [Line Items]
Due to related parties	$ 50,000

Stockholders’ Equity (Details) - USD ($)			3 Months Ended	6 Months Ended		12 Months Ended
Stockholders’ Equity (Details) - USD ($)	Nov. 01, 2010	Oct. 31, 2010	Mar. 31, 2024	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Stockholders’ Equity [Line Items]
Exercise price per share (in Dollars per share)				$ 0.22
Proceeds from issuance of common stock				$ 4,171,601	$ 155,541
Common stock par value (in Dollars per share)				$ 0.001		$ 0.001
Accrued dividends				$ 48,079
Balance sheet total				$ 379,628
Weighted average of the last sales prices				95.00%
Preferred stock per value (in Dollars per share)				$ 12
Conversion price percentage				140.00%
Discount at common stock from fair market value				95.00%
Shares issuance under the plan				$ 50,000,000
Stock-based compensation				1,876,577	$ 1,624,949
Share based compensation expenses				1,876,577
Option expense				952,595
Restricted stock				923,982
Unrecognized compensation cost				$ 7,995,398
Minimum [Member]
Stockholders’ Equity [Line Items]
Dividend rate				1.00%
Maximum [Member]
Stockholders’ Equity [Line Items]
Dividend rate				6.50%
Common Stock [Member]
Stockholders’ Equity [Line Items]
Restricted stock (in Shares)			11,666
Discount at common stock from fair market value				5.00%
Share-Based Payments [Member]
Stockholders’ Equity [Line Items]
Stock-based compensation				$ 1,876,577		$ 1,624,949
Restricted Stock [Member]
Stockholders’ Equity [Line Items]
Issued shares of common stock (in Shares)					9,584
Grant date fair value					$ 21,085
Restricted Stock Units (RSUs) [Member]
Stockholders’ Equity [Line Items]
Restricted stock (in Shares)				11,666
Withheld shares (in Shares)				11,666
Tax withholding obligation				$ 7,519
Officers and Employees [Member]
Stockholders’ Equity [Line Items]
Share based compensation expenses				$ 4,257,602
Executive Employment Agreement [Member]
Stockholders’ Equity [Line Items]
Share based compensation expenses						$ 5,181,584
Common Stock [Member]
Stockholders’ Equity [Line Items]
Issued shares of common stock (in Shares)					100,000
Exercise price per share (in Dollars per share)					$ 0.07
Proceeds from issuance of common stock					$ 7,000
Withheld shares (in Shares)				3,715
Common stock One [Member]
Stockholders’ Equity [Line Items]
Issued shares of common stock (in Shares)					75,000
Exercise price per share (in Dollars per share)					$ 0.13
Proceeds from issuance of common stock					$ 9,750
Options [Member]
Stockholders’ Equity [Line Items]
Issued shares of common stock (in Shares)				180,000
Exercise price per share (in Dollars per share)				$ 0.07
Proceeds from issuance of common stock				$ 12,600
Options Two [Member]
Stockholders’ Equity [Line Items]
Issued shares of common stock (in Shares)				60,000
Exercise price per share (in Dollars per share)				$ 0.35
Proceeds from issuance of common stock				$ 21,000
Options Three [Member]
Stockholders’ Equity [Line Items]
Issued shares of common stock (in Shares)				100,000
Exercise price per share (in Dollars per share)				$ 0.4
Proceeds from issuance of common stock				$ 40,000
Options Four [Member]
Stockholders’ Equity [Line Items]
Issued shares of common stock (in Shares)				165,000
Exercise price per share (in Dollars per share)				$ 0.06
Proceeds from issuance of common stock				$ 9,899
Series A Convertible Preferred Stock [Member]
Stockholders’ Equity [Line Items]
Preferred Stock, Shares Outstanding (in Shares)				13,602		13,602
Preferred shares outstanding (in Shares)				13,602		13,602
Series A Preferred Stock [Member]
Stockholders’ Equity [Line Items]
Preferred Stock, Shares Outstanding (in Shares)				13,602		13,602
Preferred shares outstanding (in Shares)				13,602		13,602
Liquidation preference per share (in Dollars per share)				$ 25
Series A preferred stock, dividend rate				6.50%
Liquidation preference, percentage	100.00%	100.00%		101.00%
Series A Preferred Stock [Member] \| Minimum [Member]
Stockholders’ Equity [Line Items]
Preferred stock liquidation preference				7.50%
Series A Preferred Stock [Member] \| Maximum [Member]
Stockholders’ Equity [Line Items]
Preferred stock liquidation preference				10.00%
Private Placement [Member] \| Common Stock [Member]
Stockholders’ Equity [Line Items]
Issued shares of common stock (in Shares)				1,896,182
Exercise price per share (in Dollars per share)				$ 2.2
Proceeds from issuance of common stock				$ 4,171,601
Common stock par value (in Dollars per share)				$ 0.001

