# Ocean Power Technologies (OPTT) 10-K SEC filing - FY2025
- Filed: Jul 24, 2025
- Fiscal year: FY2025
- Accession: 0001641172-25-020888
- OpenCapital page: https://www.opencapital.sh/filings/0001641172-25-020888
- Markdown URL: https://www.opencapital.sh/filings/0001641172-25-020888.md
- Official SEC filing index: https://www.sec.gov/Archives/edgar/data/1378140/0001641172-25-020888-index.htm
## Filing documents
- [10-K (form10-k.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/form10-k.htm)
- [EX-4.3 (ex4-3.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex4-3.htm)
- [EX-21.1 (ex21-1.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex21-1.htm)
- [EX-23.1 (ex23-1.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex23-1.htm)
- [EX-23.2 (ex23-2.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex23-2.htm)
- [EX-31.1 (ex31-1.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex31-1.htm)
- [EX-31.2 (ex31-2.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex31-2.htm)
- [EX-32.1 (ex32-1.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex32-1.htm)
- [EX-32.2 (ex32-2.htm)](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex32-2.htm)
---
## 10-K
SEC source: [form10-k.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/form10-k.htm)
**UNITED
STATES**
**SECURITIES
AND EXCHANGE COMMISSION**
**Washington,
D.C. 20549**
**Form10-K**
☒ **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For the fiscal year ended April 30, 2025**
**Or**
☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**For the transition period from to .**
**Commission
File Number 001-33417**
**Ocean
Power Technologies, Inc.**
**Delaware** **22-2535818**
*(State or other jurisdiction of* *(I.R.S. Employer*
*incorporation or organization)* *Identification No.)*
**28
ENGELHARD DRIVE, SUITE B**
**MONROE
TOWNSHIP, NJ 08831**
*(Address
of principal executive offices, including zip code)*
**Registrant’s
telephone number, including area code: (609) 730-0400**
**Securities
registered pursuant to Section 12(b) of the Act:**
**Title of Each Class** **Trading Symbol(s)** **Name of Exchange on Which Registered**
Common Stock, par value $0.001 OPTT NYSE American
Series A Preferred Stock Purchase Rights n/a NYSE American
**Securities
registered pursuant to Section 12(g) of the Act:**
**None**
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The
aggregate market value of the common stock of the registrant held by non-affiliates as of October 31, 2024, the last business day of
the registrant’s most recently completed second fiscal quarter, was $18.7 million based on the closing sale price of the registrant’s
common stock on that date as reported on the NYSE American.
The
number of shares outstanding of the registrant’s common stock as of July 22, 2025 was 177,542,775.
**OCEAN
POWER TECHNOLOGIES, INC.**
**ANNUAL
REPORT ON FORM 10-K**
**TABLE
OF CONTENTS**
| Line item | PART I | Page |
| --- | --- | --- |
| Item 1. | Business | 1 |
| Item 1A. | Risk Factors | 15 |
| Item 1B. | Unresolved Staff Comments | 31 |
| Item 2. | Properties | 32 |
| Item 3. | Legal Proceedings | 33 |
| Item 4. | Mine Safety Disclosures | 33 |
| | PART II | |
| Item 5. | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities | 34 |
| Item 6. | Selected Financial Data | 35 |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 35 |
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 45 |
| Item 8. | Financial Statements and Supplementary Data | 45 |
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 46 |
| Item 9A. | Controls and Procedures | 46 |
| Item 9B. | Other Information | 47 |
| | PART III | |
| Item 10. | Directors, Executive Officers and Corporate Governance | 47 |
| Item 11. | Executive Compensation | 51 |
| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters | 62 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence | 62 |
| Item 14. | Principal Accountant Fees and Services | 63 |
| | PART IV | |
| Item 15. | Exhibits, Financial Statement Schedules | 64 |
PowerBuoy®,
PB-Vue ®, PowerTower ®, Making Waves in Power ®, Talk on Water ®, Merrows™,
WAM-V®and the Ocean Power Technologies logo are trademarks of Ocean Power Technologies, Inc. All other@ trademarks appearing
in this annual report are the property of their respective holders.
i
**Special
Note Regarding Forward-Looking Statements**
We
have made statements in this Annual Report on Form 10-K (the “Annual Report”) in, among other sections, Item 1 - “Business,”
## Item 1A - “Risk Factors,” Item 3 - “Legal Proceedings,” and Item 7 - “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” that are forward-looking statements. Forward-looking statements convey
our current expectations or forecasts of future events. Forward-looking statements include statements regarding our future financial
position, business strategy, budgets, projected costs, plans and objectives of management for future operations. The words “may,”
“continue,” “estimate,” “intend,” “plan,” “will,” “believe,”
“project,” “expect,” “anticipate” and similar expressions may identify forward-looking statements,
but the absence of these words does not necessarily mean that a statement is not forward-looking.
Any
or all of our forward-looking statements in this Annual Report may turn out to be inaccurate. We have based these forward-looking statements
on our current expectations and projections about future events and financial trends that we believe may affect our financial condition,
results of operations, business strategy and financial needs. They may be affected by inaccurate assumptions we might make or unknown
risks and uncertainties, including the risks, uncertainties and assumptions described in Item 1A - “Risk Factors.” In light
of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Annual Report may not occur
as contemplated and actual results could differ materially from those anticipated or implied by the forward-looking statements.
You
should not unduly rely on these forward-looking statements, which speak only as of the date of this filing. We undertake no obligation
to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise.
Our
fiscal year begins on May 1 and ends on April 30. When we refer to a particular fiscal year, we are referring to the fiscal year ending
on April 30 of that year. References to fiscal 2025 are to the fiscal year ended April 30, 2025.
Unless
the context indicates otherwise, the terms “Company,” “Ocean Power Technologies,” “OPT,” “we,”
“our” or “us” as used herein refers to Ocean Power Technologies, Inc. and its subsidiaries.
ii
**PART
I**
**ITEM
1. *BUSINESS***
**Overview**
Ocean
Power Technologies, Inc. (“OPT,” “we,” “our,” or “the Company”) is a Maritime Domain
Awareness (MDA) company specializing in innovative intelligent maritime solutions. These solutions include a variety of “as a service”
systems, including Data as a Service (DaaS), Robotics as a Service (RaaS), and Power as a Service (PaaS). These systems consist of a
variety of platforms including the PowerBuoy®, our persistent sensor and power solution, the WAM-V® (Wave Adaptive Modular Vessel),
our autonomous unmanned surface vehicle, and Merrows™, our user interface and command and control (C2) system that integrates multiple
sensor feeds using software and hardware and enables artificial intelligence and machine learning (AI/ML) integration. We design, manufacture,
deploy, and operate these systems for defense, security, subsea infrastructure, offshore oil and gas, offshore energy, marine research,
and communication markets. We operate primarily through a combination of direct sales and leases, strategic partnerships, and long-term
service agreements. Our business model emphasizes capital-light deployments, recurring revenue from leases, service and maintenance contracts,
and high-margin technology sales and leases.
We
serve a global customer base, including the U.S. and allied defense agencies, offshore energy operators, and other commercial interests.
The common thread across these markets is the growing need for a persistent, autonomous, and sustainable offshore presence, a need we
are well positioned to fulfill.
The
Company holds numerous patents, including our recently awarded System and Method for Vehicle Charging which protects OPT’s breakthrough
system for an autonomous, floating marine charging solution, and leverages decades of research including control systems, energy storage,
and marine integration. Our headquarters and assembly operations are located in New Jersey, and we maintain an additional manufacturing
and robotics development facility in Richmond, CA.
OPT
is committed to enabling a smarter, safer ocean economy through innovation in ocean intelligence and power. As we look forward, our strategic
priorities include expanding our customer and geographic base, accelerating technology adoption, enhancing recurring revenue, and driving
margin growth through platform scalability and supply chain efficiencies.
We
were incorporated under the laws of the State of New Jersey in April 1984 and began commercial operations in 1994. On April 23, 2007,
we reincorporated in Delaware.
**Our
Solutions**
***Maritime
Domain Awareness Solution (“MDAS”)***
Maritime
Domain Awareness refers to the effective understanding of anything associated with the maritime domain that could impact safety, security,
economy, or the environment. The **“**maritime domain” includes all areas and things on, under, related to, adjacent to,
or bordering navigable waters, including the seafloor and airspace above.
Our
MDAS provides a customizable, integrated surveillance solution designed for persistent, roaming, and real-time ocean monitoring. The
system combines high-definition radar, optical and thermal imaging, and vessel Automatic Identification System (AIS) modules with edge
processing, secure communications, and cloud-based analytics.
Our
customers use and can apply our MDAS for:
- National Security (U.S. and allies**):** Monitoring territorial waters, preventing smuggling, piracy, and terrorism.
- Commercial Operations**:** Securing shipping lanes, port infrastructure, offshore energy assets, data gathering for permitting and more.
- Environmental Protection**:** Detecting pollution, illegal fishing, marine mammal activity, and more.
1
MDAS
hardware can be deployed on OPT platforms, including PowerBuoy® systems and WAM-V® autonomous vessels, and networked via satellite,
Wi-Fi, and cellular links. Our architecture enables multi-platform surveillance, with command-and-control functionality enhanced through
proprietary software and third-party system integrations. These networks can incorporate external data sources such as satellite imagery,
drones, weather, and bathymetry to form a comprehensive operational picture.
Our
MDAS is also designed to provide persistent situational awareness beneath the ocean surface, an area inaccessible to conventional technologies
such as radar or the AIS. This capability plays a critical role in supporting national security objectives, enabling autonomous maritime
operations, and protecting marine resources and infrastructure. Key system components include:
Sensing
and Detection
- Passive Acoustics: Identifies underwater sound signatures from sources such as submarines, divers, and marine life.
- Active Sonar: Emits and receives sound pulses to locate and track underwater objects and terrain.
- Magnetometers: Detects metallic anomalies, including submersibles and naval mines.
- Seismic and Pressure Sensors: Monitors vibrations and pressure changes indicative of movement or underwater disturbances.
Communications
and Networking
- Acoustic Modems: Enable underwater data transmission between sensors and platforms over medium ranges.
- RF and Satellite Relay: Transmit compressed data from surface nodes to command centers via satellite or terrestrial links.
- Edge Processing: Utilizes onboard AI and machine learning to analyze data locally, prioritize key findings, and reduce transmission loads.
Data
Fusion and Analysis
- Multi-Domain Correlation: Integrates inputs from undersea, surface, and aerial platforms to generate a unified operational picture.
Command,
Control, and Decision Support
- Automated Alerts: Flags high-priority events, such as unauthorized intrusions, suspicious underwater activity, or infrastructure tampering.
Representative
Applications
- Defense and Security
○ Submarine and Unmanned Underwater Vehicle (UUV) detection in contested maritime zones.
○ Monitoring of strategic chokepoints and exclusive economic zones (EEZs).
○ Protection of undersea cables and energy infrastructure from sabotage.
- Critical Infrastructure Protection
○ Security for offshore oil and gas platforms, wind farms, desalination plants, and seaports.
- Environmental and Regulatory Compliance
○ Marine life monitoring and conservation support.
○ Detection of illegal fishing, dredging, or resource extraction.
- Commercial Operations
○ Enhanced situational awareness for offshore energy installations.
○ Navigation and mission support for autonomous subsea vehicles.
Our
MDAS solution is a cornerstone of our broader DaaS strategy and reflects our leadership in scalable, autonomous maritime intelligence
infrastructure.
***Data
as a Service (“DaaS”)***
Our
Data as a Service offering enables persistent, near real-time collection and transmission of maritime domain awareness and environmental
intelligence data. Our DaaS platform leverages autonomous uncrewed surface vehicles (USVs), including the WAM-V® platform, and PowerBuoy®
systems, both of which integrate a range of environmental and security-focused sensors.
2
The
DaaS offering is used to support operational needs in several high-impact domains, including:
- Maritime Border and Coastal Security: Monitoring unauthorized vessel activity, trafficking, and maritime incursions.
- Offshore Asset Surveillance: Enhancing situational awareness around oil platforms, wind farms, and port infrastructure.
- Illegal, Unreported, and Unregulated (IUU) Fishing: Enabling remote detection and interdiction support.
- Aquaculture and Environmental Monitoring: Gathering data to support aquaculture health, pollution tracking, and marine ecosystem compliance.
- Permitting and Infrastructure Inspection: Supporting regulatory approvals through data-enabled insights on site conditions.
Our
WAM-V® USV platform supports modular payload integration and is engineered for operational stability in variable marine conditions.
It has been deployed in a range of commercial and governmental missions, including high-resolution sonar surveys, subsea infrastructure
assessments, berth clearance, dredging operations, and offshore renewable energy site characterization.
We
have completed multiple DaaS deployments with both government agencies and commercial customers. These engagements have provided validation
of our systems’ performance, interoperability, and mission relevance.
***Robotics
as a Service (“RaaS”)***
Our
Robotics as a Service offering provides customers with subscription-based access to our WAM-V® (Wave Adaptive Modular Vessel) autonomous
surface vehicles. Under this model, customers lease WAM-V® units pursuant to time-bound agreements or based on a defined number of
usage days. These agreements frequently include minimum usage thresholds and bundled operational support services. Oftentimes these agreements
also include OPT providing the training and operations for the vehicle. As an AUVSI Trusted Operator, (AUVSI is the world’s largest
nonprofit organization dedicated to advancing the use of autonomous systems and robotics across air, land, and sea domains). OPT’s
RaaS “pilots” are well suited to deliver value for our customers.
Through
the RaaS model, OPT retains ownership of the deployed assets and is responsible for all system maintenance, repairs, and upgrades. This
arrangement offers customers a lower upfront capital expenditure compared to outright equipment purchase, while enabling scalable access
to autonomous capabilities that can be aligned with peak mission windows or surge requirements.
Our
RaaS contracts have been utilized by both government and commercial customers for applications including port security, maritime surveying,
infrastructure inspection, and environmental monitoring. This model has allowed customers to accelerate access to autonomous maritime
solutions while preserving operational flexibility.
We
believe that our RaaS model supports our strategic goals of increasing recurring revenue, improving asset utilization, broaden our customer
base and expanding customer lifetime value. As RaaS involves OPT-owned systems deployed in customer-controlled environments, we evaluate
associated risks related to asset recoverability, service delivery logistics, and liability exposure. Based on these assessments, we
implement appropriate contractual protections, insurance coverage, and operational safeguards to mitigate such risks and ensure continuity
of service and asset security
***Power
as a Service (“PaaS”)***
Our
Power as a Service offering provides customers with subscription-based access to our PowerBuoy® systems. Under this model, customers
lease PowerBuoy® platforms pursuant to time-bound agreements, enabling flexible deployment without the need for upfront capital investment.
These leases are structured to accommodate both steady-state operations and surge requirements, offering a scalable energy solution for
offshore missions.
3
The
PowerBuoy® delivers autonomous, renewable energy via OPT-managed infrastructure. This reduces the need for traditional power delivery
methods such as subsea cabling, fuel-based generators, or periodic manual battery replacement. Our modular PowerBuoy® configurations
can include solar-only systems, wave energy converters, and optional wind turbine integrations to support varying power loads across
different marine environments.
The
PaaS offering is available for defense, offshore energy, and environmental monitoring applications. The PaaS model aligns with our broader
strategy to offer end-to-end maritime infrastructure services, complementing our DaaS and RaaS offerings. This integrated approach is
designed to support recurring revenue growth, enhance customer retention, and differentiate OPT from competitors that focus exclusively
on hardware or one-time equipment sales.
While
we believe this model strengthens our customer relationships and operational resilience, there can be no assurance of continued customer
uptake or contract renewals. We also evaluate ongoing risks associated with offshore service delivery, environmental exposure, and asset
maintenance and implement mitigation strategies including enhanced monitoring protocols, environmental hardening of equipment, and service-level
agreements with local partners
***Autonomous
Vehicles (“WAM-V***®***”)***
Our
Autonomous Vehicles business centers around our patented WAM-V® (Wave Adaptive Modular Vessel) platform—a class of modular
USVs engineered to support autonomous maritime operations in inshore, nearshore, and offshore environments. The WAM-V® platform is
designed to enable scalable, real-time data acquisition and payload customization based on mission requirements.
WAM-V®
vessels are manufactured in three standard sizes—8, 16, and 22 feet—and are built on a modular framework. This design allows
interoperability across propulsion types (electric and/or liquid-fuel) and supports rapid integration of third-party sensors and mission
systems. These features make the platform suitable for a wide range of operational use cases, including underwater. survey, scientific
research, port security, subsea infrastructure inspection, and defense surveillance.
WAM-V®
platforms have been deployed across the Middle East, Europe, Asia, Oceania, and the Americas. These deployments are conducted through
both direct sales and our RaaS offering, which provides subscription-based access to WAM-V® units and associated operational support
as described above.
Our
Autonomous Vehicles segment complements our strategic focus on persistent maritime awareness and autonomy. In particular, WAM-V®
systems are increasingly integrated with our Merrows™ MDA suite, enabling mobile MDA operations to consolidate surface, subsea,
and environmental data in real time. This integration expands our service capabilities and supports recurring revenue growth from both
government and commercial customers.
We
expect continued demand for WAM-V® platforms driven by factors including increased investment in autonomous marine systems, cost
advantages over crewed vessels, global regulatory mandates for maritime monitoring, and defense modernization initiatives. However, actual
adoption rates may be affected by procurement cycles, governemental budgetary constraints, and competitive offerings.
**PowerBuoy®**
Our
PowerBuoy® is a renewable energy-powered autonomous offshore platform designed to deliver continuous electrical power and real-time
data connectivity in remote maritime environments. The PowerBuoy® converts any combination of wave motion, solar, and wind into energy
and includes onboard energy storage to maintain system availability during low-sea-state, cloudy, or still conditions. The platform enables
persistent operations without reliance on liquid fuel-based power systems or crewed support vessels.
PowerBuoy®
deployments reduce operational costs and carbon emissions by replacing diesel generators and minimizing vessel-based maintenance. The
system is designed for compact deployment, rapid installation, and long-duration missions, with remote diagnostics and limited on-site
service requirements. Depending on the mission profile, a single PowerBuoy® unit can operate autonomously for several months or longer.
PowerBuoy® platforms support a variety of payloads, including surveillance cameras, acoustic and environmental sensors, weather stations,
radar, AIS, and communication nodes. These features enable use cases in maritime security and intelligence, surveillance, and reconnaissance
(“ISR”); offshore wind and oil infrastructure monitoring; and oceanographic data collection.
4
PowerBuoy®
units have been integrated into operational deployments for both government and commercial customers.
The
PowerBuoy® represents a core technology component across multiple OPT offerings, including DaaS and PaaS).These integrated offerings
are intended to support long-term growth in recurring revenue and platform utilization. We believe the PowerBuoy® is well suited
to serve emerging demand for autonomous, low-emission offshore infrastructure.
**Merrows**
Merrows™
is our integrated user interface and C2 platform that consolidates and enhances the capabilities of our PowerBuoy®, WAM-V®, and
sensor payload systems into a unified maritime surveillance and data processing solution. It is designed to address the operational complexity
of MDA, which involves monitoring, detecting, and analyzing activity on, under, adjacent to, or bordering navigable waters.
The
Merrows™ architecture incorporates elements of Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance,
and Reconnaissance (C5ISR) into a flexible and modular system. It leverages both mobile (WAM-V®) and stationary (PowerBuoy®)
platforms to enable persistent situational awareness across mission-critical maritime zones. As a result, Merrows™ is well-positioned
to meet the operational needs of defense, intelligence, and homeland security customers seeking scalable, multi-mission capability. By
embedding C5ISR, OPT moves beyond being a “vehicle provider” to offering full-spectrum mission solutions.
Merrows™
facilitates the collection, processing, and secure transmission of multi-modal sensor data—including radar, acoustic, visual, weather,
and geospatial inputs. The platform supports real-time and historical data analysis and integrates artificial intelligence and machine
learning to support operational decision-making, anomaly detection, and system automation.
Merrows™
has been deployed in multiple instances and is integrated within several OPT service offerings, including =DaaS= and =RaaS=. Merrows™
is offered as part of comprehensive system deployments and is not currently marketed as a standalone product.
We
believe the Merrows™ system enhances the value proposition of our broader portfolio by enabling cross-platform interoperability
and improving the operational efficiency and data fidelity of autonomous maritime missions.
***Recent
Technological Advancements***
During
fiscal year 2025 and through the date of this filing, we achieved several notable milestones related to the continued development and
operational deployment of our autonomous maritime systems. These developments reflect our investment in platform capability enhancement,
strategic partnerships, and customer-oriented service infrastructure:
- AI-enabled Merrows™ PowerBuoy® Deployment: In May 2025, we delivered a PowerBuoy® platform integrated with AI-enabled Merrows™ software to a customer in the Middle East. This system combines wave energy generation with artificial intelligence to support real-time maritime domain awareness and sensor fusion applications. The deployment is part of a broader engagement in the region and remains subject to performance validation under operational conditions.
- Extended-Duration Over the Horizon Autonomous WAM-V® Operations: In April 2025, we conducted a successful demonstration of multi-day over-the-horizon (OTH) WAM-V® (USV operations in the Indo-Pacific region. The exercise validated the WAM-V® platform’s endurance, autonomous navigation, and remote command-and-control capabilities over extended ranges and durations. Operating beyond line-of-sight with satellite and high-frequency communications, our team executed mission tasking, status monitoring, and data retrieval without the need for local support assets. This demonstration, observed by customer representatives and OPT engineering teams, confirms the WAM-V® system’s readiness for long-range survey and surveillance missions across dispersed maritime environments, further aligning our capabilities with the operational needs of defense, security, and offshore commercial stakeholders.
5
- U.S. Navy Project Overmatch Participation: Project Overmatch exercises validate the Navy’s ability to deploy resilient, autonomous unmanned systems as a critical component of multi-domain operations, fostering interoperability with coalition forces and accelerating next-gen naval capabilities. In October 2024, we completed a phase of the U.S. Navy’s Project Overmatch initiative by participating in the Mission Autonomy Proving Grounds exercises. Multiple WAM-V® USVs were deployed to demonstrate autonomous behavior, interoperability with other systems, and mission execution under naval coordination. This participation supports our positioning for future federal procurement opportunities; however, no definitive contract awards have resulted from this activity to date.
- OEM Agreement with Teledyne Marine: In June 2024, we executed an Original Equipment Manufacturer (OEM) agreement with Teledyne Marine. This agreement enables integration of Teledyne’s sensor and subsea technology with OPT’s wave energy and autonomous platforms. We believe this partnership strengthens our technical offering, but the commercial impact will depend on customer adoption in future joint projects.
- Global 24/7 Service Support Infrastructure Launch: In June 2024, we launched a 24/7 global customer support capability for deployed platforms and service contracts. This capability is expected to improve service reliability and may contribute to growth in recurring revenue. However, the cost and staffing requirements of this initiative may impact near-term gross margins for service-related business lines.
These
developments are consistent with our strategic priorities of expanding platform capability, increasing global market reach, and enhancing
customer value through integrated offerings. While we believe these achievements strengthen our market position, future revenue impact
remains dependent on follow-on orders, contract conversions, and customer retention. See Item 1A, “Risk Factors,” for a discussion
of operational and adoption risks
**Strategy
and Marketing**
We
are focused on delivering integrated, autonomous ocean infrastructure solutions. Our strategy centers on unifying renewable energy powered
systems (PowerBuoy®), autonomous vehicles (WAM-V®), and data-driven command and control platforms (Merrows™) into a cohesive,
interoperable ecosystem. This multi-domain architecture is designed to support operations across surface, subsea, and airborne environments,
offering utility in both government and commercial missions.
Intelligence,
Surveillance, and Reconnaissance (ISR) is a critical function in military and security operations that involves the collection, processing,
and dissemination of information to support decision-making, targeting, and situational awareness. and is central to OPT’s strategic
positioning as a provider of autonomous, intelligent, and scalable maritime mission systems**,** enabling it to serve both national
security and commercial maritime markets through recurring services and full-stack platform offerings. ISR is a core enabler of our strategy,
driving value across defense, homeland security, and international maritime markets. ISR capability is not only a product feature, but
a strategic differentiator woven into OPT’s platform design, autonomy stack, and service delivery models.
We
believe our platform-centric approach aligns OPT with three primary global trends:
- Maritime Security Modernization: Continued investment by defense and security agencies in unmanned systems and ISR.
- Offshore Sector Digitalization and Decarbonization: Expansion of remote, low-emission monitoring for wind, oil & gas, and shipping operations.
- Ocean Data Infrastructure Growth: Rising demand for AI-enabled environmental and security intelligence solutions.
**Market
Trends and Tailwinds**
*Defense
and Environmental Monitoring Demand*
The
defense sector continues to prioritize autonomous systems for enhanced situational awareness and cost-efficiency. Regulatory initiatives
and funding priorities within the U.S. Department of Defense and abroad, the Intelligence Community, and Department of Homeland Security
are creating pathways for long-term procurement contracts. OPT is aligning its capabilities with these procurement trends and exploring
engagement opportunities with defense prime contractors and allied foreign ministries.
6
Simultaneously,
the environmental monitoring market is expanding due to regulatory compliance pressures and increased investment in ocean science. Our
solutions are engineered to address use cases such as coastal zone management, hydrographic surveying, and habitat monitoring.
*Competitive
Positioning and Global Demand*
The
rising global focus on unmanned maritime systems is expanding OPT’s addressable market across multiple sectors and geographies.
Our platforms are being evaluated or deployed for use in:
- Defense and Security Missions: In alignment with DHS’s Maritime Domain Awareness goals and the U.S. Coast Guard’s Unmanned Systems Strategic Plan.
- Infrastructure Protection: Including remote surveillance of undersea cables, pipelines, and offshore installations.
- Commercial Operations: Such as offshore wind development, subsea exploration, permit obtainment and port monitoring.
Our
modular platforms—specifically the PowerBuoy® and WAM-V®—are designed to support autonomous missions with minimal
human intervention, and offer value in shallow-water, nearshore, and offshore environments.
*Growth
Priorities and Target Markets*
OPT’s
commercial and public-sector focus is directed toward high-value, mission-critical domains where autonomous maritime infrastructure delivers
operational or strategic benefit. Our key markets include:
- U.S. Defense and Intelligence agencies
- Allied foreign defense ministries (NATO, Indo-Pacific, Latin America, Middle East). These ministries seek advanced capabilities in surveillance, reconnaissance, and persistent maritime operations, aligned with U.S. defense cooperation and interoperability standards
- Strategic partners and commercial customers
**Product
Development Focus**
*Autonomy
Advancement (Level 3 and Beyond)*
We
have expanded our internal autonomy engineering team with the addition of full-time specialists in control systems and software integration.
This investment supports the development of Level 3+ autonomous capabilities across OPT’s vehicle platforms, with a focus on reliable,
adaptive, and scalable mission execution. Level 3 autonomy, meaning the platform can execute defined missions, such as navigating pre-set
routes or collecting data, without real-time human control. While a human operator monitors performance and can intervene if necessary,
the system is generally capable of making its own decisions under known conditions, including adjusting for environmental variables like
waves, wind, or obstacles. This level of autonomy enhances operational efficiency while maintaining human oversight for safety and reliability
*Docking
and Charging Systems*
OPT
continues to refine and improve its at-sea docking and charging system that integrates a PowerBuoy® with a WAM-V® platform. This
system is designed to extend the duration of autonomous missions by enabling unmanned surface vehicles to recharge autonomously in the
field. Test data and user feedback informs subsequent design iterations and validation protocols.
These
initiatives support our objective of offering persistent, autonomous systems that reduce lifecycle cost and increase mission resilience
in both government and commercial deployments.
7
**Competition
and Competitive Positioning**
We
operate in the converging sectors of USVs, ocean sensing and surveillance platforms, and offshore renewable energy systems. Our competitors
include companies that offer:
- Standalone USV systems for inshore, nearshore, or offshore environments;
- MDA software and data platforms;
- Legacy power infrastructure (e.g., subsea cabling, diesel generators); and
- Integrated surveillance and ocean infrastructure solutions, including manned systems, offered by divisions of large defense contractors or venture-backed maritime technology firms.
The
USV sector remains dynamic, with increasing competition as entrants focus on niche applications across varied marine environments. A
significant development in this market occurred in June 2024, when the U.S. Navy awarded a $982 million multiple-award contract to 49
vendors, signaling a move toward large-scale collaboration and integrated systems development. This marks a departure from the historically
fragmented USV market and could impact contracting and teaming dynamics in future procurements.
The
autonomous buoy segment remains comparatively early-stage and fragmented. It is generally divided between grid-connected solutions and
smaller-scale autonomous systems. OPT remains focused on the non-grid segment. To our knowledge, few competitors currently offer fully
commercialized, continuously deployed platforms with persistent, renewable power generation. This reflects the nascency of the market,
which continues to evolve through research and development programs, demonstration projects, and limited initial deployments.
**Competitive
Differentiators**
Despite
the presence of larger industry participants, OPT seeks to differentiate through a combination of vertically integrated products, operational
deployment history, and business model flexibility. Our competitive positioning is based on the following characteristics:
- **Integrated, Autonomous Maritime Infrastructure**
OPT
offers a suite of interoperable platforms—PowerBuoy®, WAM-V® USVs, and the Merrows™ data system—designed to
function as a cohesive ocean intelligence network. This integration may reduce logistical complexity and improve system interoperability
for customers compared to point-solution providers.
- **Renewable, Persistent Power Delivery**
The PowerBuoy® platform generates renewable energy from any combination of wave motion, solar, and wind and includes battery storage
to enable continuous power for sensors, communications systems, and mission payloads in remote ocean areas. This reduces or eliminates
reliance on fossil fuel-based power systems or vessel-based servicing, materially reducing customer costs.
- **Modular and Scalable Design**
Our
WAM-V® and PowerBuoy® product lines are designed for payload modularity and field customization. This architecture supports multiple
mission types and promotes asset reuse across use cases and customers.
- **Field-Proven Performance**
As
of April 30, 2025, OPT has deployed over 80 WAM-V® platforms globally and completed multiple operational deployments of PowerBuoy®
systems in varying marine conditions. These deployments contribute to our operational validation record, though additional deployments
and independent assessments are ongoing.
- **Lifecycle Cost Efficiency**
OPT’s
systems are intended to reduce lifecycle operating costs by minimizing the need for crewed vessels, fuel logistics, and routine on-site
maintenance. Our service-based business models RaaS, Daas, and PaaS may further lower customer acquisition barriers and enhance revenue
predictability.
- **Alignment with National and Allied Security Priorities**
Our
solutions are designed to align with stated U.S. government objectives, including the Department of Homeland Security’s National
MDA Plan and the U.S. Coast Guard’s Unmanned Systems Strategy. Areas of application include persistent surveillance, Exclusive
Economic Zone (EEZ) enforcement, and offshore infrastructure monitoring.
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- **Agility and Customer Responsiveness**
OPT’s organizational structure and scale may provide an advantage in prototyping, iteration, and customer collaboration. Because
OPT has an agile, lean organizational structure and smaller scale, it can more rapidly develop, test, and modify prototypes and incorporate
customer feedback into new iterations. This speed is crucial when customers need a solution tailored to a specific mission, threat, or
environment. In addition, this customer intimacy fosters trust and can lead to long-term relationships, especially in environments like
NATO, UN, or U.S.-led coalitions where interoperability and mission alignment are key.
**Recent
Contracts and Commercial Developments**
During
fiscal 2025 and fiscal 2026 to date, OPT executed several commercial transactions that expanded our international presence and supported
strategic positioning in defense and commercial maritime sectors:
- **Facility Security Clearance Level (FL)**: In fiscal 2025, our corporate headquarters and primary assembly facility in New Jersey was granted a Facility Security Clearance Level (“FCL”) by the U.S. Department of Defense. The FCL authorizes OPT to support classified U.S. government programs at the Secret level, subject to compliance with national industrial security program requirements. The FCL increases our eligibility for classified defense contracts and affirms our compliance with personnel, physical, and cybersecurity standards.
- **International Merrows™ PowerBuoy® Deployment**: In May 2025, we shipped an AI-enabled Merrows™ PowerBuoy® to a customer in the Middle East. This shipment followed a competitive procurement process in which OPT was selected as a preferred vendor for Merrows-equipped platforms.**USV Contract**: Also in May 2025, OPT entered into a contract with an international defense agency to supply multiple WAM-V® USVs. This transaction represents a material expansion of our footprint in allied defense markets and is expected to support future growth in our platform-based services.
- **Latin American Sales**: Between December 2024 and January 2025, we received purchase orders totaling approximately $5 million for PowerBuoy® and WAM-V® platforms from customers in Latin America. These transactions include product sales and associated support services and will be fulfilled over multiple quarters.
- **Naval Postgraduate School Deployment**: In September 2024, we were awarded a contract from the U.S. Naval Postgraduate School to deploy a PowerBuoy® equipped with the Merrows™ system in Monterey Bay, California. The contract supports testing of persistent maritime surveillance capabilities in an academic and operational context. This buoy was deployed in July 2025.
- **OEM Agreement with Teledyne Marine**: In June 2024, we executed an OEM agreement with Teledyne Marine. This agreement enables integration of Teledyne’s sensor and subsea technology with OPT’s wave energy and autonomous platforms. We believe this partnership strengthens our technical offering, but the commercial impact will depend on customer adoption in future joint projects.
- **OEM Agreement with Teledyne Marine**: In June 2024, we executed an Original Equipment Manufacturer (OEM) agreement with Teledyne Marine. This agreement enables integration of Teledyne’s sensor and subsea technology with OPT’s wave energy and autonomous platforms. We believe this partnership strengthens our technical offering, but the commercial impact will depend on customer adoption in future joint projects.
- OPT has established numerous strategic partnerships designed to capitalize on growing global demand, particularly in the middle east and Latin America:
○ **Remah International Group (“RIG”**): In October 2024, OPT appointed RIG as its exclusive distributor for defense and security solutions within the United Arab Emirates. Under this agreement, RIG is responsible for promoting, distributing, selling, and servicing OPT’s suite of maritime technologies, including the WAM-V® USVs, the PowerBuoy®, and the AI-capable Merrows™ system.
○ **Unique Group**: We have established a strategic partnership with Unique Group, a UAE-headquartered global innovator in subsea technologies and engineering. Announced in July 2024, this collaboration focuses on deploying OPT’s WAM-V® USVs across the United Arab Emirates and other Gulf Cooperation Council (GCC) countries for commercial customers primarily active in the offshore energy industry.
9
○ **Elektron SAS**: We have entered into a strategic partnership with Elektron SAS, a Colombia-based specialist in hydrographic and oceanographic instrumentation services. Announced in April 2025, this collaboration includes a $4 million purchase commitment for OPT’s suite of intelligent maritime technologies, encompassing the WAM-V® USVs, the PowerBuoy®, and the AI-powered Merrows™ platform.
○ **Ocean Wave Solutions (“OW**S”): During the third quarter of fiscal 2025 we established a strategic partnership with Ocean Wave Solutions Ltda (OWS)**,** a Brazil**-**based company, to serve as its authorized distributor in the Brazilian market. This collaboration is part of OPT’s broader initiative to expand its global footprint by leveraging local expertise and networks. This alliance aims to address the growing demand for autonomous and sustainable ocean technologies in Brazil, particularly in sectors such as offshore energy, environmental monitoring, and maritime security.
