UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended January 31, 2023

☐	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.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

22-2535818

(State or Other Jurisdiction

of Incorporation or Organization)

(I.R.S. Employer

Identification No.)

28 ENGELHARD DRIVE, SUITE B, MONROE TOWNSHIP, NJ 08831

(Address of Principal Executive Offices, Including Zip Code)

(609) 730-0400

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock $0.001 par value		OPTT		NYSE American

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of March 10, 2023, the number of outstanding shares of common stock of the registrant was 56,213,728

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OCEAN POWER TECHNOLOGIES, INC.

INDEX TO FORM 10-Q

	Page Number
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets as of January 31, 2023 (unaudited) and April 30, 2022	4
Unaudited Consolidated Statements of Operations for the three and nine months ended January 31, 2023 and 2022	5
Unaudited Consolidated Statements of Comprehensive Loss for the three and nine months ended January 31, 2023 and 2022	6
Unaudited Consolidated Statement of Shareholders’ Equity for the three and nine months ended January 31, 2023 and 2022	7
Unaudited Consolidated Statements of Cash Flows for the three and nine months ended January 31, 2023 and 2022	8
Notes to Unaudited Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	42
Item 4. Controls and Procedures	42
PART II — OTHER INFORMATION	43
Item 1. Legal Proceedings	43
Item 1A. Risk Factors	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3. Defaults Upon Senior Securities	43
Item 4. Mine Safety Disclosures	43
Item 5. Other Information	43
Item 6. Exhibits	44

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Special Note Regarding Forward-Looking Statements

We have made statements in this Quarterly Report on Form 10-Q that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements convey our current expectations or forecasts of future events. Forward-looking statements include statements regarding our future financial position, business strategy, pending, threatened, and current litigation, liquidity, budgets, projected revenue and 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.

The forward-looking statements contained in or incorporated by reference are largely based on our expectations, which reflect estimates and assumptions made by management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve several risks and uncertainties that are beyond our control, including:

	●	our ability to develop, market and commercialize our products, and achieve and sustain profitability;

	●	our continued development 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;

	●	our ability to obtain additional funding, as and if needed, which will be subject to several factors, including market conditions, and our operating performance;

	●	the continued impact of COVID-19 and the inflation related to the U.S. dollar on our business, operations, customers, suppliers and manufacturers and personnel;

	●	our ability to meet product development, manufacturing and customer delivery deadlines may be impacted by disruptions to our supply chain, primarily related to labor shortages and manufacturing and transportation delays both here in the U.S. and abroad;

	●	our acquisitions and our ability to integrate them into our operations may use significant resources, be unsuccessful or expose us to unforeseen liabilities;

	●	our estimates regarding future expenses, revenues, 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 may not be successful;

	●	our ability to maintain the listing of our common stock on the NYSE American;

	●	the reliability of our technology, products and solutions;

	●	our ability to improve the power output and survivability of our products;

	●	changes in current legislation, regulations and economic conditions that affect the demand for, or restrict the use of our products;

	●	our ability to hire and retain key personnel, including senior management, to achieve our business objectives;

	●	our history of operating losses, which we expect to continue for at least the short term and possibly longer; and

	●	our ability to protect our intellectual property portfolio.

Any or all of our forward-looking statements in this report may turn out to be inaccurate. We have based these forward-looking statements largely 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” of our Annual Report on Form 10-K for the year ended April 30, 2022, and in our subsequent reports under the Exchange Act. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this report may not occur as contemplated and actual results could differ materially from those anticipated or implied by the forward-looking statements.

Many of these factors are beyond our ability to control or predict. These factors are not intended to represent a complete list of the general or specific factors that may affect us. You should not unduly rely on these forward-looking statements, which speak only as of the date of this filing. Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise.

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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Ocean Power Technologies, Inc. and Subsidiaries

Consolidated Balance Sheets

(in $000’s, except share data)

	January 31, 2023			April 30, 2022
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	10,920		$	7,885
Short term investments		30,005			49,384
Restricted cash, short-term		65			258
Accounts receivable		706			482
Contract assets		93			386
Inventory		1,436			442
Other current assets		1,997			467
Total current assets		45,222			59,304
Property and equipment, net		591			445
Intangibles, net		4,017			4,136
Right-of-use asset, net		522			752
Restricted cash, long-term		154			219
Goodwill		8,537			8,537
Total assets	$	59,043		$	73,393
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	591		$	905
Accrued expenses		1,626			877
Contingent liabilities, current portion		875			748
Right-of-use liability, current portion		320			319
Contract liabilities		1,334			129
Total current liabilities		4,746			2,978
Deferred tax liability		203			203
Right-of-use liability, less current portion		282			538
Contingent liabilities, less current portion		870			843
Total liabilities		6,101			4,562
Commitments and contingencies (Note 15)		-			-
Shareholders’ Equity:
Preferred stock, $0.001 par value; authorized 5,000,000 shares, none issued or outstanding		—			—
Common stock, $0.001 par value; authorized 100,000,000 shares, issued 56,254,642 shares and 55,905,213 shares, respectively; outstanding 56,213,728 shares and 55,881,861 shares, respectively		56			56
Treasury stock, at cost; 40,914 shares and 23,352 shares, respectively		(355	)		(341	)
Additional paid-in capital		323,843			322,932
Accumulated deficit		(270,556	)		(253,770	)
Accumulated other comprehensive loss		(46	)		(46	)
Total shareholders’ equity		52,942			68,831
Total liabilities and shareholders’ equity	$	59,043		$	73,393

See accompanying notes to unaudited consolidated financial statements.