Stockholders’ Equity (Details) - Schedule of Stock Option Activity - USD ($)		6 Months Ended
	Dec. 31, 2023	Jun. 30, 2024
Schedule of Stock Option Activity [Abstract]
Shares, Granted
Weighted Average Exercise Price, Granted
Intrinsic Value, Granted
Shares, Exercised		(340,000)
Weighted Average Exercise Price, Exercised		$ (0.22)
Weighted Average Contractual Term Outstanding, Exercised		5 years 2 months 1 day
Intrinsic Value, Exercised		$ 1,756,329
Shares, Forfeited or expired
Weighted Average Exercise Price, Forfeited or expired
Intrinsic Value, Forfeited or expired
Shares, Outstanding	26,195,434	25,855,434
Weighted Average Exercise Price, Outstanding	$ 0.64	$ 0.65
Weighted Average Contractual Term Outstanding, Outstanding	9 years 4 months 13 days	5 years 6 months 3 days
Intrinsic Value, Outstanding	$ 226,821,848	$ 228,578,177
Shares, Outstanding and exercisable		21,305,431
Weighted Average Exercise Price, Outstanding and exercisable		$ 0.28
Weighted Average Contractual Term, Outstanding and exercisable		4 years 9 months 21 days
Intrinsic Value, Outstanding and exercisable		$ 102,489,203

Stockholders’ Equity (Details) - Schedule of Black-Scholes- Merton Option-Pricing Model Applying the Assumptions	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Schedule of Black-Scholes- Merton Option-Pricing Model Applying the Assumptions [Line Items]
Expected dividend yield	0.00%	0.00%
Expected life (in years)	6 years	6 years
Minimum [Member]
Schedule of Black-Scholes- Merton Option-Pricing Model Applying the Assumptions [Line Items]
Risk-free interest rate	1.26%	1.26%
Expected volatility	111.62%	109.48%
Maximum [Member]
Schedule of Black-Scholes- Merton Option-Pricing Model Applying the Assumptions [Line Items]
Risk-free interest rate	1.30%	3.98%
Expected volatility	112.60%	111.62%

Stockholders’ Equity (Details) - Schedule of Fair Value of Restricted Stock and Restricted Stock Units - Restricted Stock [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Schedule of Fair Value of Restricted Stock and Restricted Stock Units [Line Items]
Shares, Outstanding \| shares	3,480,454
Weighted Average Exercise Price, Outstanding \| $ / shares	$ 2.15
Shares, Outstanding \| shares	3,468,788
Weighted Average Fair Value per Share at Grant Date, Vested and converted to shares \| $ / shares	$ 2.15
Shares, Granted \| shares
Weighted Average Exercise Price, Granted \| $ / shares
Shares, Canceled \| shares
Weighted Average Exercise Price, Canceled \| $ / shares
Shares, Vested and converted to shares \| shares	(11,666)
Weighted Average Fair Value per Share at Grant Date, Vested and converted to shares \| $ / shares	$ 6.75

Stockholders’ Equity (Details) - Schedule of Warrant Stock Activity - Warrant [Member] - $ / shares		6 Months Ended
	Dec. 31, 2023	Jun. 30, 2024
Schedule of Warrant Stock Activity [Line Items]
Shares Granted
Weighted Average Exercise Price Granted
Shares Exercised		(165,000)
Weighted Average Exercise Price Exercised		$ 0.06
Weighted Average remaining Contractual Term Exercised		5 years 10 days
Shares Forfeited
Weighted Average Exercise Price Forfeited
Shares, Outstanding	1,750,000	1,585,000
Weighted Average Exercise Price, Outstanding	$ 0.06	$ 0.06
Weighted Average Contractual Term Outstanding, Outstanding	5 years 6 months 10 days	5 years 10 days

