Ocean Power Technologies Inc. (OPT) is a marine power equipment, data solutions and service provider. The Company controls the design, manufacture, sales, installation, operations and maintenance of its solutions and services. The main goal is to provide intelligent maritime solutions and services that enable safer and more productive ocean operations for the defense and security, offshore oil and gas, science and research, and offshore wind markets.
OPT develops and commercializes its proprietary systems that generate electricity by harnessing the renewable energy of ocean waves for PowerBuoy® (“PB3”), and solar power for hybrid PowerBuoy® (the “hybrid”). The PB3 uses proprietary technologies that convert the kinetic energy created by the heaving motion of ocean waves into electricity.
As of April 2021, OPT has been issued 66 U.S. patents, of which 41 are active, 14 have expired and 9 were abandoned. Outside of the U.S., OPT has been issued 239 patents across 15 countries.
The Company has 2 main customers, which are Eni S.p.A. and EGP with 22% and 61% of the Company´s revenue respectively. In November 2020, the Company entered into an agreement with the OOC under which the Company will provide engineering and technical services for a new project under the DeepStar Global Technology Consortium Program. In October 2020, the Company entered into an agreement with ACET to conduct a feasibility study for the evaluation of a PB3 power and 5G communications solution in support of the U.S. Navy Naval Postgraduate School’s SLAMR. In March 2020, Eni exercised their option from the March 2018 contract to extend their lease of the PB3 for an additional 18 months.
In March 2020, one of the Company’s customers cancelled a portion of their contract due to the outbreak of COVID-19. In April 2020, the Company declared force majeure on a contract with a different customer and delayed the deployment of its PB3 PowerBouy® in Chile.
In March 2020, the U.S. Government passed into law the Coronavirus Aid, Relief and Economic Security Act and the Company signed a Paycheck Protection Program loan with Santander Bank as the lender for $890,347 in support. The loan is unsecured with the interest rate of 1% and repayable over two years. In February 2021 the Company filed its loan forgiveness application asking for 100% forgiveness of the loan. In June 2021, the Company was informed that its application was approved, and the loan is now fully forgiven.
According to the Annual Financial Report, the Company´s revenues for the fiscal years ended April 30, 2021 and 2020 were approximately $1.2 million and $1.7 million, respectively, representing a decrease of approximately $0.5 million, or 28%, from 2020. The decline in revenue for the full year was mainly attributable to COVID-19 pandemic-related project delays.
The Company has currently two main revenue-producing contracts or customers. These are: ENI in the Adriatic Sea and EGP with the revenue of $271,000 and $740,000 in fiscal 2021, and $173,000 and $1,211,000 in fiscal 2020, respectively.
Premier Oil UK Limited reduced the revenue from 33% or $265.000 in fiscal 2019 to $148,000 in fiscal 2020 and amounted for only $27,000 in fiscal 2021.
Since the inception, the cash flows from customer revenues have not been sufficient to fund the Company´s operations and provide the capital resources for the business. Revenues for the fiscal years ended April 30, 2019, 2018 and 2017 were approximately $0.6 million, $0.5 million and $0.8 million, respectively.
Negotiated contract backlog amounted for $0.2 million at the end of April 2021 compared to $1.0 million at the end of April 2020. However, the amount of contract backlog is not necessarily indicative of future revenue because terminations of present contracts and production delays can provide additional revenue or reduce anticipated revenue.
Cost of revenues for the fiscal years ended April 30, 2021 and 2020 were approximately $2.2 million and $1.8 million, respectively. The increase of approximately $0.4 million, or 26%, over 2020 was mostly due to higher deployment and material costs incurred on the EGP contract in 2021 as compared to the same period in fiscal 2020.
Engineering and product development costs during the fiscal year ended April 30, 2021 were $4.6 million as compared to $4.3 million for fiscal year 2020. The increase of $0.3 million, or 5%, is due to higher spending on product development compared to the same period in fiscal 2020.
OPT has incurred net losses since it began operations in 1994, including net losses of $14.8 million and $10.4 million in fiscal 2021 and 2020. To compare, net losses in fiscal 2019 and 2018 amounted for $12.2 million and $10.2 million, respectively.
In fiscal 2021, OPT incurred a net loss of approximately $14.8 million and used cash in operations of approximately $11.7 million. The Company has continued to make investments in ongoing product development efforts in anticipation of future growth, even if future results of operations involve significant risks and uncertainties. OPT currently has committed sources of equity financing through its At the Market Offering Agreement with Alliance Global Partners and the Aspire Capital financing, but cannot be sure that additional equity or debt financing will be available as needed on acceptable terms.