0001378140 false --04-30 2022 Q2
0001378140 2021-05-01 2021-10-31 0001378140 2021-12-14 0001378140
2021-10-31 0001378140 2021-04-30 0001378140 2021-08-01 2021-10-31
0001378140 2020-08-01 2020-10-31 0001378140 2020-05-01 2020-10-31
0001378140 us-gaap:CommonStockMember 2021-04-30 0001378140
us-gaap:TreasuryStockMember 2021-04-30 0001378140
us-gaap:AdditionalPaidInCapitalMember 2021-04-30 0001378140
us-gaap:RetainedEarningsMember 2021-04-30 0001378140
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-30
0001378140 us-gaap:CommonStockMember 2021-05-01 2021-10-31
0001378140 us-gaap:TreasuryStockMember 2021-05-01 2021-10-31
0001378140 us-gaap:AdditionalPaidInCapitalMember 2021-05-01
2021-10-31 0001378140 us-gaap:RetainedEarningsMember 2021-05-01
2021-10-31 0001378140
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-05-01
2021-10-31 0001378140 us-gaap:CommonStockMember 2021-10-31
0001378140 us-gaap:TreasuryStockMember 2021-10-31 0001378140
us-gaap:AdditionalPaidInCapitalMember 2021-10-31 0001378140
us-gaap:RetainedEarningsMember 2021-10-31 0001378140
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-10-31
0001378140 us-gaap:CommonStockMember 2020-04-30 0001378140
us-gaap:TreasuryStockMember 2020-04-30 0001378140
us-gaap:AdditionalPaidInCapitalMember 2020-04-30 0001378140
us-gaap:RetainedEarningsMember 2020-04-30 0001378140
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-30
0001378140 2020-04-30 0001378140 us-gaap:CommonStockMember
2020-05-01 2020-10-31 0001378140 us-gaap:TreasuryStockMember
2020-05-01 2020-10-31 0001378140
us-gaap:AdditionalPaidInCapitalMember 2020-05-01 2020-10-31
0001378140 us-gaap:RetainedEarningsMember 2020-05-01 2020-10-31
0001378140 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-05-01 2020-10-31 0001378140 us-gaap:CommonStockMember
2020-10-31 0001378140 us-gaap:TreasuryStockMember 2020-10-31
0001378140 us-gaap:AdditionalPaidInCapitalMember 2020-10-31
0001378140 us-gaap:RetainedEarningsMember 2020-10-31 0001378140
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-10-31
0001378140 2020-10-31 0001378140 us-gaap:CommonStockMember
2021-07-31 0001378140 us-gaap:TreasuryStockMember 2021-07-31
0001378140 us-gaap:AdditionalPaidInCapitalMember 2021-07-31
0001378140 us-gaap:RetainedEarningsMember 2021-07-31 0001378140
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-31
0001378140 2021-07-31 0001378140 us-gaap:CommonStockMember
2021-08-01 2021-10-31 0001378140 us-gaap:TreasuryStockMember
2021-08-01 2021-10-31 0001378140
us-gaap:AdditionalPaidInCapitalMember 2021-08-01 2021-10-31
0001378140 us-gaap:RetainedEarningsMember 2021-08-01 2021-10-31
0001378140 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2021-08-01 2021-10-31 0001378140 us-gaap:CommonStockMember
2020-07-31 0001378140 us-gaap:TreasuryStockMember 2020-07-31
0001378140 us-gaap:AdditionalPaidInCapitalMember 2020-07-31
0001378140 us-gaap:RetainedEarningsMember 2020-07-31 0001378140
us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-31
0001378140 2020-07-31 0001378140 us-gaap:CommonStockMember
2020-08-01 2020-10-31 0001378140 us-gaap:TreasuryStockMember
2020-08-01 2020-10-31 0001378140
us-gaap:AdditionalPaidInCapitalMember 2020-08-01 2020-10-31
0001378140 us-gaap:RetainedEarningsMember 2020-08-01 2020-10-31
0001378140 us-gaap:AccumulatedOtherComprehensiveIncomeMember
2020-08-01 2020-10-31 0001378140 2020-05-01 2021-04-30 0001378140
OPTT:TwoThousandNinteenATMFacilityMember
OPTT:AGPAllianceGlobalPartnersMember 2019-01-06 2019-01-07
0001378140 OPTT:TwoThousandNinteenATMFacilityMember
OPTT:AGPAllianceGlobalPartnersMember 2019-01-07 0001378140
OPTT:AGPAllianceGlobalPartnersMember 2019-01-06 2019-01-07
0001378140 OPTT:AGPAllianceGlobalPartnersMember 2019-07-01
0001378140 2020-11-20 0001378140
OPTT:TwoThousandTwentyATMFacilityMember
OPTT:AGPAllianceGlobalPartnersMember 2020-11-18 2020-11-20
0001378140 OPTT:TwoThousandTwentyATMFacilityMember
OPTT:AGPAllianceGlobalPartnersMember 2021-05-01 2021-10-31
0001378140 OPTT:TwoThousandTwentyATMFacilityMember
OPTT:AGPAllianceGlobalPartnersMember 2021-10-31 0001378140
OPTT:StockPurchaseAgreementMember OPTT:AspireCapitalFundLLCMember
srt:MaximumMember 2019-10-23 2019-10-24 0001378140
OPTT:StockPurchaseAgreementMember OPTT:AspireCapitalFundLLCMember
2020-09-14 2020-09-18 0001378140 OPTT:StockPurchaseAgreementMember
OPTT:AspireCapitalFundLLCMember 2020-09-18 0001378140
OPTT:StockPurchaseAgreementOneMember
OPTT:AspireCapitalFundLLCMember 2020-05-01 2021-04-30 0001378140
OPTT:StockPurchaseAgreementOneMember
OPTT:AspireCapitalFundLLCMember 2021-04-30 0001378140
OPTT:StockPurchaseAgreementMember OPTT:AspireCapitalFundLLCMember
2020-12-22 2020-12-23 0001378140 OPTT:StockPurchaseAgreementMember
OPTT:AspireCapitalFundLLCMember 2021-07-30 2021-07-31 0001378140
OPTT:StockPurchaseAgreementMember OPTT:AspireCapitalFundLLCMember
2021-07-31 0001378140 OPTT:StockPurchaseAgreementMember
OPTT:AspireCapitalFundLLCMember 2021-10-30 2021-10-31 0001378140
OPTT:CheckingAndSavingsAccountsMember 2021-10-31 0001378140
OPTT:CheckingAndSavingsAccountsMember 2021-04-30 0001378140
us-gaap:MoneyMarketFundsMember 2021-10-31 0001378140
us-gaap:MoneyMarketFundsMember 2021-04-30 0001378140
OPTT:RestrictedCashAndSecurityAgreementsMember
OPTT:SantanderBankMember us-gaap:LetterOfCreditMember 2021-10-31
0001378140 OPTT:RestrictedCashAndSecurityAgreementsMember
OPTT:SantanderBankMember OPTT:LetterOneMember 2021-10-31 0001378140
OPTT:RestrictedCashAndSecurityAgreementsMember
OPTT:SantanderBankMember OPTT:LetterTwoMember 2021-10-31 0001378140
OPTT:SantanderBankMember OPTT:LetterTwoMember
OPTT:AugustTwentyTwentyMember 2020-08-31 0001378140
OPTT:SantanderBankMember OPTT:LetterTwoMember 2021-10-31 0001378140
OPTT:SantanderBankMember 2021-10-31 0001378140
OPTT:ForeignFinancialInstitutionsMember 2021-10-31 0001378140
us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:EniSPAMember
2021-08-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:EniSPAMember
2020-08-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:EniSPAMember
2021-05-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:EniSPAMember
2020-05-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember
OPTT:DepartmentOfEnergyMember 2021-08-01 2021-10-31 0001378140
us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember
OPTT:DepartmentOfEnergyMember 2020-08-01 2020-10-31 0001378140
us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember
OPTT:DepartmentOfEnergyMember 2021-05-01 2021-10-31 0001378140
us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember
OPTT:DepartmentOfEnergyMember 2020-05-01 2020-10-31 0001378140
us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:EGPMember 2021-08-01
2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:EGPMember 2020-08-01
2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:EGPMember 2021-05-01
2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:EGPMember 2020-05-01
2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:ClarkHillMember
2021-08-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:ClarkHillMember
2020-08-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:ClarkHillMember
2021-05-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:ClarkHillMember
2020-05-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:MatthewsMember
2021-08-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:MatthewsMember
2020-08-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:MatthewsMember
2021-05-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:MatthewsMember
2020-05-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:ValarisMember
2021-08-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:ValarisMember
2020-08-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:ValarisMember
2021-05-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:ValarisMember
2020-05-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:OtherMember 2021-08-01
2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:OtherMember 2020-08-01
2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:OtherMember 2021-05-01
2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:OtherMember 2020-05-01
