Ocean Power Technologies, Inc.

Current report

Our ability to adopt and use artificial intelligence could have a material impact on our business.

Current report

The development, adoption and use of artificial intelligence (“AI”) technologies are rapidly transforming our industry, enabling faster data analysis and automation through machine learning and predictive modeling. Many of our competitors are investing heavily in AI-driven capabilities to enhance customer acquisition, personalization, pricing optimization, supply chain efficiency, product development, and marketing effectiveness. If we are unable to adopt and deploy AI effectively as quickly as our competitors, it may cause us to be relatively less productive or innovative, adversely impacting our competitiveness, our ability to effectively execute our strategic transformation and requiring additional investments that increase our costs. Laws and regulations regarding AI are rapidly evolving as well, including in the areas of data privacy, cybersecurity, intellectual property, and data protections. Compliance with new or changing laws, regulations, or industry standards relating to AI may impose significant operational and financial burdens and may limit our ability to develop, deploy, or use AI in our business.

Current report

There are doubts about our ability to continue as a going concern.

Current report

Our current cash balance may not be sufficient to fund our planned expenditures through twelve months from the filing date of this Form 10-Q. These conditions raise substantial doubt about our ability to continue as a going concern. The ability to continue as a going concern is dependent upon our operations in the future and/or obtaining the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The accompanying consolidated financial statements have been prepared on a basis which assumes we are a going concern and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from any uncertainty related to our ability to continue as a going concern. Such adjustments could be material. There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources, such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations, or to raise capital from external sources would have a material adverse effect on its business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on our existing stockholders.

Previous 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.

Previous report

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.

Previous 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.

Previous report

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.

Previous 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.

Previous 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.

Previous report

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

Previous 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.

Previous report

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

Previous 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.

Previous report

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

Previous 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.

Previous report

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

Previous 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.

Previous 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.