Ocean Power Technologies(OPTT) - 2025 Q4 - Annual Report

PART I Business Ocean Power Technologies (OPT) provides intelligent maritime solutions via DaaS, RaaS, and PaaS, utilizing its PowerBuoy®, WAM-V®, and Merrows™ platforms, achieving significant backlog growth to $12.5 million in fiscal 2025 - OPT specializes in Maritime Domain Awareness (MDA) solutions, offering them through service-based models like DaaS, RaaS, and PaaS, utilizing its PowerBuoy®, WAM-V®, and Merrows™ platforms[19] Contract Backlog Growth (YoY) | Date | Backlog (in millions) | Change | | :--- | :--- | :--- | | April 30, 2024 | $4.9 | - | | April 30, 2025 | $12.5 | +155% | - The company secured approximately $5 million in purchase orders for PowerBuoy® and WAM-V® platforms from customers in Latin America between December 2024 and January 2025[82] - OPT was granted a Facility Security Clearance (FCL) at the Secret level by the U.S. Department of Defense in fiscal 2025, enabling it to pursue classified government contracts[82][101] - As of April 30, 2025, the company holds approximately 70 issued U.S. patents covering its core technologies, with expiration dates extending through fiscal year 2041[96][97] Risk Factors The company faces significant risks including a history of operating losses, an accumulated deficit of $329.1 million, and dependence on additional capital and third-party suppliers Historical Financial Performance | Fiscal Year | Net Loss (in millions) | Accumulated Deficit (as of year-end) | | :--- | :--- | :--- | | 2024 | $27.5 | - | | 2025 | $21.5 | $329.1 million | - The company's ability to operate depends on raising sufficient capital. As of April 30, 2025, the unrestricted cash balance was $6.7 million after raising approximately $23.4 million during fiscal 2025[130] - Loss of the company's Facility Security Clearance (FCL) could prevent bidding on or performing classified U.S. government contracts, significantly harming the business[128][129] - The company is highly dependent on third-party suppliers for components, facing risks from supply chain disruptions, particularly for semiconductors and specialty metals[151] - Revenue from customers outside the U.S. accounted for 60% of total revenue in fiscal 2025, up from 4% in fiscal 2024, increasing exposure to international operational risks[156] Unresolved Staff Comments The company reports no unresolved staff comments - Not applicable[204] Properties The company's headquarters is a 56,000 sq. ft. leased facility in Monroe Township, NJ, supplemented by 13,800 sq. ft. leased in Richmond, CA for operations - The main headquarters is a 56,000 sq. ft. leased facility in Monroe Township, NJ, used for administration, R&D, manufacturing, and testing[215] - The company leases two properties in Richmond, CA, totaling approximately 13,800 sq. ft., for West Coast operations[216] Legal Proceedings The company is involved in litigation with Paragon Technologies, Inc., expected to be dismissed, and is reviewing a shareholder demand for inspection of records related to equity grants - Litigation initiated by Paragon Technologies, Inc. in October 2023 is anticipated to be dismissed with prejudice after Paragon failed to file a required status report by February 10, 2025[217] - In February 2025, the company received a shareholder demand under Section 220 to inspect records related to certain equity grants, which the company is reviewing and has not recorded a liability[218] Mine Safety Disclosures The company reports no mine safety disclosures - None[219] PART II Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on NYSE American under "OPTT", has 135 holders of record, and does not intend to pay future cash dividends, with equity compensation plan details provided - The company's common stock is listed on the NYSE American under the symbol "OPTT". As of July 22, 2025, there were 135 holders of record[221] - The company has never paid cash dividends and does not anticipate doing so in the foreseeable future, intending to retain earnings for business growth[223] Equity Compensation Plan Information as of April 30, 2025 | Plan Category | Shares to be Issued Upon Exercise | Weighted-Average Exercise Price | Shares Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by Shareholders | | | | | Stock Options | 483,342 | $2.59 | — | | Restricted Stock Units | 22,461,633 | N/A | — | | Not Approved by Shareholders | | | | | Restricted Stock Units | — | N/A | 161,487 | [Reserved] This item is reserved - This item is noted as [Reserved] in the report[231] Management's Discussion and Analysis of Financial Condition and Results of Operations In FY2025, OPT's revenue increased to $5.9 million, while gross profit decreased to $1.7 million, and operating expenses were reduced, resulting in a net loss of $21.5 million, with management expecting sufficient cash to fund operations through July 2026 Fiscal Year 2025 vs. 2024 Financial Results (in thousands) | Metric | FY 2025 | FY 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $5,861 | $5,525 | +$336 | | Gross Profit | $1,660 | $2,826 | -$1,166 | | Operating Loss | $(21,686) | $(29,331) | +$7,645 | | Net Loss | $(21,511) | $(27,483) | +$5,972 | | Net Loss Per Share | $(0.17) | $(0.47) | +$0.30 | - The decrease in operating expenses by $8.9 million was primarily due to cost reduction activities implemented at the end of fiscal 2024, including headcount optimization and reduced third-party spending[282] - The company raised approximately $22.7 million from financing activities in FY2025, primarily from its At-The-Market (ATM) facility and convertible debt issuances[290] - Management believes the company's cash balance of $6.9 million as of April 30, 2025, supplemented by the May 2025 convertible debt proceeds, will be sufficient to fund operations through July 2026[294][455] Revenue by Geographic Location | Customer Location | FY 2025 | FY 2024 | | :--- | :--- | :--- | | North America & South America | 66% | 96% | | EMEA | 32% | 4% | | Asia and Australia | 2% | 0% | Quantitative and Qualitative Disclosures About Market Risk This section is reported as not applicable - Not applicable[300] Financial Statements and Supplementary Data This section refers to Item 15 for the required financial statements and supplementary data - The financial statements and supplementary data are listed in Item 15 of the Annual Report[301] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with accountants on accounting and financial disclosure - None[302] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of April 30, 2025, with prior material weaknesses fully remediated - Management concluded that disclosure controls and procedures were effective as of April 30, 2025[303] - Material weaknesses in internal control over financial reporting identified in fiscal 2024 have been fully remediated as of April 30, 2025[306][308] Other Information The company reports no other information - None[310] PART III Directors, Executive Officers and Corporate Governance The Board of Directors comprises five members, with four independent, and the Audit Committee, chaired by a financial expert, oversees corporate governance and ethics - The Board is composed of five directors: Terence J. Cryan (Chairman), Philipp Stratmann (President & CEO), Clyde W. Hewlett, Diana G. Purcel, and Peter E. Slaiby[315] - Four of the five directors are independent, with Philipp Stratmann, the President and CEO, being the only non-independent director[313][395] - The Audit Committee consists of Diana G. Purcel (Chair), Peter E. Slaiby, and Terence Cryan, with Ms. Purcel qualified as an "audit committee financial expert"[324] Executive Compensation Executive compensation, overseen by the Compensation Committee, aligns with shareholder interests through base salary, short-term incentives (STI), and long-term equity incentives (LTI), with NEOs receiving 64% of target STI bonuses in FY2025 FY2025 Named Executive Officer (NEO) Compensation Summary | Name and Principal Position | Salary ($) | Bonus ($) | Stock Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | | Philipp Stratmann, President & CEO | 374,291 | 125,753 | 5,437,530 | 5,954,405 | | Robert Powers, SVP & CFO | 306,551 | 67,813 | 2,409,089 | 2,801,606 | | Tracy Pagliara, SVP & General Counsel | 86,539 | 33,750 | 2,611,106 | 2,731,395 | - For fiscal year 2025, the Compensation Committee approved STI bonuses for NEOs at 64% of their respective targets[356] - Long-term incentive (LTI) awards for NEOs are primarily granted as Restricted Stock Units (RSUs) with time-based, performance-based (ISO certifications, bookings), and market-based (TSR) vesting conditions[342][347][348] - The company has a clawback policy compliant with SEC and NYSE American rules, allowing recovery of erroneously awarded incentive-based compensation in the event of an accounting restatement[338] Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters As of July 24, 2025, all executive officers and directors as a group beneficially owned 1.6% of the company's 177,524,775 outstanding common shares Beneficial Ownership of Directors and Executive Officers (as of July 24, 2025) | Name | Shares Beneficially Owned | Percentage of Shares | | :--- | :--- | :--- | | Philipp Stratmann | 513,725 | * | | Terence J. Cryan | 600,593 | * | | Clyde W. Hewlett | 423,806 | * | | Diana G. Purcel | 423,806 | * | | Peter E. Slaiby | 458,806 | * | | Robert Powers | 253,409 | * | | All directors and executive officers as a group (7 individuals) | 2,847,271 | 1.6% | Certain Relationships and Related Transactions, and Director Independence All directors are independent under NYSE American rules, except the CEO, and the Audit Committee reviews related person transactions, with none reported for the period - All current directors are deemed independent, except for President and CEO Philipp Stratmann[395] - The Audit Committee is responsible for reviewing and approving all related person transactions, with no related person transactions disclosed[396] Principal Accountant Fees and Services The company changed independent auditors from EisnerAmper LLP to Moss Adams LLP (now Baker Tilly US, LLP) in fiscal 2025, with total audit fees of approximately $480,825 pre-approved by the Audit Committee - In August 2024, the company dismissed EisnerAmper LLP and appointed Moss Adams LLP as its independent auditor[398][400] - Effective June 2, 2025, Moss Adams LLP merged with Baker Tilly US, LLP, which became the successor independent registered public accounting firm[401] Accountant Fees for Fiscal Year 2025 | Firm | Audit Fees ($) | Total Fees ($) | | :--- | :--- | :--- | | EisnerAmper, LLP | 130,200 | 130,200 | | Baker Tilly (Successor to Moss Adams) | 350,625 | 350,625 | | Total | 480,825 | 480,825 | PART IV Exhibits and Financial Statement Schedules This section provides an index to the consolidated financial statements and a list of exhibits filed with the report - This item contains the index to the Consolidated Financial Statements (page F-1) and the Exhibit Index (pages 53-54)[412] Form 10-K Summary The company reports no Form 10-K summary - None[413]