2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:CustomerMember
2021-08-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:CustomerMember
2020-08-01 2020-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:CustomerMember
2021-05-01 2021-10-31 0001378140 us-gaap:SalesRevenueNetMember
us-gaap:CustomerConcentrationRiskMember OPTT:CustomerMember
2020-05-01 2020-10-31 0001378140
OPTT:EngineeringAndProductDevelopmentMember 2021-08-01 2021-10-31
0001378140 OPTT:EngineeringAndProductDevelopmentMember 2020-08-01
2020-10-31 0001378140 OPTT:EngineeringAndProductDevelopmentMember
2021-05-01 2021-10-31 0001378140
OPTT:EngineeringAndProductDevelopmentMember 2020-05-01 2020-10-31
0001378140 us-gaap:SellingGeneralAndAdministrativeExpensesMember
2021-08-01 2021-10-31 0001378140
us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-08-01
2020-10-31 0001378140
us-gaap:SellingGeneralAndAdministrativeExpensesMember 2021-05-01
2021-10-31 0001378140
us-gaap:SellingGeneralAndAdministrativeExpensesMember 2020-05-01
2020-10-31 0001378140 us-gaap:EquipmentMember 2021-10-31 0001378140
us-gaap:EquipmentMember 2021-04-30 0001378140
OPTT:ComputerEquipmentAndSoftwareMember 2021-10-31 0001378140
OPTT:ComputerEquipmentAndSoftwareMember 2021-04-30 0001378140
OPTT:OfficeFurnitureAndEquipmentMember 2021-10-31 0001378140
OPTT:OfficeFurnitureAndEquipmentMember 2021-04-30 0001378140
us-gaap:LeaseholdImprovementsMember 2021-10-31 0001378140
us-gaap:LeaseholdImprovementsMember 2021-04-30 0001378140
us-gaap:ConstructionInProgressMember 2021-10-31 0001378140
us-gaap:ConstructionInProgressMember 2021-04-30 0001378140
OPTT:MonroeTownshipMember 2021-05-01 2021-10-31 0001378140
OPTT:MonroeTownshipMember 2021-10-31 0001378140
OPTT:ThreeDentAcquisitionMember 2021-10-31 0001378140
OPTT:ThreeDentAcquisitionMember 2021-05-01 2021-10-31 0001378140
OPTT:JunePurchaseAgreementMember 2016-06-01 2016-06-02 0001378140
OPTT:JunePurchaseAgreementMember 2016-06-02 0001378140
OPTT:JunePurchaseAgreementMember 2021-10-31 0001378140
OPTT:SecondAmendedPurchaseAgreementMember 2016-07-21 2016-07-22
0001378140 OPTT:SecondAmendedPurchaseAgreementMember 2016-07-22
0001378140 OPTT:SecondAmendedPurchaseAgreementMember 2021-10-31
0001378140 2019-04-07 2019-04-08 0001378140
OPTT:PreFundedWarrantsMember 2019-04-08 0001378140
OPTT:CommonWarrantsMember 2019-04-08 0001378140
OPTT:PaycheckProtectionProgramMember 2020-05-01 2020-05-03
0001378140 OPTT:PaycheckProtectionProgramMember 2020-05-03
0001378140 OPTT:PaycheckProtectionProgramMember 2020-05-02
2020-05-03 0001378140 OPTT:PaycheckProtectionProgramMember
2021-05-01 2021-10-31 0001378140
OPTT:TwoThousandAndFifteenOmnibusIncentivePlanMember 2015-12-31
0001378140 OPTT:TwoThousandAndFifteenOmnibusIncentivePlanMember
2021-10-31 0001378140
OPTT:TwoThousandAndEighteenInducementPlanMember 2018-01-18
0001378140 OPTT:TwoThousandAndEighteenInducementPlanMember
2021-10-31 0001378140 OPTT:StockIncentivePlanMember 2021-04-30
0001378140 OPTT:StockIncentivePlanMember 2021-05-01 2021-10-31
0001378140 OPTT:StockIncentivePlanMember 2021-10-31 0001378140
us-gaap:EmployeeStockOptionMember 2021-10-31 0001378140
OPTT:EmployeeStockOptionOneMember 2021-10-31 0001378140
us-gaap:EmployeeStockOptionMember 2021-05-01 2021-10-31 0001378140
us-gaap:EmployeeStockOptionMember 2020-05-01 2020-10-31 0001378140
OPTT:NonVestedStockMember 2021-10-31 0001378140
OPTT:NonVestedStockMember 2021-05-01 2021-10-31 0001378140
OPTT:ThreeDentAcquisitionMember 2021-02-01 0001378140
OPTT:ThreeDentAcquisitionMember 2021-01-28 2021-02-01 0001378140
OPTT:PerformancceBasedStockOptionsMember OPTT:TwoExecutivesMember
us-gaap:EmployeeStockOptionMember 2020-01-01 2020-01-31 0001378140
OPTT:PerformancceBasedStockOptionsMember OPTT:TwoExecutivesMember
us-gaap:EmployeeStockOptionMember 2021-05-01 2021-10-31 0001378140
OPTT:PerformancceBasedStockOptionsMember 2021-05-01 2021-10-31
0001378140 OPTT:PerformancceBasedStockOptionsMember 2021-12-01
2021-12-31 0001378140 OPTT:PerformancceBasedStockOptionsMember
OPTT:EmployeesAndExecutivesMember us-gaap:EmployeeStockOptionMember
2021-01-01 2021-01-31 0001378140
OPTT:PerformancceBasedStockOptionsMember
OPTT:EmployeesAndExecutivesMember us-gaap:EmployeeStockOptionMember
2021-05-01 2021-10-31 0001378140 OPTT:PerformanceStockOptionsMember
2021-05-01 2021-10-31 0001378140 OPTT:PerformanceStockOptionsMember
2021-04-30 0001378140 OPTT:PerformanceStockOptionsMember 2021-10-31
0001378140 us-gaap:PerformanceSharesMember 2021-10-31 0001378140
us-gaap:PerformanceSharesMember 2021-05-01 2021-10-31 0001378140
us-gaap:PerformanceSharesMember 2020-05-01 2020-10-31 0001378140
OPTT:NonVestedRestrictedStockMember 2021-04-30 0001378140
OPTT:NonVestedRestrictedStockMember 2021-05-01 2021-10-31
0001378140 OPTT:NonVestedRestrictedStockMember 2021-10-31
0001378140 us-gaap:RestrictedStockMember 2021-05-01 2021-10-31
0001378140 us-gaap:RestrictedStockMember 2020-05-01 2020-10-31
0001378140 us-gaap:RestrictedStockMember 2021-10-31 0001378140
us-gaap:EmployeeStockOptionMember OPTT:EmployeeMember
OPTT:SubjectToServiceBasedVestingRequirementsMember 2021-05-01
2021-10-31 0001378140 us-gaap:StockOptionMember OPTT:EmployeeMember
OPTT:SubjectToServiceBasedVestingRequirementsMember 2021-05-01
2021-10-31 0001378140 us-gaap:StockOptionMember OPTT:EmployeeMember
OPTT:SubjectToServiceBasedVestingRequirementsMember 2020-05-01
2020-10-31 0001378140 us-gaap:EmployeeStockOptionMember
OPTT:EmployeeMember
OPTT:SubjectToServiceBasedVestingRequirementsMember 2021-10-31
0001378140 srt:MinimumMember 2021-05-01 2021-10-31 0001378140
srt:MaximumMember 2021-05-01 2021-10-31 0001378140
srt:MinimumMember 2020-05-01 2020-10-31 0001378140
srt:MaximumMember 2020-05-01 2020-10-31 0001378140
OPTT:CharlesFDunleavyMember 2018-08-27 2018-08-28 0001378140
OPTT:CharlesFDunleavyMember 2021-05-23 2021-05-24 0001378140
us-gaap:SellingGeneralAndAdministrativeExpensesMember
us-gaap:TaxAuthoritySpainMember 2020-10-31 0001378140
us-gaap:SellingGeneralAndAdministrativeExpensesMember
us-gaap:TaxAuthoritySpainMember 2021-01-25 0001378140
OPTT:NJNOLMember 2020-05-01 2021-04-30 0001378140
us-gaap:SubsequentEventMember srt:SubsidiariesMember
OPTT:MarineAdvancedRoboticsIncMember 2021-11-14 2021-11-15
0001378140 us-gaap:SubsequentEventMember srt:SubsidiariesMember
OPTT:MarineAdvancedRoboticsIncMember 2021-11-15 iso4217:USD
xbrli:shares iso4217:USD xbrli:shares xbrli:pure iso4217:EUR
OPTT:Integer
UNITED
STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form
10-Q
(Mark
One)
|
☒ |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For the
Quarterly Period Ended
October 31, 2021
Or
|
☐ |
TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 |
For the
Transition Period From ______to______
Commission file
number:
001-33417
OCEAN POWER TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
|
Delaware |
|
22-2535818 |
|
(State or
Other Jurisdiction
of
Incorporation or Organization)
|
|
(I.R.S.
Employer
Identification
No.)
|
28 ENGELHARD DRIVE,
SUITE B,
MONROE TOWNSHIP,
NJ
08831
(Address
of Principal Executive Offices, Including Zip Code)
(609)
730-0400
(Registrant’s
Telephone Number, Including Area Code)
Securities
registered pursuant to Section 12(b) of the Act:
|
Title of
each class |
|
Trading
Symbol(s) |
|
Name of each
exchange on which registered |
|
Common Stock $0.001 par value |
|
OPTT |
|
NYSE American |
Indicate by
check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ☒ No ☐
Indicate by
check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Yes ☒ No ☐
Indicate by
check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of
“large accelerated filer,” “accelerated filer,” “smaller reporting
company” and “emerging growth company” in Rule 12b-2 of the
Exchange Act. (Check one):
|
Large
accelerated filer ☐ |
|
Accelerated
filer ☐ |
|
Non-accelerated filer
☐ |
|
Smaller
reporting company
☒ |
| |
|
|
|
|
|
|
|
Emerging
growth company
☐
|
|
|
|
|
|
|
Indicate by
check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes ☐
No ☒
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
As of
December 14, 2021, the number of outstanding shares of common stock
of the registrant was
55,873,173.