Stockholders’ Equity (Details) - Schedule of Range Exercise Prices Warrants Outstanding and Exercisable - Warrant [Member]	6 Months Ended
	Jun. 30, 2024 $ / shares shares
Schedule of Range Exercise Prices Warrants Outstanding and Exercisable [Line Items]
Warrants Outstanding, Range of Exercise Prices Lower Range Limit	$ 0.05
Warrants Outstanding, Range of Exercise Prices Upper Range Limit	$ 0.07
Warrants Outstanding, Shares Outstanding (in Shares) \| shares	1,585,000
Warrants Outstanding, Weighted Avg. Remaining Contractual Life in Years	5 years 10 days
Warrants Outstanding, Weighted Avg. Exercise Price	$ 0.06
Warrants Exercisable, Shares Exercisable (in Shares) \| shares	1,585,000
Warrants Exercisable, Weighted Avg. Exercise Price	$ 0.06

Revenue Recognition (Details) - Customer Concentration Risk [Member] - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2024	Jun. 30, 2023
Customer [Member] \| Revenue Benchmark [Member]
Revenue Recognition [Line Items]
Revenue recognized	$ 768,146	$ 902,382
Revenue recognized percentage	98.00%	99.00%
Customer [Member] \| Accounts Receivable [Member]
Revenue Recognition [Line Items]
Revenue recognized percentage		100.00%	69.00%
Accounts receivable	$ 211,177	$ 211,177	$ 162,226
One Customer [Member] \| Revenue Benchmark [Member]
Revenue Recognition [Line Items]
Revenue recognized		$ 973,356
Revenue recognized percentage		93.00%

Revenue Recognition (Details) - Schedule of Accounts Receivable, Net - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Schedule of Accounts Receivable, Net [Abstract]
Accounts receivable	$ 211,177	$ 153,029
Unbilled receivable		414,763
Total	$ 211,177	$ 567,792

Commitments and Contingencies (Details)			6 Months Ended
Commitments and Contingencies (Details)	Jul. 26, 2023 USD ($)	Jan. 31, 2023 USD ($)	Jun. 30, 2024 USD ($) ft² shares	Dec. 31, 2023 shares	Jun. 07, 2023 m²	Mar. 31, 2021 ft²
Commitments and Contingencies [Line Items]
Area of land			26,000		8,375
Lease expense (in Dollars)			$ 144,544
Cash lease payments amount (in Dollars)			125,128
Lease payments due for fiscal year (in Dollars)			$ 137,168
Common stock shares issued (in Shares) \| shares			213,645,821	211,236,688
Excess of damages value (in Dollars)	$ 40,000,000
Silicon Valley Defense Group [Member]
Commitments and Contingencies [Line Items]
Tax deductible (in Dollars)		$ 25,000
GKN and Whalen [Member]
Commitments and Contingencies [Line Items]
Common stock shares issued (in Shares) \| shares			1,242,710
laboratory/office Space [Member]
Commitments and Contingencies [Line Items]
Area of land					9,805	13,000
Rentable square foot for year one					9.1	6.7626
Rentable square foot for year two					10.2	9.2009
Rentable square foot for year three					11.3	11.4806
Rentable square foot for year four					12.4	13.174
Rentable square foot for year five					13.5	14.9306

Commitments and Contingencies (Details) - Schedule of Future Minimum Lease Payments	Jun. 30, 2024 USD ($)
Schedule of Future Minimum Lease Payments [Abstract]
2024, six months ended	$ 137,168
2025	296,284
2026	324,429
2027	343,544
2028	205,111
Thereafter
Total undiscounted lease payments	1,306,536
Present value discount, less interest	220,746
Lease Liability	$ 1,085,790

Subsequent Events (Details)	6 Months Ended
Subsequent Events (Details)	Jun. 30, 2024 ft² shares	Jun. 07, 2023 m²
Subsequent Events [Line Items]
Area of land	26,000	8,375
University of Arizona Tech Park [Member]
Subsequent Events [Line Items]
Area of land \| ft²	5,000
Common Stock [Member]
Subsequent Events [Line Items]
Vested shares (in Shares) \| shares	150,000