○ **Red Cat Holdings**: In April 2024, OPT entered a strategic alliance with Red Cat Holdings, Inc. (“Red Cat”), a U.S.-based provider of drone technologies for defense and commercial applications. The collaboration is focused on integrating Red Cat’s small unmanned aircraft systems (sUAS) with OPT’s autonomous maritime platforms, including the PowerBuoy® and WAM-V®. This integration is designed to deliver persistent, multi-domain situational awareness by combining Red Cat’s modular, night-vision-enabled drones with OPT’s ocean-powered infrastructure. The PowerBuoy® serves as a persistent power and communications node by harvesting wave energy, while the WAM-V® provides mobile, autonomous surface capabilities in a variety of sea states. The alliance advances OPT’s strategy to deliver interoperable, autonomous systems for defense, intelligence, and security missions, enhancing operational endurance, real-time intelligence, and force protection in maritime environments.
- **24/7 Global Service Support Launch**: Also in June 2024, OPT launched a global 24/7 service support program to enhance customer response capabilities for deployed systems. This initiative supports our strategy to grow recurring service revenue and strengthen long-term customer relationships.
**Backlog**
As
of April 30, 2025, our contract backlog was approximately $12.5 million, compared to $4.9 million as of April 30, 2024. The backlog represents
the value of unfulfilled, purchase orders and agreements with commercial and governmental customers. If any of our contracts were to be terminated, our backlog would be reduced
by the expected value of the remaining terms of such contract.
Backlog
figures do not necessarily reflect future revenue, as orders may be adjusted, delayed, or canceled, and our recognition of associated
revenue is subject to the terms of the underlying agreements. The size of our backlog may also fluctuate materially based on the timing
of new awards, contract renewals, or the conclusion of long-term engagements. Consequently, while we view backlog as a useful performance
indicator, it should not be relied upon as a predictor of future results.
**Product
and Solution Development**
OPT
continues to prioritize the development and commercialization of modular, autonomous solutions for offshore energy, data acquisition,
and maritime domain awareness. Our development strategy is informed by customer use cases, operational field data, and regulatory trends,
and is focused on delivering scalable capabilities that support persistent and intelligent ocean infrastructure.
Our
approach emphasizes disciplined capital allocation, with a focus on near-term commercial viability and alignment with long-term Company
strategy and platform goals. As of April 30, 2025, our product development activities primarily support enhancements to existing systems.
However, we expect to expand these efforts to include new platform capabilities, advanced autonomy features, and mission-specific configurations
in response to evolving customer requirements and emerging market opportunities
**Key
In-Development Programs**
- **WAM-V® Autonomy Stack**
OPT is advancing a proprietary autonomy framework for the WAM-V® USV vehicle platform. Features in development include edge-based navigation, adaptive mission planning, obstacle avoidance, and fleet coordination logic. These enhancements are designed to reduce operator workload and support persistent, autonomous operation across varied maritime environments.
10
- **Docking and Charging Infrastructure**
We
are advancing new platform capabilities, enhanced autonomy features, and mission-specific configurations in response to evolving customer
requirements and emerging market opportunities
These
systems are designed to extend operational duration, reduce logistical support requirements, and facilitate closed-loop surveillance
networks in remote or contested waters. A field demonstration has been completed, and refinement of hardware and software integration
is ongoing.
- **Maritime Resiliency Enhancement**
We
are continuing to enhance the resiliency of our WAM-V platforms, further improving operational envelopes, in-situ servicing, and the
ability to utilize a wide range of propulsion systems. These enhancements also include the ability to increase payloads and deploy a
wide range of systems, from unmanned underwater and surface assets, to towing sonars (sound navigation and ranging (Sonar), a technology
that uses sound waves to detect, locate, and characterize objects underwater) for seabed mapping and mine counter measures.
These
initiatives reflect OPT’s long-term focus on enabling persistent ocean operations through platform self-sufficiency, data continuity,
and autonomous system interoperability. We expect these technologies to enhance the value proposition of our service models (e.g., RaaS,
Raas and DaaS), though the timing and scale of commercial adoption will depend on customer demand, technical milestones, and system-level
testing outcomes.
**Product
Roadmap and Innovation Focus**
Our
product development roadmap is driven by three primary inputs:
1. **Customer Feedback and Operational Data**
Insights from deployments inform feature prioritization, systems hardening, and performance optimization.
2. **Strategic Technology Integration**
We are evaluating opportunities to incorporate adjacent technologies, such as aerial drones, autonomous underwater vehicles (AUVs), and remote sensing modules, into our platform suite through partner collaboration and joint development efforts.
3. **Long-Term AI/ML and Data Strategy**
As part of our innovation roadmap, we are developing artificial intelligence and machine learning applications for mission automation, anomaly detection, and data prioritization. We are also assessing requirements for secure, cloud-enabled data environments to support multi-platform information sharing and operational analytics.
**Intellectual
Property**
We
maintain an intellectual property (IP) portfolio that supports our operations across autonomous maritime systems, wave energy conversion,
and integrated ocean intelligence solutions. Our IP strategy is designed to protect proprietary technology, promote long-term product
differentiation, and support commercial growth in both U.S. and international markets.
As
of April 30, 2025, OPT held approximately 70 issued U.S. patents covering innovations in the following categories:
- Buoy system architecture, including energy conversion, battery charging systems, power take-off mechanisms, and control circuitry;
- Wave energy control systems and thermal/wave hybrid power conversion;
- Mooring and anchoring systems, including subsea cabling and marine connectors;
- Multi-unit wave energy farm network configurations;
- Autonomous charging interfaces for USVs;
- WAM-V® platform technologies, including modular propulsion and control systems; and
- Buoy-based communications infrastructure using LTE, satellite, and mesh technologies.
Our
patents have staggered expiration dates, extending through fiscal year 2041. No individual patent is considered material to our business.
However, the collective breadth and interconnectivity of the portfolio provide meaningful protection for our core systems and solutions.
11
In
addition to patents, we rely on trade secrets, proprietary engineering processes, and non-public technical documentation. Certain technologies
were developed under government-funded programs and may be subject to U.S. federal government use rights under the Bayh-Dole Act and
related provisions.
OPT
also holds and maintains registered U.S. trademarks critical to brand identity and market differentiation, including PowerBuoy®,
WAM-V®, and Merrows™.
Our
intellectual property portfolio is reviewed periodically to assess enforceability, alignment with strategic product roadmaps, and licensing
opportunities. We may pursue additional filings or commercial partnerships to expand our IP base and enter new applications or jurisdictions.
**Regulatory
Environment**
OPT’s
operations are subject to a range of domestic and international laws, regulations, and technical standards that affect product design,
deployment, data handling, and defense-related contracting. Our ability to operate effectively in key markets depends in part on maintaining
compliance across multiple regulatory regimes.
**Facility
Security Clearance**
OPT
currently holds a Facility Security Clearance (FCL) from the U.S. Department of Defense, which allows our company to access and perform
work on contracts involving classified information at the “Secret” level. This clearance supports our eligibility to participate
in certain U.S. government programs, particularly in the defense and intelligence sectors.
To
maintain this clearance, OPT is required to comply with a range of ongoing security and operational requirements under the National Industrial
Security Program (NISP). These requirements include:
- Personnel Screening: Key management personnel and employees who access classified information must hold active U.S. government security clearances.
- Facility Safeguards: Classified information must be stored, handled, and transmitted in secure areas using approved security systems and procedures.
- Designated Security Officer: We are required to designate a trained Facility Security Officer (FSO) who manages our industrial security program and coordinates with government agencies.
- Insider Threat Program: OPT must operate a formal insider threat detection and reporting program, including employee training and risk mitigation practices.
- Export and Foreign Ownership Compliance: If foreign ownership or influence is present, OPT must disclose this to the U.S. government and implement approved safeguards to mitigate potential risks.
- Security Training: All cleared personnel must complete initial and annual security training, including awareness of insider threats and reporting obligations.
- Ongoing Oversight: The company is subject to periodic inspections and reviews by the Defense Counterintelligence and Security Agency (DCSA), which oversees compliance with federal security regulations.
Failure
to comply with these requirements could result in the suspension or revocation of our security clearance, which may impact our ability
to perform on classified contracts or bid on certain U.S. government opportunities.
**Export
Control and Trade Compliance**
We
are subject to U.S. export control laws, including the International Traffic in Arms Regulations (ITAR) and the Export Administration
Regulations (EAR). Certain technologies, components, and technical data integrated into OPT systems may require U.S. government authorization
for export, re-export, or third-party access. OPT maintains internal compliance protocols to support adherence to applicable export control
requirements and customer-specific licensing obligations.
**Maritime
and Offshore Operations**
Our
PowerBuoy® and WAM-V® platforms operate in offshore and nearshore environments and may be subject to regulation by the U.S. Coast
Guard, Bureau of Ocean Energy Management, and other federal or local agencies. For international deployments, we work with country-specific
maritime authorities to obtain operational approvals and ensure environmental and navigational compliance.
12
**Telecommunications
and Data Transmission**
Several
OPT platforms transmit real-time operational data via satellite, LTE/5G, or other secure communications channels. These activities are
subject to domestic and international telecommunications regulation, including oversight by the Federal Communications Commission (FCC)
and analogous bodies abroad. OPT maintains policies to ensure frequency band licensing, data privacy compliance, and secure communications
protocols are met.
**Government
Contracting and Compliance**
As
a contractor and supplier to U.S. government agencies—including the Department of Defense (DoD), Department of Energy (DOE), and
National Oceanic and Atmospheric Administration (NOAA)—we are subject to the Federal Acquisition Regulation (FAR), Defense Federal
Acquisition Regulation Supplement (DFARS), and other federal procurement standards. These frameworks govern cybersecurity, ethics, cost
allowability, and reporting obligations. We are also subject to the terms of government funding agreements that may impose IP licensing
restrictions or data rights limitations.
**Environmental
and Safety Regulation**
OPT
systems are engineered to operate with low emissions and minimal environmental impact. However, we are subject to regulations governing
offshore noise, emissions, marine habitat protection, and operational safety. Our compliance posture is evaluated on a jurisdiction-by-jurisdiction
basis, and we continuously monitor evolving sustainability mandates across key markets.
**Assembly
Facilities and Operations**
OPT
conducts in-house assembly and integration activities at two primary U.S.-based locations:
- Monroe Township, New Jersey: Our headquarters facility includes approximately 56,000 square feet of combined manufacturing, assembly, engineering, and administrative space. This site supports the production and integration of our PowerBuoy®, WAM-V®, and Merrows™ platform components and serves as our principal site for final system testing and quality assurance. The facility includes configurable production areas that can be scaled to accommodate increased manufacturing volumes.
- Richmond, California: Our West Coast facility supports prototyping, on-water testing, final integration, and mission readiness activities for deployments in the Pacific region. This location also provides additional surge manufacturing capacity to support variable customer demand and lead-time-sensitive programs.
Together,
these facilities support OPT’s ability to meet current production requirements, provide geographic flexibility for field operations,
and maintain lead-time responsiveness for government and commercial projects.
We
believe our existing facilities are adequate for our near production needs. We continuously monitor demand forecasts and contract volume
to assess whether further investment or expansion will be required. If customer demand materially increases, we may consider expanding
our footprint, increasing shifts, or utilizing contract manufacturing partnerships.
**Human
Capital Management**
We
recognize that our workforce is central to our innovation, operational performance, and long-term business success. As of April 30, 2025,
OPT employed 53 full-time employees, all located in the United States. We believe our ability to attract, develop, and retain a skilled
workforce is critical to the execution of our strategic and technical objectives.
13
**Workplace
Culture and Inclusion**
OPT
is an equal opportunity employer. Employment decisions are made without regard to race, gender, age, disability, veteran status, or other
characteristics protected by applicable law. We are committed to fostering an inclusive, respectful, and diverse work environment and
continue to evaluate ways to improve equity across our workforce and talent pipeline.
**Quality,
Health, Safety, and Environmental**
We
maintain a Quality, Health, Safety, and Environmental (QHSE) program designed to promote operational safety, risk mitigation, and compliance
with applicable occupational health and safety regulations. Our primary manufacturing sites in Monroe Township, New Jersey and Richmond,
California are ISO 45001 certified , the international occupational health and safety management standard.
Key
elements of our QHSE program include:
- Stop-work authority and proactive hazard identification practices;
- Monitoring of leading and lagging safety indicators;
- Structured incident investigation and root cause analysis protocols;
- Ongoing safety training and employee engagement.
In
July 2025 we were awarded ISO 9001 certification. ISO 9001 is the world’s most recognized quality management standard, awarded
to organizations that consistently provide products and services that meet customer and regulatory requirements.
**Carbon
Impact and Emissions Reductions**
Our
products are designed to reduce greenhouse gas emissions by replacing fossil fuel-based systems in offshore monitoring, security, and
energy applications. The following Company estimates reflect modeled displacement of diesel-based maritime activity, based on representative
deployments:
- PowerBuoy® Units: Estimated to displace ~4 metric tons of CO₂ annually per unit, equivalent to removing approximately two passenger vehicles from the road.
- Merrows™ Maritime Domain Awareness Deployments: In scenarios where manned patrol vessels are replaced, estimated CO₂ displacement exceeds 300 metric tons per 10 vessel-days.
- WAM-V® Survey Operations: Autonomous survey missions have demonstrated potential CO₂ reductions of ~14 metric tons per vessel-day, or up to 1,300 metric tons over a multi-week deployment.
We
are in the process of building a carbon tracking database to support data verification and environmental performance reporting. These
estimates are based on internal models and publicly available benchmarks and practice and may be refined as additional field data becomes
available.
**Sustainable
Development and Marine Protection**
OPT’s
mission is aligned with UN Sustainable Development Goal 14 (Life Below Water). Our technologies are used in applications that support:
- Detection and deterrence of IUU fishing;
- Collection of oceanographic and climate-related data for scientific and regulatory use;
- Reduction of reliance on fuel-based vessels and infrastructure.
**Operational
Sustainability and Product Risk Review**
In
fiscal 2023, we completed a facility energy audit in collaboration with the New Jersey Clean Energy Program and conducted a corporate
carbon footprint assessment. We offset 100% of calculated emissions from our headquarters and business travel. We also initiated a product-level
environmental impact assessment for the PowerBuoy® platform. Based on external review and regulatory agency feedback (including from
NOAA and the U.S. Army Corps of Engineers), PowerBuoy® platforms were determined to pose no material harm to marine ecosystems. Key
safety features include:
- Absence of rare earth or toxic metals in batteries;
- Minimal fire or explosion risk; and
- Remote energy discharge capability for emergency shutdown.
14
We
are currently assessing the WAM-V® platform for materials safety and its impact on sensitive marine habitats.
**Available
Information**
Our
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports are made
available free of charge through the Investor Relations section of the Company’s website (www.oceanpowertechnologies.com) as soon
as practicable after such material is electronically filed with, or furnished to, the SEC. Material contained on our website is not incorporated
by reference in this report. Our executive offices are located at 28 Engelhard Drive, Suite B, Monroe Township, New Jersey, 08831, and
our telephone number is (609) 730-0400. Since June 2021, our common stock has traded on the NYSE American exchange under the symbol “OPTT”,
and previously, it traded on Nasdaq under the same symbol. The public may also read and copy any materials that we file with the Securities
and Exchange Commission (“SEC”) at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The
public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains
an Internet website that contains reports and other information regarding issuers that file electronically with the SEC located at http://www.sec.gov.
**ITEM
1A. *RISK FACTORS***
You
should carefully consider the following risk factors together with the other information contained in this Annual Report, and in prior
periodic and current reports. If any of the following risks occur, they may materially harm our business and our financial condition
and results of operations. In this event, the market price of our common stock could decline, and your investment could be lost.
**Risks
Related to Our Financial Condition**
***We
have a history of operating losses and may not achieve or maintain profitability and positive cash flow.***
We
have incurred net losses since we began operations in 1994, including net losses of $21.5 million and $27.5 million in fiscal 2025 and
2024, respectively. As of April 30, 2025, we had an accumulated deficit of $329.1 million. Our losses to date have resulted primarily
from costs incurred in our research and development programs and from our selling, general and administrative costs. As we continue to
develop our proprietary technologies, we expect to continue to have a net loss and use of cash from operating activities unless or until
we achieve positive cash flow from the commercialization of our products and services.
We
do not know whether we will be able to successfully commercialize our products and services or whether we can achieve profitability.
There is significant uncertainty about our ability to successfully commercialize our products in our targeted markets. Even if we do
achieve commercialization of our products and services and become profitable, we may not be able to achieve or, if achieved, sustain
profitability on a quarterly or annual basis.
***Loss
of U.S. Government Security Clearances Could Harm Our Business***
We
maintain a Facility Security Clearance (FCL) at the Secret level, which enables us to perform on U.S. government contracts that involve
access to classified information. Our eligibility to maintain this clearance is subject to the requirements of the National Industrial
Security Program, administered by the Defense Counterintelligence and Security Agency (DCSA). If we fail to comply with these requirements,
such as through deficiencies in our security protocols, loss of cleared personnel and inability to replace these people in key roles,
or failure to report material organizational changes, our FCL may be suspended or revoked. If FCL is suspended or revoked, OPT will no
longer be able to participate or bid on . contracts that involve classified information.
15
In
addition, any foreign ownership, control, or influence (FOCI), whether through investment, merger, or acquisition, must be mitigated
to DCSA’s satisfaction through an approved security agreement. Failure to properly mitigate FOCI or to obtain required pre-clearance
from DCSA could jeopardize our clearance status. Loss of our FCL would prevent us from bidding on or performing contracts requiring classified
access and could result in the termination of existing classified work, adversely impacting our financial performance and long-term strategic
positioning in the defense and intelligence markets.
***We
may not be able to raise sufficient capital to continue to operate our business.***
Historically,
we have funded our business operations through sales of equity securities. We have raised approximately $23.4 million during fiscal 2025,
and had an unrestricted cash balance of $6.7 million as of April 30, 2025. We do not know whether we will be able to secure additional
funding if needed in the future or, if secured, whether the terms will be favorable to us or our investors. Our ability to obtain additional
funding will be subject to several factors, including market conditions, our operating performance, litigation and investor sentiment.
These factors may make additional funding unavailable, or the timing, dollar amount, and terms and conditions of additional funding unattractive.
If
we issue additional securities to raise capital, our existing shareholders could experience dilution or may be subordinated to any rights,
preferences or privileges granted to the new security holders. Any new securities issued could have rights senior to those associated
with our common stock and could contain covenants that could restrict our operations. Should the financing we require to sustain our
working capital needs be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition
and prospects could be materially and adversely affected.
***Our
business could be affected by macroeconomic risks.***
The
Company’s operations and performance depend significantly on global and regional economic conditions. Macroeconomic conditions,
including inflation, slower growth or recession, changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment
and currency fluctuations can materially and adversely affect demand for the Company’s products and services. In addition, confidence
and spending can be materially adversely affected in response to financial market volatility, negative financial news, declines in income
or asset values, energy market dislocations and cost increases, labor and healthcare costs and other economic factors. An adverse impact
on demand for the Company’s products, uncertainty about, or a decline in, global or regional economic conditions can have a significant
impact on the Company’s suppliers and other partners. Potential effects include financial instability; inability to obtain credit
to finance operations and purchases of the Company’s products; and insolvency. We cannot predict the timing or scale of these various
macroeconomic conditions, but they could have a material adverse effect on our business, results of operations and financial condition.
***Changes
to U.S. tariff and import/export regulations may have a negative effect on us.***
There
have been significant changes to United States trade policies, treaties and tariffs, and in the future there may be additional significant
changes. These and any future developments, and continued uncertainty surrounding trade policies, treaties and tariffs, may have a material
adverse effect on global economic conditions, inflation and the stability of global financial markets, and may significantly reduce global
trade and, in particular, trade between the impacted nations and the United States. Any of these factors could depress economic activity
and restrict our access to suppliers or customers, increase our supply-chain costs and expenses and could have material adverse effects
on our business, financial condition and results of operations.
16
***Any
current or future indebtedness may limit our operations and our use of our cash flow, and any failure to comply with the covenants that
apply to any indebtedness could adversely affect our liquidity and financial condition.***
We
have issued $10.0 million in convertible notes to investors and have the option to issue up to an additional $15.0 million in convertible
notes under the same investment agreement. Our debt level and the need to meet related covenants can have negative consequences. We may
incur more debt in the future, and there can be no assurance that our cost of funding will not substantially increase. The convertible
notes also impose certain restrictions on us, including financial covenants and events of default. Upon an event of default, for example,
the lenders can get an increased rate of return and force a redemption, which could adversely affect our liquidity and financial condition.
***Any
failure to meet our debt obligations could damage our business.***
Our
ability to meet our obligations under our convertible notes will depend on market conditions and our future performance, which is subject
to economic, financial, competitive, and other factors beyond our control. If we are unable to remain profitable, or if we use more cash
than we generate in the future, our level of indebtedness at such time could adversely affect our operations by limiting or prohibiting
our ability to obtain financing for additional capital expenditures, acquisitions and general corporate purposes. In addition, if we
are unable to make payments as required under the convertible notes, we would be in default, which could seriously harm our business.
If we incur more debt, this could intensify the risks described above.
***Adverse
developments affecting the financial services industry, including events or concerns involving liquidity, defaults, or non-performance
by financial institutions, could adversely affect our business, financial condition, or results of operations.***
We
currently maintain cash balances in accounts at U.S. financial institutions that we believe are high quality. These accounts are in non-interest-bearing
and interest-bearing operating accounts and may, from time to time, exceed the Federal Deposit Insurance Corporation (“FDIC”)
insurance limits. If such banking institutions were to fail, we could lose all or a portion of those amounts held more than such insurance
limitations. In addition, actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect
financial institutions, our third-party vendors and counterparties or other companies in the financial services industry or the financial
services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in
the future lead to market-wide liquidity problems, which could adversely affect our business, financial condition, results of operations
and liquidity.
Although
we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements
in amounts adequate to finance or capitalize our respective current and projected future business operations could be significantly impaired
by factors that affect us, the financial institutions with which we have arrangements directly, or the financial services industry or
economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform
obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial
services industry or financial markets or concerns or negative expectations about the prospects for companies in the financial services
industry. These factors could involve financial institutions or financial services industry companies with which we have financial or
business relationships but could also include factors involving financial markets or the financial services industry generally.
In
addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing
terms, including higher interest rates or costs, and tighter financial and operating covenants, or systemic limitations on access to
credit and liquidity sources, thereby making it more difficult for us to acquire future financing or access to capital on acceptable
terms or at all. As the ability to access capital has historically been, and is expected to continue to be, one of our primary sources
of liquidity, any adverse impacts on our ability to access such credit and liquidity sources as a result of adverse developments affecting
the financial services industry could adversely affect our business, financial condition, results of operations.
17
***Currency
translation and transaction risk may adversely affect our business, financial condition and results of operations.***
Our
reporting currency is the U.S. dollar, however sometimes we incur costs in the local currency of countries in which our customers and
suppliers are located. As a result, we are subject to currency translation risk. A percentage of our revenue has historically been generated
outside the U.S. and can be denominated in foreign currencies of our customers. Changes in exchange rates between foreign currencies
and the U.S. dollar could affect our revenue and cost of revenue and could result in exchange losses. We cannot accurately predict the
impact of future exchange rate fluctuations on the results of our operations. Currently, we do not engage in any exchange rate hedging
activities and, as a result, any volatility in currency exchange rates may have an immediate adverse effect on our business, financial
condition and results of operations.
**Risks
Related to Growth of Our Business**
***If
sufficient demand for our solutions and services or new products does not develop or takes longer to develop than we anticipate, our
revenue generation will be limited, and it is unlikely that we will be able to achieve and, if achieved, then sustain profitability.***
Even
if wave energy and maritime domain awareness technology achieve broad commercial acceptance, our products, including our MDAS offering,
NextGen PB and Legacy PB and WAM-V® autonomous surface vessels may not prove to be commercially viable technologies. We
have invested a significant portion of our time and financial resources since our inception in the development of our PowerBuoys®
but have not yet achieved successful large scale or profitable commercialization of our PowerBuoys®. We have also added
the WAM-V® product line, but we have not achieved profitability with this product line. As we seek to manufacture, market,
sell and deploy our PowerBuoys® and WAM-Vs® in greater quantities, we may encounter unforeseen hurdles that would
limit the commercial viability of these products, including unanticipated manufacturing, deployment, operating, maintenance and other
costs. We may also encounter technical obstacles to deploying, operating and maintaining PowerBuoys®, WAM-Vs®, or
other products.
If
demand for our solutions and products fails to develop sufficiently, it is unlikely that we will be able to grow our business or generate
sufficient revenue.
In
addition, if we are not successful in commercializing our new solutions and products, or are significantly delayed in doing so, our business,
financial condition and results of operations will be adversely affected.
***If
we are unable to attract and retain management and other qualified personnel, we may not be able to achieve our business objectives.***
Our
success depends on the skills, experience and efforts of our management and other key product development, manufacturing, and sales and
marketing employees. We cannot be certain that we will be able to attract, retain and motivate such employees. The loss of the services
of one or more of these employees could have a material adverse effect on our business. There is a risk that we will not be able to retain
or replace these key employees. Implementation of our business plans will be highly dependent upon our ability to hire and retain senior
executives as well as talented staff in various fields of expertise.
Changes
in senior management are inherently disruptive, and efforts to implement any new strategic or operating goals may not succeed in the
absence of a long-term management team. Changes to strategic or operating goals stemming from the appointment of new executives may themselves
prove to be disruptive. Periods of transition in senior management leadership are often difficult as new executives gain detailed knowledge
of our operations. Cultural differences may also impact changes in strategy and style. Without consistent and experienced leadership,
customers, employees, suppliers, creditors, shareholders and others may lose confidence in us.
18
To
be successful, we need to attract and retain key personnel. Qualified individuals, including engineers, software developers, project
managers and sales leadership, are in high demand, and we may incur significant costs to attract and retain them. All our employees are
at-will employees, which means they can terminate their employment relationship with us at any time, and their knowledge of our business
and industry would be difficult to replace. If we lose key personnel, or do not hire or retain other personnel for key positions, this
could have a material adverse effect on our business, financial condition, results of operations or cash flows.
***Our
non-U.S. sales and operations are subject to risks inherent in conducting business outside the U.S., many of which are beyond our control
including****:*
- political and social attitudes, laws, rules, regulations, and policies within countries that favor local companies over U.S. companies,
including government-supported efforts to promote local competitors;
- new and expanded U.S. tariffs enacted in 2025 on imported components, particularly from China, have the potential to increase the cost
of materials used in our PowerBuoy®, WAM-V®, and Merrows™ platforms. These tariffs may also lead to supply chain delays,
reduced margins, and increased pricing pressure. If we cannot mitigate these impacts through sourcing alternatives or operational efficiencies,
our business and financial performance could be adversely affected;
- differing legal systems and standards of trade which may not honor our intellectual property rights, and which may place us at a competitive
disadvantage;
- pressures from foreign customers and foreign governments for us to increase our operations in the foreign country, which may necessitate
the sharing of sensitive information and intellectual property rights;
- multiple conflicting and changing governmental laws and regulations, including varying labor laws and tax regulations;
- reliance on various information systems and information technology to conduct our business, making us vulnerable to cyberattacks by third
parties or breaches due to employee error, misuse, or other causes, that could result in business disruptions, loss of or damage to our
intellectual property and confidential information (and that of our customers and other business partners), reputational harm, transaction
errors, processing inefficiencies, or other adverse consequences;
- regional or global economic downturns or recessions, varying foreign government support, unstable political environments, and other changes
in foreign economic conditions;
- the impact of public health epidemics, such as the COVID-19 pandemic, on employees, suppliers, customers and the global economy;
- difficulties in managing a global enterprise, including staffing, managing distributors and representatives, and repatriating cash;
- longer sales cycles and difficulties in collecting accounts receivable; and
- different customs and ways of doing business.
To
date, our operations have not been materially adversely affected by global conflicts including Russia’s invasion of Ukraine, the
current Israel/Palestine conflict, or the recent attacks on merchant ships in the Red Sea. However, further escalation of these or other
conflicts could result in, among other negative consequences, a disruption to the global economy and supply chain leading to a shortage
of parts, materials and services needed to manufacture and timely deliver our products. Any such shortages could negatively impact our
suppliers’ ability to meet our demand requirements and, in turn, our ability to satisfy our customer demand. These challenges,
together with other challenges associated with operating an international business, may adversely affect our ability to recognize revenue
and our other operating results.
19
***If
we are unable to effectively manage our growth, this could adversely affect our business and operations.***
The
scope of our operations to date has been limited, and we do not have experience operating on the scale that we believe may be necessary
to achieve profitable operations. We added two acquisitions over the last three fiscal years (one of which was subsequently divested
in November 2023), and now have operations in New Jersey and California, without significantly increasing our support staff. Our current
personnel, facilities, systems and internal procedures and controls may not be adequate to support our future growth plans, which we
expect to include organic growth as well as additional acquisitions and partnerships. This factor, when combined with the technical complexity
of some of our development efforts, may result in our inability to meet certain customer expectations or deadlines and could result in
an amendment to, or termination of, customer contracts or relationships. To realize our desired growth, we may need to add sales, marketing
and engineering offices in our existing and/or additional locations nationally or internationally, which may result in additional organizational
complexity and cost.
To
manage the expansion of our operations, we may be required to improve our operational and financial systems, procedures and controls,
increase our manufacturing capacity and expand, train and manage our employee base, which may need to increase significantly if we are
to be able to fulfill our current manufacturing and growth plans. Our management may also be required to maintain and expand our relationships
with customers, suppliers and other third parties, as well as attract new customers and suppliers. If we do not meet these challenges,
we may be unable to take advantage of market opportunities, execute our business strategies or respond to competitive pressures.
***If
we are unable to successfully negotiate and enter into service contracts with our customers on terms that are acceptable to us, our ability
to diversify our revenue stream will be impacted.***
An
important element of our business strategy is to enter into service contracts with our customers under which we would be paid fees for
services related to the maintenance and operation of our products purchased from us. In addition, we may offer to lease our products,
sell power generated by our products or sell data gathered by sensors on our products. Even if customers purchase or lease our products,
they may not enter into service contracts with us. We may not be able to negotiate services or other contracts that provide us with any
additional profit opportunities. Even if we successfully negotiate and enter into such service contracts, our customers may terminate
them prematurely, or they may not be profitable for a variety of reasons, including the presence of unforeseen hurdles or costs. In addition,
if we were unable to perform adequately under such service contracts, our efforts to successfully market our products could be impaired.
Any one of these outcomes could have an adverse effect on our business, financial condition and results of operations.
***Actions
of activist shareholders could be disruptive and costly and the possibility that activist shareholders may gain representation on or
control of our board of directors could adversely affect our results of operations, financial condition, or share price.***
While
we strive to maintain constructive communications with our shareholders, we have been, and may in the future be, subject to actions initiated
by activist shareholders,. While the Company has successfully defended against these lawsuits, these efforts resulted in significant
expense and management distraction. Any activist campaign against OPT that contests, conflicts with, or seeks to change, our board composition,
leadership, strategic direction, or business mix could have an adverse effect on us because: (i) responding to actions by activist shareholders
could disrupt our operations, be costly or time-consuming, or divert the attention of our board of directors and senior management from
their regular duties, which could adversely affect our results of operations or financial condition; (ii) perceived uncertainties, including
as a result of possible changes to the composition of our board, as to our future direction may lead to the perception of a change in
the direction of the business or lack of continuity, any of which may be exploited by our competitors, cause concern to our customers
and/or employees and result in the loss of potential business opportunities, or make it more difficult to attract and retain qualified
personnel and business partners, and may affect our relationships with vendors, customers and other third parties; (iii) these types
of actions could cause significant fluctuations in our share price based on temporary or speculative market perceptions or other factors
that do not necessarily reflect the underlying fundamentals and prospects of our business; and (iv) if individuals are elected to our
board of directors with a specific agenda, it may adversely affect our ability to effectively implement our business strategy and create
additional value for our shareholders.
20
***Failure
by third parties to supply or manufacture components of our products or to deploy our systems timely or properly could adversely affect
our business, financial condition, and results of operation.***
We
have been, and expect to continue to be, highly dependent on third parties to supply or manufacture components for our products, including
for pre-fabrication elements. If, for any reason, our third-party manufacturers or vendors are not willing or able to provide us with
components or supplies in a timely fashion, or at all, our ability to manufacture and sell many of our products could be impaired. Specifically,
we have concerns about the delivery of semiconductors and specialty metals, which are necessary to produce our products, as well as our
ability to find vendors for pre-fabrication elements of our products. Other global supply chain issues have caused our vendors to delay
orders, or to request increased pricing that we may not always be able to pass on to our customers.
We
do not have long-term contracts with our third-party manufacturers or vendors. If we do not develop ongoing relationships with vendors
located in different regions, we may not be successful at controlling unit costs as our manufacturing volume increases. Additionally,
we may not be able to negotiate new arrangements with these third parties on acceptable terms, or at all.
In
addition, we rely on third parties, under our oversight, for the deployment and mooring for products. We have utilized several different
deployment methods, including towing our products to the deployment location and transporting our products to the deployment location
by barge or offshore workboat. If these third parties do not properly deploy our systems, cannot effectively deploy the products on a
large, commercial scale, or otherwise do not perform adequately, or if we fail to recruit and retain third parties to deploy our systems
in particular geographic areas, our business, financial condition, and results of operations could be adversely affected.
***Our
targeted markets are competitive and highly complex. We compete against incumbent solutions already being utilized by our customers and
potential customers. If we are unable to compete effectively, we may be unable to increase our revenue and achieve or maintain profitability.***
Our
principal targeted markets include defense and security, offshore oil and gas, science and research, marine charter, and offshore wind.
In our targeted markets, which are highly competitive, we compete against incumbent power and maritime domain awareness solutions already
being utilized by our customers and potential customers. If we are unable to demonstrate to our customers and our potential customers
that our products and services are competitive and reliable to alternative solutions, or if it takes us longer to do so than we anticipate,
we may be unable to expand our business, maintain our competitive position, satisfy our contractual obligations, continue to commercialize
our products, or become profitable. In addition, if the cost associated with these development efforts exceeds our projections, our results
of operations could be materially and adversely affected.
In
addition, competition may arise from other companies manufacturing similar products, developing different products that produce energy
more efficiently than our products, or developing autonomous vehicles that perform better or have other characteristics that customers
prefer, could make our products less attractive or render them obsolete. If we are not successful in manufacturing systems and solutions
required for the application, we may not be able to respond effectively to competitive pressures from competing technologies or improvements
to existing technologies. If we are unable to respond effectively to such competitive forces, our business, financial condition and results
of operations could be adversely affected. Our targeted markets are subject to their own inherent risks, and if those risks should materialize,
then our business, financial condition and results of operations could be adversely affected.