OCEAN POWER TECHNOLOGIES,
INC.
INDEX TO
FORM 10-Q
Special
Note Regarding Forward-Looking Statements
We have made
statements in this Quarterly Report on Form 10-Q that are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking
statements convey our current expectations or forecasts of future
events. Forward-looking statements include statements regarding our
future financial position, business strategy, pending, threatened,
and current litigation, liquidity, budgets, projected costs, plans
and objectives of management for future operations. The words
“may,” “continue,” “estimate,” “intend,” “plan,” “will,” “believe,”
“project,” “expect,” “anticipate”, and similar expressions may
identify forward-looking statements, but the absence of these words
does not necessarily mean that a statement is not
forward-looking.
The
forward-looking statements contained in or incorporated by
reference are largely based on our expectations, which reflect
estimates and assumptions made by our management. These estimates
and assumptions reflect our best judgment based on currently known
market conditions and other factors. Although we believe such
estimates and assumptions to be reasonable, they are inherently
uncertain and involve several risks and uncertainties that are
beyond our control, including:
|
|
● |
our ability
to commercialize our products, and achieve and sustain
profitability; |
| |
|
|
| |
● |
our
continued development of our proprietary technologies, and expected
continued use of cash from operating activities unless or until we
achieve positive cash flow from the commercialization of our
products and services; |
| |
|
|
| |
● |
our ability
to obtain additional funding, as and if needed which will be
subject to several factors, including market conditions, and our
operating performance; |
| |
|
|
| |
● |
the impact
of the COVID-19 pandemic and its variants on our business,
operations, customers, suppliers and manufacturers and
personnel; |
| |
|
|
| |
● |
future
acquisitions, which may use significant resources, may be
unsuccessful or may expose us to unforeseen liabilities, as well as
our ability to integrate such acquisitions into our
operations; |
| |
|
|
| |
● |
our
estimates regarding expenses, future revenues, and capital
requirements; |
| |
|
|
| |
● |
the adequacy
of our cash balances and our need for additional
financings; |
| |
|
|
| |
● |
our ability
to develop and manufacture commercially viable
products; |
| |
|
|
| |
● |
our ability
to successfully develop and market new products; |
| |
|
|
| |
● |
that we will
be successful in our efforts to commercialize our products or the
timetable upon which commercialization can be achieved, if at
all; |
| |
|
|
| |
● |
our ability
to identify and penetrate markets for our products, services, and
solutions; |
| |
|
|
| |
● |
our ability
to implement our commercialization strategy as planned, or at
all; |
| |
|
|
| |
● |
our
relationships with our strategic partners may not be successful and
we may not be successful in establishing additional
relationships; |
| |
|
|
| |
● |
our ability
to maintain the listing of our common stock on the NYSE
American; |
| |
|
|
| |
● |
the
reliability of our technology, products and solutions; |
| |
|
|
| |
● |
our ability
to improve the power output, survivability and reliability of our
products; |
| |
|
|
| |
● |
the impact
of pending and threatened litigation on our business, financial
condition and liquidity; |
| |
|
|
| |
● |
changes in
current legislation, regulations and economic conditions that
affect the demand for renewable energy; |
| |
|
|
| |
● |
our ability
to compete effectively in our target markets; |
| |
|
|
| |
● |
our limited
operating history and history of operating losses; |
| |
|
|
| |
● |
our sales
and marketing capabilities and strategy in the United States and
internationally; and |
| |
|
|
| |
● |
our ability
to protect our intellectual property portfolio. |
Any or all
of our forward-looking statements in this report may turn out to be
inaccurate. We have based these forward-looking statements largely
on our current expectations and projections about future events and
financial trends that we believe may affect our financial
condition, results of operations, business strategy and financial
needs. They may be affected by inaccurate assumptions we might make
or unknown risks and uncertainties, including the risks,
uncertainties and assumptions described in Item 1A “Risk Factors”
of our Annual Report on Form 10-K for the year ended April 30,
2021, and in our subsequent reports under the Exchange Act. In
light of these risks, uncertainties and assumptions, the
forward-looking events and circumstances discussed in this report
may not occur as contemplated and actual results could differ
materially from those anticipated or implied by the forward-looking
statements.
Many of
these factors are beyond our ability to control or predict. These
factors are not intended to represent a complete list of the
general or specific factors that may affect us. You should not
unduly rely on these forward-looking statements, which speak only
as of the date of this filing. Unless required by law, we undertake
no obligation to publicly update or revise any forward-looking
statements to reflect new information or future events or
otherwise.
PART I — FINANCIAL
INFORMATION
Item 1. Financial
Statements
Ocean Power
Technologies, Inc. and Subsidiaries
Consolidated Balance
Sheets
(in
$000’s, except share data)
See
accompanying notes to unaudited consolidated financial
statements.
Ocean Power
Technologies, Inc. and Subsidiaries
Consolidated
Statements of Operations
(in
$000’s, except per share data)
Unaudited
See
accompanying notes to unaudited consolidated financial
statements.
Ocean Power
Technologies, Inc. and Subsidiaries
Consolidated
Statements of Comprehensive Loss
(in
$000’s)
Unaudited
See
accompanying notes to unaudited consolidated financial
statements.
Ocean Power
Technologies, Inc. and Subsidiaries
Consolidated
Statement of Shareholders’ Equity
(in
$000’s, except share data)
Unaudited
|
|
|
Six Months
Ended October 31, 2020 |
|
|
|
|
Common
Shares |
|
|
Treasury
Shares |
|
|
Additional
Paid-In
|
|
|
Accumulated |
|
|
Accumulated Other
Comprehensive |
|
|
Total
Shareholders’ |
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at
May 1, 2020 |
|
|
12,939,420 |
|
|
$ |
13 |
|
|
|
(4,251 |
) |
|
$ |
(302 |
) |
|
$ |
231,101 |
|
|
$ |
(220,136 |
) |
|
$ |
(183 |
) |
|
|
10,492 |
|
|
Net
loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,409 |
) |
|
|
— |
|
|
|
(6,409 |
) |
|
Share-based
compensation |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
223 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
223 |
|
|
Issuance of
common stock- Aspire financing, net of issuance costs |
|
|
5,525,000 |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
3,236 |
|
|
|
— |
|
|
|
— |
|
|
|
3,241 |
|
|
Issuance of
common stock- AGP At The Market offering, net of issuance
costs |
|
|
5,689,134 |
|
|
$ |
6 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
6,088 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
6,094 |
|
|
Other
comprehensive gain |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
8 |
|
|
|
8 |
|
|
Balances at
October 31, 2020 |
|
|
24,153,554 |
|
|
$ |
24 |
|
|
|
(4,251 |
) |
|
$ |
(302 |
) |
|
$ |
240,648 |
|
|
$ |
(226,545 |
) |
|
$ |
(175 |
) |
|
$ |
13,650 |
|
|
|
|
Three Months
Ended October 31, 2021 |
|
|
|
Common
Shares |
|
Treasury
Shares |
|
Additional
Paid-In
|
|
Accumulated |
|
Accumulated
Other
Comprehensive
|
|
Total
Shareholders’
|
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
Capital |
|
Deficit |
|
Loss |
|
Equity |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at
August 1, 2021 |
|
|
52,479,051 |
|
|
$ |
52 |
|
|
|
(21,040 |
) |
|
$ |
(338 |
) |
|
$ |
316,211 |
|
|
$ |
(237,975 |
) |
|
$ |
(185 |
) |
|
|
77,765 |
|
|
Net
loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(5,171 |
) |
|
|
— |
|
|
|
(5,171 |
) |
|
Share-based
compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
157 |
|
|
|
— |
|
|
|
— |
|
|
|
157 |
|
|
Proceeds
from stock options exercises |
|
|
20,000 |
|
|
|
20 |
|
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
|
— |
|
|
|
— |
|
|
|
21 |
|
|
Other
comprehensive gain/(loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(45 |
) |
|
|
46 |
|
|
|
1 |
|
|
Balance,
October 31, 2021 |
|
|
52,499,051 |
|
|
|
52 |
|
|
|
(21,040 |
) |
|
|
(338 |
) |
|
|
316,389 |
|
|
|
(243,191 |
) |
|
|
(139 |
) |
|
|
72,773 |
|
|
|
|
Three Months
Ended October 31, 2020 |
|
|
|
|
Common
Shares |
|
|
Treasury
Shares |
|
|
Additional
Paid-In
|
|
|
Accumulated |
|
|
Accumulated Other
Comprehensive |
|
|
Total
Shareholders’ |
|
|
|
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Loss |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at
August 1, 2020 |
|
|
18,624,816 |
|
|
$ |
19 |
|
|
|
(4,251 |
) |
|
$ |
(302 |
) |
|
$ |
234,089 |
|
|
$ |
(223,521 |
) |
|
$ |
(168 |
) |
|
$ |
10,117 |
|
| Beginning
balance |
|
|
18,624,816 |
|
|
$ |
19 |
|
|
|
(4,251 |
) |
|
$ |
(302 |
) |
|
$ |
234,089 |
|
|
$ |
(223,521 |
) |
|
$ |
(168 |
) |
|
$ |
10,117 |
|
|
Net
loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,024 |
) |
|
|
— |
|
|
|
(3,024 |
) |
|
Share-based
compensation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
107 |
|
|
|
— |
|
|
|
— |
|
|
|
107 |
|
|
Issuance of
common stock- Aspire financing, net of issuance costs |
|
|
500,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
606 |
|
|
|
— |
|
|
|
— |
|
|
|
606 |
|
|
Issuance of
common stock- AGP At The Market offering, net of issuance
costs |
|
|
5,028,738 |
|
|
|
5 |
|
|
|
— |
|
|
|
— |
|
|
|
5,846 |
|
|
|
— |
|
|
|
— |
|
|
|
5,851 |
|
|
Other
comprehensive gain |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7 |
) |
|
|
(7 |
) |
|
Other
comprehensive gain/(loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7 |
) |
|
|
(7 |
) |
|
Balances at
October 31, 2020 |
|
|
24,153,554 |
|
|
$ |
24 |
|
|
|
(4,251 |
) |
|
$ |
(302 |
) |
|
$ |
240,648 |
|
|
$ |
(226,545 |
) |
|
$ |
(175 |
) |
|
$ |
13,650 |
|
|
Ending
balance |
|
|
24,153,554 |
|
|
$ |
24 |
|
|
|
(4,251 |
) |
|
$ |
(302 |
) |
|
$ |
240,648 |
|
|
$ |
(226,545 |
) |
|
$ |
(175 |
) |
|
$ |
13,650 |
|
See
accompanying notes to unaudited consolidated financial
statements.
