Shares of Applied Energetics AERG have declined 16.7% since reporting first-quarter 2026 results, underperforming the S&P 500 index’s 1.4% fall. Over the past month, the stock has fallen 13.3% against the S&P 500’s 3.7% return.
Applied Energetics reported no revenues for the first quarter of 2026 compared with revenues of $209,753 in the year-ago quarter, as previously active government-related contracts remained unfunded.
The company posted a net loss of $3.81 million, wider than the prior-year loss of $3.11 million. Net loss attributable to common shareholders totaled $3.82 million, or 2 cents per share, versus $3.11 million, or 1 cent per share, a year earlier. General and administrative expenses rose 25.8% year over year to $3.28 million, while research and development expenses increased 16.1% to $375,041. Selling and marketing expenses declined 46% to $172,279.
Applied Energetics Inc. Price, Consensus and EPS Surprise
Applied Energetics Inc. price-consensus-eps-surprise-chart | Applied Energetics Inc. Quote
Revenue Trends & Operating Metrics
Management attributed the revenue decline to the suspension of work on two active contracts after a customer informed the company in April 2025 that the contracts were unfunded. Although the contracts remain open, Applied Energetics halted related work until financing becomes available. Cost of revenues also fell to zero from $63,914 in the prior-year quarter because the company was no longer performing services under those contracts.
Despite the absence of revenues, the company continued internal development work on its ultrashort pulse laser technologies. Research and development spending increased primarily due to higher labor costs tied to continued development efforts. Payroll-related R&D costs rose to $317,442 from $182,707 a year earlier.
Cash and cash equivalents totaled $4.06 million as of March 31, 2026, down from $6.44 million at the end of 2025. Net cash used in operating activities was $2.30 million in the quarter, compared with $1.73 million in the prior-year period. Working capital stood at $3.71 million at the quarter-end.
Management Commentary & Technology Development
Management emphasized ongoing progress in the company’s directed-energy and laser technology portfolio despite reduced contract activity. Applied Energetics said it continued integrating its ultrashort pulse technologies into the Kord Firefly platform during the quarter and extended that work into the second quarter.
The company also highlighted field testing activities conducted during late 2025 and early 2026. According to management, several laser tests were performed at third-party facilities, including private and university-operated sites. In one field test, the company said that it successfully disabled a drone sensor at a range that met specifications requested by prospective customers.
Applied Energetics reiterated that its proprietary fiber-based laser architecture remains a differentiator because of its reduced size, weight and power requirements compared with conventional continuous-wave laser systems. The company said that its technology is designed for applications spanning defense, biomedical and advanced manufacturing markets.
The company also noted continued investment in intellectual property protection. As of quarter-end, Applied Energetics held 26 patents, along with nine government-sensitive patent applications under secrecy orders.
Factors Affecting Results & Financial Position
Management pointed to macroeconomic and geopolitical pressures as continuing challenges. Supply-chain disruptions, semiconductor shortages, tariffs and inflationary pressures affected procurement of materials and components used in customer-funded and internal projects.
The company also cited uncertainty surrounding U.S. defense funding and federal budget processes as risks to future contract activity. Applied Energetics said reductions in government personnel and funding delays could affect contract administration and payment processing.
Higher operating expenses also weighed on the quarterly results. General and administrative costs increased mainly due to higher salaries, employee benefits and stock-based compensation. Stock-based compensation expenses rose to $1.35 million from $991,793 a year earlier.
Applied Energetics continued to warn about substantial doubt regarding its ability to continue as a going concern. Management stated that while current cash balances and anticipated government contract revenues are expected to support near-term operations, there is no assurance that the existing business plan will succeed. The company said that it continues exploring additional equity financing opportunities with investment bankers and private investors.
Outlook
The company said that it remains optimistic about opportunities for directed-energy technologies and expects innovation-focused defense spending priorities to support long-term growth prospects.
Applied Energetics disclosed that it received a $243,000 requisition from the University of Rochester in April 2026 to support ongoing pulsed laser development efforts under its Laboratory for Laser Energetics program. The work is expected to continue through June 2026.
Other Developments
The quarter included continued expansion of the company’s operational footprint and testing capabilities. Applied Energetics maintained approximately 26,000 square feet of space at the Arizona Tech Park after previously exercising an option for additional leased space.
The company also disclosed ongoing litigation against former legal counsel Gusrae, Kaplan & Nusbaum, and attorney Ryan Whalen. A mediation held in April 2026 did not result in a settlement, and a trial is currently scheduled to begin in December 2026.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpApplied Energetics Inc. (AERG): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