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Ocean Power Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

(in $000’s, except per share data)

Unaudited

	2023			2022			2023			2022
	Three months ended January 31,						Nine months ended January 31,
	2023			2022			2023			2022

Revenues	$	734		$	484		$	1,752		$	1,003
Cost of revenues		598			597			1,382			1,320
Gross margin (loss)	$	136		$	(113	)	$	370		$	(317	)
(Gain)/loss from change in fair value of consideration		373			(60	)		154			(60	)
Operating expenses		6,820			5,439			19,546			15,451
Operating loss	$	(7,057	)	$	(5,492	)	$	(19,330	)	$	(15,708	)

Interest income, net	$	229		$	16		$	604		$	56
Other income, proceeds from insurance claim		458			—			458			—
Other income, employee retention credit		—			—			1,202			—
Gain on extinguishment of PPP loan		—			—			—			890
Foreign exchange gain		2			5			2			—
Loss before income taxes	$	(6,368	)	$	(5,471	)	$	(17,064	)	$	(14,762	)
Income tax benefit		278			—			278			1,041
Net loss	$	(6,090	)	$	(5,471	)	$	(16,786	)	$	(13,721	)
Basic and diluted net loss per share	$	(0.11	)	$	(0.10	)	$	(0.30	)	$	(0.26	)
Weighted average shares used to compute basic and diluted net loss per common share		55,966,672			55,308,799			55,918,284			53,408,998

See accompanying notes to unaudited consolidated financial statements.

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Ocean Power Technologies, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Loss

(in $000’s)

Unaudited

	2023			2022			2023			2022
	Three months ended January 31,						Nine months ended January 31,
	2023			2022			2023			2022

Net loss	$	(6,090	)	$	(5,471	)	$	(16,786	)	$	(13,721	)
Foreign currency translation adjustment		—			(1	)		—			(14	)
Total comprehensive loss	$	(6,090	)	$	(5,472	)	$	(16,786	)	$	(13,735	)

See accompanying notes to unaudited consolidated financial statements.

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Ocean Power Technologies, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(in $000’s, except share data)

Unaudited

	Shares		Amount		Shares			Amount			Capital		Deficit			Loss			Equity
	Nine Months Ended January 31, 2023
	Common Shares				Treasury Shares						Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Loss			Equity

Balances at May 1, 2022		55,905,213	$	56		(23,352	)	$	(341	)	$	322,932	$	(253,770	)	$	(46	)		68,831
Net loss		—		—		—			—			—		(16,786	)		—			(16,786	)
Share-based compensation		—		—		—			—			911		—			—			911
Common stock issued upon vesting of restricted stock		349,429		—		—			—			—		—			—			—
Acquisition of treasury stock		—		—		(17,562	)		(14	)		—		—			—			(14	)
Balances at January 31, 2023		56,254,642	$	56		(40,914	)	$	(355	)	$	323,843	$	(270,556	)	$	(46	)	$	52,942

	Nine Months Ended January 31, 2022
	Common Shares				Treasury Shares						Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Loss			Equity

Balances at May 1, 2021		52,479,051	$	52		(21,040	)	$	(338	)	$	315,821	$	(234,896	)	$	(171	)	$	80,468
Net loss			$	—					—			—		(13,721	)		—			(13,721	)
Share-based compensation		—	$	—		—			—			864		—			—			864
Proceeds from stock options exercises		85,000	$	1		—			—			89		—			—			90
Issuance of shares for acquisition		3,330,162	$	3		—			—			5,852		—			—			5,855
Other comprehensive loss		—		—		—			—			—		—			(14	)		(14	)
Balances at January 31, 2022		55,894,213	$	56		(21,040	)	$	(338	)	$	322,626	$	(248,617	)	$	(185	)	$	73,542

	Three Months Ended January 31, 2023
	Common Shares				Treasury Shares						Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount		Shares			Amount			Capital		Deficit			Loss			Equity
Balance at November 1, 2022		55,921,880	$	56		(23,352	)	$	(341	)	$	323,564	$	(264,466	)	$	(46	)		58,767
Net loss		—		—		—			—			—		(6,090	)		—			(6,090	)
Share-based compensation		—		—		—			—			279		—			—			279
Common stock issued upon vesting of restricted stock		332,762		—		—			—			—		—			—			—
Acquisition of treasury stock		—		—		(17,562	)		(14	)		—		—			—			(14	)
Balance, January 31, 2023		56,254,642	$	56		(40,914	)	$	(355	)	$	323,843	$	(270,556	)	$	(46	)	$	52,942

	Three Months Ended January 31, 2022
	Common Shares				Treasury Shares							Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Shareholders’
	Shares		Amount			Shares			Amount			Capital		Deficit			Loss			Equity
Balances at November 1, 2021		52,499,051	$	52			(21,040	)	$	(338	)	$	316,389	$	(243,191	)	$	(139	)	$	72,773
Balance, value		52,499,051	$	52			(21,040	)	$	(338	)	$	316,389	$	(243,191	)	$	(139	)	$	72,773
Net loss		—		—			—			—			—		(5,471	)		—			(5,471	)
Share-based compensation		—		—			—			—			317		—			—			317
Proceeds from stock options exercises		65,000		1			—			—			68		—			—			69
Issuance of shares for acquisition		3,330,162		3			—			—			5,852		—			—			5,855
Other comprehensive gain/(loss)		—		—			—			—			—		45			(46	)		(1	)
Balances at Balance, January 31, 2022		55,894,213	$	56			(

SEC Form 10-Q filed by Ocean Power Technologies Inc.