Ocean Power
Technologies, Inc. and Subsidiaries
Consolidated
Statements of Cash Flows
(in
$000’s)
Unaudited
See
accompanying notes to unaudited consolidated financial
statements.
Ocean Power
Technologies, Inc. and Subsidiaries
Notes to
Unaudited Consolidated Financial Statements
(1)
Background, Basis of
Presentation and Liquidity
(a)
Background
Ocean Power
Technologies, Inc. (the “Company”) was founded in 1984 in New
Jersey, commenced business operations in 1994 and re-incorporated
in Delaware in 2007. We are a complete solutions provider,
controlling the design, manufacturing, sales, installation,
operations and maintenance of our products while working closely
with partners that provide payloads, integration services, and
marine installation capabilities. Our solutions provide distributed
offshore power which is persistent, reliable, and economical along
with power and communications for remote surface and subsea
applications. Historically, funding from government agencies, such
as research and development grants, accounted for a significant
portion of the Company’s revenues. Today our goal is to generate
the majority of our revenue from the sale or lease of products and
solutions, and sales of services to support our business
operations. As we continue to develop and commercialize our
products and services, we expect to have a net decrease in cash due
to the use of cash from operating activities unless and until we
achieve positive cash flow from the commercialization of products,
solutions and services.
(b)
Basis of Presentation
The
accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) and for interim
financial information in accordance with the Securities and
Exchange Commission (“SEC”), instructions to Form 10-Q and Article
10 of Regulation S-X. Accordingly, they do not include all the
information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. The interim operating
results are not necessarily indicative of the results for a full
year or for any other interim period. Further information on
potential factors that could affect the Company’s financial results
can be found in the Company’s Annual Report on Form 10-K for the
year ended April 30, 2021, as filed with the SEC and elsewhere in
this Form 10-Q. Certain items have been reclassified from prior
periods to be consistent with current GAAP
presentations.
(c)
Liquidity
For the six
months ended October 31, 2021, and the fiscal year ended April 30,
2021, the Company incurred net losses of approximately $8.3
million and
$14.8
million,
respectively, and used cash in operations of approximately
$10.4
million and
$11.7
million,
respectively. The Company has continued to make investments in
ongoing product development efforts in anticipation of future
growth, including its recent acquisition of Marine Advanced
Robotics, Inc., as described in Note 19. The Company’s future
results of operations involve significant risks and uncertainties.
Factors that could affect the Company’s future operating results
and cause actual results to vary materially from expectations
include, but are not limited to, performance of its products, its
ability to market and commercialize its products and new products
that it may develop, technology development, scalability of
technology and production, dependence on skills of key personnel,
concentration of customers and suppliers, deployment risks and
integration of acquisitions, pending or threatened litigation, and
the impact of COVID-19 and any variants on its business. The
Company previously obtained equity financing through its At the
Market Offering Agreement (“ATM”) with A.G.P/Alliance Global
Partners (“AGP”) and through its equity line financing with Aspire
Capital, but the Company cannot be sure that additional equity
and/or debt financing will be available to the Company as needed on
acceptable terms, or at all. For fiscal year 2022 to date,
management has not obtained any additional capital financing.
Management believes the Company’s current cash balance of
$72.6
million is
sufficient to fund its planned expenditures through at least
December 2022.
On January
7, 2019, the Company entered into an At the Market Offering
Agreement with AGP (the “2019 ATM Facility”), under which the
Company could issue and sell to or through AGP, acting as agent
and/or principal, shares of the Company’s common stock having an
aggregate offering price of up to $25.0
million.
From inception of the program through its termination on December
8, 2020, under the 2019 ATM Facility, the Company sold and issued
an aggregate of
17,595,472 shares of its common
stock with an aggregate market value of $23.4
million at
an average price of $1.33
per share,
including
12,342,506 shares in fiscal year
2021 with an aggregate market value of $18.7
million at
an average price of $1.51
per share
and paid AGP a sales commission of approximately $0.8
million
related to those shares. The agreement was fully utilized and
terminated on December 8, 2020.
On November
20, 2020, the Company entered into another At the Market Offering
Agreement with AGP (the “2020 ATM Facility”), having capacity up to
$100.0
million. On
December 4, 2020, the Company filed a prospectus with the
Securities and Exchange Commission whereby, the Company could issue
and sell to or through AGP, acting as agent and/or principal,
shares of the Company’s common stock having an aggregate offering
price of up to $50.0
million.
From inception of the 2020 ATM Facility through October 31, 2021,
the Company had sold and issued an aggregate of
17,179,883 shares of its common
stock with an aggregate market value of $50.0
million at
an average price of $2.91
per share
and paid AGP a sales commission of approximately $1.6
million
related to those shares. A prospectus supplement would need to be
filed for the Company to sell an additional amount under the 2020
ATM Facility.
Equity
Line Common Stock Purchase Agreements
On October
24, 2019, the Company entered into a common stock purchase
agreement with Aspire Capital which provided that, subject to
certain terms, conditions and limitations, Aspire Capital was
committed to purchase up to an aggregate of $10.0 million
shares of the Company’s common stock over a 30-month period.
Through September 18, 2020, the Company had sold an aggregate of
6,424,205 shares
of common stock with an aggregate market value of $4.0
million at an average price of $0.63 per share
pursuant to this common stock purchase agreement, including
5,025,000 shares
in fiscal year 2021 with an aggregate market value of $2.9
million at an average price of $0.57 per share.
The agreement was fully utilized and terminated on September 18,
2020.
On September
18, 2020, the Company entered into a new common stock purchase
agreement with Aspire Capital which provided that, subject to
certain terms, conditions and limitations, Aspire Capital was
committed to purchase up to an aggregate of $12.5
million
shares of the Company’s common stock over a 30-month period subject
to a limit of 19.99%
of the outstanding common stock on the date of the agreement if the
price did not exceed a specified price in the agreement. The number
of shares the Company could issue within the 19.99%
limit was 3,722,251
shares
without shareholder approval. Shareholder approval was received at
the Company’s annual meeting of shareholders on December 23, 2020
for the sale of 9,864,706
additional
shares of common stock which exceeds the 19.99% limit of the
outstanding common stock on the date of the agreement. Through
October 31, 2021, the Company had sold an aggregate of
3,722,251 shares of common stock
with an aggregate market value of $11.8
million at
an average price of $3.17
per share
pursuant to this common stock purchase agreement with approximately
$1.0
million
remaining on the facility as of October 31, 2021.
(2)
Summary of Significant
Accounting Policies
(a)
Consolidation
The
accompanying consolidated financial statements include the accounts
of the Company and its majority-owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation.
(b)
Use of
Estimates
The
preparation of the consolidated financial statements requires
management of the Company to make a number of estimates and
assumptions relating to the reported amounts of assets and
liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the
period. Significant items subject to such estimates and assumptions
include, among other items, estimated costs to complete projects
and percentage of completion of customer contracts for purposes of
revenue recognition. Actual results could differ from those
estimates.
(c)
Cash, Cash
Equivalents, Restricted Cash and Security
Agreements
Cash and
Cash Equivalents
The Company
considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents. The Company
invests excess cash in a money market account. The following table
summarizes cash and cash equivalents as of October 31, 2021 and
April 30, 2021:
Schedule
of Cash and Cash Equivalents
|
|
|
October 31,
2021 |
|
|
April 30,
2021 |
|
|
|
|
(in
thousands) |
|
|
Checking and
savings accounts |
|
$ |
713 |
|
|
$ |
1,850 |
|
|
Money market
account |
|
|
71,917 |
|
|
|
81,178 |
|
|
|
|
$ |
72,630 |
|
|
$ |
83,028 |
|
Restricted Cash and
Security Agreements
The Company
has a letter of credit agreement with Santander Bank, N.A.