***We
market and plan to market our services and products in multiple international regions. If we are unable to manage our international operations
effectively, our business, financial condition and results of operations could be adversely affected.***
We
market and plan to market our services and products in multiple global regions, including parts of North and South America, Europe, Sub-Saharan
Africa, Middle East, and Asia, and we are therefore subject to risks associated with having international operations. Revenue from customers
who are based outside of the U.S. accounted for 60% of our revenue in fiscal 2025 and 4% of our revenue in fiscal 2024. Risks inherent
in international operations include, but are not limited to, the following:
- changes in general economic and political conditions in the countries in which we operate;
21
- unexpected adverse changes in foreign laws or regulatory requirements, including those with respect to renewable energy, environmental protection, permitting, export duties and quotas;
- trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make us less competitive in some countries;
- fluctuations in exchange rates that may affect demand for our products and may adversely affect our profitability in U.S. dollars to the extent the price of our products and cost of raw materials and labor are denominated in a foreign currency;
- difficulty with staffing and managing widespread operations, including managing the complexity of international labor laws as we send staff and hire consultants to support our international deployments;
- complexity of, and costs relating to compliance with, the different commercial and legal requirements of the overseas markets in which we offer and sell our products;
- inability to obtain, maintain or enforce intellectual property rights; and
- difficulty in enforcing agreements in foreign legal systems.
Our
business in foreign markets requires us to respond to rapid changes in market conditions in these countries. Our overall success as a
global business depends, in part, on our ability to succeed in differing legal, regulatory, economic, social, and political conditions.
We may not be able to develop and implement policies and strategies that will be effective in each location where we do business, which
in turn could adversely affect our business, financial condition, and results of operations. The current economic environment may increase
these risks.
***Failure
of our information systems or those of third parties or breaches of data security could cause significant harm to our business.***
Our
systems and processes involve the storage and transmission of proprietary information and sensitive or confidential data, including personal
information of employees, and possibly customers and others. In addition, we rely on information systems controlled by third parties.
Information system failures, network disruptions, and system and data security breaches, manipulation, destruction, ransom, or leakage,
whether intentional or accidental, could impair our ability to provide services to our customers or otherwise harm our ability to conduct
our business., including delays in execution of classified work or revocation of our FCL Any such failures, disruptions or breaches could
also impede the development, manufacture or shipment of products, interrupt or delay processing of transactions and reporting financial
results, result in theft or misuse of our intellectual property or other assets, or result in the unintentional disclosure of personal,
proprietary, sensitive, or confidential information of employees, customers, and others. Our development and use of our MDAS platforms,
cloud-based offerings, as well as our evolution toward DaaS, PaaS and RaaS models, require us to host increasing amounts of our own data
as well as customer data, and increases the risk that our and our customers’ data and financial and proprietary information could
be more susceptible to such failures and data breaches.
***Cyber-security
breaches of our systems and information technology could adversely impact our ability to operate or meet contractual obligations.***
We
utilize, develop, install and maintain a number of information technology systems. Various privacy and security laws require us to protect
sensitive and confidential information from disclosure. In addition, we are bound by our customers and other contracts, as well as our
own business practices, to protect confidential and proprietary information (whether it be ours or a third party’s information
entrusted to us) from disclosure. Our computer systems, as well as those of our customers, contractors and other vendors, face the threat
of unauthorized access, computer hackers, viruses, malicious code, cyber-attacks, phishing and other security incursions and system disruptions,
including attempts to improperly access our confidential and proprietary information, as well as the confidential and proprietary information
of our customers and other business partners. Industry-accepted security measures and technology to secure computer systems, and the
information stored by cloud vendors on these systems are subject to threats. For example, as we plan to receive projects from the DoD
and Department of Homeland Security (“DoHS”), we will have to meet their framework for establishing cyber security standards
and best practices, what they call Cybersecurity Maturity Model Certification at various levels as we grow our business with DoD and
DoHS. There can be no assurance that our efforts will prevent these threats, or that we will be able to secure appropriate certifications
in this area. Further, as these security threats continue to evolve, we may be required to devote additional resources to protect, prevent,
detect and respond against such threats. A party who circumvents our security measures, or those of our customers, contractors or other
vendors, could misappropriate confidential or proprietary information, improperly manipulate data, or cause damage or interruptions to
systems. If we are unable to protect sensitive information, our customers or governmental authorities could question the adequacy of
our security processes and procedures and our compliance with applicable laws and regulations, including evolving government cyber security
requirements for government contractors. Any of these events could damage our reputation, result in litigation and regulatory fines and
penalties, or have a material adverse effect on our business, financial condition, results of operations or cash flows.
22
As
part of our broader cyber defense strategy, we actively participate in the Federal Bureau of Investigation’s InfraGard program
and related cyber threat intelligence initiatives. These programs enhance our access to real-time threat indicators and best practices
for protecting critical infrastructure. While such participation underscores our commitment to proactive risk mitigation and national
security collaboration, it may also elevate scrutiny of our cybersecurity protocols, increase compliance obligations, and expose us to
additional reputational and regulatory risks in the event of a breach or lapse.
***Our
ability to use net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes may be limited***.
We
have federal net operating loss (“NOL”) carryforwards that are available to offset future taxable income. We may recognize
additional NOLs in the future. Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) imposes an annual
limitation on the amount of taxable income that may be offset by a corporation’s NOLs if the corporation experiences an “ownership
change” as defined in Section 382 of the Code. An ownership change occurs when our “five-percent shareholders” (as
defined in Section 382 of the Code) collectively increase their ownership in OPT by more than 50 percentage points (by value) over a
rolling three-year period. Additionally, various states have similar limitations on the use of state NOLs following an ownership change.
If
an ownership change occurs, the amount of the taxable income for any post-change year that may be offset by a pre-change loss is subject
to an annual limitation that is cumulative to the extent it is not all utilized in a year. This limitation is derived by multiplying
the fair market value of our stock as of the ownership change by the applicable federal long-term tax-exempt rate. To the extent that
a company has a net unrealized built-in gain at the time of an ownership change, which is realized or deemed recognized during the five-year
period following the ownership change, there is an increase in the annual limitation for each of the first five-years that is cumulative
to the extent it is not all utilized in a year. If an ownership change should occur in the future, our ability to use the NOLcarryforwards
to offset future taxable income will be subject to an annual limitation and will depend on the amount of taxable income generated by
us in future periods. There is no assurance that we will be able to fully utilize the NOL carryforwards and we may be required to record
an additional valuation allowance related to the amount of the NOL that may not be realized, which could impact the results of our operations.
As
noted, we believe that these NOL carryforwards are a valuable asset for us. Consequently, we have a Section 382 Tax Benefits Preservation
Plan in place, to protect our NOLs and NOL carryforwards during the effective period of the rights plan. Although the Tax Benefits Preservation
Plan is intended to reduce the likelihood of an “ownership change” that could adversely affect us, there is no assurance
that the restrictions on transferability in the rights plan will prevent all transfers that could result in such an “ownership
change”. The Tax Benefits Preservation Plan could make it more difficult for a third party to acquire, or could discourage a third
party from acquiring, us or a large block of our common stock. A third party that acquires 4.9% or more of our common stock could suffer
substantial dilution of its ownership interest under the terms of the Tax Benefits Preservation Plan through the issuance of common stock
or common stock equivalents to all shareholders other than the acquiring person. The foregoing provisions may adversely affect the marketability
of our common stock by discouraging potential investors from acquiring our stock. In addition, these provisions could delay or frustrate
the removal of incumbent directors and could make more difficult a merger, tender offer or proxy contest involving us, or impede an attempt
to acquire a significant or controlling interest in us, even if such events might be beneficial to us and our shareholders. Pursuant
to the terms of the Tax Benefits Preservation Plan, the Board of Directors has authority to grant an exception to the 4.9% ownership
threshold which could potentially limit the utilization of our NOL carryforwards.
23
**Risks
Related to Product Development and Commercialization**
***We
have only manufactured a limited number of PowerBuoys®, and to date, we have not produced these products in any significant quantity
for commercial production. These products do not have a sufficient operating history to accurately predict how they will perform over
their estimated useful life.***
To
date, we have only manufactured a limited number of PowerBuoys®. As a result, our products may not have a sufficient operating history
to confirm how they will perform over their estimated useful life. Our technology may not yet have demonstrated that our engineering
and test results can be duplicated in volume or in commercial production. If our products are ultimately proven ineffective or unfeasible,
we may not be able to expand the commercial production of our products or we may become liable to our customers for quantities we are
obligated to produce but are unable to produce. If our products perform below expectations, we could lose customers and face substantial
repair and replacement expenses which could in turn adversely affect our business, financial condition and results of operations.
***We
face the possibility of a range of potential accident and safety risks and hazards, including hazards associated with extreme weather,
wind and other environmental conditions, which are inherent in offshore operations.***
Portions
of our operations are subject to hazards and risks inherent in the building, testing, deploying and maintenance of our products, particularly
offshore operations. These hazards and risks could result in personal injuries or loss of life. The unintentional release of a PowerBuoy®
product from its mooring, for example, due to extreme environmental conditions and related damage caused by its drifting could result
in injury to persons, property damage (including to third-party vessels or infrastructure), environmental harm, and potential regulatory
or legal liabilities, as well as reputational damage and increased insurance costs. Other damages may include damage to our properties,
including our products, and the properties of others, or other consequential damages. Certain weather events could increase in frequency
or severity requiring potential design changes or limiting the windows available for offshore operations.
Our
autonomous vessels could cause other types of damage, including collisions with other vessels, property of others, or even swimmers or
other persons or property utilizing a body of water where the WAM-V® is operating. This could also lead to the suspension of certain
of our operations, large damage claims, damage to our safety reputation and a loss of business. Some of these risks may be uninsurable,
and some claims may exceed our insurance coverage. Therefore, the occurrence of a significant accident or other risk event or hazard
that is not fully covered by insurance could materially and adversely affect our business and financial results and, even if fully covered
by insurance, could materially and adversely affect our business due to the impact on our reputation for safety.
***Our
relationships with our strategic partners may not be successful, and we may not be successful in establishing additional relationships,
either of which could adversely affect our ability to commercialize our products and services.***
We
have a number of critical relationships with strategic partners, specifically our software development partners. Generally, these types
of relationships obligate a party to provide certain services or perform certain tasks in connection with the relationship with the alliance
partner, and we are generally responsible for paying the costs we incur relating to such services or tasks. These relationships generally
are not expected to provide us with any revenue or sources of financing. If we are unable to reach agreements with additional suitable
alliance partners, we may fail to meet our business objectives for the commercialization of our products. We may face significant competition
in seeking appropriate alliance partners. Moreover, these development agreements and strategic alliances are complex to negotiate and
time consuming to document. We may not be successful in our efforts to establish additional strategic relationships or other alternative
arrangements. The terms of any additional strategic relationships or other arrangements that we establish may not be favorable to us.
Furthermore, even if we can find, negotiate and enter these relationships, such arrangements may be conditional upon our receipt of additional
funding. There can be no assurance that we will receive such additional funding. In addition, strategic relationships may not be successful,
and we may be unable to sell and market our products to these companies, their affiliates and customers in the future, or growth opportunities
may not materialize.
24
***We
have limited manufacturing, deployment and internal software development experience. If we are unable to increase our software development
and manufacturing capacity in a cost-effective manner, our business may be materially harmed.***
We
manufacture key components of our products, while outsourcing manufacturing for other components of our products. We have only manufactured
our products in limited quantities for use in development and testing and have limited commercial manufacturing and deployment experience.
Our future success depends on our ability to significantly increase both our manufacturing capacity and production, develop vendor alternatives
and service throughput in a cost-effective and efficient manner, and to manage multiple vendors with several orders that have specific
deadlines. In order to meet our growth objectives, we will need to increase our engineering, contract management, and manufacturing staff.
There is intense competition for hiring qualified technical and engineering personnel. Therefore, we may not be able to hire a sufficient
number of qualified personnel to allow us to meet our growth objectives.
We
may be unable to develop efficient, low-cost manufacturing capabilities and processes that enable us to meet the quality, price, engineering,
design and production standards or production volumes necessary to successfully commercialize our products. If we cannot do so, we may
be unable to expand our business, satisfy our contractual obligations or become profitable. Even if we are successful in developing our
manufacturing capabilities and processes, we may not be able to do so in time to meet our commercialization schedule or satisfy the requirements
of our customers.
In
addition, historically we have outsourced the majority of our software development activities. We may be unable to hire appropriate outsourced
resources to enable us to meet the software development needs of our products and solutions. If we cannot do so, we may be unable to
expand our business and become profitable or do so in time to meet the needs of our customers.
***Problems
with the quality or performance of our products would adversely affect our business, financial condition and results of operations.***
Our
agreements with customers will generally include warranties with respect to the quality and performance of our products. Because of the
limited operating history of our products, we have been required to make analytical assumptions regarding the durability, reliability
and performance of the systems, and we may not be able to predict whether and to what extent we may be required to perform under the
warranties that we expect to give our customers. Our assumptions could prove to be materially different from the actual performance of
our products, causing us to incur substantial expense to repair or replace defective systems in the future. We could bear the risk of
claims long after we have sold our products and recognized revenue. Moreover, any widespread product failures could adversely affect
our business, financial condition and results of operations.
***We
must continually improve existing services and products, design and sell new products and improve reliability in order to compete effectively.***
The
markets for our services and products are characterized by rapid technological change, evolving industry standards and continuous improvements
of products. Due to constant changes in our markets, our future success depends on our ability to develop new technologies, products,
processes and product applications. New product development and commercialization efforts, including efforts to enter markets or product
categories in which we have limited, or no prior experience, have inherent risks. These risks include the costs involved, such as development
and commercialization, product development or launch delays, and the failure of new products and line extensions to achieve anticipated
levels of market acceptance or growth in sales or operating income. We also face the risk that our competitors will introduce innovative
new products that compete with our products. If new product development and commercialization efforts are not successful, our financial
results could be adversely affected. Our financial condition and results of operations may be materially and adversely affected if:
- Product improvements are not completed on a timely basis;
25
- New products are not introduced on a timely basis or do not achieve sufficient market penetration; or
- New products experience reliability or quality problems, or otherwise do not meet customer preferences or requirements.
**Risks
Related to Intellectual Property**
***If
we are unable to obtain or maintain intellectual property rights relating to our technology and products, the commercial value of our
technology and products may be adversely affected, which could in turn adversely affect our business, financial condition and results
of operations.***
Our
success and ability to compete depends in part upon our ability to obtain protection in the U.S. and other countries for our products
by establishing and maintaining intellectual property rights relating to or incorporated into our technology and products. We own a variety
of patents and patent applications in the U.S. and corresponding patents and patent applications in several foreign jurisdictions. However,
we have not obtained patent protection in each market in which we plan to compete. In addition, we do not know how successful we would
be should we choose to assert our patents against suspected infringement, and we do not know what the cost to do so would be. Our pending
and future patent applications may not be issued as patents or, if issued, may not be issued in a form that will be advantageous to us.
Even if issued, patents may be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from
marketing similar products or limit the length of term of patent protection we may have for our products. Changes in either patent laws
or in interpretations of patent laws in the U.S. and other countries may diminish the value of our intellectual property or narrow the
scope of our patent protection, which could in turn adversely affect our business, financial condition and results of operations.
***If
we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could
be adversely affected, which could in turn adversely affect our business, financial condition and results of operations.***
In
addition to patented technology, we rely upon unpatented proprietary technology, processes and know-how, particularly with respect to
our PowerBuoy® control and electricity generating systems and our WAM-V® systems. We generally seek to protect this
information in part by confidentiality agreements with our employees, consultants and third parties. These agreements may be breached,
and we may not have adequate remedies for any such breach. In addition, our trade secrets may otherwise become known or be independently
developed by competitors.
***Foreign
laws may not afford us sufficient protections for our intellectual property, and we may not be able to obtain patent protection outside
of the U.S.***
Intellectual
property rights protection continues to present significant challenges to U.S. companies operating around the world. The body of law
is often relatively undeveloped compared to the commercial law in the U.S. and only limited protection of intellectual property may be
available in those jurisdictions. Although we have taken precautions to protect our intellectual property, any local design or manufacture
of products that we undertake in a foreign jurisdiction could subject us to an increased risk that unauthorized parties will be able
to copy or otherwise obtain or use our intellectual property, which could harm our business. We may also have limited legal recourse
in the event we encounter patent or trademark infringement. If we are unable to manage our intellectual property rights, our business
and operating results may be seriously harmed.
***If
we infringe or are alleged to have infringed upon intellectual property rights of third parties, our business, financial condition and
results of operations could be adversely affected.***
Our
products or use of our trademarks may infringe, or be claimed to infringe, upon patents, patent applications or trademarks under which
we do not hold licenses or other rights. Third parties may own or control these patents, patent applications or trademarks in the U.S.
and abroad. Third parties could bring claims against us that would cause us to incur substantial expenses and, if successfully asserted
against us, could cause us to pay substantial damages. Further, if a patent or trademark infringement suit were brought against us, we
could be forced to stop or delay manufacturing or sales of the product or component that is the subject of the suit.
26
As
a result of patent or trademark infringement claims, or in order to avoid potential claims, we may choose or be required to seek a license
from a third party and be required to pay license fees, royalties or both. These licenses may not be available on acceptable terms, or
at all. Even if we were able to obtain a license, the rights may be non-exclusive, which could result in our competitors gaining access
to the same intellectual property. Ultimately, we could be forced to cease some aspect of our business operations if, as a result of
actual or threatened patent or trademark infringement claims, we are unable to enter into licenses on acceptable terms. This could significantly
and adversely affect our business, financial condition and results of operations.
In
addition to infringement claims against us, we may become a party to other types of patent or trademark litigation and other proceedings,
including proceedings declared by the U.S. Patent and Trademark Office and proceedings in the European Patent Office, regarding intellectual
property rights with respect to our products and technology. The cost to us of any patent or trademark litigation or other proceeding,
even if resolved in our favor, could be substantial. In addition, if we were to license our intellectual property to others, we may be
required to indemnify our licensee if the licensed intellectual property is found to be infringing on a third party’s rights. Some
of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater
financial resources.
***Our
contracts with governmental entities could negatively affect our intellectual property rights, and our ability to commercialize our products
could be impaired.***
Our
prior agreements with government agencies in large part funded the research and development of our PowerBuoy®. When new technologies
are developed with U.S. government funding, the government obtains certain rights in any resulting patents, technical data and software,
generally including, at a minimum, a non-exclusive license authorizing the government to use the invention, technical data or software
for non-commercial purposes. These rights may permit the government to disclose our confidential information to third parties and to
exercise “march-in” rights. March-in rights refer to the right of the U.S. government to require us to grant a license to
the technology to a responsible applicant or, if we refuse, the government may grant the license itself. U.S. government-funded inventions
must be reported to the government and U.S. government funding must be disclosed in any resulting patent applications; our rights in
such inventions will normally be subject to government license rights, periodic post-contract utilization reporting, foreign manufacturing
restrictions and march-in rights.
The
government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application
of the technology or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations or
to give preference to U.S. industry. Our government-sponsored research contracts are subject to audit and require that we provide regular
written technical updates on a monthly, quarterly or annual basis, and, at the conclusion of the research contract, a final report on
the results of our technical research. Because these reports are generally available to the public, third parties may obtain some aspects
of our sensitive confidential information. Moreover, if we fail to provide these reports or to provide accurate or complete reports,
the government may obtain rights to any intellectual property arising from the related research. Funding from government contracts may
also limit when and how we can deploy our technology developed under those contracts. Foreign governments with which we contract to provide
funding for our research and development may seek similar rights.
**Risks
Related to Regulatory and Compliance Matters**
***If
we are unable to obtain all necessary regulatory permits and approvals, it is possible that we will not be able to implement our planned
projects or business plan.***
The
offshore deployment of our products is heavily regulated. Each of our deployments is subject to multiple permitting and approval requirements.
We and our customers are dependent on state, federal and regional government agencies for such permits and approvals. Due to the unique
nature of in-ocean power generation and the associated potential for environmental hazards stemming from deployment of our products,
we expect our projects to receive a higher level of scrutiny by permitting agencies, approval authorities and the public, which could
result in substantial delay in the permitting process. New regulations surrounding the deployment of autonomous vessels could restrict
or limit our ability to deploy WAM-Vs® in certain jurisdictions. Successful challenges by parties opposed to our deployments
could result in increased costs, or in the denial of necessary permits and approvals.
27
If
we or our clients are unable to obtain necessary permits and approvals in connection with any or all our projects, those projects would
not be implemented, and our business, financial condition and results of operations would be adversely affected. If we violate or fail
to comply with these permits and approvals, we could be fined or otherwise sanctioned by regulators.
***In
the event we are unable to satisfy regulatory requirements relating to internal control over financial reporting, or if our internal
controls are not effective, our business, reputation and financial results may suffer.***
Effective
internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to effectively prevent
fraud. Pursuant to the Sarbanes-Oxley Act of 2002, we are required to furnish a report by management on internal control over financial
reporting, including management’s assessment of the effectiveness of such control. Internal control over financial reporting may
not prevent or detect misstatements because of its inherent limitations, including the possibility of human error, the circumvention
or overriding of controls, or fraud. Therefore, even effective internal controls can provide only reasonable assurance with respect to
the preparation and fair presentation of financial statements. In addition, projections of any evaluation of the effectiveness of internal
control over financial reporting to future periods are subject to the risk that the control may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures may deteriorate. If we fail to maintain the adequacy
of our internal controls, including any failure to implement new or improved controls, or if we experience difficulties in their implementation,
our business and operating results could be harmed, we could fail to meet our reporting obligations, and there could also be a material
adverse effect on our stock price.
***Environmental
and other regulation of our business, including potential climate change regulation, could adversely impact us by increasing our production
cost or restricting our ability to deliver products to our customers.***
Climate
change serves as a risk multiplier increasing both the frequency and severity of natural disasters that may affect our business operations.
Moreover, there has been a broad range of proposed and promulgated state, national and international regulation aimed at reducing the
effects of climate change. In the U.S., there is a significant possibility that some form of regulation will be enacted at the federal
level to address the effects of climate change. Such regulation could take several forms that could result in additional costs in the
form of taxes, consultant costs, the restriction of output, investments of capital to maintain compliance with laws and regulations or
required acquisition or trading of emission allowances. Climate change regulation continues to evolve, and it is not possible to accurately
estimate either a timetable for implementation or our future compliance costs relating to implementation.
***A
portion of products we acquire from our suppliers are manufactured in foreign countries, making the price and availability of these products
subject to international trade risks and other international conditions.***
A
portion of our parts for our products are sourced from foreign countries, some of which in the future are, or could become subject to
trade restrictions, including increased tariffs or quotas, embargoes and customs restrictions, which would increase the cost or could
reduce the supply of products available to us, and could have a material adverse effect on our business, financial condition and results
of operations. Tariffs on imports from foreign countries, as well as changes in tax and trade policies, such as a border adjustment tax
or disallowance of certain tax deductions for imported product, could materially increase our manufacturing costs, the costs of our imported
products or our income tax expense, which would have a material adverse effect on our financial condition and results of operations.
Tariffs imposed by foreign countries on imports of our products could also adversely affect our international sales. Any increase in
manufacturing costs, the cost of our products or limitation on the amount of products we can purchase, could have a material adverse
effect on our financial condition and results of operations.
28
***Our
business involves the use of hazardous materials, which require compliance with environmental and occupational safety laws regulating
the use of such materials. If we violate these laws, we could be subject to significant fines, liabilities or other adverse consequences.***
Our
manufacturing operations, particularly some of the activities undertaken by our third-party suppliers and manufacturers, involve the
controlled use of hazardous materials. These include batteries, as well as various lubricants and oils. Accordingly, our third-party
contractors and we are subject to foreign, federal, state and local laws governing the protection of the environment and human health
and safety, including those relating to the use, handling and disposal of these materials. We cannot eliminate the risk of accidental
contamination or injury from these hazardous materials. In the event of an accident or failure to comply with environmental or health
and safety laws and regulations, we could be held liable for resulting damages, including damages to natural resources, fines and penalties,
and any such liability could adversely affect our business, financial condition and results of operations.
Environmental
laws and regulations are complex, change frequently and have tended to become more stringent over time. While we have planned for future
capital and operating expenditures to maintain compliance, we cannot assure you that environmental laws and regulations will not change
or become more stringent in the future. Therefore, we cannot assure you that our costs of complying with current and future environmental
and health and safety laws, and any liabilities arising from past or future releases of, or exposure to, hazardous substances will not
adversely affect our business, financial condition or results of operations.
**Risks
Related to Litigation**
***Litigation
is costly and time-consuming to defend, and if decided against us, could require us to pay substantial judgments or settlements. We may
be the subject of future securities or other litigation, which could adversely affect our company, our business and our liquidity.***
Any
litigation is costly, and time consuming to defend and may distract our management from the daily operations of our business. We may
be the subject of additional future litigation, which could have a material adverse effect on our business, financial condition, results
of operations or cash flows. Although we maintain insurance coverage, we cannot assure you that this insurance coverage will be sufficient
to cover the substantial fees of lawyers and other professional advisors relating to these pending lawsuits or any future litigation,
our obligations to indemnify our officers and directors who may become parties to such pending and future actions, or the amount of any
judgments or settlements that we may be obligated to pay in connection with these lawsuits. In addition, prior judgements and settlements
have caused our insurance premiums and retention amounts to increase, and we may be subject to additional increases in the future or
be subjected to other changes in our insurance coverage. Further, given the volatility of the market price of our common stock, we may
be subject to future class action securities and other litigation. Accordingly, we have incurred and may continue to incur substantial
legal expenses, judgments and/or settlements relating to pending and future litigation and our management’s time and attention
may be diverted from the operation of our business, which could materially and adversely affect the Company.
***We
may become the target of securities litigation, which is costly and time-consuming to defend.***
In
the past, companies that experienced significant volatility in the market price of their publicly traded securities have become subject
to class action securities litigation. Our stock price has been volatile, and class action securities litigation and derivative lawsuits
have been filed against us, and it is possible that additional lawsuits could be brought against us in the future. The results of complex
legal proceedings are difficult to predict. These lawsuits assert types of claims that, if resolved against us, could give rise to substantial
damages, and an unfavorable outcome or settlement of these lawsuits, or any future lawsuits, could have a material adverse effect on
our business, financial condition, results of operations and/or stock price. Even if any future lawsuits are not resolved against us,
the costs of defending such lawsuits may be material to our business and our operations. Moreover, these lawsuits may divert our management’s
attention from the operation of our business. For more information on our legal proceedings, see Item 3 “Legal Proceedings”
of this Annual Report and Note 14 “Commitments and Contingencies – Litigation with Paragon Technologies, Inc.” in the
accompanying consolidated financial statements for the fiscal year ended April 30, 2025.
29
**Risks
Related to Our Common Stock**
***If
we issue additional shares of our equity securities in the future, our shareholders may experience substantial dilution in the value
of their investment or their ownership interest.***
Our
certificate of incorporation currently authorizes us to issue up to 300,000,000 shares of our common stock and to issue and designate
the rights of, without shareholder approval, up to 5,000,000 shares of preferred stock. In the future, if we were required to raise additional
capital, we may offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock
at prices that may not be the same as the price per share paid by other investors, and dilution to our shareholders in the value of their
investment and their ownership and voting interest in the Company could result. We may sell shares or other securities in any other offering
at a price per share that is less than the price per share paid by existing investors, and investors purchasing shares or other securities
in the future could have rights superior to existing shareholders.
In
addition, we have a significant number of stock options and restricted stock units outstanding. To the extent that outstanding stock
options, warrants or restricted stock units have been or may be exercised or other shares issued, current shareholders and future investors
who have purchased our common stock will experience further dilution. In addition, we may choose to raise additional capital due to market
conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the
extent that we issue new securities or raise additional capital through the sale of equity or convertible debt securities, the issuance
of these securities could result in further dilution to our shareholders or result in downward pressure on the price of our common stock.
In
May 2025, we issued $10 million in aggregate principal amount of convertible notes with a 24-month maturity to institutional investors.
The convertible notes are convertible into shares of our common stock in accordance with the terms of the related Securities Purchase
Agreement and Indenture. The conversion of these notes into equity may occur at times and underpricing mechanisms that could lead to
a substantial number of shares being issued, potentially at prices below the prevailing market price.
The
issuance of shares upon conversion of the notes could dilute the ownership interests of existing stockholders, and the sales of such
shares into the public market (or the perception that such sales may occur) could place significant downward pressure on the trading
price of our common stock. If our share price declines, it may result in more shares being issued upon conversion of the notes, further
diluting existing stockholders.
***Historically,
our stock price has been volatile, and this is likely to continue; purchasers of our common stock could incur substantial losses as a
result.***
Historically,
the market price of our common stock has fluctuated significantly, and we expect that this will continue. Purchasers of our common stock
could incur substantial losses relating to their investment in our stock as a result. Also, the stock market, particularly microcap stocks,
experiences volatility that has often been unrelated or disproportionate to the operating performance of particular companies. These
broad market fluctuations could result in fluctuations in the price of our common stock, which could cause purchasers of our common stock
to incur substantial losses. The market price for our common stock may be influenced by many factors, including the items identified
within these Risk Factors and the other information included within this annual report. In addition, the interests of the convertible
noteholders may not align with those of our common shareholders, particularly if the noteholders are primarily motivated to convert and
sell shares quickly. This misalignment may result in pressure to make near-term decisions that are not accretive to long-term shareholder
value.
30
***Provisions
in our corporate charter documents and under Delaware law may delay or prevent attempts by our shareholders to change our management
or our Board of Directors and hinder efforts to acquire a controlling interest in us.***
As
a result of our reincorporation in Delaware in April 2007, provisions of our certificate of incorporation and bylaws may discourage,
delay or prevent a merger, acquisition or other change in control that shareholders may consider favorable, including transactions in
which our shareholders might otherwise receive a premium for their shares. These provisions may also prevent or frustrate attempts by
our shareholders to replace or remove our management. These provisions include:
- advance notice requirements for shareholder proposals and nominations;
- the inability of shareholders to act by written consent or to call special meetings; and
- the ability of our Board of Directors to designate the terms of and issue new series of preferred stock without shareholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our Board of Directors.
In
June 2023, our Board of Directors adopted a Section 382 Tax Benefits Preservation Plan in an effort to diminish the risk that the Company’s
ability to utilize its net operating loss carryovers to reduce potential future federal income tax obligations may become substantially
limited. The Section 382 Tax Benefits Preservation Plan is also intended to act as a deterrent to any person or group acquiring beneficial
ownership of 4.99% or more of the outstanding common stock without the approval of our Board of Directors.
In
addition, Section 203 of the Delaware General Corporation Law prohibits a publicly-held Delaware corporation from engaging in a business
combination with an interested shareholder, which is generally a person who together with its affiliates owns or within the last three
years has owned 15% of our voting stock, for a period of three years after the date of the transaction in which the person became an
interested shareholder, unless the business combination is approved in a prescribed manner. Accordingly, Section 203 may discourage,
delay or prevent a change in control of our company.
***If
securities or industry analysts fail to cover us, or do not publish research or publish unfavorable or inaccurate research about our
business, our stock price and trading volume could decline.***
Currently
we do not have significant analyst coverage, however, the trading market for our common stock could be influenced by the research and
reports that industry or securities analysts may publish about us, our business, or our industry from time to time. If no analyst covers
us, or ultimately one or more of these analysts cease coverage or fail to publish reports on the Company regularly, we could lose visibility
in the financial markets, which in turn could cause the price or trading volume of our common stock to decline.
***We
have never paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.***
We
have not paid any cash dividends on our common stock to date. We currently intend to retain our future earnings, if any, to fund the
development and growth of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. Also,
there can be no assurance that the Company will have the liquidity necessary to pay dividends in the future if we want to do so. As a
result, prospective investors and shareholders should make or maintain an investment in our common stock solely on the basis that potential
future capital appreciation, if any, of our common stock will be the only source of gain for our shareholders for the foreseeable future
and there can be no assurance that any such future capital appreciation will occur.
**ITEM
1B. *UNRESOLVED STAFF COMMENTS***
Not
applicable.
**ITEM
1C. *CYBERSECURITY***
Cybersecurity
risk is an important component of our overall enterprise risk management framework, given our reliance on digital systems for product
development, operational control, communications, data management, and financial reporting. Our operations involve proprietary software
and hardware systems integrated into offshore platforms, as well as sensitive information related to customer deployments, government
contracts, and internal business processes.
31
We
employ a layered cybersecurity approach aligned with industry standards. Our strategy includes preventive and detective technical controls
(e.g., endpoint protection, intrusion detection, access control, and network segmentation), employee training, vendor diligence, and
third-party audits. We maintain a combination of on-premise and cloud-based infrastructure with multi-factor authentication and routine
patch management.
We
also work with managed cybersecurity service providers to support real-time threat monitoring and incident response capabilities. Penetration
testing and vulnerability scanning are performed periodically, and findings are reviewed with senior leadership.
Cybersecurity
risks are considered in connection with strategic planning, vendor selection, product development (particularly in embedded control systems),
and compliance with regulatory obligations, including export control and data privacy laws.
To
date, we have not experienced any material cybersecurity incidents that have had a significant impact on our financial condition, results
of operations, or reputation. However, we recognize that the threat landscape continues to evolve, and we remain vigilant in adapting
our security posture to mitigate emerging risks.
*Governance*
The
Board of Directors has oversight responsibility for cybersecurity risk as part of its broader enterprise risk oversight function. The
Audit Committee receives periodic updates on cybersecurity threats, incidents, risk mitigation strategies, and program enhancements from
senior management.
Our
Incident Response Plan outlines steps to investigate, contain, report, and recover from cybersecurity events. We have established internal
procedures to investigate, contain, report, and recover from cybersecurity incidents. These procedures are designed to enable a prompt
and coordinated response to potential threats. In the event of an incident determined to be material under SEC guidelines, we are prepared
to make timely disclosures through current reports (Form 8-K) as required.
*Cybersecurity
Incidents*
During
the fiscal years ended April 30, 2025 and 2024, we did not identify any cybersecurity incidents that had a material impact on our operations,
liquidity, or financial condition. We did observe routine scanning, phishing attempts, and minor technical vulnerabilities, all of which
were mitigated without operational disruption or data loss.
While
no material incidents have occurred, we cannot guarantee that future incidents will not materially affect our company, especially as
we expand digital product features, enter new geographic markets, and integrate with third-party systems.
Additional
information about cybersecurity risks we face is discussed in Item 1A of Part I, “Risk Factors,” under the headings “Failure
of our information systems or those of third parties or breaches of data security could cause significant harm to our business”
and “Cybersecurity breaches of our systems and information technology could adversely impact our ability to operate or meet contractual
obligations,” which should be read in conjunction with the information above.
**ITEM
2. *PROPERTIES***
Our
headquarters are currently located in Monroe Township, New Jersey, where we occupy approximately 56,000 square feet under a lease expiring
on April 30, 2026. We use this facility for administration, research and development, as well as manufacturing, assembly and testing
of our products.
32
Additionally,
we have a property located in Richmond, California where we occupy approximately 11,500 square feet under a lease expiring on June 18,
2028. We have an additional property also located in Richmond, California where we occupy approximately 2,300 square feet under a lease
which began on May 12, 2025 and expiring on May 31, 2027. We believe that our facilities are sufficient for our current needs and are
in good condition in all material respects.
