Ocean Power Technologies, Inc.

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our Annual Report on Form 10-K for the year ended April 30, 2025 and set forth below in this Quarterly Report on Form 10-Q. These risk factors describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner. Except as noted below, there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K filed with the SEC on July 24, 2025.

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.

The convertible notes that we issued in May and October 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.

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 issued an aggregate of $16.5 million in convertible notes to investors in May and October 2025 and have the option to issue up to an additional $8.5 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.

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.

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.

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

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.

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

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.

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

As of October 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.

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

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.

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

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.

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.