(“Santander”). Cash of $157,000 is on deposit at Santander and
serves as security for a letter of credit issued by Santander for
the lease of warehouse/office space in Monroe Township, New Jersey.
This agreement cannot be extended beyond July 31, 2025 and is
cancellable at the discretion of Santander.
Santander
also issued two letters of credit to subsidiaries of Enel Green
Power (“EGP”) pursuant to the Company’s contracts with EGP. The
first letter of credit was issued in the amount of $126,000 that
will be released 12 months after the PB3 PowerBuoy®
(“PB3”) is fully deployed. The second letter of credit was issued
in the amount of $645,000 and
was reduced to $323,000 in
August 2020. The second letter of credit will be reduced by
$64,000 once the PB3
is fully deployed and passes final acceptance testing. The
remaining restricted amount of $258,000 will be
released 12 months after the buoy is fully deployed.
The
following table provides a reconciliation of cash, cash equivalents
and restricted cash reported within the Consolidated Balance Sheets
that total to the same amounts shown in the Consolidated Statements
of Cash Flows.
Schedule
of Cash and Cash Equivalents and Restricted Cash
|
|
|
October 31,
2021 |
|
|
April 30,
2021 |
|
|
|
|
(in
thousands) |
|
|
Cash and
cash equivalents |
|
$ |
72,630 |
|
|
$ |
83,028 |
|
|
Restricted
cash- short term |
|
|
384 |
|
|
|
384 |
|
|
Restricted
cash- long term |
|
|
222 |
|
|
|
222 |
|
|
|
|
$ |
73,236 |
|
|
$ |
83,634 |
|
(d)
Concentration of
Credit Risk
Financial
instruments that potentially subject the Company to credit risk
consist principally of accounts receivable and cash and cash
equivalents. The Company believes that its current contracts do not
represent a risk of collectability on its receivables. The Company
invests its excess cash in a money market account and does not
believe that it is exposed to any significant risks related to its
cash and money market accounts. Cash and cash equivalents are also
maintained at foreign financial institutions. Cash and cash
equivalents in foreign financial institutions as of October 31,
2021 was $32,000.
The table
below shows the amount of the Company’s revenues derived from
customers whose revenues accounted for at least 10% of the
Company’s consolidated revenues for at least one of the periods
indicated:
Schedule
of Revenue by Major Customers by Reporting
Segments
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
Three months
ended October 31, |
|
|
Six months
ended October 31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
(in
thousands) |
|
|
(in
thousands) |
|
|
Eni
S.p.A. |
|
$ |
14 |
|
|
$ |
72 |
|
|
$ |
14 |
|
|
$ |
99 |
|
| Department of
Energy |
|
|
81 |
|
|
|
— |
|
|
|
81 |
|
|
|
— |
|
| EGP |
|
|
14 |
|
|
|
42 |
|
|
|
163 |
|
|
|
157 |
|
|
Clark
Hill |
|
|
30 |
|
|
|
— |
|
|
|
37 |
|
|
|
— |
|
| Matthews |
|
|
30 |
|
|
|
— |
|
|
|
30 |
|
|
|
— |
|
| Valaris |
|
|
47 |
|
|
|
— |
|
|
|
135 |
|
|
|
— |
|
|
Other (no
customer over 10%) |
|
|
31 |
|
|
|
4 |
|
|
|
59 |
|
|
|
31 |
|
|
Revenues |
|
|
247 |
|
|
|
118 |
|
|
|
519 |
|
|
|
287 |
|
(e)
Share-Based
Compensation
Costs
resulting from all share-based payment transactions are recognized
in the consolidated financial statements at their fair values. The
following table summarizes share-based compensation related to the
Company’s share-based plans by expense category for the three and
six months ended October 31, 2021 and 2020:
Schedule
of Employee Service Share-based Compensation, Allocation of
Recognized Period Costs
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
Three months
ended October 31, |
|
|
Six months
ended October 31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
(in
thousands) |
|
|
|
|
|
Engineering
and product development |
|
$ |
125 |
|
|
$ |
22 |
|
|
$ |
342 |
|
|
$ |
59 |
|
|
Selling,
general and administrative |
|
|
32 |
|
|
|
85 |
|
|
|
205 |
|
|
|
164 |
|
|
Total
share-based compensation expense |
|
$ |
157 |
|
|
$ |
107 |
|
|
$ |
547 |
|
|
$ |
223 |
|
(f)
Revenue
Recognition
A
performance obligation is the unit of account for revenue
recognition. The Company assesses the goods or services promised in
a contract with a customer and identifies as a performance
obligation either: a) a good or service (or a bundle of goods or
services) that is distinct; or b) a series of distinct goods or
services that are substantially the same and that have the same
pattern of transfer to the customer. A contract may contain a
single or multiple performance obligations. For contracts with
multiple performance obligations, the Company allocates the
contracted transaction price to each performance obligation based
upon the relative standalone selling price, which represents the
price the Company would sell a promised good or service separately
to a customer. The Company determines the standalone selling price
based upon the facts and circumstances of each obligated good or
service. The majority of the Company’s contracts have no observable
standalone selling price since the associated products and services
are customized to customer specifications. As such, the standalone
selling price generally reflects the Company’s forecast of the
total cost to satisfy the performance obligation plus an
appropriate profit margin.
The nature
of the Company’s contracts may give rise to several types of
variable consideration, including unpriced change orders and
liquidated damages and penalties. Variable consideration can also
arise from modifications to the scope of services. Variable
consideration is included in the transaction price to the extent it
is probable that a significant reversal of cumulative revenue
recognized will not occur once the uncertainty associated with the
variable consideration is resolved. Our estimates of variable
consideration and determination of whether to include such amounts
in the transaction price are based largely on our assessment of
legal enforceability, performance, and any other information
(historical, current, and forecasted) that is reasonably available
to us. There was no variable consideration as of October 31, 2021
and 2020. The Company presents shipping and handling costs, that
occur after control of the promised goods or services transfer to
the customer, as fulfillment costs rather than evaluating whether
the shipping and handling activities are promised services to the
customer.
The Company
recognizes revenue when or as it satisfies a performance obligation
by transferring a good or service to a customer, either (1) at a
point in time or (2) over time. A good or service is transferred
when, or as, the customer obtains control. The evaluation of
whether control of each performance obligation is transferred at a
point in time or over time is made at contract inception. Input
measures such as costs incurred or time elapsed are utilized to
assess progress against specific contractual performance
obligations for the Company’s services. The selection of the method
to measure progress towards completion requires judgment and is
based on the nature of the services to be provided. For the
Company, the input method using costs incurred or time elapsed best
represents the measure of progress against the performance
obligations incorporated within the contractual agreements. If
estimated total costs on any contract project a loss, the Company
charges the entire estimated loss to operations in the period the
loss becomes known. The cumulative effect of revisions to revenue,
estimated costs to complete contracts, including penalties,
incentive awards, change orders, claims, anticipated losses, and
others are recorded in the accounting period in which the events
indicating a loss are known and the loss can be reasonably
estimated. These loss projects are re-assessed for each subsequent
reporting period until the project is complete. Such revisions
could occur at any time and the effects may be material.
The
Company’s contracts are either cost plus or fixed price contracts.
Under cost plus contracts, customers are billed for actual expenses
incurred plus an agreed-upon fee. Under cost plus contracts, a
profit or loss on a project is recognized depending on whether
actual costs are more or less than the agreed upon
amount.
The Company
has two types of fixed price contracts, firm fixed price and
cost-sharing. Under firm fixed price contracts, the Company
receives an agreed-upon amount for providing products and services
specified in the contract, and a profit or loss is recognized
depending on whether actual costs are more or less than the agreed
upon amount. Under cost-sharing contracts, the fixed amount agreed
upon with the customer is only intended to fund a portion of the
costs on a specific project. Under cost sharing contracts, an
amount corresponding to the revenue is recorded in cost of
revenues, resulting in gross profit on these contracts of zero. The
Company’s share of the costs is recorded as product development
expense. The Company reports its disaggregation of revenue by
contract type since this method best represents the Company’s
business. For the six-month periods ended October 31, 2021 and
2020, all of the Company’s contracts were classified as firm fixed
price.
As of
October 31, 2021, the Company’s total remaining performance
obligations, also referred to as backlog, totaled $0.3
million. The
Company expects to recognize 100%,
or $0.3
million, of
the remaining performance obligations as revenue over the next
twelve months.
The Company
also enters into lease arrangements for its PB3 with certain
customers. Revenue related to multiple-element arrangements is
allocated to lease and non-lease elements based on their relative
standalone selling prices or expected cost plus a margin approach.
Lease elements generally include a PB3 and components, while
non-lease elements generally include engineering, monitoring and
support services. In the lease arrangement, the customer is
provided an option to extend the lease term or purchase the leased
PB3 at some point during and/or at the end of the lease
term.
Products
and Solutions Leasing
The Company
enters into lease arrangements with certain customers for their
products and solutions. As of October 31, 2021, the Company had one
lease arrangement with a remaining operating lease term of less
than 7 months. Revenue related to multiple-element arrangements is
allocated to lease and non-lease elements based on their relative
standalone selling prices or expected cost plus a margin approach.