**ITEM
3. *LEGAL PROCEEDINGS***
*Litigation
with Paragon Technologies, Inc.*
On
October 10, 2023, Paragon Technologies, Inc. filed a complaint in the Court of Chancery of the State of Delaware against the Company,
and the members of its Board of Directors, claiming certain breaches of their fiduciary duties. The complaint sought only injunctive
relief against the Company, and not monetary damages, and therefore the financial exposure derived therein was limited to applicable
legal fees and costs at that stage, which was material to fiscal year 2024. On November 2, 2023, Paragon sought leave to amend its complaint
to add additional claims. The Court granted this motion for leave to amend, provided that the Court would not delay the hearing on the
matters raised in the initial complaint, which was set for November 28, 2023. This hearing on the initial complaint was held and on November
30, 2023, the Court ruled in favor of the Company and denied Paragon’s motion for injunctive relief. On February 28, 2024, the
Company successfully finalized its 2023 annual meeting of stockholders in spite of Paragon’s repeated attempts to contest the meeting.
In an August 12, 2024 Press Release and its Form 10-Q report for the second quarter of 2024, Paragon announced that it was no longer
pursuing litigation against the Company. Pursuant to a Court order dated January 9, 2025, Paragon was required “to file a status
report within 30 days. Otherwise, the case will be dismissed under Rule 41(e).” Because Paragon did not file a status report by
February 10, 2025, the Company anticipates that the Court will dismiss the case, with prejudice, due to Paragon’s failure to prosecute.
*Section
220 Demand*
In
February 2025, the Company received a shareholder demand under Section 220 of the General Corporation Law of the State of Delaware for
inspection of certain books and records relating to prior equity grants made to officers and directors under the 2015 Plan in January
2023, February 2024 and January 2025. The Company is reviewing and considering the demand and engaging with counsel for the shareholder.
The Company has not recorded any liability for these matters as of April 30, 2025 as it cannot estimate the ultimate outcome at this
time.
**Item
4. *MINE SAFETY DISCLOSURES***
None.
33
**PART
II**
## Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities ITEM
5. *MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES***
**Shareholders**
Our
common stock was listed on the Nasdaq Capital Market, under the symbol “OPTT” until June 2021 when the listing was transferred
to the NYSE American under the same symbol. As of July 22, 2025, there were 135 holders of record for shares of our common stock. Since
a portion of our common stock is held in “street” or nominee name, we are unable to determine the exact number of beneficial
holders.
We
adopted a Section 382 Tax Benefits Preservation Plan on June 30, 2023 to diminish the risk we could experience an “ownership change”
as defined in Section 382 of the Internal Revenue Code of 1986, as amended, which could substantially limit or permanently eliminate
our ability to utilize its net operating loss carryovers to reduce potential future income tax obligations. Under this plan, a person
who acquires, without the approval of our Board of Directors, beneficial ownership of 4.99% or more of the outstanding common stock could
be subject to significant dilution. See Note 13 to the consolidated financial statements included herein for more.
**Dividend
Policy**
We
have never declared or paid any cash dividends on our common stock, and we do not currently anticipate declaring or paying cash dividends
on our common stock in the foreseeable future. At this time, we intend to retain all of our future earnings, if any, to finance the growth
and development of our business. Any future determination relating to our dividend policy will be made at the discretion of our Board
of Directors, and will depend on a number of factors, including future earnings, capital requirements, financial conditions, future prospects,
contractual restrictions and covenants, and other factors that our Board of Directors may deem relevant.
**Transfer
Agent Information**
Our
transfer agent is Computershare Trust Company, N.A. Computershare is located at 250 Royall Street, Canton, MA 02021-1011. Its contact
information is: U.S. and Canada: (800) 662 - 7232, International (781) 575–4238, and its website is located at www.computershare.com.
**Purchases
of Equity Securities by the Issuer**
There
were no purchases of equity securities by the Company for the year ended April 30, 2025.
**Equity
Compensation Plan Information**
The
following table sets forth the indicated information as of April 30, 2025, with respect to our equity compensation plans:
| Plan Category | Number of Shares to be Issued Upon Exercise of Outstanding Options and Restricted Stock | Weighted-Average Exercise Price of Outstanding Options | Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in First Column) |
| --- | --- | --- | --- |
| Equity compensation plans approved by shareholders: | | | |
| Stock Options | 483,342 | $2.59 | — |
| Restricted Stock Units | 22,461,633 | N/A | — |
| Equity compensation plans not approved by shareholders: | | | |
| Stock Options | — | — | — |
| Restricted Stock Units | — | N/A | 161,487 |
(1)
Consists of shares of our common stock available for issuance under the 2015 Omnibus Incentive Plan.
(2)
Consists of shares of our common stock available for issuance under the 2018 Employee Inducement Incentive Award Plan.
34
Our
equity compensation plans consist of a 2006 Stock Incentive Plan and a 2015 Omnibus Incentive Plan which were approved by our shareholders.
Once the 2015 Omnibus Incentive Plan was approved by the shareholders on October 22, 2015, no further stock options or other awards were
awarded under the 2006 Stock Incentive Plan and it was terminated. Shares that are forfeited under the 2006 Stock Incentive Plan on or
after October 22, 2015, will become available for issuance under the 2015 Omnibus Incentive Plan.
The
equity compensation plan that has not been approved by our shareholders is our 2018 Employee Inducement Incentive Award Plan, as amended.
**Unregistered
Sales of Equity Securities and Use of Proceeds**
Not
Applicable.
## Item 6. Selected Financial Data ITEM
6. [*Reserved]***
**ITEM
7. *MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS***
*You
should read the following discussion and analysis of our financial condition and results of operations together with our consolidated
financial statements and the related notes and other financial information included elsewhere in this Annual Report. Some of the information
contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans
and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should
review the “Risk Factors” section of this Annual Report, and elsewhere in this report, for a discussion of important factors
that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained
in the following discussion and analysis. Our fiscal year ends on April 30. References to fiscal 2024 are to the fiscal year ended April
30, 2025.*
**Business
Overview**
Ocean
Power Technologies, Inc. (“OPT,” “we,” “our,” or “the Company”) is a Maritime Domain
Awareness (MDA) company specializing in innovative intelligent maritime solutions. These solutions include a variety of “as a service”
systems, including Data as a Service (DAAS), Robotics as a Service (RAAS), and Power as a Service (PAAS). These systems consist of a
variety of platforms including the PowerBuoy®, our persistent sensor and power solution, the WAM-V® (Wave Adaptive Modular Vessel),
our autonomous unmanned surface vehicle, and Merrows™, our user interface and command and control (C2) system that integrates multiple
sensor feeds using software and hardware and enables artificial intelligence and machine learning (AI/ML) integration. We design, manufacture,
deploy, and operate these systems for defense, security, subsea infrastructure, offshore oil and gas, offshore energy, marine research,
and communication markets. We operate primarily through a combination of direct sales and leases, strategic partnerships, and long-term
service agreements. Our business model emphasizes capital-light deployments, recurring revenue from service and maintenance contracts,
and high-margin technology sales and leases.
We
serve a global customer base, including the U.S. and allied defense agencies, offshore energy operators, and commercial interests. The
common thread across these markets is the growing need for persistent, autonomous, and sustainable offshore presence, a need we are uniquely
positioned to fulfill.
The
Company holds numerous patents and leverages decades of research including control systems, energy storage, and marine integration. Our
headquarters and assembly operations are located in New Jersey, and we maintain an additional manufacturing and robotics development
facility in Richmond, CA.
OPT
is committed to enabling a smarter, safer ocean economy through innovation in ocean intelligence and power. As we look forward, our strategic
priorities include expanding our customer base and geographic footprint, accelerating technology adoption, enhancing recurring revenue,
and driving margin growth through platform scalability and supply chain efficiencies.
35
We
were incorporated under the laws of the State of New Jersey in April 1984 and began commercial operations in 1994. On April 23, 2007,
we reincorporated in Delaware.
**Business
Update Regarding Macroeconomic Condition**
During
fiscal year 2025, our macroeconomic business environment was affected by geopolitical instability, persistent inflationary pressures,
global supply chain constraints, tightening monetary policy, and recent shifts in international trade and tariff regimes. While our long-term
demand outlook remains strong, these conditions could present operational and financial challenges, particularly in procurement, logistics,
and cost control.
The
U.S. federal election cycle in late 2024, followed by an extended period of political and administrative transition through late January
2025, resulted in a temporary standstill across multiple federal agencies, procurement offices, and budgeting authorities. This standstill
delayed the finalization of fiscal year 2025 appropriations and temporarily paused decision-making within key federal entities, including
those critical to our government-facing business lines such as the DoD, Department of Homeland Security (DHS), Department of Energy (DOE),
and intelligence community customers.
As
a result, we experienced delays in program funding visibility, new contract solicitations, and procurement-related communications from
certain U.S. government customers during this transitional period. Although normal operations have largely resumed since late January
2025, the delayed award cycle may shift the timing of revenue recognition, contract execution, and cash collections associated with targeted
government opportunities. While we remain confident in the long-term demand for our autonomous platforms and maritime intelligence solutions,
the early portion of calendar year 2025 reflected an uncertain operating environment marked by deferred awards and extended federal acquisition
timelines.
We
continue to monitor federal budget developments, appropriations activity, and agency guidance to assess downstream effects on pipeline
conversion and resource allocation. We believe our active positioning in mission-critical domains, including persistent maritime surveillance,
energy resilience, and multi-domain autonomy, will allow us to capitalize on pent-up demand as deferred contract opportunities move forward
in the second half of calendar year 2025. However, additional political disruptions or appropriations delays could further affect our
operating results and cash flow.
Inflationary
pressures may impact the cost of key inputs used in products. Although pricing volatility began to moderate in the latter half of fiscal
2025, we may experience elevated vendor pricing compared to pre-pandemic levels. To partially offset these pressures, we have implemented
cost optimization measures, adjusted pricing on new contracts, and re-evaluated supplier agreements.
In
May 2025, the U.S. government expanded tariffs under Section 301 of the Trade Act of 1974 on a variety of Chinese-origin components.
OPT sources most of its products from U.S. based companies and sources very little from China, however, these changes could result in
higher costs for certain imported materials used in our manufacturing process. In the near term, we expect these tariff changes to have
a modest but measurable impact on the cost of goods sold.
Global
monetary tightening, led by the Federal Reserve and other central banks, contributed to higher interest rates and constrained liquidity
conditions across the capital markets. These conditions have increased the cost of capital for emerging growth companies like OPT and
may impact customer funding timelines, particularly in our commercial segments.
Despite
these headwinds, our diversified contract base including U.S. federal government agencies, strategic defense contractors, and energy
developers—continues to support revenue visibility. We remain focused on cost discipline, capital efficiency, and maintaining operational
flexibility as macroeconomic uncertainty persists into fiscal 2026.
Looking
ahead, we are monitoring global trade developments, interest rate policy, and energy infrastructure spending trends closely, and will
adjust our operating and capital planning assumptions accordingly. Our proactive supply chain and pricing strategies are designed to
support margin preservation and competitive positioning in a shifting economic landscape.
36
**Capital
Raises**
During
fiscal year 2025 and subsequently, we undertook two significant capital raising activities to support our strategic initiatives and operational
needs.
*At-the-Market
Offering Agreement*
On
March 21, 2024, the Company entered into an At-the-Market Offering Agreement with an aggregate offering price of up to $7.0 million (the
“2023 ATM Facility”). On August 30, 2024 the aggregate offering price under the 2023 ATM Facility was increased to approximately
$16.0 million. It was then reduced to approximately $2.9 million in September 2024 and increased again to approximately $60.0 million
in December 2024. As of April 30, 2025, the Company had received proceeds of approximately $17.7 million under this facility and an additional
$0.3 million between April 30, 2025 and June 16, 2025.
*Fall
2024 Equity Financing*
In
the fall of 2024, we completed an equity financing round, issuing shares of our common stock to raise approximately $3.0 million in gross
proceeds. This capital infusion was instrumental in funding our ongoing product development, expanding our sales and marketing efforts,
and enhancing our working capital position. The equity raises also provided us with the financial flexibility to pursue new market opportunities
and strategic partnerships.
*December
2024 Convertible Debt Issuance*
On
December 20, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an
institutional investor (the “Investor”) under which the Company agreed to issue and sell, in one or more registered public
offerings by the Company directly to the Investor (the “Offering”), senior convertible notes for up to an aggregate principal
amount of $54.0 million (the “Notes”) that will be convertible into shares of the Company’s common stock. On December
20, 2024 (the “Initial Closing Date”), the Company issued and sold to the Investor a Note in the original principal amount
of $4.0 million (the “Initial Note”). Upon our filing of one or more additional prospectus supplements, and our satisfaction
of certain other conditions, the Securities Purchase Agreement contemplates additional closings of up to $50 million in aggregate principal
amount of additional Notes, upon mutual agreement of the Company and the Investor. The Securities Purchase Agreement contains customary
representations, warranties and covenants. It also grants the Investor the right to participate in certain future equity and equity-linked
transactions of the Company from the Initial Closing Date through the 3-year anniversary thereof, as well as certain anti-dilution rights
applicable to the Notes. No Note may be converted to the extent that such conversion would cause the then holder of such Note to become
the beneficial owner of more than 4.99%, or, at the option of such holder, 9.99% of the then outstanding common stock, after giving effect
to such conversion (the “Beneficial Ownership Cap”).
*May
2025 Convertible Debt Issuance*
Separate
from the December 2024 transaction noted above, in May 2025 we issued $10 million in aggregate principal amount of convertible notes
with a 24-month maturity to new institutional investors with net proceeds of $9.7 million. The notes are convertible into shares of our
common stock under specific terms outlined in the Securities Purchase Agreement and Indenture. This financing was aimed at bolstering
our balance sheet, supporting the commercialization of our systems, and advancing our autonomous maritime solutions. The convertible
debt structure offers the potential for conversion into equity, which may result in dilution to existing shareholders upon conversion.
These
capital raises have strengthened our financial position, enabling us to invest in key growth areas. We remain committed to prudent financial
management and will continue to assess our capital needs in alignment with our strategic objectives.
37
The
sale of additional equity under new facilities could result in dilution to our shareholders. If additional funds are raised through the
issuance of debt securities or preferred stock, these securities could have rights senior to those associated with our common stock and
could contain covenants that would restrict our operations. The Company cannot be certain that additional equity and/or debt financing
will be available to the Company as needed on acceptable terms, or at all. If we are unable to obtain required financing when needed,
we may be required to reduce the scope of our operations, including our planned incremental product development and marketing efforts,
which could materially and adversely affect our financial condition and operating results. If we are unable to secure additional financing,
we may be forced to cease our operations.
**Backlog**
As
of April 30, 2025 and 2024, the Company’s backlog was $12.5 million and $4.9 million, respectively. The backlog represents the
value of unfulfilled, purchase orders and agreements with commercial and governmental customers. If any of our contracts were to be terminated,
our backlog would be reduced by the expected value of the remaining terms of such contract.
Backlog figures do not
necessarily reflect future revenue, as orders may be adjusted, delayed, or canceled, and our recognition of associated revenue is subject
to the terms of the underlying agreements. The size of our backlog may also fluctuate materially based on the timing of new awards, contract
renewals, or the conclusion of long-term engagements. Consequently, while we view backlog as a useful performance indicator, it should
not be relied upon as a predictor of future results.
**Critical
Accounting Policies and Estimates**
To
understand our financial statements, it is important to understand our critical accounting policies and estimates. We prepare our financial
statements in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements
also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related
disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the
circumstances. Actual results could differ significantly from the estimates made by our management. To the extent that there are differences
between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and
cash flows will be affected. We believe that accounting policies are critical to understanding our historical and future performance,
as these policies relate to the more significant areas involving management’s judgments and estimates.
We
believe the following accounting policy requires significant judgment and estimates by us in the preparation of our consolidated financial
statements.
***Revenue
recognition***
The
Company accounts for revenue in accordance with Accounting Standards Codification 606 (ASC 606) for contracts with customers and Accounting
Standards Codification 842 (ASC 842) for leasing arrangements. In relation to ASC 606, which states that a performance obligation is
the unit of account for revenue recognition, the Company assesses the goods or services promised in a contract with a customer and identifies
as a performance obligation as either: a) a good or service (or a bundle of goods or services) that is distinct; or b) a series of distinct
goods or services that are substantially the same and that have the same pattern of transfer to the customer. A contract may contain
a single performance obligation or multiple performance obligations. For contracts with multiple performance obligations, the Company
allocates the contracted transaction price to each performance obligation based upon the relative standalone selling price, which represents
the price the Company would sell a promised good or service separately to a customer. The Company determines the standalone selling price
based upon the facts and circumstances of each obligated good or service. When no observable standalone selling price is available, the
standalone selling price is generally estimated based upon the Company’s forecast of the total cost to satisfy the performance
obligation plus an appropriate profit margin.
38
The
nature of the Company’s contracts may give rise to several types of variable consideration, including unpriced change orders, liquidated
damages and penalties. Variable consideration can also arise from modifications to the scope of services. Variable consideration is included
in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once
the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether
to include such amounts in the transaction price are based largely on the assessment of legal enforceability, performance, and any other
information (historical, current, and forecasted) that is reasonably available to us. There was no variable consideration as of April
30, 2025 or 2024. The Company presents shipping and handling costs, that occur after control of the promised goods or services transfer
to the customer, as fulfilment costs in costs of revenues and regular shipping and handling activities charged to operating expenses.
The
Company recognizes revenue when or as it satisfies a performance obligation by transferring a good or service to a customer, either (1)
at a point in time or (2) over time. A good or service is transferred when or as the customer obtains control (e.g., upon shipment, upon
delivery, as services are rendered, or upon completion of service), including when performance obligations are satisfied in a bill-and-hold
arrangement. The evaluation of whether control of each performance obligation is transferred at a point in time or over time is made
at contract inception. Input measures such as costs incurred are utilized to assess progress against specific contractual performance
obligations for the Company’s services. The selection of the method to measure progress towards completion requires judgment and
is based on the nature of the services to be provided. For the Company, the input method using costs or labor hours incurred best represents
the measure of progress against the performance obligations incorporated within the contractual agreements. If estimated total costs
on any contract project a loss, the Company charges the entire estimated loss to operations in the period the loss becomes known. The
cumulative effect of revisions to revenue, estimated costs to complete contracts, including penalties, change orders, claims, anticipated
losses, and others are recorded in the accounting period in which the events indicating a loss are known and the loss can be reasonably
estimated. These loss projections are re-assessed for each subsequent reporting period until the project is complete. Such revisions
could occur at any time and the effects may be material. During the fiscal year ended April 30, 2025 the Company recognized approximately
$4.9 million in revenue related to performance obligations satisfied at a point in time and approximately $1.0 million in revenue related
to performance obligations satisfied over time as compared to $3.6 million in revenue related to performance obligations satisfied at
a point in time and $1.9 million in revenue related to performance obligations satisfied over time revenue for the fiscal year ended
April 30, 2024.
The
Company’s contracts are either cost-plus contracts, fixed-price contracts, time and material agreements, lease or service agreements.
Under cost plus contracts, customers are billed for actual expenses incurred plus an agreed-upon fee.
The
Company has two types of fixed-price contracts, firm fixed-price and cost-sharing. Under firm fixed-price contracts, the Company receives
an agreed-upon amount for providing products and services specified in the contract, and a profit or loss is recognized depending on
whether actual costs are more or less than the agreed-upon amount. Under cost-sharing contracts, the fixed amount agreed upon with the
customer is only intended to fund a portion of the costs on a specific project. Under cost-sharing contracts, an amount corresponding
to the revenue is recorded in cost of revenue, resulting in gross profit on these contracts of zero. The Company reports its disaggregation
of revenue by contract type since this method best represents the Company’s business. For the fiscal years ended April 30, 2025
and 2024, the majority of the Company’s contracts were classified as firm fixed-price and the balance were cost-sharing.
The
Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection
with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company’s
accounts receivable balance is made up entirely of customer contract-related balances.
The
Company’s revenue also includes revenue from certain contracts which do not fall within the scope of ASC 606, but under the scope
of ASC 842, “Leases”. At inception of a contract for those classified under ASC 842, the Company classifies leases as either
operating or financing in accordance with the authoritative accounting guidance contained within ASC 842. If the direct financing or
sales-type classification criteria are met, then the lease is accounted for as a finance lease. All others are treated as operating leases.
The Company recognizes revenue from operating lease arrangements generally on a straight-line basis over the lease term, or as agreed
upon in-use days are utilized, both of which are presented in Revenues in the Consolidated Statement of Operations. The Company also
enters into operating lease arrangements for its PowerBuoys® and Wave Adaptive Modular Vessels (“WAM-V®”) with certain
customers. Revenue related to multiple-element arrangements is allocated to lease and non-lease elements based on their relative standalone
selling prices or expected cost plus a margin approach. Lease elements generally include a PowerBuoy®, WAM-V®, and components,
while non-lease elements, which the Company expects to become more prevalent, generally include engineering, monitoring and support services.
In the lease arrangement, the customer may be provided with an option to extend the lease term or purchase the leased PowerBuoy®
or WAM-V® at some point during and/or at the end of the lease term.
39
**Financial
Operations Overview**
As
of the years ended April 30, 2025 and 2024, the Company had three and four customers, respectively, whose revenue accounted for at least
10% of the Company’s consolidated revenue. These customers accounted for approximately 53% and 52% of the Company’s total
revenue for the respective periods.
We
currently focus our sales efforts in key global markets in North America, South America, Europe and Asia. In fiscal 2025, we made significant
progress in diversifying our customer and geographic base. Our strategic efforts to expand into defense, energy, and environmental monitoring
markets in Europe, the Middle East, and Africa (EMEA) resulted in a substantial increase in EMEA-sourced revenue. This geographic expansion
reflects the increasing global relevance of our autonomous maritime systems, particularly among government and industrial customers.
It also demonstrates the early success of our international channel development initiatives, which we intend to further scale in fiscal
2026 through targeted partnerships, regional deployments, and export-driven offerings.
The
following table shows the percentage of our revenue by geographical location of our customers for fiscal 2025 and 2024:
| Customer Location | Fiscal year ended April 30, 2025 | Fiscal year ended April 30, 2024 |
| --- | --- | --- |
| North America & South America | 66% | 96% |
| EMEA | 32% | 4% |
| Asia and Australia | 2% | — |
| Total | 100% | 100% |
*Cost
of revenue*
Our
cost of revenue consists primarily of subcontracts, incurred material, labor and manufacturing overhead expenses, such as engineering
expense, equipment depreciation, maintenance, and facility related expenses, and includes the cost of equipment to customize the PowerBuoy®,
WAM-V® and our other products supplied by third-party suppliers. Cost of revenue also includes PowerBuoy® and other product system
delivery and deployment expenses and may include losses recorded at the time a loss is forecasted to be incurred on a contract.
*Operating
Expenses*
*Engineering
and product enhancement costs*
Our
engineering and product enhancement costs consist of salaries and other personnel-related costs and the costs of products, materials
and outside services used in our product enhancement and unfunded research activities. Our product enhancement costs relate primarily
to our efforts to increase the power output and reliability of our PowerBuoy® system and other products, to enhance and optimize
data monitoring and controls systems, and the development of new products, product applications and complementary technologies. We expense
all of these costs as incurred.
40
*Selling,
general and administrative costs*
Our
selling, general and administrative costs consist primarily of professional fees, salaries and other personnel-related costs for employees
and consultants engaged in sales and marketing of our products, and costs for executive, accounting and administrative personnel, professional
fees and other general corporate expenses.
*Interest
income, net*
Interest
income, net consists of interest received on cash, cash equivalents, and short-term investments and interest paid on certain obligations
to third parties as well as amortization expense related to the premiums on the purchase of short-term investments.
*Foreign
exchange gain (loss)*
We
transact business in various countries and have exposure to fluctuations in foreign currency exchange rates. Since we conduct our business
in U.S. dollars and our functional currency is the U.S. dollar, our main foreign exchange exposure, if any, results from changes in the
exchange rate between the U.S. dollar and transactions settled in foreign currencies.
While
OPT remains committed to expanding its international footprint and serving customers globally, the Company has also taken steps to streamline
its legal and operational structure to improve efficiency and reduce administrative overhead. As part of this initiative, the Company
completed the wind-down of its Australian subsidiary during fiscal 2024 and began the wind-down of its UK subsidiary during the same
period. The wind-down of the UK entity was completed during fiscal 2025. These decisions were not reflective of a diminished international
focus, but rather represent a strategic reallocation of resources toward regions and engagement models better aligned with current customer
demand, strategic partnerships, and long-term growth potential. OPT’s international business development continues through:
- Direct contracting from the United States with allied government and commercial entities;
- Regional strategic partners, resellers, and OEM collaborators;
- Mobile deployment teams and project-specific operational hubs.
The
simplification of OPT’s legal entity structure reduces fixed costs and compliance complexity, enabling a more agile and scalable
approach to international market entry and project execution. The unrealized gains or losses resulting from foreign currency translation
associated with these entities are included in Accumulated Other Comprehensive Loss within Shareholders’ Equity. Foreign currency
transaction gains and losses are recognized within the Company’s Consolidated Statements of Operations.
We
currently do not hedge our exchange rate exposure. However, we assess the anticipated foreign currency working capital requirements and
capital asset acquisitions of our foreign operations and assess the need and cost to utilize financial instruments to hedge currency
exposures on an ongoing basis and may hedge against exchange rate exposure in the future.
**Results
of Operations**
This
section should be read in conjunction with the discussion below under “Liquidity Outlook”.
41
***Fiscal
Years Ended April 30, 2025 and 2024***
The
following table contains selected Consolidated Statements of Operations information, which serves as the basis of the discussion of our
results of operations for the fiscal years ended April 30, 2025 and 2024:
_(in thousands)_
| Line item | Fiscal years ended April 30, 2025 | Fiscal years ended April 30, 2024 |
| --- | --- | --- |
| Revenue | $5,861 | $5,525 |
| Cost of revenue | 4,201 | 2,699 |
| Gross profit | 1,660 | 2,826 |
| Change in fair value of contingent consideration | — | (72) |
| Other operating expenses | 23,346 | 32,229 |
| Total operating expenses | 23,346 | 32,157 |
| Operating loss | (21,686) | (29,331) |
| Interest income, net | 47 | 800 |
| Other (expense)/income | (23) | 2 |
| Loss on disposition of assets | — | (210) |
| Loss on extinguishment of debt | (838) | — |
| Foreign exchange (loss)/gain | (45) | 2 |
| Loss before income taxes | (22,545) | (28,737) |
| Income tax benefit | 1,034 | 1,254 |
| Net loss | $(21,511) | $(27,483) |
*Revenue*
Revenue
for the fiscal years ended April 30, 2025 and 2024 were approximately $5.9 million and $5.5 million, respectively, representing an increase
of approximately $0.4 million. The year-over-year increase primarily reflects higher levels of revenue stemming from the sales and leases
of WAM-Vs.
*Cost
of revenues*
Cost
of revenues for the fiscal years ended April 30, 2025 and 2024 were approximately $4.2 million and $2.7 million, respectively, representing
an increase of approximately $1.5 million. The year-over-year increase is related to an increase in revenue and a change in product mix,
and some current year product offerings at lower margin as a means to gain market share.
*Change
in fair value of contingent consideration*
The
change in fair value of contingent consideration for the fiscal year ended April 30, 2025, and 2024 was zero and a gain of $0.1 million,
respectively. The prior year amount was due to changes in actual and forecasted bookings relating to the WAM-V offerings.
*Operating
Expenses*
Our
operating expenses include both product development costs (substantially completed during fiscal year 2024) as well as
administrative costs, including the costs of products, materials and outside services used in our product development and unfunded
research activities. Also included are professional fees, salaries and other personnel-related costs for employees and consultants
engaged in sales and marketing and costs for executive, accounting and administrative personnel, and other general corporate
expenses. Operating expenses during the fiscal year ended April 30, 2025 were $23.3 million as compared to $32.2 million for fiscal
year 2024. The decrease of approximately $8.9 million was primarily the result of the significant cost reduction activities we
implemented at the end of fiscal 2024 including headcount optimization, material reductions in third party spend, and efforts to
tightly control and contain costs.
*Interest
income, net*
Total
cash, cash equivalents, and restricted cash was $6.9 million as of April 30, 2025, compared to $3.3 million as of April 30, 2024. Interest
income, net was approximately $47,000 and $800,000 for fiscal 2025 and 2024, respectively, and reflects no short-term investments during
fiscal 2025 and the decreased balance of our short-term investments throughout fiscal 2024. Short-term investments balance was higher
throughout fiscal 2024 and yielded higher interest rates than cash held in bank accounts during fiscal 2025.
42
*Other
(expense)/income*
Other
(expense)/income for the fiscal year ended April 30, 2025 and 2024 was (23,000) and $2,000, respectively.
*Loss
on extinguishment of debt*
The
loss on extinguishment of debt of $0.8 million as of April 30, 2025 relates to convertible notes that were issued in December 2024 and
were converted to common stock in December 2024 loss on disposition of assets.
The
loss on disposition of assets of $0.2 million as of April 30, 2024 relates to the disposal of intangible and fixed assets related to
the disposition of 3Dent Technology, LLC in November 2023.
*Foreign
exchange gain/(loss)*
Foreign
exchange loss was $45,000 for fiscal year 2025 as compared to a foreign exchange gain of approximately $2,000 for fiscal year 2024. The
difference was attributable to the relative change in value of the British pound sterling dollar compared to the U.S. dollar.
*Income
tax benefit*
Income
tax benefit reflects the sale by the Company of New Jersey State net operating losses and research development credits under the New
Jersey Economic Development Authority Tax Transfer programs, resulting in $1.0 million and $1.3 million of tax benefit related to the
fiscal year ended April 30, 2025 and 2024, respectively.
**Net
cash used in operating activities**
During
the fiscal year ended April 30, 2025, net cash flows used in operating activities was $18.6 million, a decrease of $11.1 million compared
to net cash used in operating activities during the fiscal year ended April 30, 2024. This primarily reflects a decrease in the net loss
of $5.4 million and increases in the current year on non-cash expenses, such as depreciation and stock-based compensation.
**Net
cash used in/provided in investing activities**
Net
cash used in investing activities was approximately $0.5 million for fiscal year 2025 versus net cash provided by investing activities
of approximately $25.5 million for fiscal year 2024. During fiscal 2025, the Company purchased $0.5 million in property and equipment,
down from $2.6 million during fiscal 2024. The remainder of the difference relates to purchases and redemptions of short-term investments
during fiscal 2024, which fully matured in fiscal 2024.
**Net
cash provided by/used by financing activities**
Net
cash provided by financing activities during the fiscal year ended April 30, 2025 was approximately $22.7 million compared to net cash
used in financing activities during the fiscal year ended April 30, 2024 of $0.5 million. The increase in net cash provided by financing
activities during the fiscal year ended April 30, 2025 was driven by the issuance of common stock under the Company’s At the Market
Facility and proceeds from the issuance of stock and convertible debt, discussed under “Capital Raises” above.
**Effect
of exchange rates on cash and cash equivalents**
The
effect of exchange rates on cash and cash equivalents was not material during fiscal 2025 or fiscal 2024.
**Liquidity
Outlook**
Since
our inception, our operating cash flows have not been sufficient to fund our operations and provide the capital resources for our business.
For the two-year period ended April 30, 2025 our aggregate revenue was $11.4 million, our aggregate net losses were $49.6 million and
our aggregate net cash used in operating activities was $48.4 million.
43
We
expect to devote substantial resources to continue our enhancement efforts for our products and to expand our sales, marketing and manufacturing
programs associated with the continued commercialization of our products. Our future capital requirements will depend on several factors,
including but not limited to:
- our ability to improve, market and commercialize our products, and achieve and sustain profitability;
-
our continued improvement of our proprietary technologies, and expected continued use of cash from operating activities unless or until we achieve positive cash flow from the commercialization of our products and services;
- changes in current legislation, regulations and economic conditions regarding Federal governmental tariffs, the implementation on the new US Department of Governmental Efficiency (“DOGE”) and related DOGE federal governmental budget cuts and the potential that this affects the demand for, or restrict the use of, our products and services;
- our ability to obtain additional funding, as and if needed, which will be subject to several factors, including market conditions, our financial condition and our operating performance;
- our ability to comply with the covenants and other obligations under our convertible notes;
- the ability to continue as a going concern;
- our history of operating losses, which we expect to continue for at least the short-term and possibly longer;
- our ability to manage challenges and expenses associated with communications and disputes with activist shareholders, including litigation;
- our ability to manage and mitigate risks associated with our internal cyber security protocols and protection of the data we collect and distribute;
- our ability to protect our intellectual property portfolio;
- the impact of potential inflation related to the U.S. dollar on our business, operations, customers, suppliers, manufacturers, and personnel;
- our ability to meet product enhancement, manufacturing and customer delivery deadlines and the potential impact due to disruptions to our supply chain or our ability to identify vendors that can assist with the prefabrication elements of our products, as a result of, among other things, staff shortages, order delays, and increased pricing from vendors and manufacturers;
- our forecasts and estimates regarding future expenses, revenue, gross margin, cash flow and capital requirements;
- our ability to identify and penetrate markets for our products, services, and solutions;
- our ability to effectively respond to competition in our targeted markets;
- our ability to establish relationships with our existing and future strategic partners which may not be successful;
- our ability to maintain the listing of our common stock on the NYSE American;
- the reliability and continuous improvement of our technology, products and solutions;
- our ability to increase or more efficiently utilize the synergies available from our product lines:
- our ability to expand markets across geographic boundaries;
- our ability to be successful with Federal government work which is complex due to various statutes and regulations applicable to doing business with the Federal government;
- our ability to be successful doing business internationally which requires strict compliance with applicable statutes and regulations;
- the current geopolitical world uncertainty, including tariffs, Russia’s invasion of Ukraine, the Israel/Palestine conflict and previous attacks on merchant ships in the Red Sea;
- the potential impact that new foreign country tariffs may have on our ability (i) to source and procure necessary raw materials for the manufacture and provision of our products and services; and (ii) to deliver our products to such foreign countries;
- our ability to hire and retain key personnel, including senior management, to achieve our business objectives; and
- our ability to establish and maintain consistent commercial profit margins.
44
Our
business is capital intensive, and through April 30, 2025, we have been funding our business principally through sales of our
securities. As of April 30, 2025, our cash and cash equivalents and long-term restricted cash balance was $6.9 million and we expect
to fund our business with this amount, future financings such as the May 2025 convertible debt issuance and, to a lesser extent,
with our cash flow generated from operations. Management believes the Company’s current cash and cash equivalents, inclusive
of the May 2025 convertible debt, and long-term restricted cash, and future financing will be sufficient to fund its planned
expenditures through July 2026.
**Off-Balance
Sheet Arrangements**
Since
inception, we have not engaged in any off-balance sheet financing activities.
**Recent
Accounting Pronouncements**
The
Company does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, will have a material
effect on the Company’s consolidated financial position, results of operations, or cash flows.
***Recently
Issued Accounting Standards***
In
December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which improves the transparency
of income tax disclosures by requiring companies to (1) disclose consistent categories and greater disaggregation of information in the
effective rate reconciliation and (2) provide information on income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective
for fiscal years beginning after December 15, 2024, although early adoption is permitted. The guidance should be applied on a prospective
basis with the option to apply the standard retrospectively. We are currently evaluating the impact of adopting this ASU 2023-09 on our
consolidated financial statements and disclosures.
