Ocean Power Technologies (OPT) is a pioneer in renewable wave-energy technology that converts ocean wave energy into electricity. OPT specializes in advanced autonomous, cost-effective, and sound ocean wave-based power generation and management technology. OPT's proprietary PowerBuoy system integrates patented technologies in hydrodynamics, electronics, energy conversion, and computer control systems to extract the natural energy in ocean waves. As a result, this autonomous system turns wave power into reliable, clean, and environmentally beneficial electricity for offshore applications.
Since 2002, government agencies have accounted for a significant portion of the Company´s revenues. These revenues were for the support of development efforts relating to the Company´s technology. Today the Company aims to increase revenues from the sale or lease of its products, and sales of services to support its business operations.
Currently, the Company has two revenue-producing contracts. In May 2016 it entered into a contract with Mitsui Engineering and Shipbuilding (MES), totalling nearly $1.0 million. The contract with MES includes engineering and other services for the PB3 PowerBuoy, which was shipped to Japan in February 2017 and successfully deployed off the coast of Japan in March 2017. The total percentage of MES revenue amounted to 80% in 2017 compared to 14% in 2016. In September 2016, OPT entered into a contract with the U.S. Department of Defense, Office of Naval Research (ONR), totalling approximately $0.2 million to carry out the first phase of a project which focuses on the initial concept design and development of a PowerBuoy. The total percentage of ONR revenue amounted to 20% in 2017 compared to 0% in 2016. In 2017 there were no revenues generated from the EU–Wave Port Project compared to 58% of the total revenues in 2016.
Production contracts have been with a small number of customers under to fund the costs of operational efforts to develop and improve technology, validate the product through ocean and laboratory testing and business development activities with potential commercial customers. Therefore, the Company´s goal in the future is to increase revenues from the lease or sale of its services.
Two new collaboration agreements were signed in 2017. One is a joint marketing agreement with Sonalysts, an engineering consulting firm which will combine the OPT´s technology with their systems integration expertise to address specific requirements of customers in the defence and oil & gas industries. A second collaboration is a development and marketing agreement with HAI Technologies for opportunities related to offshore oil and gas subsea chemical injection systems.
According to the Annual Financial Report, the Company generated revenues of $0.8 million and, despite a drastic decrease in revenues of 83% during 2016, the Company managed to achieve an increase in revenues of almost 20% during 2017. The revenues were $0.7 million in 2016 and $4.1 million in 2015. The increase of approximately $0.1 million or 20% over 2017 was attributable to the MES agreement and $0.2 million attributable to the ONR contract.
Cost of revenues consisting of material, labour and manufacturing expenses incurred, were $0.9 million in 2017 and $0.7 million in 2016. The increase of $0.2 million, or 40%, over 2017 was due to increased indirect costs in connection with the MES and ONR projects, which resulted in a gross loss for 2017.
Product development costs consisting of personnel-related costs and the costs of products, materials and outside services were $5.0 million in 2017 compared to $7.1 million in 2016. The decrease of $2.1 million, or 29%, is attributable to the completion of utility-scale projects and a decision not to continue these projects.
In 2017 the Company experienced substantial losses from its operations. This caused an accumulated deficit of $187.4 million at the end of 2017, compared to $177.9 million at the end of 2016. The net loss in 2017 amounted to $9.49 million in 2017 and reduced by 27% from $13.08 million in 2016.
Total cash and cash equivalents were $8.9 million in 2017, compared to $7.1 million in 2016. The Company believes that it will be able to finance its operations until the end of July 2018.
At the end of 2017 the Company held 63 U.S. patents, of which 49 were active and 14 had expired. Outside the U.S. the Company issued 169 patents.
The Company has been funding its business operation through sales of its securities, and expects to generate sufficient revenues and cash flow to fund its business. Over the next several years the Company hopes to fund the majority of its product development with sources from commercial relationships, including cost-sharing agreements. If the Company, however, is not successful in its efforts to raise additional capital, it cannot guarantee to be able to increase revenues and cash flow to a level which would support business operations and provide sufficient funds to pay the Company´s obligations and continue as a going concern.