Lease elements generally include a PB3 and components, while
non-lease elements generally include engineering, monitoring and
support services. In the lease arrangement, the customer is
provided an option to extend the lease term or purchase the leased
PB3 at some point during and/or at the end of the lease
term.
The Company
classifies leases as either operating or financing in accordance
with the authoritative accounting guidance contained within ASC
Topic 842, “Leases”. At inception of the contract, the
Company evaluates the lease against the lease classification
criteria within ASC Topic 842. If the direct financing or
sales-type classification criteria are met, then the lease is
accounted for as a finance lease. All others are treated as
operating leases.
The Company
recognizes revenue from operating lease arrangements generally on a
straight-line basis over the lease term which is presented in
Revenues in the Consolidated Statements of Operations. The lease
income for the six months ended October 31, 2021 and 2020 was
immaterial.
(g)
Net Loss per Common
Share
Basic and
diluted net loss per common share for all periods presented is
computed by dividing net loss by the weighted average number of
shares of common stock and common stock equivalents outstanding
during the periods. The pre-funded warrants were determined to be
common stock equivalents and have been included in the weighted
average number of shares outstanding for calculation of the basic
earnings per share number. Due to the Company’s net losses,
potentially dilutive securities, consisting of options to purchase
shares of common stock, warrants on common stock and unvested
restricted stock issued to employees and non-employee directors,
were excluded from the diluted loss per common share calculation
due to their anti-dilutive effect.
In computing
diluted net loss per common share on the Consolidated Statements of
Operations, warrants exercisable for common stock, options to
purchase shares of common stock and non-vested restricted stock
issued to employees and non-employee directors, totaling
4,928,474 and
5,540,469 for the six months ended
October 31, 2021 and 2020, respectively, were excluded from each of
the computations as the effect would be anti-dilutive due to the
Company’s net losses.
(h)
Recently Issued
Accounting Standards
In June
2016, the Financial Accounting Standards Board (“FASB”) issued ASU
No. 2016-13, “Financial Instruments - Credit Losses
(Topic 326), Measurement of Credit Losses on Financial
Instruments.” This amendment replaces the incurred loss
impairment methodology in current GAAP with a methodology that
reflects expected credit losses on instruments within its scope,
including trade receivables. This update is intended to provide
financial statement users with more decision-useful information
about the expected credit losses. In November 2019, the FASB issued
No. 2019-10, Financial Instruments—Credit Losses (Topic 326),
Derivatives and Hedging (Topic 815), and Leases (Topic 842),
which deferred the effective date of ASU 2016-13 for Smaller
Reporting Companies for fiscal years beginning after December 15,
2022, including interim periods within those fiscal years. The
Company is currently evaluating the impact the adoption of ASU
2016-13 will have on its consolidated financial
statements.
(3)
Account Receivable and
Contract Assets
The
following provides further details on the balance sheet accounts of
accounts receivable and contract assets from contracts with
customers:
Schedule
of Accounts Receivable, Contract Assets and Contract
Liabilities
|
|
|
October 31,
2021 |
|
|
April 30,
2021 |
|
|
|
|
(in
thousands) |
|
|
Accounts
receivable |
|
$ |
180 |
|
|
$ |
350 |
|
|
Contract
assets |
|
|
325 |
|
|
|
190 |
|
|
Contract
liabilities |
|
$ |
117 |
|
|
$ |
— |
|
Accounts
Receivable
The Company
grants credit to its customers, generally without collateral, under
normal payment terms (typically 30 to 60 days after invoicing).
Generally, invoicing occurs after the related services are
performed or control of goods have transferred to the customer.
Accounts receivable represent an unconditional right to
consideration arising from the Company’s performance under
contracts with customers. The carrying value of such receivables
represents their estimated realizable value.
Contract
Assets
Significant
changes in the contract assets balances during the period were as
follows:
Schedule
of Significant Changes in Contract Assets and Contract
Liabilities
|
|
|
Six months
ended
October 31, 2021 |
|
|
|
|
(in
thousands) |
|
|
Transferred
to receivables from contract assets recognized at the beginning of
the period |
|
$ |
(190 |
) |
|
Revenue
recognized and not billed as of the end of the period |
|
|
325 |
|
|
Net change
in contract assets |
|
$ |
135 |
|
Contract
assets include unbilled amounts typically resulting from
arrangements whereby the right to payment is conditioned on
completing additional tasks or services for a performance
obligation.
(4)
Other Current
Assets
Other
current assets consisted of the following at October 31, 2021 and
April 30, 2021:
Schedule
of Other Current Assets
|
|
|
October 31,
2021 |
|
|
April 30,
2021 |
|
|
|
|
(in
thousands) |
|
|
Deposits |
|
$ |
37 |
|
|
$ |
68 |
|
|
Other
receivables |
|
|
17 |
|
|
|
21 |
|
|
Prepaid
insurance |
|
|
130 |
|
|
|
194 |
|
|
Prepaid
recruiting |
|
|
135 |
|
|
|
12 |
|
|
Prepaid
expenses- other |
|
|
241 |
|
|
|
192 |
|
|
Other
current assets |
|
$ |
560 |
|
|
$ |
487 |
|
(5)
Property and
Equipment, net
The
components of property and equipment, net as of October 31, 2021
and April 30, 2021 consisted of the following:
Schedule
of Components of Property and Equipment
|
|
|
October 31,
2021 |
|
|
April 30,
2021 |
|
|
|
|
(in
thousands) |
|
|
Equipment |
|
$ |
313 |
|
|
$ |
291 |
|
|
Computer
equipment & software |
|
|
501 |
|
|
|
498 |
|
|
Office
furniture & equipment |
|
|
339 |
|
|
|
341 |
|
|
Leasehold
improvements |
|
|
474 |
|
|
|
474 |
|
|
Construction
in process |
|
|
15 |
|
|
|
15 |
|
| Property
and equipment, gross |
|
|
1,642 |
|
|
|
1,619 |
|
|
Less:
accumulated depreciation |
|
|
(1,282 |
) |
|
|
(1,213 |
) |
|
Property
and equipment, net |
|
$ |
360 |
|
|
$ |
406 |
|
Depreciation
expense was approximately $70,000 and $73,000 for the six month periods ended
October 31, 2021 and 2020, respectively.
(6)
Leases
Lessor
Information
As of
October 31, 2021, the Company has one lease which has been
classified as an operating lease per accounting guidance contained
within ASC Topic 842,” Leases”. The Company’s remaining term
on this operating lease is less than 10 months. The maturity of
lease payments remaining on this lease is immaterial.
Lessee
Information
The Company
has one lease for its facility located in Monroe Township, New
Jersey that is used as warehouse/production space and the Company’s
principal offices and corporate headquarters.
The initial lease term is for
seven years which expires in November of 2024 with an option
to extend the lease for another five years.
The lease is
classified as an operating lease. The operating lease is included
in right-of-use assets, lease liabilities- current and lease
liabilities- long-term on the Company’s Consolidated Balance
Sheets.
The Company
also has one lease located in Houston, Texas that was acquired as
part of the 3Dent acquisition (see Note 18) that is used as office
space. The lease term is for
3 years
andis
set to
expire in January of 2023. The lease is
classified as an operating lease and included in the right-of-use
assets, lease liabilities- current and lease liabilities- long-term
on the Company’s Consolidated Balance Sheets.
The Company
has one lease for additional office space also located in Houston,
Texas. The lease was renewed for a 12-month term ending on
June 30, 2022. In accordance
with ASC 842-20-5-2, since the lease term is 12 months, the asset
was recognized directly to the profit and loss statement on a
straight-line basis and was not recognized as a right-of-use
asset.
Right-of-use
asset and operating lease liabilities are recognized based on the
present value of future minimum lease payments over the lease term
at commencement date. When the implicit rate of the lease is not
provided or cannot be determined, the Company uses the incremental
borrowing rate based on the information available at the effective
date to determine the present value of future payments. Lease terms
may include options to extend or terminate the lease when it is
reasonably certain that the Company will exercise those options.
The renewal options have not been included in the lease term as
they are not reasonably certain of exercise. Lease expense for
minimum lease payments is recognized on a straight- line basis over
the lease term and consists of interest on the lease liability and
the amortization of the right of use asset. Variable lease
expenses, if any, are recorded as incurred.
The
operating lease cash flow payments for the three months ended
October 31, 2021 and 2020 were $102,000 and $85,000, respectively. The
operating lease cash flow payments for the six months ended October
31, 2021 and 2020 were $204,000 and $168,000,
respectively.