In
November 2024, the FASB issued ASU No. 2024-3, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU improves the disclosures about a public business entity’s
expenses and addresses requests from investors for more detailed information about the types of expenses in commonly presented expense
captions. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning
after December 15, 2027. Early adoption is permitted. We are currently evaluating what the potential impact of adopting this ASU 2024-03
could have on our consolidated financial statements and disclosures
***Recently
Adopted Accounting Standards***
In
November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.”
This ASU improves financial reporting by requiring disclosure of incremental segment information. The new guidance is effective for fiscal
years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is
permitted. The Company adopted this standard beginning in fiscal 2025 and all required segment related disclosures are presented within
this Form 10-K and will be in subsequent interim reports on Form 10-Q. Refer to Note 15 for further discussion.
**ITEM
7A. *QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK***
Not
applicable.
**ITEM
8. *FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA***
The
financial statements and supplementary data required by this item are listed in Item 15 - “Exhibits and Financial Statement Schedules”
of this Annual Report.
45
**ITEM
9. *CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE***
None.
**ITEM
9A. *CONTROLS AND PROCEDURES***
*Evaluation
of Disclosure Controls and Procedures*
We
maintain disclosure controls and procedures that are designed to provide reasonable assurance that material information required to be
disclosed in our reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer
(“CFO”), as appropriate, to allow timely decisions regarding required financial disclosure. In designing and evaluating the
disclosure controls and procedures, management recognized that a control system, no matter how well designed and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within
a company have been detected.
As
of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our
management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls based upon the framework
presented in “Internal Control-Integrated Framework” (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (“COSO”). Based upon that evaluation, our CEO and CFO concluded that our disclosure
controls and procedures were effective as of April 30, 2025.
*Management’s Annual Report on Internal Control
over Financial Reporting*
Our management
is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with
U.S. generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect
to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate. Under the supervision and with the participation of our management, including our Chief Executive Officer
and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on
the framework in Internal Control—Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework, our management concluded that
our internal control over financial reporting was effective as of April 30, 2025.
This Annual
Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules
of the SEC for smaller reporting companies that permit us to provide only management’s report in this Annual Report.
**Remediation
of Previously Identified Material Weakness**
As
previously disclosed in our Annual Report on Form 10-K for the year ended April 30, 2024, management identified material weaknesses
in internal control over financial reporting related to control activities around stock-based compensation and risk assessment and
design of controls related to inventory account balances and related disclosures. During fiscal year 2025, management implemented a
series of remediation measures designed to address the identified material weakness. These measures included:
- We trained our employees to reinforce the importance of a strong control environment and communicated expectations to emphasize responsibilities and the technical requirements for controls, and to set the appropriate expectations on internal controls. Furthermore, we enhanced policies and procedures over control documentation, specifically the completeness and accuracy of stock based compensation information.
- We established a business process control remediation plan, which included frequent communications between our Audit Committee and senior management regarding the progression of remediation of our financial reporting and internal control environment.
- We increased the frequency and quality of internal monitoring and review processes
46
- We established IT General Controls and invested in people and technology to address gaps in IT Systems Security controls. In addition, there is now a formal process for System and Organization Controls (“SOC”) Report reviews and templates that are being performed by management.
- We engaged third-party consultants to assist with process mapping and internal control design, as well as assess the effectiveness of the remediated controls.
As
of April 30, 2025, management has completed testing of the newly implemented and enhanced controls and has concluded that the material
weakness has been fully remediated.
*Changes
in Internal Control over Financial Reporting*
Other
than the remediation measures described above, there were no changes in our internal control over financial reporting during fiscal 2025
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
**ITEM
9B. *OTHER INFORMATION***
None.
**ITEM
9C. *DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS***
Not
applicable.
**PART
III**
**ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE**
**Directors**
Our
Board is currently composed of five highly qualified and experienced directors, four of whom are independent. All of the directors bring
to our Board of Directors executive leadership experience from their service as executives and/or directors of our Company and/or other
entities. Collectively, our directors possess a broad and diverse set of skills and experiences, including in the energy, maritime, marine
data acquisition and government sectors as well as the areas of engineering design, manufacturing, operations, government contracting
and procurement, information technology, cybersecurity, environment and sustainability, finance, governance, mergers and acquisitions,
capital markets, capital allocation, capital structure, risk management, and strategic planning.
The
biography of each director contains information regarding the person’s service as a director, business experience, director positions
held currently or at any time during the last five years, and the experiences, qualifications, attributes, and skills that caused the
Nominating and Corporate Governance Committee and our Board of Directors to determine that the person should serve as a director, given
our business and structure.
| Name | Age | Position(s) with the Company | Served as Director From |
| --- | --- | --- | --- |
| Terence J. Cryan | 63 | Chairman of the Board and Independent Director | 2012 |
| Philipp Stratmann | 46 | President, Chief Executive Officer, and Director | 2021 |
| Clyde W. Hewlett | 70 | Independent Director | 2020 |
| Diana G. Purcel | 59 | Independent Director | 2020 |
| Peter E. Slaiby | 67 | Independent Director | 2020 |
47
**Terence
J. Cryan** has been a member of our Board of Directors since October 2012 and Chairman of the Board since June 2014. Mr. Cryan was
our lead independent director from October 2013 to June 2014 when he became Chairman of the Board. Mr. Cryan currently serves as a Managing
Director of MACCO Restructuring Group, LLC, which provides qualified interim leadership and advice to stakeholders across a broad spectrum
of business sectors. Since August 2017, Mr. Cryan has served as the Chairman of the Board of Westwater Resources, Inc. , where he currently
serves as Executive Chairman. Mr. Cryan has served on the boards of directors of a number of other publicly traded companies including
Uranium Resources, Inc. from 2006 to 2016; Global Power Equipment Group Inc. from 2008 to 2017; Superior Drilling Products from May 2014
to 2016; Gryphon Gold Corporation from 2009 to 2012; and The Providence Service Corporation from 2009 to 2011. Mr. Cryan served as President
and CEO of Global Power Equipment Group Inc., from March 2015 until July 2017. From September 2012 until April 2013, Mr. Cryan served
as interim President and CEO of Uranium Resources, Inc., and was elected as Chairman of the Board of Directors of Uranium Resources,
Inc. in June 2014 and served until March 2016. Mr. Cryan is also a former investment banker with extensive experience advising public
companies across a broad array of industries on mergers and acquisitions and capital markets transactions. Mr. Cryan earned his Bachelor
of Arts degree from Tufts University and a Master of Science degree in Economics from The London School of Economics. In addition, Terence
Cryan was named a Board Leadership Fellow by the National Association of Corporate Directors. We believe Mr. Cryan’s qualifications
to sit on our Board of Directors include his significant experience in financial matters, his prior board and executive management experience
at other companies, his broad energy technology industry background and his extensive expertise in financings, capital markets, and mergers
and acquisitions.
**Philipp
Stratmann** has served as our President, Chief Executive Officer, and a member of our Board of Directors since June 2021. Prior to
this, Mr. Stratmann served as Vice President – Global Business Development of the Company since 2019. Prior to that, he was Vice
President, Biofuels for Velocys, which he joined in 2015 as Business Development Director. He previously served as General Manager Global
Development and West Africa for InterMoor and has held leadership positions with Acteon Group and Ernst & Young, in addition to experience
with VT Group and Shell. He is a graduate of the United Kingdom’s University of Southampton, where he received his Engineering
Doctorate and his Master of Engineering degree in Ship Science. He also served in the German Navy in 2001 and 2002, in roles including
as an instructor in naval engineering. We believe Mr. Stratmann’s significant leadership experience in the energy and maritime
industries qualifies him to serve on our Board of Directors.
**Clyde
W. Hewlett** has served on the Board of Directors since December 2020. Mr. Hewlett has over 40 years of experience in offshore engineering
design, manufacturing, and operations. Mr. Hewlett has served on the Board of Directors of Seismic City, Inc. since April 2000. From
2015 until 2019, Mr. Hewlett served as Chief Operating Officer (COO) of Oceaneering International, Inc., a global provider of engineered
services and products to the offshore energy industry as well as the defense, entertainment, and aerospace industries. Prior to his service
as COO, Mr. Hewlett was the Senior Vice President for Projects (from 2007 to 2015) and a Vice President and Project Manager (1988 to
2007) with Oceaneering International, Inc. Prior to joining Oceaneering, Mr. Hewlett worked as in various project engineering and project
management roles with Vetco Gray, Inc. (from 1987 to 1988), with Hughes Offshore (from 1985 to 1987), with CanOcean Resources, Ltd. (from
1979 to 1984) and with Esso Canada (from 1978 to 1979). Mr. Hewlett obtained his Bachelor of Engineering in Mechanical Engineering from
Memorial University of Newfoundland, Canada in 1978. We believe that Mr. Hewlett’s significant engineering, manufacturing and operational
experience in the offshore environment qualifies him to serve on our Board of Directors.
**Diana
G. Purcel** has served on the Board of Directors since December 2020. As a respected voice on corporate governance and strategy, Ms.
Purcel was named as a Director to Watch by Directors & Boards magazine and is NACD Director Certified®. Ms. Purcel has approximately
20 years of experience as a chief financial officer, including 17 years with small cap publicly traded companies. Since April 2022, Ms.
Purcel has served on the board of directors of PetMed Express, Inc. (NASDAQ: PETS) on their Audit Committee, and Compensation Committee.
Ms. Purcel also served on the Governance and Nominating Committee from April 2022 to July 2024, and has served as the Audit Committee
Chair since July 2022. From December 2017 to December 2023, she served on the Board of Directors, and as a member of the executive committee
and chair of the finance committee, for the Animal Humane Society. From March 2019 to June 2021 (when the company was sold), Ms. Purcel
served on the Board of Directors for Now Boarding. From 2005 to 2008, Ms. Purcel served on the Board of Directors for Multicultural Foodservice
and Hospitality Alliance, as the chair of its audit committee. From April 2018 until May 2019, Ms. Purcel served as executive vice president
and Chief Financial Officer for EvineLive, Inc. (NASDAQ: EVLV), subsequently known as iMedia Brands, Inc. (NASDAQ: IMBI), an interactive
video and digital commerce company. From September 2014 until June 2017, Ms. Purcel served as the Chief Financial Officer for Cooper’s
Hawk Winery & Restaurants, LLC, which operated restaurants, manufactured private-label wines, and managed the largest wine club in
the world. From 2003 until 2014, Ms. Purcel served as Chief Financial Officer and Corporate Secretary for Famous Dave’s of America,
Inc. (at the time, NASDAQ: DAVE), which franchised and operated a casual dining restaurant chain of almost 200 locations in over 35 states.
From September 2002 to June 2003, Ms. Purcel served as Chief Financial Officer, and from April 1999 to September 2002, as Vice President,
Controller and Chief Accounting Officer of Paper Warehouse, Inc. (OTC:PWHS), a party-goods retailer and franchisor in 10 states. Ms.
Purcel also worked with Arthur Andersen & Co, from 1988 to 1993 as a certified public accountant and senior auditor, and with other
companies including Target Corporation (from 1994 to 1998 as a senior analyst). Ms. Purcel holds a Master’s in Business Administration
from the University of St. Thomas, a Bachelor of Science in Management, with a concentration in Accounting, from Tulane University, and
is a certified public accountant (inactive). Ms. Purcel brings significant financial experience and expertise, and is considered to be
an “audit committee financial expert” within the meaning of Item 407(d) (5) of Regulation S-K. We believe that Ms. Purcel’s
significant financial, strategy, and governance experience as a Chief Financial Officer in numerous public and private entities over
a 20-year period qualifies her to serve on our Board of Directors.
48
**Peter
E. Slaiby** has served on the Board of Directors since December 2020. Mr. Slaiby has over 40 years of experience in the oil and gas
industry including over 37 years working with Shell. Mr. Slaiby served on the Board of Directors for Glacier Oil and Gas and The Harris
School in Houston, Texas (since 2017). Previously Mr. Slaiby served on the Board of Directors for the Alaska Oil & Gas Association
(from 2009 to 2014) including as its Chairman (in 2014) and served on the Chancellors Advisory Board for University of Alaska –
Anchorage (from 2010 to 2013). Slaiby is serving as the Managing Director for Quartz Upstream (since 2017) and is serving as Managing
Partner for Floris Energy (since April 2020). From 2019 to 2020, Mr. Slaiby was a co-founder for Novara Energy. From 1980 to 2017, Mr.
Slaiby worked with Shell in various roles: as Vice President, Decommissioning and Restoration, as Vice President, Shell Alaska, and as
Asset Manager – Brunei and UK Shell Petroleum. Mr. Slaiby also worked with Pecten (a Shell subsidiary) as Technical Manager –
Cameroon, as Project and Technical Manager – Brazil, and as Project Manager – Syria. Mr. Slaiby began his professional career
in 1980 working for Shell Oil Company in various production roles in the Gulf of Mexico. Mr. Slaiby obtained his Bachelor of Engineering
in Mechanical Engineering from Vanderbilt University in 1980. We believe that Mr. Slaiby’s significant experience in the oil and
gas industry in many different roles qualifies him to serve on our Board of Directors.
**Executive
Officers**
We
have two executive officers who are not directors:
**Name** **Age** **Position(s) with the Company**
Robert Powers 54 Senior Vice President & Chief Financial Officer
Tracy Pagliara 62 Senior Vice President General Counsel & Corporate Secretary
**Robert
Powers** joined OPT in December 2021 with more than 25 years of experience providing domestic and international leadership to entrepreneurial,
privately owned, and founder-led companies, as well as SEC registrants and private equity backed companies. Prior to OPT, Bob was CFO
of Constellation Advisors, a private equity-owned provider of outsourced back-office operations and compliance services. He has held
financial leadership roles with Sterling Talent Solutions, Wood Group PPS – a division of Wood Group, GTE, SABIC Innovative Plastics,
and Plug Power. He has also provided financial consulting services to various companies. Bob began his career at PricewaterhouseCoopers,
LLP. He received a Bachelor of Science in Accounting degree from Fordham University and an MBA in Business Administration from Rensselaer
Polytechnic Institute and he is a Certified Public Accountant.
**Tracy
D. Pagliara** was appointed Senior Vice President, General Counsel and Corporate Secretary in January 2025. Prior to joining OPT, he
served as President and CEO of Williams Industrial Services Group Inc. (formerly known as Global Power Equipment Group, Inc.), a publicly
traded provider of construction and maintenance services to power, energy and industrial customers. He also served as Senior Vice President,
Administration (2017-2018) and as General Counsel, Secretary and Vice President, Business Development (2010-2017) at Williams Industrial
Group. Prior to joining Williams , Mr. Pagliara served as the Chief Legal Officer of Gardner Denver, Inc., a leading publicly traded
global manufacturer of highly engineered compressors, blowers, pumps and other fluid transfer equipment. He also had responsibility for
other roles during his tenure with Gardner Denver, including Executive Vice President of Administration, Chief Compliance Officer, and
Corporate Secretary. Prior to joining Gardner Denver, Mr. Pagliara held positions of increasing responsibility in the legal departments
of Verizon Communications/GTE Corporation and Kellwood Company, ultimately serving in the role of Assistant General Counsel for each
company. Mr. Pagliara has a B.S. in Accounting and a J.D. from the University of Illinois. He is a member of the Missouri and Illinois
State Bars and a Certified Public Accountant.
49
**Audit
Committee**
During
the year ended April 30, 2025, the members of our Audit Committee were Diana G. Purcel, Peter E. Slaiby, and Terence Cryan. Ms. Purcel
is the chair of the Audit Committee. The Board of Directors has determined that Ms. Purcel is an “audit committee financial expert”
within the meaning of the regulations of the Securities and Exchange Commission (the “SEC”). The Audit Committee met 5 times
in fiscal 2025. Our Board has also determined that all Audit Committee members meet the independence requirements contemplated by 303A.02
of the NYSE American Rules and Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Our
Audit Committee assists our Board of Directors in its oversight of the integrity of our consolidated financial statements, our independent
registered public accounting firm’s qualifications, independence, and performance.
Our
Audit Committee’s responsibilities include: appointing, approving the compensation of, and assessing the independence of, our independent
registered public accounting firm; overseeing the work of our independent registered public accounting firm, including through the receipt
and consideration of reports from our independent registered public accounting firm; reviewing and discussing with management and our
independent registered public accounting firm our annual and quarterly consolidated financial statements and related disclosures; recommending
to the Board whether the Company’s audited financial statements be included in our Annual Report on Form 10-K; monitoring our internal
controls over financial reporting, disclosure controls and procedures and corporate code of business conduct and ethics; establishing
procedures for the receipt and retention of accounting related complaints and concerns; reviewing related party transaction; ratifying
the charter of our disclosure controls committee; reviewing and assessing management risk assessment and risk management; meeting independently
with our independent registered public accounting firm, our internal audit services firm, and management; and preparing the Audit Committee
report required by SEC regulations.
**Corporate
Governance**
Our
Board of Directors believes that good corporate governance is important to ensure that the Company is managed for the long-term benefit
of our shareholders. Complete copies of our corporate governance guidelines, committee charters and corporate code of business conduct
and ethics are available on the corporate governance section of our website, www.oceanpowertechnologies.com. Alternatively, you can request
a copy of any of these documents by writing to our Secretary at 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831.
**Code
of Ethics**
We
have adopted a corporate code of business conduct and ethics that applies to our employees, officers (including our principal executive
officer and principal financial officer) and independent directors. The corporate code of business conduct and ethics is posted on our
corporate website at Corporate Governance | Ocean Power Technologies and can also be obtained free of charge by sending a request to
our Secretary at 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831. Any changes to or waivers under the corporate code of business
conduct and ethics as it relates to our chief executive officer, chief financial officer, chief commercial officer, controller, or persons
performing similar functions must be approved by our Board of Directors and will be disclosed in a Current Report on Form 8-K within
four business days of the change or waiver.
**Section
16(a) Beneficial Ownership Reporting Compliance**
Pursuant
to Section 16(a) of the Exchange Act and the rules issued thereunder, our executive officers and directors are required to file with
the SEC reports of ownership and changes in ownership of Common Stock. Copies of such reports are required to be furnished to us. Based
solely on a review of the copies of such reports furnished to us, or written representations that no other reports were required, we
believe that all required reports were filed in a timely manner during the year ended April 30, 2025.
50
**DIRECTOR
COMPENSATION**
We
have structured our Board compensation to have a significant equity component that exceeds the cash component to align the interests
of our directors with the interests of our shareholders. For Board service during fiscal year 2025, the Board of Directors approved,
for each non-employee director, an annual base compensation consisting of a cash payment of $70,000 and restricted share units (RSU)
representing a value of $75,000. Each non-employee director also receives a per annum supplement ranging from $8,000 to $30,000 in cash
for each committee that they belong to or chair and an additional RSU grant based upon committee membership. In addition, the Chairman
of the Board annually receives an additional $75,000 in cash. Finally, for fiscal year 2025 each non-employee director received a one-time
RSU grant. See the table below for a summary of total cash and equity compensation for fiscal 2025.
We
reimburse each non-employee director for out-of-pocket expenses incurred in connection with attending our Board and Board committee meetings.
Compensation for our directors, including cash and equity compensation, is determined, and remains subject to adjustment, by the Nominating
and Corporate Governance Committee of our Board of Directors.
The
following table summarizes compensation paid to each of our non-employee directors who served during fiscal year 2025.
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Stock Awards (#) | Option Awards ($) | Total ($) |
| --- | --- | --- | --- | --- | --- |
| Terence J. Cryan | $202,000 | $1,341,254 | 1,354,802 | — | $1,543,254 |
| Clyde W. Hewlett | $90,000 | $552,499 | 558,080 | — | $642,499 |
| Diana G. Purcel | $116,000 | $894,711 | 903,748 | — | $1,010,711 |
| Peter E. Slaiby | $110,000 | $587,276 | 593,208 | — | $697,276 |
| Natalie Lorenz-Anderson (Former) | $78,000 | $86,337 | 87,209 | — | $164,337 |
**ITEM
11. EXECUTIVE COMPENSATION**
Our
Compensation Committee is responsible for overseeing the compensation of our named executive officers (NEOs), including the design, review,
approval, and implementation of all compensation programs. The goal of the Compensation Committee is to ensure that our compensation
practices are aligned with our business strategies and objectives and that the total compensation paid to each of our named executive
officers is fair, reasonable, and competitive. During fiscal year 2025our Company had four NEOs: (1) the President and Chief Executive
Officer (CEO); (2) the Senior Vice President and Chief Financial Officer (CFO), (3) the Secretary and General Counsel, and (4) the Chief
Commercial Officer (no longer employed as of June 2025).
The
Compensation Committee is composed entirely of independent, non-management members of the Board. Each member of the Compensation Committee
is both a “non-employee director” within the meaning of Rule 16b3 of the Exchange Act, and an “outside director”
within the meaning of Section 162(m) of the Internal Revenue Code. No Compensation Committee member participates in any of the Company’s
employee compensation programs. Each year the Company reviews any and all relationships that each director has with the Company, and
the Board subsequently reviews these findings. The responsibilities of the Compensation Committee, as stated in its charter, include
the following:
- review and make such recommendations to the Board as the Compensation Committee deems advisable with regard to all incentive-based compensation plans and equity-based plans;
- review and approve the corporate goals and objectives that may be relevant to the compensation of NEOs;
51
- evaluate the performance of the NEOs in light of the goals and objectives that were set and determine and approve the compensation of the NEOs based on such evaluation; and
- review and approve the recommendations of the CEO with regard to the compensation of all officers of the Company other than the CEO.
The
full Board of Directors also conducts an annual evaluation of the CEO, which is designed to help assess the CEO’s performance against
established goals and objectives and provide additional feedback for the Compensation Committee.
**Stock
Ownership and Holding Guidelines Policy**
At
the recommendation of the Nominating and Corporate Governance Committee, during fiscal 2024, the Board amended its stock ownership and
holding guidelines for all NEOs and all independent directors. The guidelines are designed to increase stock ownership over time and
thereby align their interests with the interests of shareholders. For the CEO, the guidelines now provide for the achievement of stock
ownership of 5 times base salary over a period of 5 years. For the CFO and CCO, the guidelines now provide for the achievement of stock
ownership of 3 times base salary over a period of 5 years. For the independent directors, the guidelines now provide for the achievement
of stock ownership of one times the annual cash retainer for each full year of service over a period of 5 years.
**Compensation
Clawback Policy**
In
2023, the Board adopted a Compensation Clawback Policy which is compliant with the requirements of the NYSE American and the SEC. Under
the policy, if OPT is required to prepare an accounting restatement, including to correct an error that would result in a material misstatement
if the error were corrected in the current period or left uncorrected in the current period, OPT could determine to recover from any
current or former executive officers incentive-based compensation that was erroneously awarded during the three years preceding the date
such a restatement was required. The recoverable amount is the amount of incentive-based compensation received in excess of the amount
that otherwise would have been received had it been determined based on the restated financial measure. This would apply even if the
executive officer did not engage in any misconduct or had no responsibility for the errors. The Compensation Committee has the full and
final authority to make all determinations under this policy.
**Compensation
Objectives and Philosophy**
The
Company’s compensation program is centered around a philosophy that focuses on aligning the interests of our management with those
of our shareholders, retention of key personnel, and pay-for-performance compensation. The Company believes this philosophy allows the
Company to compensate its executive officers competitively, while simultaneously ensuring support of its strategy and continued development
and achievement of key business goals. The Compensation Committee firmly believes that a pay-for-performance philosophy should recognize
both short- and long-term performance and should include both cash and equity compensation arrangements that are supported by strong
corporate governance, including active and effective oversight by the Compensation Committee.
52
Our
compensation programs are intended to reward executives for the achievement of specified predetermined quantitative and qualitative goals
aligned with the interests of shareholders and designed to increase shareholder value. Our compensation programs are also designed to
attract and retain qualified executives and reward them for attaining superior short-term and long-term performance.
**Total
Compensation Program Elements and Relationship to Performance**
Key
elements of these programs include:
- Base salary that is fixed cash compensation designed to reward annual achievements, with consideration given to the executive’s qualifications, scope of responsibility, leadership abilities and management experience and effectiveness;
- Short-term incentive (STI) programs that provide yearly cash bonus awards, where warranted, designed to incentivize, and reward executives for executing against predetermined business objectives with demonstrated performance; and
- Long-term incentive (LTI) programs that provide equity-based incentive compensation, over a multi-year period, which further align executive and shareholder interests. Grants prior to and including fiscal year 2022 had been primarily in the form of Non-qualified Stock Options (NQSOs). Beginning with fiscal year 2023, NEOs have received equity grants in the form of Restricted, Stock Units (RSUs) instead of NQSOs. For fiscal year 2026 and beyond, our intention is for NEOs to continue to receive equity grants in the form of RSUs. The value of LTI compensation is based upon the market value of our common stock that requires continued service, with the majority of the vesting criteria tied to the attainment of certain performance goals.
53
**Determining
and Setting Executive Compensation**
The
Compensation Committee works closely with key members of management to set the compensation for the Company’s non-NEO executives.
Under direction by, and oversight from, the Compensation Committee, management develops recommendations for the Company’s compensation
plans by utilizing market data sourced from publicly available compensation sources. This includes reputable on-line compensation surveys
for comparable executive positions that review a broad selection of national and regional companies, which the Company believes it may
compete with for executive talent. These companies are considered to be comparable to the Company in terms of public ownership, organizational
structure, size, and stage of development. The Compensation Committee reviews the results of any compensation analyses, and recommendations
by management are reviewed with and approved by the Compensation Committee annually; however, if the Company becomes aware within the
year that a market adjustment is required based on market or other data, the Compensation Committee can make changes as necessary. The
Compensation Committee targets compensation for our executives within a competitive range, generally at the market 50th percentile. Other
considerations, including the unique nature of our business, the experience level of an executive, performance, tenure, and other market
and/or relevant factors may dictate variations to this general target.
In
addition to traditional benchmarking metrics, such as product sales, revenue and profits, the additional factors the Compensation Committee
typically considers when determining the STI and LTI compensation of our NEOs’ compensation include:
- key product and solution development initiatives;
- technology advancements;
- achievement of commercial milestones;
- establishment and maintenance of key strategic relationships;
- implementation of appropriate financing strategies;
- financial and operation performance;
- safety performance; and
- compliance with international quality and operational standards, including ISO certification and audits.
**Results
of Recent Annual Meeting Votes on Executive Compensation**
The
results of the voting on the executive compensation proposals at our last three Annual Meetings of Shareholders is presented in the following
table.
| | For | Against | Abstain |
| --- | --- | --- | --- |
| 2024 Annual Meeting | 86% | 12% | 3% |
| 2023 Annual Meeting | 63% | 31% | 6% |
| 2022 Annual Meeting | 70% | 22% | 8% |
The
Board and Compensation Committee continue to focus on driving NEO performance against specific goals and ensuring that the interests
of management and shareholders are aligned properly. Accordingly, as part of our governance processes, we continually review our incentive
programs, including equity vehicles that better align with our shareholders, in addition to our governance policies.
54
**LTI
Goals**
In
January 2022, the Company adopted a new program for LTI awards. Pursuant to the new program NEOs, vice presidents, and select other direct
reports to the Chief Executive Officer received RSUs while the rest of the Company’s employees received NQSOs. NQSOs are subject
to time-based vesting, while RSUs are subject to both time-based and performance-based vesting criteria. Performance-based vesting is
subject to a total shareholder return (“TSR”) formula, which allows for vesting in the second year if the TSR metric is not
achieved in the first year, and for vesting in the third year if the TSR metric is not achieved for the second year. The TSR metric has
two components – an absolute TSR metric that evaluates the performance of our common stock year-over-year, and a relative TSR metric
that evaluates the performance of our common stock against a defined index, the Russell 3000 Microcap index. One-third of RSU awards
vest over time, one-third vest as absolute TSR metrics are achieved and one-third vest as relative TSR metrics are achieved. LTI awards
granted in January 2022 and January 2023 were granted under this revised program. In January 2024 the Company adopted a new program for
LTI awards. Pursuant to the new program all employees received RSUs subject to both time-based and performance-based vesting criteria.
One third of the RSUs shall vest equally over time on January 31, 2025, on January 31, 2026, and on January 31, 2027. One third of the
RSUs shall vest over time based upon achieving and maintaining various specified ISO certifications by January 2027. Progress toward
these targets and annual vesting will be determined by OPT’s Compensation Committee on January 31, 2025, on January 31, 2026, and
on January 31, 2027. One third of the RSUs shall vest over time based upon the achieving specified cumulative contracted bookings targets
by January 2027. Contracted bookings will be assessed on a gross basis, but excluding options, and any terminations will be subtracted
from the total. Progress toward this target and annual vesting will be determined by OPT’s Compensation Committee on January 31,
2025, on January 31, 2026, and on January 31, 2027. As long as the Company is within 95% of the bookings target in year 1 and 2, 1/3
of the total grant will vest. Year 3 is then a makeup year that allows for overperformance (if at least 120% of total is achieved), or
catchup (if 100% of total cumulative target is achieved), or it balances out based on the total cumulative achievement. Finally, upon
the attainment of positive TSR for each of the years ended January 31, 2025, 2026, and 2027, respectively, an additional 10% of the shares
awarded on January 31, 2024 will be granted – issued and assessed annually, with immediate vesting. For clarity, positive TSR will
be calculated based on the share price 12 months prior using the 10 day VWAP. Shares awarded annually will be either 0% or 10% based
upon the analysis above, with no extrapolation. Total cumulative awarded shares are capped at 30% and there is no penalty for not achieving
positive TSR.
In
January 2025 the Company granted RSUs to all employees subject to the following vesting criteria and continued employment on the applicable
vesting dates:
i. One-third of the RSUs shall vest equally over time
ii. One-third of the RSUs shall vest over time based upon achieving and maintaining ISO certification. Progress will be determined by OPT’s Compensation Committee.
iii. One-third of the RSUs shall vest over time based upon the achievement of cumulative contracted bookings and progress will be determined by OPT’s Compensation Committee.
iv. Bonus: Upon achieving positive TSR for the fiscal years ending January 31, 2026, 2027, and 2028, respectively, an additional 10% of the shares initially awarded on January 16, 2025, will be granted. The assessment will be conducted annually, with shares vesting immediately upon such determination. The cumulative total award is capped at 30% of the shares initially granted.
**STI
Goals for Fiscal Year 2024**
In
its May 2023 meeting, the Compensation Committee also developed objectives for the STI plan for the NEOs for fiscal year 2024. The Compensation
Committee established objectives across three main categories; financial performance, operational performance, and safety and quality
performance as reflected in the following table. For Operational and Safety and Quality metrics management has also identified specific
measurement criteria which was approved by the Compensation Committee.
55
| Category | Metric | Measurement | Target Points |
| --- | --- | --- | --- |
| Financial | New Bookings | Multi System Orders (10 points per multi-buoy [3 or more], 5 points per multi-vehicle [3 or more]) | 10 |
| Financial | New Bookings | $7.8M Buoy new bookings | 15 |
| Financial | New Bookings | $6M Vehicles new bookings | 15 |
| Financial | New Bookings | $1.3M Consulting new bookings | 5 |
| Operational | Manufacturing | | 30 |
| Operational | Technology | | 10 |
| Operational | Cyber | | 5 |
| Safety and Quality | Proactive Measures Implementation | | 5 |
| Safety and Quality | Total Recordable Incident Rate | | 5 |
| Total | | | 100 |
Consistent
with fiscal year 2023, a 75% threshold was established, and upon attainment, a 50% award will be made. Between 75% and 100%, the award
would be linearly interpolated, and between 100% and 200% (the maximum award), the award would be interpolated.
Considering
the overall performance of the Company for the fiscal year, and particularly the performance reviews of high performing individuals within
the staff, the Compensation Committee approved management’s recommendation for the STI pool for the fiscal year , and the STI pool
resulted in a total of approximately $1,060,000 in bonus awards across the Company. In terms of NEOs STI bonus, the Compensation Committee
approved that the NEOs receive 64% of their respective target bonuses for fiscal year 2024.
**STI
Goals for Fiscal Year 2025**
In
its July 2024 meeting, the Compensation Committee developed objectives for the STI plan for’ the NEOs for fiscal year 2025. The
Compensation Committee established objectives across two main categories; financial performance and safety and quality performance as
reflected in the following table. Management also identified specific measurement criteria which was approved by the Compensation Committee.
| Category | Metric | Measurement | Target Points |
| --- | --- | --- | --- |
| Financial | New Bookings | $18M new bookings = 100% of target points. No points awarded <$13.5M | 30 |
| Financial | Revenue | $12.5M = 100% of target points. No points awarded <$9.38M | 40 |
| Financial | Adjusted Operating Income | $10M operating loss = 100% of target points. No points awarded if operating loss >$12.5M | 15 |
| Safety and Quality | Proactive Measures Implementation | | 5 |
| Safety and Quality | Total Recordable Incident Rate | | 10 |
| Total | | | 100 |
56
**Compensation
Considerations and Decisions for Fiscal Year 2025/2026**
In
May and July 2025, the Compensation Committee held a meetings to address management’s recommendation for fiscal year 2026 in terms
of salary changes and the fiscal year 2026 STI bonus pool. The Compensation Committee assessment included a review of the Company’s
scorecard for the fiscal year 2026. The Compensation Committee determined that the overall performance of the Company in terms of meeting
the targets for the fiscal year included in the scorecard had resulted in the attainment of 82 points out of a total 100 possible points.
Accordingly, based upon the formula noted above, the business portion of the bonus was earned at the rate of 64% of target bonus for
the majority of the Company’s eligible employees. A small number of employees received 100% of their target bonus based upon outstanding
performance.
Considering
the overall performance of the Company for the fiscal year, and particularly the performance reviews of high performing individuals within
the staff, the Compensation Committee approved management’s recommendation for the STI pool for the fiscal year, and the STI pool
resulted in a total of approximately $1,060,000 in bonus awards across the Company.
In
terms of NEOs compensation and STI bonus, the Compensation Committee approved that the NEOs receive 64% of their respective target bonuses
for fiscal year 2025, and pay increases of 3.5% would be granted for fiscal year 2026.
**STI
Goals for Fiscal Year 2026**
In
its May 2025 meeting, the Compensation Committee also developed objectives for the STI plan for the NEOs for fiscal year 2026. The Compensation
Committee established objectives across two main categories; financial performance and safety and quality performance as reflected in
the following table. Management also identified specific measurement criteria which was approved by the Compensation Committee.
| Category | Metric | Measurement | Target Points |
| --- | --- | --- | --- |
| Finance | New Bookings | $24M new bookings = 100% of target points. | 25 |
| | Revenues | $24M revenues = 100% of target points. | 20 |
| | Adjusted* EBITDA | $(7)M = 100% of target points | 15 |
| Development | Advanced Autonomy and Resiliency | See Development tab | 15 |
| | Docking and Charging | | 10 |
| Safety and Quality | Proactive Measures Implementation | See Safety tab | 5 |
| | TRIR | | 10 |
| Total Points | | | 100 |
57
**Summary
Compensation Table**
The
following table sets forth the compensation awarded to, earned by, or paid by us during the fiscal years ended April 30, 2025, and 2024
to our named executive officers.
| Name and Principal Position | Year | Salary ($) (1) | Bonus ($) (2) | Stock Awards ($) (3) | Option Awards ($) (4) | All Other Compensation ($) (5) | Total ($) |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Philipp Stratmann | 2025 | $374,291 | $125,753 | $5,437,530 | — | $16,831 | $5,954,405 |
| President and Chief Executive Officer | 2024 | $372,600 | $179,803 | $289,042 | — | $17,444 | $858,889 |
| Robert Powers | 2025 | $306,551 | $67,813 | $2,409,089 | — | $18,153 | $2,801,606 |
| Senior Vice President and Chief Financial Officer | 2024 | $301,392 | $96,961 | $155,868 | — | $17,787 | $572,008 |
| Matthew Burdyny | 2025 | $251,587 | — | $2,464,296 | — | $15,058 | $2,730,941 |
| Chief Commercial Officer (former) (6) | 2024 | $250,000 | $72,385 | $136,125 | — | $15,613 | $474,123 |
| Tracy Pagliara | 2025 | $86,539 | $33,750 | $2,611,106 | — | — | $2,731,395 |
| Senior Vice President, General Counsel, & Corporate Secretary | 2024 | — | — | — | — | — | — |
| Joseph DiPietro | 2025 | — | — | — | — | — | — |
| Controller and Treasurer (Former) (6) | 2024 | $196,650 | — | $25,425 | — | $5,911 | $227,986 |
(1)
Salary represents actual salary earned during each fiscal year. The amounts in this column may be different from the amounts listed below
under description of employment agreements due to increases in salary levels and mid-year hire dates.
