Applied Energetics agent files arbitration alleging misrepresentations

By Devika Patel

Knoxville, Tenn., Feb. 8 - Applied Energetics, Inc. reported that NewOak Capital Markets LLC, the placement agent for the company's October 2005 private placement of preferred stock, has started an arbitration proceeding.

In an 8-K filed Friday with the Securities and Exchange Commission, the company said NewOak is alleging that Applied Energetics made material misrepresentations concerning the status of its products.

The company said that it previously settled class action and derivative lawsuits relating to these misrepresentations.

NewOak, however, opted out of the class action and alleges that the misrepresentations constituted a breach of its agreement and that the company breached warranties it made in connection with the private placement.

The agent is seeking indemnification and recovery and an award in excess of $10 million, plus punitive damages and attorney's fees and costs.

The company said it intends to defend itself vigorously against the claims.

Applied Energetics, formerly Ionatron, Inc., is a Tucson, Ariz.-based developer and manufacturer of applied energy systems, primarily for military applications.

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