Ocean Power Technologies, Inc.

Current report

Our convertible notes have certain limitations on sales in this offering and our use of proceeds, which may limit our ability to use this offering to raise capital.

Current report

The convertible notes that we issued in May 2025 include certain limitation on the total dollars we can raise under our ATM program and also may require us to use the proceeds of the ATM program to pay down the principal and interest on those convertible notes. In addition, the investors in our December 2024 convertible note financing have certain rights of participation in our future financings. Any limitations which are imposed on our ability to utilize this “at the market offering” or require us to use the proceeds of the ATM program to pay down the notes rather than on our business could have an adverse effect on our results of operation. We could also be required to raise capital through other means and there is no assurance will be available on terms that are acceptable to us.

Current report

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.

Current report

We issued $10.0 million in convertible notes to investors in May 2025 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.

Current report

Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our obligations under our convertible notes.

Current report

Our ability to make payments of principal or to pay interest on or to refinance our convertible notes depends on our future performance, which is subject to economic, financial, competitive and other factors, some of which are beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to satisfy our obligations under the convertible notes. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as reducing or delaying investments or capital expenditures, selling assets, refinancing or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance the convertible notes will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the convertible notes.

Current report

Provisions in our convertible notes may deter or prevent a business combination that may be favorable to you.

Current report

Under the terms of the convertible notes, we are prohibited from engaging in certain mergers or acquisitions unless, among other things, the surviving entity in certain circumstances assumes our obligations under the convertible notes. In addition, the terms of the convertible notes require us to offer to purchase the convertible notes for cash in the event of a change of control. A non-stock takeover of our company may trigger the requirement that we purchase the convertible notes. These and other provisions could prevent or deter a third party from acquiring us, even where the acquisition could be beneficial to you.

Current report

Our ability to raise capital under our ATM program may be limited and could result in substantial dilution to existing shareholders.

Current report

While our ATM program with Ladenburg provides us with flexibility to raise equity capital, our ability to do so will depend on market conditions, trading volume, investor demand, and compliance with applicable regulations. There is no assurance we will be able to sell any shares under the ATM, or that we will raise the full amount available. Any sales of common stock under the ATM could also dilute the ownership interest of existing shareholders, and such sales, or the perception that they may occur, could depress the market price of our stock.

Current report

Delays or difficulties in converting backlog into revenue could adversely affect our results of operations.

Current report

As of July 31, 2025, our backlog was $15.0 million, a significant increase compared to the prior year. While backlog represents business under contract that we expect to recognize as revenue, the timing of conversion is uncertain and may be delayed due to changes in customer schedules, contract modifications, regulatory approvals, or other factors beyond our control. If we are unable to convert backlog into revenue as anticipated, our results of operations and cash flows could be negatively affected.

Current report

Participation in international defense and security projects exposes us to heightened regulatory, political, and operational risks.

Current report

During fiscal 2025 and the first quarter of fiscal 2026, we increased our international sales and partnerships, including in the Middle East and Latin America. These markets can present unique risks, including complex export control requirements, compliance with the U.S. Foreign Corrupt Practices Act and similar laws, exposure to geopolitical instability, sudden changes in government procurement priorities, and logistical challenges in delivery and support. Any of these factors could result in contract delays, cancellations, increased costs, or reputational harm, all of which could have an adverse effect on our business, financial condition and results of operations.

Current report

Our results of operations and financial conditions may be adversely affected by the financial soundness of our customers, distributors, and suppliers.

Current report

Our operational results and financial condition are closely linked to the financial health of our customers, distributors, and suppliers. If any of these parties experience a deterioration in their financial performance or encounter difficulties with scheduled payments or credit, it could have several adverse effects on our business.

Current report

For instance, if our customers are unable to pay or delay payment on accounts receivable, this would negatively impact our cash flow. Similarly, if our suppliers face financial challenges, they may restrict credit, impose more stringent payment terms, reduce or cease production of essential components, or even stop operations entirely. Such disruptions could directly affect our ability to procure necessary materials and maintain consistent product supply. The combined effect of these potential challenges could significantly influence our business, financial condition and results of operations.

Previous report

We have a history of operating losses and may not achieve or maintain profitability and positive cash flow.

Previous report

We have incurred net losses since we began operations in 1994, including net losses of $15.1 million during the first nine months of fiscal year 2025 and $20.8 million during the same nine-month period in fiscal year 2024. As of January 31, 2025, we had an accumulated deficit of $322.5 million.

Previous report

We do not know whether we will be able to successfully commercialize our products and solutions, or whether we can achieve profitability. There is significant uncertainty about our ability to successfully commercialize our products and solutions in our targeted markets. Even if we do achieve commercialization of our products and solutions and become profitable, we may not be able to achieve or, if achieved, sustain profitability on a quarterly or annual basis.

Previous report

We encounter seasonality and revenue variability due to the markets and customers we serve which may impact our ability to attain forecasted revenue, earnings and cash flow targets consistently on a quarterly basis

Previous report

As we continue to grow and scale, we anticipate some quarterly variability in both bookings and revenue recognition going forward. This is a natural outcome of our business model, which involves securing large, complex contracts that may span multiple quarters before revenue is fully recognized. We believe this variability will continue to be offset by our existing “as a Service” solutions that provide recurring revenue, but there may be quarters in our business where this cannot be the case. Our focus remains on long-term execution, delivering on our commitments, and driving sustained value creation. By maintaining this disciplined approach, we believe we will successfully navigate these natural variances as we scale, but there can be no assurance that this will be the case consistently on a quarterly basis. In turn, our ability to attain forecasted revenue, earnings and cash flow targetscould be negatively impacted from time to time.

Previous report

Changes in government trade policies, including the imposition of tariffs, may have a material impact on our results of operations.

Previous report

We evaluate all trade policies that impact us, and we adjust our operational strategies to mitigate the impact of these policies. However, trade policies, including quotas, duties, tariffs, taxes, or other restrictions on the import or export of our products, are subject to change, and we cannot ensure that any mitigation strategies employed will remain available in the future or that we will be able to offset tariff-related costs or maintain competitive pricing of our products. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the global economy, which in turn could have a material adverse effect on our business, operating results, and financial condition.

Previous report

Further tariffs may be imposed on other imports of our products. For example, effective February 4, 2025, the U.S. announced additional tariffs for goods imported into the U.S. from Mexico, Canada, and China beginning in January through April of 2025. We cannot predict what additional actions may ultimately be taken by the U.S. or other governments with respect to tariffs or trade relations and our business may be further impacted by retaliatory trade measures taken by other countries in response to existing or future U.S. tariffs or other measures (e.g., subsidies). We may raise our prices on products subject to such tariffs to share the cost with our customers, which could harm our operating performance or cause our customers to seek alternative suppliers. In addition, we may seek to shift some of our manufacturing to other countries, which could result in additional costs and disruption to our operations. We also sell our products globally and, therefore, our export sales could be impacted by the tariffs. Any material reduction in sales may have a material adverse effect on our results of operations.