(2)
This amount represents bonuses earned by the named executive officers for fiscal years 2025 and 2024. For fiscal year 2025 and 2024 the
Compensation Committee awarded bonuses in accordance with performance results.
(3)
The amounts in the “Stock Awards” column are subject to the vesting criteria described above and reflect the aggregate grant
date fair value of restricted stock units granted during the year computed in accordance with the provisions of Accounting Standards
Codification (ASC) No. 718, “Compensation- Stock Compensation.” The assumptions used in calculating these amounts are incorporated
by reference to Note 11 to the financial statements.
(4)
The amounts in the “Option Awards” column reflect the aggregate grant date fair value of stock options granted during the
year computed in accordance with the provisions of Accounting Standards Codification (ASC) No. 718, “Compensation- Stock Compensation.”
The assumptions used in calculating these amounts are incorporated by reference to Note 11 to the financial statements.
(5)
All amounts in fiscal 2025 and 2024 were related to the Company’s matching contributions to the 401(K) Plan.
(6)
Mr. DiPietro separated from the Company in April 2024 and Mr. Burdyny separated from the Company in June 2025.
58
**Employment
Agreements**
**Philipp
Stratmann – President, Chief Executive Officer, and Director**
Effective
June 18, 2021, in connection with his appointment as Chief Executive Officer and President, Mr. Stratmann entered into an Employment
Agreement with the Company. Pursuant to the Employment Agreement Mr. Stratmann is eligible for an annual, discretionary, performance-based
bonus targeted at 75% of base salary on such terms and conditions as may be determined by the Board or its Compensation Committee, and
is eligible to receive long-term incentive equity based awards, pursuant to the Company’s 2015 Omnibus Incentive Plan, as amended
(the “2015 Plan”), subject to such terms and conditions as may be determined by the Board or its Compensation Committee.
Mr. Stratmann will receive an annual base salary of $385,641 for fiscal year 2026.
If
he is terminated other than for cause, he will receive 12 months of salary as severance. Mr. Stratmann is also subject to covenants regarding
non-competition, non-solicitation, and confidentiality.
**Robert
Powers - Senior Vice President and Chief Financial Officer**
Effective
December 13, 2021, in connection with his appointment as Senior Vice President and Chief Financial Officer, Mr. Powers entered into an
Employment Agreement with the Company. Pursuant to the Employment Agreement, Mr. Powers is eligible for an annual, discretionary, performance-based
bonus targeted at 50% of base salary on such terms and conditions as may be determined by the Board or its Compensation Committee, and
is eligible to receive long-term incentive equity based awards, pursuant to the 2015 Plan, subject to such terms and conditions as may
be determined by the Board or its Compensation Committee. Mr. Powers will receive an annual base salary of $311,941 for fiscal 2026.
If
Mr. Powers is terminated other than for cause (or Mr. Powers quits for good reason), he will receive six months of salary as severance.
Mr. Powers is also subject to covenants regarding non-competition, non-solicitation, and confidentiality.
**Tracy
Pagliara – Senior Vice President General Counsel & Corporate Secretary**
Effective
January 16, 2025, in connection with his appointment as Senior Vice President, General Counsel & Corporate Secretary, Mr. Pagliara
entered into an Employment Agreement with the Company. Pursuant to the Employment Agreement, Mr. Pagliara will receive an annual base
salary of $300,000, is eligible for an annual, discretionary, performance-based bonus targeted at 50% of base salary on such terms and
conditions as may be determined by the Board or the Compensation Committee, and is eligible to receive long-term incentive equity based
awards, pursuant to the 2015 Plan, subject to such terms and conditions as may be determined by the Board or its Compensation Committee.
At the time of signing the Employment Agreement, he received a one-time grant of 75,000 restricted stock units under the 2015 Plan that
vest, if at all, over two years, 1/4 on each of the first and second anniversary of the date of grant, and 1/4 in each year based on
achievement of certain performance targets.
If
Mr. Pagliara is terminated other than for cause (or Mr. Pagliara quits for good reason), he will receive three months of salary as severance
if that occurs prior to January 2026 and then six months thereafter. He is also entitled to certain other severance payments in connection
with a change of control or non-renewal of the Employment Agreement. Mr. Pagliara is also subject to covenants regarding non-competition,
non-solicitation and confidentiality.
We
do not include employment agreement information for Mr. DiPietro or Mr. Burdyny as neither of them is currently employed by the Company.
59
**2025
Outstanding Equity Awards at Fiscal Year End Table**
The
following table contains certain information regarding equity awards held by the named executive officers as of April 30, 2025:
| Name and Principal Position | Option Awards / Numbers of Shares Underlying Unexercised Options (#) Exercisable | Option Awards / Numbers of Shares Underlying Unexercised Options (#) Unexercisable | Option Awards / Option Exercise Price ($) | Option Awards / Option Expiration Date | Stock Awards / Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) |
| --- | --- | --- | --- | --- | --- | --- |
| Philipp Stratmann | 9,333 | — | $2.93 | 1/14/2031 | | |
| President and Chief Executive Officer | | | | | 7,583,897 | $3,109,398 |
| Robert Powers | — | — | — | — | 3,449,206 | $1,414,174 |
| Senior Vice President and Chief Financial Officer | | | | | | |
| Matthew Burdyny | — | — | — | — | 3,305,855 | $1,355,401 |
| Chief Commercial Officer | | | | | | |
| Tracy Pagliara | — | — | — | — | 3,196,721 | $1,310,656 |
| Senior Vice President, General Counsel, & Corporate Secretary | | | | | | |
| Joseph DiPietro | — | — | — | — | — | — |
| Controller and Treasurer (Former | | | | | | |
(1)
Represents stock options granted January 14, 2021 relating to an aggregate of 9,333 shares which vest over a two-year period based on
service requirements.
(2)
Represents restricted stock units, with market based conditions, (A) granted on January 19, 2023 relating to an aggregate 145,588 shares
which vest over a three- year period when certain market price targets are met, (B) granted on February 1, 2024 relating to an aggregate
781,259 shares which vest over a three-year period when certain market price and performance targets are met, and (C) granted on January
16, 2025 relating to an aggregate 6,657,050 shares which vest over a three-year period when certain market price and performance targets
are met.
(3)
Represents restricted stock units, with market based conditions, (A) granted on January 19, 2023 relating to an aggregate 78,510 shares
which vest over a three-year period when certain market price targets are met, (B) granted on February 1, 2024 relating to an aggregate
421,300 shares which vest over a three-year period when certain market price and performance targets are met, and (C) granted on January
16, 2025 relating to an aggregate 2,949,396 shares which vest over a three-year period when certain market price and performance targets
are met.
60
(4)
Represents restricted stock units, with market based conditions, (A) granted on January 19, 2023 relating to an aggregate 27,021 shares
which vest over a three-year period when certain market price targets are met, (B) granted on November 9, 2023 related to an aggregate
of 16,667 shares which vest after a two-year period when certain market price targets are met, and (C) granted on February 1, 2024 relating
to an aggregate 349,462 shares which vest over a three-year period when certain market price and performance targets are met, and (D)
granted on January 16, 2025 relating to an aggregate 2,912,705 shares which vest over a three-year period when certain market price and
performance targets are met. Mr. Burdyny separated from the Company in June 2025.
(5)
Represents restricted stock units, with market based conditions, granted on January 16, 2025 relating to an aggregate 3,196,721 shares
which vest over a three-year period when certain market price and performance targets are met.
**Potential
Payments upon Termination of Employment or Change in Control**
The
following information sets forth the terms of potential payments to each of our named executive officers in the event of a termination
of employment. The terms cause, good reason and change of control have the meanings given such terms in the executive’s employment
agreement. We do not include information regarding Mr. DiPietro or Mr. Burdyny as neither of them is currently employed by the Company.
*Termination
by Company without Cause; Termination by Executive for Good Reason.* Our employment agreement with each of Messer’s. Stratmann,
Powers and Pagliara provide, upon the termination of employment other than for cause, or if terminated for good reason, that they have
the right to receive severance payments of twelve months of base salary (for Mr. Stratmann) or six months of base salary (for Mr. Powers
and Mr. Pagliara).
*Termination
by Company for Cause; Termination by Executive without Good Reason.* Neither Messrs. Stratmann, Powers nor Burdyny are entitled to
any benefits in the event of a termination by the Company for cause or by the executive without good reason.
*Change
in Control.* The agreements for Mr. Stratmann, Mr. Powers, and Mr. Pagliara include a double trigger severance clause. In the event
of a termination by the Company in connection with a change of control, or by the executive within 90 days of a change of control, the
employment agreements for Mr. Stratmann, Mr. Powers, and Mr. Pagliara provide for a payment of twelve, three, and three months, respectively,
of base salary. The restricted stock unit agreement provides for accelerated stock vesting upon a change in control.
*Termination
upon Failure to Renew by the Company.* In the event that the Company elects not to renew the employment agreement, and the executive
terminates their employment within 30 days of notice of non-renewal, the employment agreements for Mr. Stratmann, and Messs. Powers and
Pagliara, provide for a payment of twelve, three and three months, respectively, of base salary.
*Qualifying
retirement.* Under our restricted stock unit agreements with the named executive officers, upon a Qualifying Retirement, 50% of unvested
restricted shares will vest immediately. A “Qualifying Retirement” means retirement by the recipient after satisfaction of
the conditions in either clause (A) or clause (B): (A) the recipient has both (1) attained the age of 55 and (2) completed at least ten
years of employment with the Company; or (B) the sum of the recipient’s age plus the number of years he or she has been employed
by the Company equals or exceeds 75 years. In addition, the agreements of Messrs. Stratmann, Powers and Pagliara extend the exercisability
of vested options to 90 days after any termination event.
61
**ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS**
The
following table sets forth certain information regarding the beneficial ownership of our common stock as of July 24, 2025, by (a) each
person known by us to be the beneficial owner of more than 5% of the outstanding shares of Common Stock, (b) each executive officer (c)
each director, and (d) all executive officers and directors as a group.
The
percentage of common stock beneficially owned is based on 177,524,775 shares of our common stock outstanding as of July 24, 2025. For
purposes of the table below, and in accordance with the rules of the SEC, we deem shares of common stock subject to options that are
currently exercisable or exercisable within sixty days of July 24, 2025 to be outstanding and to be beneficially owned by the person
holding the options for the purpose of computing the percentage ownership of that person, but we do not treat them as outstanding for
the purpose of computing the percentage ownership of any person. Except as otherwise noted, each of the persons or entities in this table
has sole voting and investing power with respect to all of the shares of common stock beneficially owned by such person, subject to community
property laws, where applicable. The street address of each beneficial owner shown in the table below is c/o Ocean Power Technologies,
Inc., 28 Engelhard Drive, Suite B, Monroe Township, NJ 08831.
| Name of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Shares Beneficially Owned |
| --- | --- | --- |
| Philipp Stratmann (1) | 513,725 | * |
| Terence J. Cryan (2) | 600,593 | * |
| Clyde W. Hewlett (3) | 423,806 | * |
| Diana G. Purcel (3) | 423,806 | * |
| Peter E. Slaiby (4) | 458,806 | * |
| Robert Powers (5) | 253,409 | * |
| Matthew Burdyny (6) | 173,126 | * |
| Tracy Pagliara | — | * |
| All director and executive officers as a group (7 individuals) | 2,847,271 | 1.6% |
*
Represents a beneficial ownership of less than one percent of our outstanding common stock
(1)
Beneficial ownership includes 504,392 shares of our common stock and 9,333 shares issuable upon the exercise of options that are currently
exercisable or exercisable within sixty days of July 24, 2025.
(2)
Beneficial ownership includes 600,593 shares of our common stock and 50,668 shares issuable upon the exercise of options that are currently
exercisable or exercisable within sixty days of July 24, 2025.
(3)
Beneficial ownership includes 423,806 shares of our common stock and 19,129 shares issuable upon the exercise of options that are currently
exercisable or exercisable within sixty days of July 24, 2025.
(4)
Beneficial ownership includes 458,806 shares of our common stock and 19,129 shares issuable upon the exercise of options that are currently
exercisable or exercisable within sixty days of July 24, 2025.
(5)
Beneficial ownership includes 253,409 shares of our common stock as of July 24, 2025.
(6)
Beneficial ownership includes 173,126 shares of our common stock as of July 24, 2025.
**ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE**
**Board
Determination of Independence**
Under
applicable NYSE American rules, a director will only qualify as an “independent director” if they are not an executive officer
or employee of the Company, and, in the opinion of our Board of Directors, that person does not have a relationship which would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director.
Our
Board has determined that all of our current directors are “independent directors” within the meaning of the applicable listing
standards of the NYSE American, except for Philipp Stratmann who is our President and Chief Executive Officer.
62
**Certain
Relationship and Related Person Transaction**
***Review
and Approval of Related Person Transactions***
The
Audit Committee is charged with the responsibility of reviewing and approving all related person transactions (as defined in SEC regulations),
and periodically reassessing any related person transaction entered into by the Company to ensure continued appropriateness. This responsibility
is set forth in our Audit Committee charter. A related party transaction will only be approved if the members of the Audit Committee
determine that the transaction is in the best interests of the Company. If a director is involved in the transaction, he or she will
recuse himself or herself from all decisions regarding the transaction.
## Item 14. Principal Accountant Fees and Services ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES**
**Fees
of Independent Registered Public Accounting Firm**
The
Audit Committee, effective as of December 2023, appointed EisnerAmper, LLP as the Company’s independent registered public accounting
firm for the Company’s fiscal year ended April 30, 2024. EisnerAmper, LLP’s PCAOB firm ID is 274.
On
August 19, 2024, the Audit Committee (the “Audit Committee”) of the Board of Directors of Ocean Power Technologies, Inc.
(the “Company”) dismissed EisnerAmper LLP (“EisnerAmper”) as the Company’s independent registered public
accounting firm, effective immediately. The decision by the Audit Committee was made primarily to save on audit fees and costs.
EisnerAmper’s
audit reports on the Company’s consolidated financial statements for each of the two most recent fiscal years ended April 30,
2024 and April 30, 2023 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles, except that EisnerAmper’s reports on the consolidated financial statements
of the Company as of and for the year ended April 30, 2024, contained an explanatory paragraph stating that “Those
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in
Note 1(b) to those financial statements, the Company has recurring net losses and net cash flow used in operations that raise
substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters were also
described in Note 1(b). Those financial statements do not include any adjustments that might result from the outcome of this
uncertainty.”
During
the Company’s two most recent fiscal years ended April 30, 2024 and April 30, 2023 and during the subsequent interim period through
August 19, 2024, there were (i) no disagreements with EisnerAmper on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures, which if not resolved to EisnerAmper’s satisfaction, would have caused EisnerAmper
to make reference to the subject matter of the disagreements in its reports on the Company’s consolidated financial statements
for such years, and (ii) no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K.
The
Audit Committee, on and effective as of August 19, 2024, appointed Moss Adams LLP (“Moss Adams”) as the Company’s independent
registered public accounting firm for the Company’s fiscal year ended April 30, 2025. During the Company’s two most recent
fiscal years ended April 30, 2024 and April 30, 2023 and during the subsequent interim period through August 19, 2024, neither the Company
nor anyone acting on its behalf has consulted with Moss Adams, regarding either: (i) the application of accounting principles to a specific
transaction, completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial
statements, and neither a written report nor oral advice was provided to the Company that Moss Adams concluded was an important factor
considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue, or (ii) any matter that
was either the subject of a “disagreement” (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a “reportable event”
(as described in Item 304(a)(1)(v) of Regulation S-K).
Effective
June 2, 2025, Moss Adams LLP, our independent registered public accounting firm for the fiscal year ended April 30, 2025, completed its
merger with Baker Tilly US, LLP (“Baker Tilly”). As a result of this transaction, Baker Tilly succeeded the audit practice
of Moss Adams, and the professionals responsible for our fiscal year 2025 audit have become part of Baker Tilly. In accordance with the
rules of the Public Company Accounting Oversight Board (PCAOB) and the SEC, Baker Tilly is deemed to be our successor independent registered
public accounting firm. Baker Tilly’s PCAOB firm ID is 23.
63
The
audit committee of our board of directors was informed of the pending merger and concurred that Baker Tilly, as the legal successor to
Moss Adams, may continue to serve as our independent registered public accounting firm without the need for re-engagement or a new audit
committee approval, in accordance with SEC and PCAOB guidance on firm succession.
The
following table summarizes the fees of EisnerAmper, LLP billed to us for each of the last two fiscal years.
| Line item | Fiscal Year 2025 | Fiscal Year 2024 |
| --- | --- | --- |
| Audit Fees (1) | $130,200 | $350,700 |
| Audit-Related Fees | — | — |
| Tax Fees (2) | — | — |
| All Other Fees | — | — |
| Total Fees | $130,200 | $350,700 |
(1)
Audit Fees consist of fees for the audit and quarterly reviews of our consolidated financial statements and other professional services
provided in connection with the statutory and regulatory filings or engagements.
(2)
Tax Fees include fees for tax consulting and tax return preparation assistance and review for the Company.
The
following table summarizes the fees of Baker Tilly billed to us for each of the last two fiscal years.
| Line item | Fiscal Year 2025 | Fiscal Year 2024 |
| --- | --- | --- |
| Audit Fees (1) | $350,625 | — |
| Audit-Related Fees | — | — |
| Tax Fees (2) | — | — |
| All Other Fees | — | — |
| Total Fees | $350,625 | — |
(1)
Audit Fees consist of fees for the audit and quarterly reviews of our consolidated financial statements and other professional services
provided in connection with the statutory and regulatory filings or engagements.
(2)
Tax Fees include fees for tax consulting and tax return preparation assistance and review for the Company.
**Pre-Approval
Policies and Procedures**
The
Audit Committee’s policy is that all audit services and all non-audit services to be provided to us by our independent registered
public accounting firm must be approved in advance by our Audit Committee. The Audit Committee’s approval procedures include the
review and approval of a description of the services that documents the fees for all audit services and non-audit services, primarily
tax advice and tax return preparation and review.
All
audit services and all non-audit services in fiscal years 2025 and 2024 were pre-approved by the Audit Committee. The Audit Committee
has determined that the provision of the non-audit services for which these fees were rendered is compatible with maintaining the independent
auditor’s independence.
**PART
IV**
**ITEM
15. *FILINGSOURCEITEMBOUNDARYBEGIN Item 15. Exhibits, Financial Statement Schedules FILINGSOURCEITEMBOUNDARYENDEXHIBITS AND FINANCIAL STATEMENT SCHEDULES***
(a)
(1) Financial Statements: See Index to Consolidated Financial Statements on page F-1.
(3)
Exhibits: See Exhibit Index on pages 53 to 54.
**ITEM
16. FORM 10-K SUMMARY**
None.
64
**SIGNATURES**
Pursuant
to the requirements of Section 13 or 15(d) 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.
OCEAN POWER TECHNOLOGIES, INC.
Date: July 24, 2025
*/s/ Philipp Stratmann*
By: Philipp Stratmann
*President and Chief Executive Officer*
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
**SIGNATURE** **TITLE** **DATE**
*/s/ Philipp Stratmann* President, Chief Executive Officer and Director July 24, 2025
Philipp Stratmann (Principal Executive Officer)
/*s/ Robert Powers* Senior Vice President and Chief Financial Officer July 24, 2025
Robert Powers (Principal Financial Officer and Principal Accounting Officer)
*/s/ Terence J. Cryan* Chairman of the Board and Director July 24, 2025
Terence J. Cryan
*/s/ Clyde W. Hewlett* Director July 24, 2025
Clyde W. Hewlett
*/s/ Diana G. Purcel* Director July 24, 2025
Diana G. Purcel
*/s/ Peter E. Slaiby* Director July 24, 2025
Peter E. Slaiby
65
**Exhibits
Index**
| | Description |
| --- | --- |
| 3.1 | Restated Certificate of Incorporation of the registrant (incorporated by reference from Exhibit 3.1 to our Quarterly Report on Form 10-Q filed September 14, 2007). |
| 3.2 | Certificate of Amendment of Certificate of Incorporation of Ocean Power Technologies, Inc. dated October 27, 2015 (incorporated by reference from Exhibit 3.1 to Current Report on Form 8-K filed on October 28, 2015). |
| 3.3 | Certificate of Amendment to Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on October 21, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 21, 2016). |
| 3.4 | Certificate of Amendment to Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on December 7, 2018 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on December 7, 2018). |
| 3.5 | Certificate of Amendment to Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on March 8, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 8, 2019). |
| 3.6 | Certificate of Designations of Series A Preferred Stock of the Company, filed with the Secretary of State of the State of Delaware on June 30, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 30, 2023). |
| 3.7 | Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on July 5, 2024). |
| 4.1 | Specimen certificate of Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Annual Report on Form 10-K filed on July 28, 2023). |
| 4.2 | Form of Warrant to Purchase Common Stock (incorporated by reference from Exhibit 4.1 to Current Report on Form 8-K/A filed on June 7, 2016). |
| 4.3 | Description of Company Securities.++ |
| 4.4 | Section 382 Tax Benefits Preservation Plan, dated as of June 29, 2023, by and between the Company and Computershare Trust Company, N.A., as Rights Agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 30, 2023). |
| 4.5 | Indenture, dated December 20, 2024, by and between Ocean Power Technologies, Inc. and U.S. Bank, National Association (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 20, 2024). |
| 4.6 | First Supplemental Indenture, dated December 20, 2024, by and between Ocean Power Technologies, Inc. and U.S. Bank, National Association (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on December 20, 2024). |
| 10.1 | Amended and Restated 2006 Stock Incentive Plan (incorporated by reference from Exhibit A to Proxy Statement filed August 28, 2013).* |
| 10.2 | Form of Restricted Stock Agreement Unit (incorporated by reference from Exhibit 10.1 to Form 10-Q filed March 14, 2011).* |
| 10.3 | 2015 Omnibus Incentive Plan* (incorporated by reference to Annex A to Proxy Statement filed on September 3, 2015). |
| 10.4 | Ocean Power Technologies, Inc. Employment Inducement Incentive Award Plan (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on January 19, 2018).* |
| 10.5 | Form of Restricted Stock Unit Agreement for Employment Inducement Incentive Award Plan (incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC on January 19, 2018).* |
| 10.6 | Contract between Eni S.p.A. and the Company dated March 14, 2018 (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on March 19, 2018). + |
| 10.7 | Contract between Harbour Energy UK Limited and the Company dated June 27, 2018 (incorporated by reference to Exhibit 10.27 to Form 10-K filed with the SEC on July 17, 2018).+ |
| 10.8 | Amendment to the Employment Agreement of George H. Kirby III (incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC on July 18, 2018). * |
| 10.9 | Contract between U.S. Navy and the Company dated February 11, 2019 (incorporated by reference to Exhibit 10.2 to Form 10-Q filed with the SEC on March 11, 2019). |
| 10.10 | Contract amendment between Harbour Energy UK Limited and the Company dated June 24, 2019 (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on June 25, 2019).+ |
| 10.11 | Lease Agreement dated March 31, 2017 between Ocean Power Technologies, Inc. and PPH Industrial 28 Engelhard, LLC (incorporated by reference from Exhibit 10.37 to the Company’s Annual Report on Form 10-K filed with the SEC on July 22, 2019). |
| 10.12 | Supply and Service Contract between the Company and Empresa Electrica Panguipulli S.A. dated September 19, 2019 (incorporated by reference from Exhibit 10.1 to Current Report on Form 8-K filed on September 23, 2019). + |
66
| 10.13 | Supply and Service Contract between the Company and Enel Green Power Chile LTDA dated September 19, 2019 (incorporated by reference from Exhibit 10.2 to Current Report on Form 8-K filed on September 23, 2019). + |
| --- | --- |
| 10.14 | Contract amendment between Eni s.P.a. and the Company dated February 28, 2020 (incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on March 9, 2020). |
| 10.17 | Subcontract between Ocean Power Technologies, Inc. and Adams Communication & Engineering Technology Inc. dated effective October 20, 2020 (incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 27, 2020). |
| 10.18 | Stock Purchase Agreement among Ocean Power Technologies, Inc. and the sellers named therein dated November 15, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 16, 2021). |
| 10.19 | Employment Letter between the Company and Robert P. Powers dated effective December 13, 2021* (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 13, 2021). |
| 10.20 | Fifth Amendment to 2015 Omnibus Incentive Plan (incorporated by reference to Annex A to Proxy Statement filed on October 15, 2021). |
| 10.21 | First Amendment to the Employment Inducement Incentive Award Plan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 11, 2022). |
| 10.22 | Sixth Amendment to the 2015 Omnibus Incentive Plan (incorporated by reference to Annex A to Proxy Statement filed on October 19, 2022). |
| 10.23 | Form of Restricted Stock Unit Agreement for Non-Directors (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on March 13, 2023). |
| 10.24 | Form of Restricted Stock Unit Agreement for Directors (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on March 13, 2023). |
| 10.25 | Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed on March 13, 2023). |
| 10.26 | Contract for Commercial Items between the Company and the National Oceanic and Atmospheric Administration dated September 1, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on December 13, 2023). |
| 10.27 | Contract for Commercial Items between the Company and the National Oceanic and Atmospheric Administration dated September 1, 2023 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on December 13, 2023). |
| 10.28 | Contract for Commercial Items between the Company and the National Oceanic and Atmospheric Administration dated September 1, 2023 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on December 13, 2023). |
| 10.29 | Sales Agreement between the Company and A.G.P./Alliance Global Partners dated March 21, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 21, 2024). |
| 10.30 | Form of Amended and Restated Common Stock Purchase Agreement, dated as of September 19, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 20, 2024. |
| 10.31 | Form of Securities Purchase Agreement, dated as of September 13, 2024 (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on September 16, 2024). |
| 10.32 | Securities Purchase Agreement dated December 20, 2024 between Ocean Power Technologies, Inc. and the investor signatory thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 20, 2024). |
67
| 10.33 | Form of Series A-1 Convertible Note dated December 20, 2024 between Ocean Power Technologies, Inc. issued by Ocean Power Technologies, Inc. to the holder (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 20, 2024). |
| --- | --- |
| 10.34 | Securities Purchase Agreement dated May 15, 2025 between Ocean Power Technologies, Inc. and the investors party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 15, 2025). |
| 10.35 | Form of Series B-1 Convertible Note dated May 15, 2025 between Ocean Power Technologies, Inc. issued by Ocean Power Technologies, Inc. to the holder (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 15, 2025). |
| 10.36 | Employment Agreement between the Company and Tracy Pagliara dated effective January 16, 2025 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 21, 2025). |
| 10.37 | Second Amendment to Ocean Power Technologies, Inc. Employment Inducement Incentive Award Plan dated June 3, 2025 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 4, 2025). |
| 19.1 | Company Insider Trading Policy. ++ |
| 21.1 | Subsidiaries of the registrant ++ |
| 23.1 | Consent of Baker Tilly US, LLP. ++ |
| 23.2 | Consent of EisnerAmper LLP. ++ |
| 31.1 | Certification of Chief Executive Officer ++ |
| 31.2 | Certification of Chief Financial Officer ++ |
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002** ++ |
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of Sarbanes-Oxley Act of 2002** ++ |
| 101 | The following financial information from Ocean Power Technologies, Inc.’s Annual Report on Form 10-K for the annual period ended April 30, 2025 and 2024, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets - as of April 30, 2025 and 2024, (ii) Consolidated Statements of Operations - for the years ended April 30, 2025 and 2024, (iii) Consolidated Statements of Comprehensive Loss - for the years ended April 30, 2025 and 2024, (iv) Consolidated Statements of Shareholders’ Equity - for the years ended April 30, 2025 and 2024 (v) Consolidated Statements of Cash Flows - for the years ended April 30, 2025 and 2024, (vi) Notes to Consolidated Financial Statements.*** |
+
Indicates that confidential treatment has been requested for this exhibit.
++
Filed herewith.
*
Management contract or compensatory plan or arrangement.
**
As provided in Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed to be “filed” or part of a registration
statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability under those sections.
***
As provided in Rule 406T of Regulation S-T, this exhibit shall not be deemed “filed” or a part of a registration statement
or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, and shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability under those sections.
68
**OCEAN
POWER TECHNOLOGIES, INC., AND SUBSIDIARIES**
**Index
to Consolidated Financial Statements**
**Page**
[Report of Independent Registered Public Accounting Firm](#F_001) PCAOB ID: 23 F-2
[Report of Independent Registered Public Accounting Firm](#aAA_001) PCAOB ID: 274 F-3
[Consolidated Balance Sheets, as of April 30, 2025 and 2024](#F_002) F-4
[Consolidated Statements of Operations, for the fiscal years ended April 30, 2025 and 2024](#F_003) F-5
[Consolidated Statements of Shareholders’ Equity, fiscal years ended April 30, 2025 and 2024](#F_004) F-6
[Consolidated Statements of Cash Flows, fiscal years ended April 30, 2025 and 2024](#F_005) F-7
[Notes to Consolidated Financial Statements](#F_006) F-8
F-1
**REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To the Shareholders and the Board of Directors of
Ocean Power Technologies, Inc.
***Opinion on the Financial Statements***
We have audited the accompanying consolidated balance
sheet of Ocean Power Technologies, Inc. (and subsidiaries) (the “Company”) as of April 30, 2025, the related consolidated
statements of operations, shareholders’ equity and cash flows for the year then ended, and the related notes (collectively referred
to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as of April 30, 2025, and the consolidated results of its operations
and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
***Basis for Opinion***
These consolidated financial statements are the responsibility
of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements
based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards
of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess
the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides
a reasonable basis for our opinion.
***Critical Audit Matters***
Critical audit
matters are matters arising from the current period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material
to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are
no critical audit matters.
/s/ Baker Tilly US, LLP
Dallas, Texas
July 24, 2025
We have served as the Company’s auditor since 2024.
F-2
**REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**
To
the Board of Directors and Stockholders of
Ocean
Power Technologies, Inc.:
***Opinion
on the Financial Statements***
We
have audited the accompanying consolidated balance sheet of Ocean Power Technologies, Inc. and Subsidiaries (the “Company”)
as of April 30, 2024, and the related consolidated statement of operations, shareholders’ equity, and cash flows for the year then
ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements
present fairly, in all material respects, the consolidated financial position of the Company as of April 30, 2024, and the consolidated
results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted
in the United States of America.
***Basis
for Opinion***
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit,
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.
We
had served as the Company’s auditor from 2020 to 2024.
*/s/ EisnerAmper LLP*
EISNERAMPER LLP
Iselin,
NJ
July
25, 2024, except as to Note 15 which is as of July 24, 2025
F-3
**Ocean Power Technologies, Inc. and Subsidiaries**
### Consolidated Balance Sheets
_(in thousands, except share data)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| ASSETS | | |
| Current assets: | | |
| Cash and cash equivalents | $6,715 | $3,151 |
| Accounts receivable, net | 1,191 | 796 |
| Contract assets | 1,088 | 18 |
| Inventory | 4,222 | 4,831 |
| Other current assets | 400 | 1,747 |
| Total current assets | $13,616 | $10,543 |
| Property and equipment, net | 3,444 | 3,443 |
| Intangibles, net | 3,490 | 3,622 |
| Right-of-use assets, net | 1,552 | 2,405 |
| Restricted cash, long-term | 154 | 154 |
| Goodwill | 8,537 | 8,537 |
| Total assets | $30,793 | $28,704 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY | | |
| Current liabilities: | | |
| Accounts payable | $568 | $3,366 |
| Earn out payable | 300 | 1,130 |
| Accrued expenses | 1,271 | 1,787 |
| Contract liabilities | — | 302 |
| Right-of-use liabilities, current portion | 1,150 | 774 |
| Total current liabilities | $3,289 | $7,359 |
| Deferred tax liability | 203 | 203 |
| Right-of-use liabilities, less current portion | 649 | 1,798 |
| Total liabilities | $4,141 | $9,360 |
| Commitments and contingencies (Note 14) | - | |
| Shareholders’ Equity: | | |
| Preferred stock, $0.001 par value; authorized 5,000,000 shares, none issued or outstanding | — | — |
| Common stock, $0.001 par value; authorized 300,000,000 and 100,000,000 shares, issued 172,050,563 and 61,352,731 shares, respectively, and outstanding 171,263,086 and 61,264,714 shares, respectively | 172 | 61 |
| Treasury stock, at cost; 787,477 and 88,017 shares, respectively | (1,018) | (369) |
| Additional paid-in capital | 356,588 | 327,276 |
| Accumulated deficit | (329,090) | (307,579) |
| Accumulated other comprehensive loss | — | (45) |
| Total shareholders’ equity | 26,652 | 19,344 |
| Total liabilities and shareholders’ equity | $30,793 | $28,704 |
See
accompanying notes to consolidated financial statements.
F-4
**Ocean Power Technologies, Inc. and Subsidiaries**
### Consolidated Statements of Operations
_(in thousands, except per share data)_
| Line item | 2025 / Fiscal year ended April 30, | 2024 / Fiscal year ended April 30, |
| --- | --- | --- |
| Revenue | $5,861 | $5,525 |
| Cost of revenue | 4,201 | 2,699 |
| Gross profit | 1,660 | 2,826 |
| Loss/(Gain) from change in fair value of consideration | — | (72) |
| Operating expenses | 23,346 | 32,229 |
| Total operating expenses | 23,346 | 32,157 |
| Operating loss | $(21,686) | $(29,331) |
| Interest income, net | 47 | 800 |
| Other (expense)/income | (23) | 2 |
| Loss on disposition of assets (Note 7) | — | (210) |
| Loss on extinguishment of debt | (838) | — |
| Foreign exchange (loss)/gain | (45) | 2 |
| Loss before income taxes | $(22,545) | $(28,737) |
| Income tax benefit | 1,034 | 1,254 |
| Net loss | $(21,511) | $(27,483) |
| Basic and diluted net loss per share | $(0.17) | $(0.47) |
| Weighted average shares used to compute basic and diluted net loss per share | 126,913,998 | 59,031,736 |
See
accompanying notes to consolidated financial statements.