The
components of lease expense in the Consolidated Statements of
Operations for the three and six months ended October 31, 2021 and
2020 were as follows:
Schedule
of Operating Lease Costs
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
Three months
ended October 31, |
|
|
Six months
ended October 31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
Operating
lease cost |
|
$ |
92 |
|
|
$ |
80 |
|
|
$ |
184 |
|
|
$ |
159 |
|
|
Short-term
lease cost |
|
|
5 |
|
|
|
3 |
|
|
|
10 |
|
|
|
5 |
|
|
Total lease
cost |
|
$ |
97 |
|
|
$ |
83 |
|
|
$ |
194 |
|
|
$ |
164 |
|
Information
related to the Company’s right-of use assets and lease liabilities
as of October 31, 2021 was as follows:
Schedule
of Right-of Use Assets and Lease Liabilities
|
|
|
October 31,
2021 |
|
|
|
|
|
(in
thousands) |
|
| |
|
|
|
|
|
Operating
lease: |
|
|
|
|
|
Operating
right-of-use asset, net |
|
$ |
897 |
|
| |
|
|
|
|
|
Right-of-use
liability- current |
|
$ |
327 |
|
|
Right-of-use
liability- long term |
|
|
690 |
|
|
Total lease
liability |
|
$ |
1,017 |
|
| |
|
|
|
|
|
Weighted
average remaining lease term- operating leases |
|
|
2.86
years |
|
|
Weighted
average discount rate- operating leases |
|
|
8.2 |
% |
Total
remaining lease payments under the Company’s operating leases are
as follows:
Schedule
of Future Minimum Lease Payments Under Operating
Lease
|
|
|
October 31,
2021 |
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
Remainder of
fiscal year 2022 |
|
$ |
199 |
|
|
2023 |
|
|
391 |
|
|
2024 |
|
|
362 |
|
|
2025 |
|
|
182 |
|
|
Total future
minimum lease payments |
|
$ |
1,134 |
|
|
Less imputed
interest |
|
|
(117 |
) |
|
Total |
|
$ |
1,017 |
|
(7)
Accrued
Expenses
Accrued
expenses consisted of the following at October 31, 2021 and April
30, 2021:
Schedule of Accrued Expenses
|
|
|
October 31,
2021 |
|
|
April 30,
2021 |
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
Project
costs |
|
$ |
257 |
|
|
$ |
368 |
|
|
Contract
loss reserve |
|
|
328 |
|
|
|
328 |
|
|
Employee
incentive payments |
|
|
275 |
|
|
|
283 |
|
|
Accrued
salary and benefits |
|
|
426 |
|
|
|
631 |
|
|
Professional
fees |
|
|
241 |
|
|
|
200 |
|
|
Other |
|
|
49 |
|
|
|
71 |
|
|
Accrued
expenses total |
|
$ |
1,576 |
|
|
$ |
1,881 |
|
(8)
Warrants
Liability
Classified Warrants
On June 2,
2016, the Company entered into a securities purchase agreement,
which was amended on June 7, 2016 (as amended, the “June Purchase
Agreement”) with certain institutional purchasers (the “June
Purchasers”). Pursuant to the terms of the June Purchase Agreement,
the Company sold an aggregate of 20,850
shares of Common Stock together with warrants to purchase up to an
aggregate of 7,298 shares of Common Stock.
Each share of common stock was sold together with a warrant to
purchase 0.35 of a share of
common stock at a combined purchase price of $92.00. The
warrants have an exercise price of $121.60 per share, became
exercisable on December 3, 2016 (“Initial Exercise Date”), and will
expire on December 3, 2021, five years
following the Initial Exercise Date. As of October 31, 2021,
none of the warrants
had been exercised.
On July 22,
2016, the Company entered into a Second Amendment to the Purchase
Agreement (the “Second Amended Purchase Agreement”) with certain
institutional purchasers (the “July Purchasers”). Pursuant to the
terms of the Second Amended Purchase Agreement, the Company sold an
aggregate of 29,750 shares of
Common Stock together with warrants to purchase up to an aggregate
of 8,925 shares of Common Stock.
Each share of common stock was sold together with a warrant to
purchase 0.30 of a share of
common stock at a combined purchase price of $135.00. The
warrants were exercisable immediately at an exercise price of
$187.20 per share. The
warrants will expire on the fifth (5th)
anniversary of the initial exercise date of January 23, 2017. As of
October 31, 2021, none of the warrants
had been exercised.
Equity
Classified Warrants
On April 8,
2019, the Company issued and sold 1,542,000 shares
of common stock and pre-funded warrants to purchase up to
3,385,680 shares of common stock and common warrants to
purchase up to 4,927,680 shares of our common
stock in an underwritten public offering. The public offering price
for the pre-funded warrants was equal to the public offering price
of the common stock, less the $0.01 per share exercise
price of each warrant. The pre-funded warrants have no expiration
date. As of October 31, 2021, all of the pre-funded warrants had
been exercised. The common stock warrants have an exercise price of
$3.85 per share and expire
five years
from the issuance date. As of October 31, 2021, all of the common
warrants had been exercised.
The Company
accounts for warrants issued in connection with its June 2016 and
July 2016 public offerings in accordance with the guidance on
“Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity” in Topic 480
which provides that the Company classify the warrant instruments as
a liability at its fair value. The warrant liabilities are subject
to re-measurement at each balance sheet date using the
Black-Scholes option pricing model. The June 2016 and July 2016
warrants contain a feature whereby they could require the transfer
of assets and therefore are classified as a liability award in
accordance with the guidance in Topic 480. The warrants had a value
near
zero at October 31, 2021 and April 30, 2021. The
pre-funded and common warrants issued in the Company’s April 8,
2019 public offering did not meet the criteria to be classified as
a liability award and therefore were treated as an equity award and
recorded as a component of shareholders’ equity in the Consolidated
Balance Sheets.
(9)
Paycheck Protection
Program Loan
On March 27,
2020, the U.S. Government passed into law the Coronavirus Aid,
Relief and Economic Security Act, or the (“CARES Act”). On May 3,
2020, the Company signed a Paycheck Protection Program (“PPP”) loan
with Santander as the lender for approximately $891,000 in support
through the Small Business Association (“SBA”) under the PPP Loan.
The PPP Loan was unsecured and evidenced by a note in favor of
Santander as the lender and governed by a Loan Agreement with
Santander. The loan contained an interest rate of 1% and was repayable over two
years. The loan contained customary events of defaults relating to,
among other things, payment defaults or breaches of the terms of
the loan. Upon the occurrence of an event of default, the lender
could have required immediate repayment of all outstanding amounts
under the loan. Interest and principal payments were deferred for
the first 6 months from the date of the loan. Principal and
interest were payable monthly commencing 6 months after the
disbursement date and were allowed to be repaid by the Company at
any time prior to maturity with no prepayment penalties. The
Company received the proceeds on May 5, 2020.
The Company filed its loan
forgiveness application at the end of February 2021 asking for 100%
forgiveness of the loan. In June 2021, the Company was informed
that its application was approved, and that the loan is now fully
forgiven. The Company recognized a gain on extinguishment of PPP
loan of approximately $891,000 during the six
months ended October 31, 2021 as reflected on the Consolidated
Statement of Operations.
(10)
Preferred
Stock
The Company
has authorized 5,000,000 shares
of undesignated preferred stock with a par value of $0.001 per share. As of
October 31, 2021, no shares of
preferred stock had been issued.
(11)
Common
Stock
The Company
has authorized 100,000,000 shares
of common stock with a par value of $0.001 per share. As of
October 31, 2021, 52,499,051
shares had been issued and are outstanding.
(12)
Treasury
Shares
During each
of the six months ended October 31, 2021 and 2020, no shares of
common stock were purchased by the Company from employees to pay
taxes related to the vesting of restricted stock.
(13)
Share-Based
Compensation
In 2015,
upon approval by the Company’s shareholders, the Company’s 2015
Omnibus Incentive Plan (the “2015 Plan”) became effective. A total
of 1,332,036
shares were authorized for issuance under the 2015 Omnibus
Incentive Plan, including shares available for awards under the
2006 Stock Incentive Plan remaining at the time that plan
terminated, or that were subject to awards under the 2006 Stock
Incentive Plan that thereafter terminated by reason of expiration,
forfeiture, cancellation or otherwise. If any award under the 2006
Stock Incentive Plan or 2015 Plan expires, is cancelled, terminates
unexercised or is forfeited, those shares become again available
for grant under the 2015 Plan. The 2015 Plan will terminate ten
years after its effective date, in October 2025, but is subject to
earlier termination as provided in the 2015 Plan. As of October 31,
2021, the Company has 193,928
shares available for future issuance under the 2015 Plan which
reflects adjustments made for the departure of our former CEO as
well as other departures.
On January
18, 2018, the Company’s Board of Directors adopted the Company’s
Employment Inducement Incentive Award Plan (the “2018 Inducement
Plan”) pursuant to which the Company reserved 25,000
shares of common stock for issuance under the Inducement Plan. In
accordance with Rule 711(a) of the NYSE American Company Guide,
awards under the Inducement Plan may only be made to individuals
not previously employees of the Company (or following such
individuals’ bona fide period of non-employment with the Company),
as an inducement material to the individuals’ entry into employment
with the Company. An award is any right to receive the Company’s
common stock pursuant to the 2018 Inducement Plan, consisting of a
performance share award, restricted stock award, a restricted stock
unit award or a stock payment award. As of October 31, 2021, there
were 11,487
shares available for grant under the 2018 Inducement
Plan.
Stock
Options
The Company
estimates the fair value of each stock option award granted with
service-based vesting requirements, using the Black-Scholes option
pricing model, assuming no dividends, and using the weighted
average valuation assumptions noted in the following table. The
risk-free rate is based on the US Treasury yield curve in effect at
the time of grant. The expected life (estimated period of time
outstanding) of the stock options granted is estimated using the
“simplified” method as permitted by the SEC’s Staff Accounting
Bulletin No. 110, Share-Based Payment. Expected volatility
is based on the Company’s historical volatility over the expected
life of the stock option granted. The Company did not grant any
stock options during the three and six months ended October 31,
2021 and 2020. A summary of stock options under our stock incentive
plans is detailed in the following table.