F-5
**OCEAN POWER TECHNOLOGIES, INC. AND SUBSIDIARIES**
### Consolidated Statements of Shareholders’ Equity
_(in thousands, except share data)_
| Line item | Shares / Common Shares | Amount / Common Shares | Shares / Treasury Shares | Amount / Treasury Shares | Capital / Additional Paid-In | Deficit / Accumulated | Loss / Accumulated Other Comprehensive | Equity / Total Shareholders’ |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Balances at April 30, 2023 | 56,304,642 | $56 | (40,914) | $(355) | $324,393 | $(280,096) | $(45) | $43,953 |
| Net loss | — | — | — | — | — | (27,483) | — | (27,483) |
| Share-based compensation | — | — | — | — | 1,155 | — | — | 1,155 |
| Common stock issued related to bonus and earnout payments | 2,403,846 | 3 | — | — | 1,247 | — | — | 1,250 |
| Common stock issued upon vesting of restricted stock units | 787,498 | — | — | — | — | — | — | — |
| Issuance of common stock - Cantor At The Market offering, net of issuance costs | 55,604 | — | — | — | 29 | — | — | 29 |
| Issuance of common stock - AGP At The Market offering, net of issuance costs | 1,801,141 | 2 | — | — | 452 | — | — | 454 |
| Shares withheld for tax withholdings | — | — | (47,103) | (14) | — | — | — | (14) |
| Balances at April 30, 2024 | 61,352,731 | $61 | (88,017) | $(369) | $327,276 | $(307,579) | $(45) | $19,344 |
| Balances | 61,352,731 | $61 | (88,017) | $(369) | $327,276 | $(307,579) | $(45) | $19,344 |
| Net loss | — | — | — | — | — | (21,511) | — | (21,511) |
| Share-based compensation | — | — | — | — | 4,603 | — | — | 4,603 |
| Common stock issued related to bonus and earnout payments | 2,864,808 | 3 | — | — | 627 | — | — | 630 |
| Common stock issued upon vesting of restricted shares | 2,964,209 | 3 | — | — | — | — | — | 3 |
| Issuance of common stock – AGP At The Market Offering, net of issuance costs | 67,980,307 | 68 | — | — | 17,661 | — | — | 17,729 |
| Issuance of common stock – Capital Raise, net of issuance costs | 21,446,079 | 22 | — | — | 2,428 | — | — | 2,450 |
| Issuance of common stock - Convertible Debt, net of issuance costs | 15,442,429 | 15 | — | — | 3,993 | — | — | 4,008 |
| Shares withheld for tax withholdings | — | — | (699,460) | (649) | — | — | — | (649) |
| Foreign exchange loss | — | — | — | — | — | — | 45 | 45 |
| Balances, April 30, 2025 | 172,050,563 | $172 | (787,477) | $(1,018) | $356,588 | $(329,090) | — | $26,652 |
| Balances | 172,050,563 | $172 | (787,477) | $(1,018) | $356,588 | $(329,090) | — | $26,652 |
See
accompanying notes to consolidated financial statements
F-6
**OCEAN POWER TECHNOLOGIES, INC. AND SUBSIDIARIES**
### Consolidated Statements of Cash Flows
_(in thousands)_
| Line item | 2025 / Fiscal year ended April 30, | 2024 / Fiscal year ended April 30, |
| --- | --- | --- |
| Cash flows from operating activities: | | |
| Net loss | $(21,511) | $(27,483) |
| Adjustments to reconcile net loss to net cash used in operating activities: | | |
| Foreign exchange loss/(gain) | 45 | (2) |
| Depreciation of fixed assets | 771 | 420 |
| Amortization of intangible assets | 132 | 148 |
| Amortization of right-of-use assets | 853 | 593 |
| (Accretion of discount)/amortization of premium on investments | — | (290) |
| Change in contingent consideration liability | — | (72) |
| Loss on disposal of assets | — | 210 |
| Stock based compensation | 4,603 | 1,155 |
| Loss on extinguishment of debt | 838 | — |
| Loss on disposal of property and equipment | 111 | — |
| Changes in operating assets and liabilities, net of acquisitions: | | |
| Accounts receivable | (395) | (51) |
| Contract assets | (1,070) | 134 |
| Inventory | 230 | (3,787) |
| Other assets | 1,347 | (753) |
| Accounts payable | (2,798) | 2,414 |
| Accrued expenses | (515) | (309) |
| Earn out payable | (200) | (500) |
| Right-of-use liabilities | (773) | (514) |
| Contract liabilities | (302) | (1,076) |
| Net cash used in operating activities | $(18,634) | $(29,763) |
| Cash flows from investing activities: | | |
| Redemptions of short-term investments | — | $35,975 |
| Purchases of short-term investments | — | (7,894) |
| Purchases of property and equipment | (505) | (2,585) |
| Net cash (used in)/provided by investing activities | $(505) | $25,496 |
| Cash flows from financing activities: | | |
| Cash paid for tax withholding related to shares withheld | $(649) | $(14) |
| Proceeds from convertible notes | 3,173 | — |
| Proceeds from issuance of common stock - At The Market offering, net of issuance costs | 17,729 | 483 |
| Proceeds from issuance of common stock - Capital Raise, net of issuance costs | 2,450 | — |
| Net cash provided by/(used in) financing activities | $22,703 | $469 |
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | — | — |
| Net decrease in cash, cash equivalents and restricted cash | $3,564 | $(3,798) |
| Cash, cash equivalents and restricted cash, beginning of year | 3,305 | 7,103 |
| Cash, cash equivalents and restricted cash, end of year | $6,869 | $3,305 |
| Supplemental disclosure of noncash investing and financing activities: | | |
| Common stock issued related to bonus and earnout payments | $630 | $1,250 |
| Common stock issued related to conversion of convertible debt | 15 | — |
| Operating right of use asset obtained in exchange for operating lease liability | — | $1,247 |
See
accompanying notes to the consolidated financial statements
F-7
**OCEAN
POWER TECHNOLOGIES, INC. AND SUBSIDIARIES**
### **Notes to Consolidated Financial Statements**
**(1)Background and Liquidity**
***(a)
Background***
Ocean
Power Technologies, Inc. (“OPT,” “we,” “our,” or “the Company”) is a Maritime Domain
Awareness (MDA) company specializing in innovative intelligent maritime solutions. These solutions include a variety of “as a service”
systems, including Data as a Service (DaaS), Robotics as a Service (RaaS), and Power as a Service (PaaS). These systems consist of a
variety of platforms including the PowerBuoy®, our persistent sensor and power solution, the WAM-V® (Wave Adaptive Modular Vessel),
our autonomous unmanned surface vehicle, and Merrows™, our user interface and command and control (C2) system that integrates multiple
sensor feeds using software and hardware and enables artificial intelligence and machine learning (AI/ML) integration. We design, manufacture,
deploy, and operate these systems for defense, security, subsea infrastructure, offshore oil and gas, offshore energy, marine research,
and communication markets. We operate primarily through a combination of direct sales and leases, strategic partnerships, and long-term
service agreements. Our business model emphasizes capital-light deployments, recurring revenue from service and maintenance contracts,
and high-margin technology sales and leases.
We
serve a global customer base, including the U.S. and allied defense agencies, offshore energy operators, and commercial interests. The
common thread across these markets is the growing need for a persistent, autonomous, and sustainable offshore presence, a need we are
uniquely positioned to fulfill.
The
Company holds numerous patents and leverages decades of research including control systems, energy storage, and marine integration. Our
headquarters and assembly operations are located in New Jersey, and we maintain an additional manufacturing and our robotics development
facility in Richmond, CA.
OPT
is committed to enabling a smarter, safer ocean economy through innovation in ocean intelligence and power. As we look forward, our strategic
priorities include expanding our customer base, accelerating technology adoption, enhancing recurring revenue, and driving margin growth
through platform scalability and supply chain efficiencies.
We
were incorporated under the laws of the State of New Jersey in April 1984 and began commercial operations in 1994. On April 23, 2007,
we reincorporated in Delaware.
***(b)
Liquidity***
For
the fiscal year ended April 30, 2025, the Company incurred net losses of approximately $21.5 million and used cash in operations of approximately
$18.6 million. In addition, the Company has continued to make investments to support order backlog and future growth. For the fiscal
year ended April 30, 2025 and through the date of filing of this Form 10-K, the Company has obtained additional capital financing through
our capital raises with certain investors. Management believes the Company’s current cash, cash equivalents, and restricted cash
balances at April 30, 2025 of $6.9 million and future financing including the May 2025 convertible debt proceeds will be sufficient to
fund its planned expenditures through July 2026.
F-8
**(2)Summary of Significant Accounting Policies**
***(a)Basis of Consolidation***
The
accompanying consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries, Marine Advanced
Robotics Inc. (CA), referred to herein as MAR, 3dent Technologies LLC (3Dent), Oregon Wave Energy Partners I LLC (DE), and ReedSport
OPT WavePark, LLC (OR). The Ocean Power Technologies Ltd. in the United Kingdom was dissolved on April 22, 2025. ReedSport OPT WavePark,
LLC (OR) and Oregon Wave Energy Partners I, LLC (DE) were dissolved during the first quarter of fiscal 2024. 3dent was sold in November
2023 and the consolidated financial statements for the three and nine months ended January 31, 2024 include 3dent’s results of
operations for the applicable periods through the date of sale. All significant intercompany balances and transactions have been eliminated
in consolidation.
***(b)Use of Estimates***
The
preparation of the consolidated financial statements requires management of the Company to make several estimates and assumptions relating
to the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue
and expenses during the period. Significant items subject to such estimates and assumptions include, among other items, stock-based compensation
based on actual and projected revenues, over time revenue recognition, valuation consideration related to business combinations, including
contingent consideration based on actual and projected revenues, including discount rates and present values, and other assumptions and
estimates used to evaluate the recoverability of long-lived assets, goodwill and other intangible assets. Actual results could differ
from those estimates.
***(c)Business Combinations***
The
Company accounts for business combinations in accordance with Financial Accounting and Standards Board (“FASB”) Business
Combinations (Topic 805). The Company allocates the fair value of consideration transferred in a business combination to the estimated
fair value at the acquisition date of the tangible and intangible assets acquired as well as the liabilities assumed. Acquisition costs
are expensed as incurred. Any excess consideration transferred is recorded as goodwill and in instances where the fair value of consideration
transferred is less than the estimated fair value of tangible and intangible assets acquired less liabilities assumed, such amounts are
recorded as a gain on the bargain purchase.
***(d)Revenue Recognition***
The
Company accounts for revenue in accordance with Accounting Standards Codification 606 (ASC 606) for contracts with customers and Accounting
Standards Codification 842 (ASC 842) for leasing arrangements. In relation to ASC 606, which states that a performance obligation is
the unit of account for revenue recognition, the Company assesses the goods or services promised in a contract with a customer and identifies
as a performance obligation as either: a) a good or service (or a bundle of goods or services) that is distinct; or b) a series of distinct
goods or services that are substantially the same and that have the same pattern of transfer to the customer. A contract may contain
a single performance obligation or multiple performance obligations. For contracts with multiple performance obligations, the Company
allocates the contracted transaction price to each performance obligation based upon the relative standalone selling price, which represents
the price the Company would sell a promised good or service separately to a customer. The Company determines the standalone selling price
based upon the facts and circumstances of each obligated good or service. When no observable standalone selling price is available, the
standalone selling price is generally estimated based upon the Company’s forecast of the total cost to satisfy the performance
obligation plus an appropriate profit margin.
F-9
The
nature of the Company’s contracts may give rise to several types of variable consideration, including unpriced change orders, liquidated
damages and penalties. Variable consideration can also arise from modifications to the scope of services. Variable consideration is included
in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur once
the uncertainty associated with the variable consideration is resolved. Estimates of variable consideration and determination of whether
to include such amounts in the transaction price are based largely on the assessment of legal enforceability, performance, and any other
information (historical, current, and forecasted) that is reasonably available to us. There was no variable consideration as of April
30, 2025 or 2024. The Company presents shipping and handling costs, that occur after control of the promised goods or services transfer
to the customer, as fulfillment costs in costs of goods sold and regular shipping and handling activities charged to operating expenses.
The
Company recognizes revenue when or as it satisfies a performance obligation by transferring a good or service to a customer, either (1)
at a point in time or (2) over time. A good or service is transferred when or as the customer obtains control (e.g., upon shipment, upon
delivery, as services are rendered, or upon completion of service), including when performance obligations are satisfied in a bill-and-hold
arrangement. The evaluation of whether control of each performance obligation is transferred at a point in time or over time is made
at contract inception. Input measures such as costs incurred are utilized to assess progress against specific contractual performance
obligations for the Company’s services. The selection of the method to measure progress towards completion requires judgment and
is based on the nature of the services to be provided. For the Company, the input method using costs or labor hours incurred best represents
the measure of progress against the performance obligations incorporated within the contractual agreements. If estimated total costs
on any contract project a loss, the Company charges the entire estimated loss to operations in the period the loss becomes known. The
cumulative effect of revisions to revenue, estimated costs to complete contracts, including penalties, change orders, claims, anticipated
losses, and others are recorded in the accounting period in which the events indicating a loss are known and the loss can be reasonably
estimated. These loss projections are re-assessed for each subsequent reporting period until the project is complete. Such revisions
could occur at any time and the effects may be material. During the fiscal year ended April 30, 2025 the Company recognized approximately
$4.9 million in revenue related to performance obligations satisfied at a point in time and approximately $1.0 million in revenue related
to performance obligations satisfied over time. During the fiscal year ended April 30, 2024 the Company recognized approximately $3.7 million in revenue related to performance obligations satisfied at a point in time and approximately $1.9 million in revenue related
to performance obligations satisfied over time.
The
Company’s contracts are either cost-plus contracts, fixed-price contracts, time and material agreements, lease or service agreements.
Under cost plus contracts, customers are billed for actual expenses incurred plus an agreed-upon fee.
The
Company has two types of fixed-price contracts, firm fixed-price and cost-sharing. Under firm fixed-price contracts, the Company receives
an agreed-upon amount for providing products and services specified in the contract, and a profit or loss is recognized depending on
whether actual costs are more or less than the agreed-upon amount. Under cost-sharing contracts, the fixed amount agreed upon with the
customer is only intended to fund a portion of the costs on a specific project. Under cost-sharing contracts, an amount corresponding
to the revenue is recorded in cost of revenue, resulting in gross profit on these contracts of zero. The Company reports its disaggregation
of revenue by contract type since this method best represents the Company’s business. For the fiscal years ended April 30, 2025
and 2024, the majority of the Company’s contracts were classified as firm fixed-price and the remainder were cost-sharing.
The
Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection
with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company’s
accounts receivable balance is made up entirely of customer contract-related balances.
The
Company’s revenue also includes revenue from certain contracts which do not fall within the scope of ASC 606, but under the scope
of ASC 842, “Leases”. At inception of a contract for those classified under ASC 842, the Company classifies leases as either
operating or financing in accordance with the authoritative accounting guidance contained within ASC 842. If the direct financing or
sales-type classification criteria are met, then the lease is accounted for as a finance lease. All others are treated as operating leases.
The Company recognizes revenue from operating lease arrangements generally on a straight-line basis over the lease term, or as agreed
upon in-use days are utilized, which is presented in Revenues in the Consolidated Statement of Operations. The Company also enters into
lease arrangements for its PowerBuoys® and Wave Adaptive Modular Vessels (“WAM-V®”) with certain customers. Revenue
related to multiple-element arrangements is allocated to lease and non-lease elements based on their relative standalone selling prices
or expected cost plus a margin approach. Lease elements generally include a PowerBuoy®, WAM-V®, and components, while non-lease
elements, which the Company expects to become more prevalent, generally include engineering, monitoring and support services. In the
lease arrangement, the customer may be provided with an option to extend the lease term or purchase the leased buoy or WAM-V® at
some point during and/or at the end of the lease term.
F-10
As
of April 30, 2025, the Company’s remaining performance obligations, also called contracted backlog, totaled $12.5 million.
The
Company has elected to record taxes collected from customers on a net basis and does not include tax amounts in revenue or costs of revenue.
The
below table represents the total revenue recognized under ASC 606 and ASC 842 fiscal years ended April 30, 2025 and 2024:
Schedule of Revenue Recognized Under ASC 606 and ASC 842
_(in thousands) · (in thousands)_
| Line item | Fiscal year ended April 30, 2025 / ASC 606 | Fiscal year ended April 30, 2025 / ASC 842 | Fiscal year ended April 30, 2025 / Total | Fiscal year ended April 30, 2024 / ASC 606 | Fiscal year ended April 30, 2024 / ASC 842 | Fiscal year ended April 30, 2024 / Total |
| --- | --- | --- | --- | --- | --- | --- |
| Product Line: | | | | | | |
| WAM-V | $4,216 | $338 | $4,554 | $1,912 | $1,392 | $3,304 |
| Buoy | 474 | 115 | 589 | 1,739 | — | 1,739 |
| Services | 718 | — | 718 | 482 | — | 482 |
| Total | $5,408 | $453 | $5,861 | $4,133 | $1,392 | $5,525 |
| Region: | | | | | | |
| North and South America | $3,855 | — | $3,855 | $4,101 | $1,177 | $5,278 |
| EMEA | 1,550 | 338 | 1,888 | 32 | 215 | 247 |
| Asia and Australia | 3 | 115 | 118 | — | — | — |
| Total | $5,408 | $453 | $5,861 | $4,133 | $1,392 | $5,525 |
| Revenue | $5,408 | $453 | $5,861 | $4,133 | $1,392 | $5,525 |
***(e)Cash and Cash Equivalents, Restricted Cash, Security Agreements and Investments***
*Cash
and Cash Equivalents*
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased, to be cash equivalents.
The Company invests excess cash in a money market account or in short-term investments that are held-to-maturity. The Company had cash
and cash equivalents of approximately $6.9 million and $3.3 million as of April 30, 2025 and 2024, respectively.
*Restricted
Cash and Security Agreements*
The
Company has a letter of credit agreement with Santander Bank, N.A. (“Santander”). Cash of $154,000 is on deposit at Santander
and serves as security for a letter of credit issued by Santander for the lease of warehouse/office space in Monroe Township, New Jersey.
F-11
The
following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets
that total to the same amounts shown in the Consolidated Statements of Cash Flows.
Schedule of Cash, Cash Equivalents and Restricted Cash
_(in thousands)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Cash and cash equivalents | $6,715 | $3,151 |
| Restricted cash- short-term | — | — |
| Restricted cash- long-term | 154 | 154 |
| Cash, cash equivalents, restricted cash and restricted cash equivalents | $6,869 | $3,305 |
***(f)Inventory***
In
accordance with Accounting Standards Codification 330 (ASC 330), inventory is stated at the lower of cost or net realizable value applicable
to goods on hand. Items remain in inventory until they are shipped to the customer, at which time the costs are transferred on a FIFO
basis to cost of revenues, or moved to leased assets as applicable, following the matching principle where costs and revenues are recognized
in the same period. The Company has three classes of inventory; raw materials, work in process, and finished goods.
F-12
***(g)Accounts Receivable***
Accounts
receivable are stated at the net amount expected to be collected. Amounts are usually due between 30 and 90 days after the invoice issuance.
The Company is exposed to credit losses primarily on accounts receivable and contract assets related to sales to customers. If applicable,
an allowance for credit losses is established to provide for the expected lifetime credit losses by evaluating factors such as customer
creditworthiness, historical payment and loss experiences, current economic conditions (including geographic and political risk), and
the age and status of outstanding receivables. Based on these factors, management has established the allowance for credit losses of
approximately $100,000. Expected credit losses are written off in the period in which the financial assets are no longer collectible.
The
Company grants credit to its customers, generally without collateral terms as long as the customer demonstrates the ability to make the
payments. . Generally, invoicing occurs after the services are performed or control of the product has transferred to the customer. Accounts
receivable represent an unconditional right to consideration arising from the Company’s performance under contracts with customers.
***(h)Property and Equipment, net***
Property
and equipment is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is calculated using
the straight-line method over the estimated useful lives (3 three to ten years) of the assets. Leasehold improvements are amortized
using the straight-line method over the shorter of the estimated useful life of the asset or the remaining lease term. Expenses for
maintenance and repairs are charged to operations as incurred. Property and equipment is also reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of the asset to estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, then an
impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the
asset.
Schedule
of Property and Equipment Estimated Useful Life
| Description | Estimated useful life |
| --- | --- |
| Equipment | 5-7 years |
| Computer equipment & software | 3 years |
| Office furniture & fixtures | 3-7 years |
| Leasehold improvements | Shorter of the estimated useful life or lease term |
| Leased Power Buoy assets | 10 years |
| Leased WAM-V assets | 10 years |
***(i)Foreign Exchange Gains and Losses***
Transactions
denominated in a foreign currency may result in realized and unrealized foreign exchange gains or losses from exchange rate fluctuations,
which are included in “Foreign exchange gain” in the accompanying Consolidated Statements of Operations.
F-13
***(j)Concentration of Credit Risk***
Financial
instruments that potentially subject the Company to credit risk consist principally of trade accounts receivable and cash equivalents.
The Company believes that its credit risk is limited because the Company’s current contracts are with entities with a reliable
and predictable payment history. The Company invests its excess cash in a money market fund and does not believe that it is exposed to
any significant risks related to its cash accounts, money market fund, or held-to-maturity investments.
As
of the year ended April 30, 2025 and 2024, the Company had three and four customers whose revenue accounted for at least 10% of the Company’s
consolidated revenue, respectively. These customers accounted for approximately 53% and 52% of the Company’s total revenue for
the respective periods.
***(k)Net Loss per Common Share***
Basic
and diluted net loss per share for all periods presented is computed by dividing net loss by the weighted average number of shares of
common stock and common stock equivalents outstanding during the period. Due to the Company’s net losses, potentially dilutive
securities, consisting of options to purchase shares of common stock, warrants on common stock and unvested restricted stock units (“RSUs”)
issued to employees and non-employee directors, were excluded from the diluted loss per share calculation due to their anti-dilutive
effect.
In
computing diluted net loss per share on the Consolidated Statement of Operations, warrants on common stock, options to purchase shares
of common stock and unvested RSUs issued to employees and non-employee directors, totaling 24,929,864 and 5,859,072 for the years ended
April 30, 2025 and 2024, respectively, were excluded from each of the computations as the effect would have been anti-dilutive due to
the net loss for the periods. Share purchase rights, which include a contingency, are not included in the calculation until the contingency
is resolved.
***(l)Share-Based Compensation***
Costs
resulting from all share-based payment transactions are recognized in the consolidated financial statements at their fair values. The
aggregate share-based compensation expense recorded in the Consolidated Statements of Operations for the years ended April 30, 2025 and
2024 was approximately $4.6 million and $1.2 million, respectively. The Company’s policy is to account for forfeitures of share-based
compensation as they occur.
Additionally,
upon vesting of RSUs that were granted to an employee, the employee is given the option to either pay the taxes themselves, or have enough
shares of their RSU award withheld by the Company to cover the taxes incurred by the employee. In the event the employee elects to surrender
shares to cover the tax obligation, the Company maintains those shares in the Company’s treasury stock account. Forfeited shares
held in the Company’s treasury stock account are not available for future RSU grants.
***(m)Intangibles, net***
Intangible
assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at
the acquisition date (which is regarded as their cost). Intangible assets, including patents, are amortized over the estimated useful
life of the asset on a basis that approximates the pattern of economic benefit. The patents are being amortized over 20, 12 and 10 years
respectively, which is consistent with the estimated pattern of economic benefit of the assets. Prior to their disposal during the fiscal
year ended April 30, 2024, trade-name and customer relationship intangibles were amortized over 20, 12 and 10 years respectively The
trademark is not subject to amortization.
Intangible
assets are reviewed for impairment if indicators of potential impairment exist. There was no indication of impairment of intangible assets
for the fiscal years ended April 30, 2025 and April 30, 2024. However, in connection with the sale of 3Dent in November of 2023, the
trade-name and customer relationships were both expensed fully during the year ended April 30, 2024 under Loss on disposition of assets
on the Consolidated Statements of Operations.
F-14
***(n)Goodwill***
Goodwill
is assessed for impairment using a qualitative or quantitative approach. The Company performs an annual impairment test of goodwill and
further periodic tests to the extent indicators of impairment develop between annual impairment tests. There were no indications of potential
impairment of goodwill identified for the year ended April 30, 2025 and 2024. Where the Company uses a qualitative analysis, it considers
factors that include historical financial performance, macroeconomic and industry conditions, and the legal and regulatory environment.
If the qualitative assessment indicates that it is more likely than not that an impairment exists, then a quantitative assessment is
also performed. The quantitative assessment requires an analysis of several estimates including future cash flows or income consistent
with management’s strategic business plans, annual sales growth rates and the selection of assumptions underlying a discount rate
(weighted average cost of capital) based on market data available at the time to determine fair value of the Company. If the fair value
is less than the carrying amounts, an impairment charge for the difference is recorded. The Company acquired goodwill as part of its
purchase of MAR. Management performed its annual qualitative assessment in fiscal year 2025 and 2024 and determined that it is more likely
than not that no goodwill impairment existed as of April 30, 2025 and 2024.
***(o)Income Taxes***
The
Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained upon examination.
Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition
or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized
tax benefits in interest expense and penalties in selling, general, and administrative expenses, to the extent incurred. Refer to Note
13 for additional disclosure.
In
order to monetize their attributes, the Company has historically sold the Net Operating Losses (NOL’s) generated in New Jersey.
The Company has elected to recognize the gain on the sale as a component of tax expense at the time of the sale. Prior to the time of
sale, the Company has elected to not factor the expected sales when assessing the realizability of the related deferred tax assets.
***(p)Accumulated Other Comprehensive Loss***
The
functional currency for the Company’s foreign operations is the applicable local currency. The translation from the applicable
foreign currencies to U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date
and for revenue and expense accounts using an average exchange rate during the period. The unrealized gains or losses resulting from
such translation are included in Accumulated Other Comprehensive (Income) Loss within Shareholders’ Equity. For the year ended
April 30, 2025 and 2024, there were no amounts recorded to other comprehensive (income) loss due to no longer having any foreign subsidiaries
as of April 30, 2025.
***(q)Warranty***
The
Company does not include a right of return on its products other than rights related to standard warranty provisions that permit repair
or replacement of defective goods. Warranty expense incurred to date has not been material.
***(r)Product development***
Costs
related to research and development activities by the Company are expensed as incurred. The Company had approximately $3.6 million and
$7.7 million in product development expense for the year ended April 30, 2025 and 2024, respectively. The year over year decrease related
to the completion of the majority of research activities and a transition to a focus on development and enhancements to our existing
products.
F-15
***(s)Recent Accounting Standards***
***Recently
Issued Accounting Standards***
In
December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.
2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which improves the transparency
of income tax disclosures by requiring companies to (1) disclose consistent categories and greater disaggregation of information in the
effective rate reconciliation and (2) provide information on income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective
for fiscal years beginning after December 15, 2024, although early adoption is permitted. The guidance should be applied on a prospective
basis with the option to apply the standard retrospectively. We are currently evaluating the impact of adopting this ASU 2023-09 on our
consolidated financial statements and disclosures.
In
November 2024, the FASB issued ASU No. 2024-3, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures
(Subtopic 220-40): Disaggregation of Income Statement Expenses.” This ASU improves the disclosures about a public business entity’s
expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense
captions. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning
after December 15, 2027. Early adoption is permitted. We are currently evaluating what the potential impact of adopting this ASU 2024-03
could have on our consolidated financial statements and disclosures
***Recently
Adopted Accounting Standards***
In
November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.”
This ASU improves financial reporting by requiring disclosure of incremental segment information. The new guidance is effective for fiscal
years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is
permitted. The Company adopted this standard beginning in fiscal 2025 and all required segment related disclosures will be presented
within this Form 10-K and in subsequent interim reports on Form 10-Q. Refer to Note 15 for further discussion.
***(t)Reclassifications***
Certain
amounts may have been reclassified to conform to the current period’s presentation. This reclassification had no impact on the
previously reported net loss or comprehensive loss.
**(3)Account Receivable, Contract Assets, and Contract Liabilities**
*Accounts
Receivable*
The
following provides further details on the balance sheet accounts of accounts receivable, contract assets and contract liabilities from
contracts with customers:
Schedule of Accounts Receivable, Contract Assets and Contract Liabilities
_(in thousands)_
| Line item | Fiscal year ended April 30, 2025 | Fiscal year ended April 30, 2024 | Fiscal year ended April 30, 2023 |
| --- | --- | --- | --- |
| Accounts receivable | $1,191 | $796 | $745 |
| Contract assets | 1,088 | 18 | 152 |
| Contract liabilities | — | 302 | 1,378 |
*Contract
Assets*
Significant
changes in the contract assets balances during the period are as follows:
Schedule of Significant Changes in Contract Assets
_(in thousands)_
| Line item | Fiscal year ended April 30, 2025 | Fiscal year ended April 30, 2024 |
| --- | --- | --- |
| Transferred to receivables from contract assets recognized | $(768) | $(1,879) |
| Revenue recognized and not billed | 1,838 | 1,745 |
| Net change in contract assets | $1,070 | $(134) |
F-16
Contract
assets include unbilled amounts typically resulting from arrangements whereby the right to payment is conditional on completing additional
tasks or services for a performance obligation. The increase in contract assets from the prior year is primarily a result of consulting
services projects for which revenue was recognized in the prior year yet billed in the current year including two Bill-and-Hold agreements
for $529,000. No impairments to contract assets were incurred during the fiscal years ended April 30, 2025 and 2024, respectively.
*Contract
Liabilities*
Significant
changes in the contract liabilities balances during the period are as follows:
Schedule of Significant Changes in Contract Liabilities
_(in thousands)_
| Line item | Fiscal year ended April 30, 2025 | Fiscal year ended April 30, 2024 |
| --- | --- | --- |
| Revenue recognized | $(2,107) | $(2,424) |
| Payments collected for which revenue has not been recognized | 1,805 | 1,348 |
| Net change in contract liabilities | $(302) | $(1,076) |
Contract
liabilities consist of amounts invoiced to and collected from customers in excess of revenue recognized. The decrease in contract liabilities
from April 30, 2024 is primarily due to recognizing revenue on the DOE Phase II contract for which the Company was paid in prior periods.
**(4)Inventory**
The
Company holds inventory related to the production of our products.
Schedule of Inventory
_(in thousands)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Raw Materials | $3,586 | $4,298 |
| Work in Process | 636 | 397 |
| Finished Goods | — | 136 |
| Inventory, net | $4,222 | $4,831 |
The
Company’s raw materials balance represents the majority of the inventory as the Company orders parts in quantity to fill orders.
Work in process and finished products typically represent smaller portions of inventory as the Company does not historically hold finished
products with the exception of assets transitioning to the lease fleet or to be shipped to a customer. The Company typically ships finished
products as they are completed.
F-17
**(5)Other Current Assets**
Other
current assets consist of the following at April 30, 2025 and 2024:
Schedule of Other Current Assets
_(in thousands)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Prepaid insurance | $80 | $202 |
| Prepaid software & licenses | 68 | 224 |
| Prepaid sales & marketing | 90 | 124 |
| Prepaid project costs | 36 | 578 |
| Prepaid inventory materials | — | 414 |
| Prepaid expenses- other | 126 | 205 |
| Total other current assets | $400 | $1,747 |
**(6)Property and Equipment**
The
components of property and equipment as of April 30, 2025 and 2024 consisted of the following:
Schedule
of Components of Property and Equipment, Net
_(in thousands)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Equipment | $1,569 | $1,530 |
| Computer equipment & software | 620 | 790 |
| Office furniture & equipment | 425 | 422 |
| Leasehold improvements | 683 | 683 |
| Leased WAM-V’s | 1,735 | 1,547 |
| Leased Buoys | 949 | 444 |
| Property and equipment, gross | 5,981 | 5,416 |
| Less: accumulated depreciation | (2,537) | (1,973) |
| Property and equipment, net | $3,444 | $3,443 |
Leased
WAM-V’s represent fixed assets that are associated with underlying operating leases with customers as discussed in revenue recognition
section related to ASC 842 (see footnote 1(d) Revenue Recognition).
Depreciation
expense was approximately $771,000 and $420,000 for years ended April 30, 2025 and 2024, respectively. Additionally, the Company disposed
of $170,000 in fully depreciated assets that were no longer in use as of April 30, 2025.
F-18
**(7)Intangible Assets**
The
components of intangible assets, net as of April 30, 2025 and 2024 consisted of the following:
Schedule of Components of Intangible Assets
_(in thousands)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Patents | $2,729 | $2,729 |
| Trademarks | 2,769 | 2,769 |
| Intangible assets, gross | 5,498 | 5,498 |
| Accumulated amortization | (2,008) | (1,876) |
| Intangible assets, net | $3,490 | $3,622 |
Amortization
expense was approximately $132,000 and $148,000 for the years ended April 30, 2025 and 2024, respectively. Trademarks are not subject
to amortization.
Additionally,
in connection with the sale of 3Dent in November of 2023, the trade-name and customer relationships were both expensed fully during the
fiscal year ended April 30, 2024 under Loss on disposition of assets on the Consolidated Statements of Operations.
**(8)Goodwill**
Goodwill
in the amount of $8.5 million was recognized in November 2021 related to the acquisition of MAR. There have been no additions to or impairment
of goodwill during the years ended April 30, 2025 and 2024.
**(9)Leases**
*Lessor
Information*
As
of April 30, 2025 and 2024, the Company had three and five WAM-V’s, respectively, leased to customers which have been classified
as operating leases per accounting guidance contained within ASC Topic 842, “Leases”, respectively. The remaining term on
these operating leases is less than 2 years.
*Lessee
Information*
Right-of-use
assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term
at commencement date. When the implicit rate of the lease is not provided or cannot be determined, the Company uses the incremental borrowing
rate based on the information available at the effective date to determine the present value of future payments. Lease terms may include
options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The renewal options
have not been included in the lease term as they are not reasonably certain of exercise. The Company’s operating leases consist
of leases for office facilities and warehouse space. Lease expense for minimum lease payments is recognized on a straight- line basis
over the lease term and consists of interest on the lease liability and the amortization of the right of use asset.
The
Company has a lease for its facility located in Monroe Township, New Jersey that is used as warehouse/production space and the Company’s
principal offices and corporate headquarters. In February 2024, the Company extended the lease for its main headquarters in Monroe, NJ
to April 30, 2026 and it was executed and recorded as an additional right of use asset and liability. The lease is classified as an operating
lease and is included in right-of-use assets, right-of-use liabilities – current, and right-of-use liabilities- long-term on the
Company’s Consolidated Balance Sheets.
The
Company also has a lease for office space located in Richmond, California. This lease commenced in April of 2023 and will continue for
62 months. The lease is classified as an operating lease and is included in right-of-use assets, right-of-use liabilities- current and
right-of-use liabilities- long-term on the Company’s Consolidated Balance Sheets.
F-19
Variable
lease expenses, if any, are recorded as incurred. The operating lease expense in the Consolidated Statement of Operations was $1.0 million
and $0.7 million for the fiscal year ended April 30, 2025 and 2024, respectively. The operating lease cash flow payments for the year ended April 30, 2025 and 2024 were $994,000 and $745,000, respectively.
The
components of lease expense in the Consolidated Statement of Operations for the fiscal year ended April 30, 2025 and 2024 was as follows:
Schedule
of Operating Lease Costs
| Line item | Fiscal year ended April 30, 2025 | Fiscal year ended April 30, 2024 |
| --- | --- | --- |
| Operating lease cost | $1,038 | $640 |
| Short-term lease cost | 32 | 68 |
| Total lease cost | $1,070 | $708 |
Information
related to the Company’s right-of use assets and lease liabilities as of April 30, 2025 is as follows:
Schedule of Right-of use Assets and Lease Liabilities
_April 30, 2025 · (in thousands)_
| Operating lease: | |
| --- | --- |
| Operating right-of-use assets, net | $1,552 |
| Right-of-use liabilities- current | 1,150 |
| Right-of-use liabilities- long-term | 649 |
| Total lease liabilities | $1,799 |
| Weighted average remaining lease term- operating leases | 2.10 years |
| Weighted average discount rate- operating leases | 8.4% |
Total
remaining lease payments under the Company’s operating leases are as follows:
Schedule of Future Minimum Lease Payments Under Operating Lease
_April 30, 2025 · (in thousands)_
| | |
| --- | --- |
| 2026 | $1,847 |
| 2027 | 329 |
| 2028 | 333 |
| 2029 | 28 |
| Thereafter | - |
| Total future minimum lease payments | 2,537 |
| Less imputed interest | (738) |
| Total | $1,799 |
F-20
**(10)Accrued Expenses**
Accrued
expenses consisted of the following at April 30, 2025 and 2024:
Schedule of Accrued Expenses
_(in thousands)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Employee incentive payments | $759 | $1,271 |
| Accrued salary and benefits | 417 | 369 |
| Other | 95 | 147 |
| Accrued expenses total | $1,271 | $1,787 |
**(11)Share-Based Compensation Plans**
In
2015, upon approval by the Company’s shareholders, the Company’s 2015 Omnibus Incentive Plan (the “2015 Plan”)
became effective. A total of 1,332,036 shares were authorized for issuance under the 2015 Omnibus Incentive Plan, including shares available
for awards under the 2006 Stock Incentive Plan remaining at the time that plan terminated, or that were subject to awards under the 2006
Stock Incentive Plan that thereafter terminated by reason of expiration, forfeiture, cancellation or otherwise. If any award under the
2006 Stock Incentive Plan or 2015 Plan expires, is cancelled, terminates unexercised or is forfeited, those shares become again available
for grant under the 2015 Plan. Most recently in January 2025, the shareholders approved an amendment and restatement of the 2015 Plan
to, among other things, provide an aggregate increase to the 2015 Plan of 20,000,000 shares resulting in total shares authorized for
issuance of 27,282,036 as of April 30, 2025, based on 7,282,036 available before the amendment. The 2015 Plan will now terminate in January
2035, but is subject to earlier termination as provided in the 2015 Plan.
On
January 18, 2018, the Company’s Board of Directors adopted the Company’s Employment Inducement Incentive Award Plan (the
“2018 Inducement Plan”) pursuant to which the Company reserved 25,000 shares of common stock for issuance under the Inducement
Plan in accordance with Rule 711(a) of the NYSE American Company Guide. On February 9, 2022, the 2018 Inducement Plan was amended to
increase the authorized shares by 250,000 to 275,000.
F-21
*Stock
Options*
The
Company estimates the fair value of each stock option award granted with service-based vesting requirements, using the Black-Scholes
option pricing model, assuming no dividends, and using weighted average valuation assumptions. The risk-free rate is based on the U.S.
Treasury yield curve in effect at the time of grant commensurate with the expected life of the award. The expected life (estimated period
of time outstanding) of the stock options granted was estimated using the “simplified” method as permitted by the SEC’s
Staff Accounting Bulletin No. 110, *Share-Based Payment.* Expected volatility is based on the Company’s historical volatility
over the expected life of the stock option granted. The Company did not grant any stock options during the periods ended April 30, 2025
and 2024, respectively.
A
summary of stock options under our Stock Incentive Plans is detailed in the following table.
Schedule of Stock Option Activity
| Line item | Shares Underlying Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (In Years) |
| --- | --- | --- | --- |
| Outstanding as of April 30, 2024 | 734,543 | $2.12 | 7.6 |
| Granted | — | — | |
| Exercised | — | — | |
| Cancelled/forfeited | (251,201) | $1.20 | |
| Outstanding as of April 30, 2025 | 483,342 | $2.59 | 6.3 |
| Exercisable as of April 30, 2025 | 425,440 | $2.85 | 6.1 |
As
of April 30, 2025, the total intrinsic value of outstanding and exercisable options was zero. As of April 30, 2025, approximately 58,000 additional options were unvested, which had an intrinsic value of zero and a weighted average remaining contractual term of 7.7 years.
There was approximately $47,000 and $82,000 of total recognized compensation cost related to stock options during each of the fiscal
year ended April 30, 2025 and 2024, respectively. As of April 30, 2025, there was approximately $26,000 of total unrecognized compensation
cost related to non-vested stock options granted under the plans. This cost is expected to be recognized over a weighted-average period
of 0.7 years.
*Performance
Stock Options*
As
of April 30, 2025 and 2024 there were no performance stock units outstanding.
*Restricted
Stock Units*
Compensation
expense for restricted stock units (“RSUs”) is generally recorded based on the market value on the date of grant and recognized
ratably over the associated service and performance period. During the years ended April 30, 2025 and 2024, the Company granted 21,079,453 and 4,439,257 shares, respectively, subject to service-based, performance, and market condition vesting requirements.
F-22
A
summary of unvested restricted stock units under our stock incentive plans is as follows:
Schedule of Non-vested Restricted Stock Activity
| Line item | Number of Shares | Weighted Average Price per Share |
| --- | --- | --- |
| Issued and unvested at April 30, 2024 | 5,124,529 | $0.38 |
| Granted | 21,079,453 | $0.99 |
| Vested and issued | (2,964,280) | |
| Cancelled/forfeited | (778,069) | $0.30 |
| Issued and unvested at April 30, 2025 | 22,461,633 | $0.90 |
There
was approximately $4.6 million and $1.0 million of total recognized compensation cost related to restricted stock units for the years
ended April 30, 2025 and 2024, respectively. As of April 30, 2025, there was $15.2 million of unrecognized compensation cost remaining
related to unvested restricted stock granted under our plans. This cost is expected to be recognized over a weighted-average period of1.6 years.
**(12)Fair Value Measurements**
ASC
Topic 820, “*Fair Value Measurements”* states that fair value is an exit price, representing the amount that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs
used to measure fair value. This hierarchy maximizes the use of observable input and minimizes the use of unobservable inputs. The following
is a description of the three hierarchy levels.
Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly.
Level 3 Inputs that are unobservable for the asset or liability.
*Disclosure
of Fair Values*
The
Company’s financial instruments that are not re-measured at fair value include cash, cash equivalents, restricted cash, accounts
receivable, other assets, contract assets and liabilities, deposits, accounts payable, and accrued expenses. The carrying value is equal
to their fair value due to the short-term nature of these accounts.
Transfers
into or out of any hierarchy level are recognized at the end of the reporting period in which the transfers occurred. There were no transfers
between any hierarchy levels during either of the fiscal years ended April 30, 2025 and 2024, respectively.
F-23
**(13)Income Taxes**
Loss
before income taxes for the years ended April 30, 2025 and 2024 consisted of the following components:
Schedule of Components of Loss Before Income Taxes
_(in thousands)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Domestic | $(22,545) | $(28,737) |
| Foreign | - | - |
| Total loss before income taxes | $(22,545) | $(28,737) |
The
income tax benefit for the years ended April 30, 2025 and 2024 consisted of $1.0 million and $1.3 million, respectively, from the sale
of New Jersey net operating losses and research and development credits.
*Tax
Rate Reconciliation*
The
effective income tax rate differed from the percentages computed by applying the U.S. federal income tax rate for the periods ended April
30, 2025 and 2024 to loss before income taxes as a result of the following:
Schedule of Effective Income Tax Rate Reconciliation
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Computed expected tax benefit | (21.0 | (21.0 |
| Increase (reduction) in income taxes resulting from: | | |
| State income taxes, net of federal benefit | (3.7 | (3.5 |
| Federal research and development tax credits | — | (1.1 |
| Foreign rate differential | — | — |
| Other non-deductible expenses | (0.1 | 0.4% |
| Proceeds of sale of New Jersey tax benefits | (3.6 | (3.4 |
| Expiration of net operating loss due to dissolution of subsidiary | 8.8% | — |
| Other expiration of net operating loss | 6.7% | 4.5% |
| Increase in valuation allowance | 8.3% | 19.8% |
| Income tax (benefit) | (4.6 | (4.3 |
*Significant
Components of Deferred Taxes*
The
tax effects of temporary differences and carry forwards that give rise to the Company’s deferred tax assets and deferred tax liabilities
are presented below.
Schedule of Deferred Tax Assets and Liabilities
_(in thousands)_
| Line item | April 30, 2025 | April 30, 2024 |
| --- | --- | --- |
| Deferred tax assets: | | |
| Federal net operating loss carryforwards | $52,496 | $48,745 |
| Foreign net operating loss carryforwards | — | 2,059 |
| State operating loss carryforwards | 1,950 | 1,934 |
| Federal and New Jersey research and development tax credits | 5,553 | 5,404 |
| Stock compensation | 378 | 470 |
| Accrued expenses | 188 | 312 |
| Research and experimentation expenses | 2,259 | 1,977 |
| Other | 337 | 601 |
| Net deferred tax assets before valuation allowance | $63,161 | $61,502 |
| Valuation allowance | $(62,192) | $(60,322) |
| Deferred tax assets | $969 | $1,180 |
| Deferred tax liabilities: | | |
| Intangibles | $(788) | $(793) |
| Lease liabilities | (384) | (590) |
| Net deferred tax liabilities | $(203) | $(203) |
F-24
In
assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all
the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of
future taxable income during the periods in which those temporary differences and carry forwards become deductible or are utilized.
As of April 30, 2025 and 2024, based upon the level of historical taxable losses, valuation allowances of $62.2 million and $60.3 million, respectively, were recorded to fully offset deferred tax assets. The valuation allowance increased $1.9 million during the year ended April 30, 2025 and increased $5.7 million during the year ended 2024 respectively, due to continuing net operating losses.
As
of April 30, 2025, the Company had net operating loss carry forwards for federal income tax purposes of approximately $250.0 million, which begin to
expire in fiscal 2026; $116.2 million of the federal carryforward has no expiration, but the
deductibility of such federal net operating losses may be limited to 80% of our taxable income in future years. The Company
also had federal research and development tax credit carry forwards of approximately $5.2 million as of April 30, 2025, which begins to expire in 2026. The Tax Reform Act of 1986 contains provisions that limit the
utilization of net operating loss and tax credit carry forwards if there has been an ownership change, as defined. The Company has
determined that as a result of multiple ownership changes, as described in Section 382 of the Internal Revenue Code, its ability to
utilize these NOL’s and research and development tax credit have been significantly limited.
In
addition, as of April 30, 2025, the Company had state net operating loss carry forwards of approximately $28.3 million which begin to
expire in 2042, which also may be limited to utilization limitations. Further, as of April 30, 2025, the Company dissolved their UK subsidiary,
Ocean Power Technologies Ltd., and thus have written off their outstanding net operating losses. The ability to utilize these carry forwards
may also be limited due to ownership changes.
*Income
Tax Benefit*
The
Company has sold New Jersey State net operating losses and research development credits under the New Jersey Economic Development Authority
Tax Transfer programs, which has resulted in $1.0 million and $1.3 million of tax benefit related to the fiscal year ended April 30,
2025 and 2024, respectively, from the sale of New Jersey net operating losses and research and development credits. New Jersey-based
technology or biotechnology companies with fewer than 225 US employees may be eligible to sell net operating losses and research and
development tax credits to unaffiliated corporations, up to a maximum lifetime benefit of $20.0 million per business.
*Uncertain
Tax Positions*
The
Company applies the guidance issued by the FASB for the accounting and reporting of uncertain tax positions. The guidance requires the
Company to recognize in its consolidated financial statements the impact of a tax position if that position is more likely than not to
be sustained upon examination, based on the technical merits of the position. At April 30, 2025 and 2024, the Company had no other unrecognized
tax positions. The Company does not expect any material increase or decrease in its income tax expense in the next fiscal year, related
to examinations or uncertain tax positions. Net operating loss and credit carry forwards since inception remain open to examination by
taxing authorities and will continue to remain open for a period after utilization.
The
Company does not have any interest or penalties accrued related to uncertain tax positions as it does not have any unrecognized tax benefits.
**(14)Commitments and Contingencies**
*Litigation
with Paragon Technologies, Inc.*
On
October 10, 2023, Paragon Technologies, Inc. filed a complaint in the Court of Chancery of the State of Delaware against the Company,
and the members of its Board of Directors, claiming certain breaches of their fiduciary duties. The complaint sought only injunctive
relief against the Company, and not monetary damages, and therefore the financial exposure derived therein was limited to applicable
legal fees and costs at that stage, which was material to FY’ 24. On November 2, 2023, Paragon sought leave to amend its complaint
to add additional claims. The Court granted this motion for leave to amend, provided that the Court would not delay the hearing on the
matters raised in the initial complaint, which was set for November 28, 2023. This hearing on the initial complaint was held and on November
30, 2023, the Court ruled in favor of the Company and denied Paragon’s motion for injunctive relief. On February 28, 2024, the
Company successfully finalized its 2023 annual meeting of stockholders in spite of Paragon’s repeated attempts to contest the meeting.
In an August 12, 2024 Press Release and its Form 10-Q report for the second quarter of 2024, Paragon announced that it was no longer
pursuing litigation against the Company. Pursuant to a Court order dated January 9, 2025, Paragon was required “to file a status
report within 30 days. Otherwise, the case will be dismissed under Rule 41(e).” Because Paragon did not file a status report by
February 10, 2025, the Company anticipates that the Court will dismiss the case, with prejudice, due to Paragon’s failure to prosecute.
*Section
220 Demand*
In
February 2025, the Company received a shareholder demand under Section 220 of the General Corporation Law of the State of Delaware for
inspection of certain books and records relating to prior equity grants made to officers and directors under the 2015 Plan in January
2023, February 2024 and January 2025. The Company has produced to the Plaintiff documents fully responsive to the Demand. The Company
is reviewing and considering the demand and engaging with counsel for the shareholder but has not recorded any material liability for
these matters as of April 30, 2025 as it cannot estimate the ultimate outcome at this time.
*General
Legal Matters*
From
time to time, the Company is involved in legal and administrative proceedings and claims of various types. The Company records a liability
in its consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably
estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision
when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company
estimates and discloses the possible loss or range of loss to the extent necessary to make the consolidated financial statements not
misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its consolidated financial
statements.
F-25
**(15)Operating Segments and Geographic Information**
The
Company operates as one operating segment. The Company’s chief operating decision maker (the “CODM”) is its Chief Executive Officer, who
reviews financial information on a consolidated basis and utilizes net loss for purposes of making operating decisions, assessing
financial performance of the consolidated Company, and making resource allocation decisions. The CODM also reviews total assets.
While assets may move throughout the world to support our revenue projects, for reporting purposes they are included in North
America total assets. Revenue and expenses are generally attributed to the operating unit that bills the customers. Geographic
information is as follows:
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas
_Year Ended April 30, 2025 · (in thousands)_
| Line item | North & South America | Europe | Asia and Australia | Total |
| --- | --- | --- | --- | --- |
| Revenue from external customers | $3,855 | $1,888 | $118 | $5,861 |
| Operating (loss) income | (22,835) | 467 | 78 | (22,290) |
| Right-of-use assets, net | 1,552 | — | — | 1,552 |
| Long-lived assets | 3,444 | — | — | 3,444 |
| Total assets | 30,793 | — | — | 30,793 |
_Year Ended April 30, 2024 · (in thousands)_
| Line item | North & South America | Europe | Asia and Australia | Total |
| --- | --- | --- | --- | --- |
| Revenue from external customers | $5,278 | $247 | — | $5,525 |
| Operating (loss) income | (29,548) | 217 | — | (29,331) |
| Right-of-use assets, net | 2,405 | — | — | 2,405 |
| Long-lived assets | 3,443 | — | — | 3,443 |
| Total assets | 28,704 | — | — | 28,704 |
The
following table presents selected financial information with respect to the Company’s single operating segment and its significant
segment expenses for the years ended April 30, 2025 and 2024:
Schedule
of Operating Segment Expenses
_(in thousands)_
| Line item | 2025 / Fiscal years ended April 30, | 2024 / Fiscal years ended April 30, |
| --- | --- | --- |
| Revenue | $5,861 | $5,525 |
| Less: | | |
| Cost of sales | 4,201 | 2,699 |
| Product development costs | 1,619 | 5,027 |
| Employee-related costs | 6,939 | 11,045 |
| Professional, consulting and contractor fees | 4,705 | 9,024 |
| General and administrative costs | 2,889 | 3,829 |
| Facilities costs | 1,587 | 1,544 |
| Stock based compensation | 4,603 | 1,155 |
| Depreciation and amortization expense | 904 | 568 |
| Other expense (income) | 168 | 171 |
| Interest income | (47) | (800) |
| Loss on extinguishment of debt | 838 | — |
| Income tax benefit | (1,034) | (1,254) |
| Net loss | $(21,511) | $(27,483) |
**(16)Employee Benefits**
**401(k)
Savings & Retirement Plan**
The
Company offers a 401(k) Savings & Retirement Plan to eligible employees meeting certain age and service requirements. This plan permits
participants to contribute 100% of their salary, up to the maximum allowable by the Internal Revenue Service regulations. Participants
are immediately vested in their voluntary contributions plus actual earnings or less actual losses thereon. Participants are eligible
to participate in the Company match after one year of service and are fully vested in the Company match after two years of service.
The
Company matches employee contributions dollar for dollar up to the first 3% and fifty cents on the dollar for each additional 1% up to9% for a maximum match contribution of 6%. The aggregate employer 401(k) match expense recorded in the Consolidated Statements of Operations
for the years ended April 30, 2025 and 2024 was approximately $0.2 million and $0.3 million, respectively.
The
Company may also provide for a voluntary contribution to the plan which is approved by the Company’s Board of Directors on an annual
basis. All participants immediately vest on the date of distribution.
**(17)Subsequent Events**
**Convertible
Note Issuance**
In
May 2025, the Company issued a $10.0 million unsecured convertible promissory note (“Notes”) to an institutional investor
under its shelf registration statement on Form S-3. The Notes will not bear interest except that upon the occurrence and during the continuance
of an event of default, interest will accrue on the Notes at an interest rate of 13% per annum. Unless earlier converted or redeemed,
the Notes will mature on the twenty-four month anniversary of the issuance date at a premium of 13% to the face value of the Notes (the
“Redemption Value”). At any time after the issuance date, the Notes are convertible, in whole or in part, and subject to
certain beneficial ownership limitations, at the option of the holders, into shares of our common stock at a conversion price equal to
$0.68 (the “Fixed Conversion Price”). The Fixed Conversion Price is subject to customary adjustments upon any stock split,
stock dividend, stock combination, recapitalization or similar events. Starting on the closing date, the Notes amortize in installments,
and we will make monthly payments on the first trading day of each monthly anniversary commencing on the closing date through the maturity
date, payable in cash or shares of common stock. Upon the satisfaction of certain conditions, we may prepay outstanding Notes upon not
less than 20 trading days’ written notice by paying an amount equal to the portion of the Notes being redeemed at a 12.5% premium.
The Notes will rank senior to the right to payment of the holders of our unsecured debt. Net proceeds will be used for working capital
and general corporate purposes. As of July 21, 2025 approximately $2 million of the original $10.0 million of the Notes have been converted
into common equity shares of the Company.
**Tax
Update**
On
July 4, 2025, the One Big Beautiful Bill was enacted, introducing significant and wide-ranging changes to the U.S. tax system. These
include expanded deductions for certain expenses, the restoration of 100% bonus depreciation, expanded opportunity zones, and immediate
expensing for U.S.-based research and development. The legislation also reinstates EBITDA-based interest deductions and makes several
business tax incentives permanent.
The
Company is currently assessing the potential impact of this legislation on its future financial position, results of operations, and
cash flows. In accordance with U.S. GAAP, the effects will be recognized in the period of enactment.
F-26
---
## EX-4.3
SEC source: [ex4-3.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex4-3.htm)
**Exhibit** **4.3**
**DESCRIPTION
OF SECURITIES**
Our
authorized capital stock consists of 300,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred
stock, par value $0.001 per share, 100,000 of which are designated as Series A Participating Preferred Stock which may be issued upon
the exercise of the preferred stock purchase rights described below under “Section
382 Tax Benefits Preservation Plan”.
**Description
of Common Stock**
*Voting*.
Holders of common stock are entitled to one vote for each share held on all matters submitted to a vote of stockholders and do not have
cumulative voting rights. Accordingly, holders of a majority of the shares of common stock entitled to vote in any election of directors
may elect all of the directors standing for election.
*Dividends*.
Holders of common stock are entitled to receive proportionately any dividends that may be declared by our Board, subject to any preferential
dividend rights of outstanding preferred stock.
*Liquidation
and Distribution*. Upon our liquidation, dissolution or winding up, the holders of common stock are entitled to receive proportionately
our net assets available after the payment of all debts and other liabilities and subject to the prior rights of any outstanding preferred
stock. Holders of common stock have no preemptive, subscription, redemption or conversion rights. Our outstanding shares of common stock
are, and the shares offered by us in this offering will be, when issued and paid for, fully paid and nonassessable. The rights, preferences
and privileges of holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any
series of preferred stock that we may designate and issue in the future.
**Anti-Takeover
Effects of Delaware Law, Our Certificate of Incorporation and Our Bylaws**
Delaware
law, our certificate of incorporation and our bylaws contain provisions that could have the effect of delaying, deferring or discouraging
another party from acquiring control of us. These provisions, which are summarized below, are intended to discourage coercive takeover
practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first
negotiate with our Board.
**Removal
of Directors**
Our
certificate of incorporation currently provides that directors may be removed only for cause and only by the affirmative vote of the
holders of 75% of our shares of capital stock present in person or by proxy and entitled to vote. However, our Board of Directors approved
an amendment to our bylaws that became effective on June 17, 2016, which permits our directors to be removed either for cause or without
cause by our shareholders. At our annual meeting of stockholders for the year ended April 30, 2016 that was held on October 21, 2016
(the “2016 Annual Meeting”), we submitted a proposal to stockholders seeking stockholder approval to amend our certificate
of incorporation to delete the reference to “for cause” in Section 6 of Article IX of the certificate of incorporation. This
proposal to amend the certificate of incorporation did not receive the required affirmative vote of the holders of at least 75% of the
outstanding shares of common stock entitled to vote at the meeting, so the proposal did not pass. However, we also submitted a proposal
to stockholders at the 2016 Annual Meeting seeking approval to amend our certificate of incorporation to add a clause that specified
that, to the fullest extent permitted by law, any provision in the Certificate of Incorporation that is contrary to a requirement of
the Delaware General Corporate Law (the “DGCL”) shall be read in conformity with the applicable requirement of the DGCL.
This second proposal only required the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled
to vote at the 2016 Annual Meeting, and it passed.
Our
Board of Directors takes the position that under current Delaware law, the “only for cause” provision in the certificate
of incorporation regarding removal of the company’s directors is not enforceable and is therefore not in conformity with the applicable
requirement of the DGCL. Accordingly, we will comply with the provisions of our bylaws, as amended and as described above, relating to
director removal and will not seek to enforce that provision of our certificate of incorporation relating to stockholder removal of directors
only for cause, as presently in effect. Under our certificate of incorporation and bylaws, any vacancy on the Board, including a vacancy
resulting from an enlargement of the Board, may be filled only by vote of a majority of our directors then in office.
The
limitations on the ability of our stockholders to remove directors and fill vacancies could make it more difficult for a third party
to acquire, or discourage a third party from seeking to acquire, control of us.
**Stockholder
Action by Written Consent; Special Meetings**
Our
certificate of incorporation provides that any action required or permitted to be taken by our stockholders must be effected at a duly
called annual or special meeting of such holders and may not be effected by any consent in writing by such holders. Our certificate of
incorporation and our bylaws also provide that, except as otherwise required by law, special meetings of our stockholders can only be
called by our chairman of the board, our chief executive officer, our president or the Board.
**Advance
Notice Requirements for Stockholder Proposals**
Our
bylaws establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of stockholders, including
proposed nominations of persons for election to the Board. Stockholders at an annual meeting may only consider proposals or nominations
specified in the notice of meeting or brought before the meeting by or at the direction of the Board of Directors or by a stockholder
of record on the record date for the meeting, that is entitled to vote at the meeting and that has delivered to our secretary a timely
written notice in proper form of the stockholder’s intention to bring such business before the meeting, as well as having met certain
other requirements specified in the bylaws. These provisions could have the effect of delaying until the next stockholder meeting stockholder
actions that are favored by the holders of a majority of our outstanding voting securities.
**Delaware
Business Combination Statute**
We
are subject to Section 203 of the Delaware General Corporation Law. Subject to certain exceptions, Section 203 prevents a publicly held
Delaware corporation from engaging in a “business combination” with any “interested stockholder” for three years
following the date that the person became an interested stockholder, unless the interested stockholder attained such status with the
approval of our Board of Directors or unless the business combination is approved in a prescribed manner. A “business combination”
includes, among other things, a merger or consolidation involving us and the “interested stockholder” and the sale of more
than 10% of our assets. In general, an “interested stockholder” is any entity or person beneficially owning 15% or more of
our outstanding voting stock and any entity or person affiliated with or controlling or controlled by such entity or person.
**Section
382 Tax Benefits Preservation Plan**
Our
Board of Directors has approved the adoption of a tax benefits preservation plan in the form of a Section 382 Rights Agreement designed
to protect and preserve our tax assets primarily associated with net operating loss carryforwards (“NOLs”) that could potentially
be utilized in certain circumstances to offset our future taxable income and reduce its federal income tax liability.
Section
382 of the Internal Revenue Code imposes limitations on the future use of a company’s NOLs if it undergoes an “ownership
change.” Our ability to benefit from its tax assets would be substantially limited by Section 382 if an “ownership change”
occurred. A company experiences an “ownership change” for tax purposes if the percentage of stock owned by one or a group
of its 5% stockholders (as defined for tax purposes) increases by more than 50 percentage points over a rolling three-year period over
the lowest percentage of stock of such corporation owned by such stockholders at any time during that period.
Our
tax benefits preservation plan is similar to those adopted by numerous other public companies with significant NOLs. In order to protect
our NOLs from being limited or permanently lost under Section 382, the tax benefits preservation plan is intended to reduce the likelihood
of an unintended “ownership change” occurring through the buying and selling of our common stock. This is accomplished by
deterring any person or group from acquiring beneficial ownership of 4.99% or more of our outstanding common stock without the approval
of the Board. Our tax benefits preservation plan does not, however, block anyone from buying or selling OPT’s common stock. Accordingly,
there can be no assurance that the tax benefits preservation plan will prevent an “ownership change.”
Under
the terms of the tax benefits preservation plan, OPT will distribute to its stockholders one preferred stock purchase right for each
share of our common stock held as of the close of business on July 11, 2023. Any shares of common stock issued after the July 11, 2023
record date will be issued together with associated preferred stock purchase rights.
Under
the tax benefits preservation plan, the rights will initially trade with our common stock. The rights will generally become exercisable
only if a person (or any persons acting as a group) acquires beneficial ownership of 4.99% or more of our outstanding common stock, without
the approval of the Board, after the first public announcement by us of the adoption of the tax benefits preservation plan. A person
or group who acquires, without the approval of the Board, beneficial ownership of 4.99% or more of our outstanding common stock could
be subject to significant dilution. If the preferred stock purchase rights become exercisable, all holders of rights, other than the
person or group triggering the rights, will be entitled to purchase our common stock at a 50% discount. The Board also has the option
to cause the exchange of one share of common stock for each preferred stock purchase right held. Preferred stock purchase rights held
by the person or group triggering the rights will become null and void and will not be exercisable or transferable.
Stockholders
who beneficially owned 4.99% or more of our outstanding common stock prior to the first public announcement by us of the adoption of
the tax benefits preservation plan will not trigger any penalties under the tax benefits preservation plan so long as they do not acquire
beneficial ownership of any additional shares of common stock (other than pursuant to a stock split, stock dividend, reclassification,
or similar transaction effected by us) at a time when they still beneficially own 4.99% or more of such common stock. The Board also
has the discretion to exempt any acquisition of our common stock from the provisions of the tax benefits preservation plan.
The
preferred stock purchase rights and the tax benefits preservation plan will expire no later than June 29, 2026. The preferred stock purchase
rights and the tax benefits preservation plan may also expire on an earlier date upon the occurrence of other events, including a determination
by our Board that (i) the tax benefits preservation plan is no longer necessary for the preservation of our tax attributes, (ii) no tax
attributes may be carried forward (with such expiration occurring as of the beginning of the applicable taxable year), or (iii) prior
to the time any person or group acquires 4.99% or more of our common stock, that the tax benefits preservation plan and the preferred
stock purchase rights are no longer in the best interests of us and our stockholders. The preferred stock purchase rights may also be
redeemed, exchanged, or terminated prior to their expiration.
**Amendment
of Certificate of Incorporation and Bylaws**
The
Delaware General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter
is required to amend a corporation’s certificate of incorporation or bylaws, unless a corporation’s certificate of incorporation
or bylaws, as the case may be, requires a greater percentage. Our bylaws may be amended or repealed by a majority vote of our Board of
Directors or the affirmative vote of the holders of at least 75% of the voting power of our capital stock issued and outstanding and
entitled to vote on the matter.
**Limitation
of Liability and Indemnification of Officers and Directors**
Our
certificate of incorporation limits the personal liability of directors for breach of fiduciary duty to the maximum extent permitted
by the Delaware General Corporation Law. Our certificate of incorporation provides that no director will have personal liability to us
or to our stockholders for monetary damages for breach of fiduciary duty or other duty as a director. However, these provisions do not
eliminate or limit the liability of any of our directors:
- for any breach of their duty of loyalty to us or our stockholders;
- for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
- for voting or assenting to unlawful payments of dividends or other distributions; or
- for any transaction from which the director derived an improper personal benefit.
Any
amendment to or repeal of these provisions will not eliminate or reduce the effect of these provisions in respect of any act or failure
to act, or any cause of action, suit or claim that would accrue or arise prior to any amendment or repeal or adoption of an inconsistent
provision. If the Delaware General Corporation Law is amended to provide for further limitations on the personal liability of directors
of corporations, then the personal liability of our directors will be further limited to the greatest extent permitted by the Delaware
General Corporation Law.
In
addition, our certificate of incorporation provides that we must indemnify our directors and officers and we must advance expenses, including
attorneys’ fees, to our directors and officers in connection with legal proceedings, subject to limited exceptions.
**Notice
of Share Ownership**
Our
bylaws contain a provision requiring any beneficial owner of three percent or more of our outstanding common stock to notify us of his
or her stockholdings, as well as of any change in his or her beneficial ownership of one percent or more of our outstanding common stock.
Our bylaws do not provide for any specific remedy in the event a stockholder does not comply with this provision. We do not intend to
make any such information public, unless required by law or the rules of the SEC or the NYSE American.
**Authorized
but Unissued Shares**
Our
authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval, subject
to any limitations imposed by the listing standards of the NYSE American. These additional shares may be used for a variety of corporate
finance transactions, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and
preferred stock could make it more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer,
merger or otherwise.
**Transfer
Agent and Registrar**
The
transfer agent and registrar for our common stock is Computershare Trust Company, N.A. Its address is 250 Royall Street, Canton, MA 02021-1011,
and its telephone number is 1-800-662-7232.
Our
common stock is listed on the NYSE American under the symbol “OPTT.”
---
## EX-21.1
SEC source: [ex21-1.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex21-1.htm)
**EXHIBIT
21.1**
**Subsidiary** **Jurisdiction of Incorporation**
Marine Advanced Robotics, Inc. California
---
## EX-23.1
SEC source: [ex23-1.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex23-1.htm)
**Exhibit
23.1**
**Consent
of Independent Registered Public Accounting Firm**
We
consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-261240, No. 333-275843, No. 333-273044
and No. 333-281283) and Form S-8 (No. 333-208522, No. 333-214316, No. 333-224436, No. 333-232755, No. 333-252372, No. 333-262684, No.
333-269344, No. 333-277728, No. 333-284643 and No. 333-288874) of Ocean Power Technologies, Inc. (the “Company”), of our
report dated July 24, 2025, relating to the fiscal year ended April 30, 2025 consolidated financial statements of the Company, appearing
in this Annual Report on Form 10-K of the Company for the year ended April 30, 2025.
/s/
Baker Tilly US, LLP
Dallas,
Texas
July
24, 2025
---
## EX-23.2
SEC source: [ex23-2.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex23-2.htm)
**Exhibit** **23.2**
**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM**
We consent to the incorporation
by reference in the Registration Statements of Ocean Power Technologies, Inc. on Form S-3 (Nos. 333-275843, 333-273044, and 333-281283)
and Form S-8 (Nos. 333-208522, 333-214316, 333-224436, 333-232755, 333-252372, 333-262684, 333-269344, 333-277728, 333-284643, and 333-288874)
of our report dated July 25, 2024, except for Note 15 as to which the date is July 24, 2025, on our audit of the financial statements
as of April 30, 2024 and for the year then ended, which report is included in this Annual Report on Form 10-K.
*/s/ EisnerAmper LLP*
EISNERAMPER LLP
Iselin, NJ
July 24, 2025
---
## EX-31.1
SEC source: [ex31-1.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex31-1.htm)
**EXHIBIT
31.1**
**CERTIFICATIONS**
I,
Philipp Stratmann, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Ocean Power Technologies, 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 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 control 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. | The registrant’s other certifying officer and 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 other 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/ Philipp Statman*
Philipp Stratmann
President and Chief Executive Officer
Dated: July 24, 2025
---
## EX-31.2
SEC source: [ex31-2.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex31-2.htm)
**EXHIBIT
31.2**
**CERTIFICATIONS**
I,
Robert Powers, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K of Ocean Power Technologies, 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 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 control 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. | The registrant’s other certifying officer and 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 other 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/ Robert Powers*
Robert Powers
Senior Vice President and Chief Financial Officer
Dated: July 24, 2025
---
## EX-32.1
SEC source: [ex32-1.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex32-1.htm)
**EXHIBIT
32.1**
**CERTIFICATION**
**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 Annual Report on Form 10-K of Ocean Power Technologies, Inc. (the “Company”) for the year ended April
30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Philipp
Stratmann, Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
*/s/ Philipp Stratmann*
Philipp Stratmann
President and Chief Executive Officer
Dated: July 24, 2025
A
signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company
and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
---
## EX-32.2
SEC source: [ex32-2.htm](https://www.sec.gov/Archives/edgar/data/1378140/000164117225020888/ex32-2.htm)
**EXHIBIT
32.2**
**CERTIFICATION**
**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 Annual Report on Form 10-K of Ocean Power Technologies, Inc. (the “Company”) for the year ended April
30, 2025 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Robert
Powers, Senior Vice President, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
*/s/ Robert Powers*
Robert Powers
Senior Vice President and Chief Financial Officer
Dated: July 24, 2025
A
signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company
and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.