Schedule of Stock Option
Activity
|
|
|
Shares
Underlying
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Weighted
Average
Remaining
Contractual
Term
(In
Years)
|
|
|
Outstanding
as of April 30, 2021 |
|
|
516,827 |
|
|
$ |
3.89 |
|
|
|
9.0 |
|
| Granted |
|
|
— |
|
|
$ |
— |
|
|
|
|
|
| Exercised |
|
|
(6,666 |
) |
|
$ |
1.05 |
|
|
|
|
|
| Expired |
|
|
(1,806 |
) |
|
$ |
32.62 |
|
|
|
|
|
|
Cancelled/forfeited |
|
|
(110,382 |
) |
|
$ |
2.58 |
|
|
|
|
|
|
Outstanding
as of October 31, 2021 |
|
|
397,973 |
|
|
$ |
4.16 |
|
|
|
8.4 |
|
|
Exercisable
as of October 31, 2021 |
|
|
239,780 |
|
|
$ |
4.98 |
|
|
|
7.8 |
|
As of
October 31, 2021, the total intrinsic value of outstanding and
exercisable options was approximately $0.2
million. As
of October 31, 2021, approximately
158,000 additional options were
unvested, which had an intrinsic value of
zero and a weighted average
remaining contractual term of
9.2 years. There was
approximately $115,000
and
$188,000
of total
recognized compensation cost related to stock options during each
of the six months ended October 31, 2021 and 2020, respectively. As
of October 31, 2021, there was approximately $0.2
million of
total unrecognized compensation cost related to non-vested stock
options granted under the plans. This cost is expected to be
recognized over a weighted-average period of
1.0 year.
The
Company’s acquisition of 3Dent (See Note 18) was valued at the fair
value of the stock on the acquisition date of $1,451,584
(361,991
shares at
$4.01).
Since the shares will be restricted for one year and lack
marketability, the Company applied a 20% discount to the purchase
price making the adjusted fair value $1,161,267.
Additionally, as the sellers must be employed for 12 months from
the date of acquisition to retain all of their shares, the
difference between the calculated fair value and the net assets
acquired represents the value of the compensation expense to be
recognized over the period of the agreed upon
employment.
Schedule of Business Acquisition and Fair Value of
Net Assets, Compensation Expense Recognized
| |
|
|
|
|
|
Fair Value
of Purchase |
|
$ |
1,161,267 |
|
|
Total
Acquired Assets |
|
$ |
(593,571 |
) |
|
Total
Acquired Liabilities |
|
$ |
117,106 |
|
|
Compensation
Expense |
|
$ |
684,802 |
|
|
Quarterly
Compensation Expense |
|
$ |
171,201 |
|
The Company
will recognize approximately $171,000
of compensation expense on a quarterly basis for the consideration
paid until 12 months from the acquisition date of February 2,
2022.
Performance Stock
Options
In January
of 2020, the Company issued
81,337 performance-based stock
options to two of its executives. There were
40,668 shares that were unvested and outstanding at October
31, 2021 which expire on December 15, 2021, 40,000 of which were
exercised in December 2021.
In January
of 2021, the Company issued 344,723
performance-based stock options to employees and executives.
The awards vest
over 2 years provided there is positive total shareholder return
(e.g. share price increase) as measured by the closing share price
on January 14, 2022 and January 14, 2023. There were
257,356
shares unvested and outstanding at October 31, 2021. None of the
shares granted to our former President and CEO under this issuance
vested and lapsed as of June 18, 2021. A summary of performance
stock options under our stock incentive plans is detailed in the
following table.
Schedule of Stock Option
Activity
|
|
|
Shares
Underlying
Options
|
|
|
Weighted
Average
Exercise
Price |
|
|
Weighted
Average
Remaining
Contractual
Term
(In
Years)
|
|
|
Outstanding
as of April 30, 2021 |
|
|
424,790 |
|
|
$ |
2.57 |
|
|
|
9.5 |
|
| Granted |
|
|
66,667 |
|
|
$ |
0.62 |
|
|
|
|
|
| Exercised |
|
|
(13,334 |
) |
|
$ |
1.05 |
|
|
|
|
|
|
Cancelled/forfeited |
|
|
(193,433 |
) |
|
$ |
2.80 |
|
|
|
|
|
|
Outstanding
as of October 31, 2021 |
|
|
284,690 |
|
|
$ |
2.03 |
|
|
|
9.1 |
|
|
Exercisable
as of October 31, 2021 |
|
|
27,334 |
|
|
$ |
1.05 |
|
|
|
8.2 |
|
As of
October 31, 2021, the total intrinsic value of both outstanding and
exercisable options was approximately $30,000
and
zero, respectively. As of
October 31, 2021, approximately
257,000 additional options were
unvested, which had an intrinsic value of $30,000
and a
weighted average remaining contractual term of
9.1 years. There was
approximately $61,000
and
$187,000
of total
recognized compensation cost related to stock options during each
of the six months ended October 31, 2021 and 2020, respectively. As
of October 31, 2021, there was approximately $0.3
million of
total unrecognized compensation cost related to non-vested stock
options granted under the plans. This cost is expected to be
recognized over a weighted-average period of
1.3 years.
Restricted
Stock
Compensation
expense for non-vested restricted stock is generally recorded based
on its market value on the date of grant and recognized ratably
over the associated service and performance period. During the six
months ended October 31, 2021 and 2020, the Company granted
33,333 shares that were subject to service-based
vesting requirements.
A summary of
non-vested restricted stock under our stock incentive plans is as
follows:
Schedule of Non-vested Restricted Stock
Activity
|
|
|
Number
of
Shares
|
|
|
Weighted
Average
Price
per Share
|
|
|
Issued and
unvested at April 30, 2021 |
|
|
10,000 |
|
|
$ |
2.93 |
|
| Granted |
|
|
33,333 |
|
|
$ |
2.37 |
|
| Vested |
|
|
— |
|
|
$ |
— |
|
|
Cancelled/forfeited |
|
|
— |
|
|
$ |
— |
|
|
Issued and
unvested at October 31, 2021 |
|
|
43,333 |
|
|
$ |
2.50 |
|
There was
approximately $29,000 and
$10,000 of
total recognized compensation cost related to restricted stock for
the six months ended October 31, 2021 and 2020, respectively. As of
October 31, 2021, there is approximately $70,000 of
unrecognized compensation cost remaining related to unvested
restricted stock granted under our plans. This cost is expected to
be recognized over a weighted-average period of 1.5
years.
In December
2019, the Company granted
51,547 shares to an employee, subject to service-based
vesting requirements, that were outside the Company stock incentive
plans. There was approximately zero and
$12,000 of
total recognized compensation cost related to this award for the
three months ended October 31, 2021 and 2020, respectively. As of
October 31, 2021, there was no
unrecognized compensation cost remaining related to this
award.
(14)
Fair Value
Measurements
ASC Topic
820, “Fair Value Measurements” states that fair value is an
exit price, representing the amount that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Assets and
liabilities that are measured at fair value are reported using a
three-level fair value hierarchy that prioritizes the inputs used
to measure fair value. This hierarchy maximizes the use of
observable input and minimizes the use of unobservable inputs. The
following is a description of the three hierarchy
levels.
|
Level
1 |
Unadjusted
quoted prices in active markets for identical assets or liabilities
that the Company has the ability to access at the measurement
date. |
| |
|
| Level 2 |
Inputs other
than quoted prices in active markets that are observable for the
asset or liability, either directly or indirectly. |
| |
|
| Level 3 |
Inputs that
are unobservable for the asset or liability. |
Disclosure of Fair
Values
The
Company’s financial instruments that are not re-measured at fair
value include cash, cash equivalents, restricted cash, accounts
receivable, contract assets and liabilities, deposits, accounts
payable, and accrued expenses. The carrying values of these
financial instruments approximate their fair values and are viewed
as Level 1 items. The Company’s warrant liabilities represent the
only asset or liability classified financial instrument that is
measured at fair value on a recurring basis.
The fair
value of the Company’s warrant liabilities (refer to Note 8) is
based on the Black-Scholes pricing model which is based on Level 3
unobservable inputs for which there is little or no market data,
requiring the Company to develop its own assumptions. The
assumptions used by the Company are the quoted price of the
Company’s common stock in an active market, risk-free interest
rate, volatility and expected life, and assumes no dividends.
Volatility is based on the actual market activity of the Company’s
stock. The expected life is based on the remaining contractual term
of the warrants and the risk-free interest rate is based on the
implied yield available on U.S. Treasury Securities with a maturity
equivalent to the warrants’ expected life. The fair value on a
recurring basis as of October 31, 2021 and April 30, 2021 was near
zero.
There were
no unrealized gains or losses for the three and six months ended
October 31, 2021 and 2020. When incurred, gains and losses are
included within “Gain (loss) due to change in fair value of warrant
liabilities” in the Consolidated Statements of Operations. The
Company determined the fair value using the Black-Scholes pricing
model with the following assumptions:
Schedule of Share-based Payment Award, Stock
Options, Valuation Assumption
|
|
|
October 31,
2021 |
|
|
October 31,
2020 |
|
| |
|
|
|
|
|
|
|
Dividend
rate |
|
|
0.0 |
% |
|
|
0.0 |
% |
|
Risk-free
rate |
|
|
0.06% - 0.08 |
% |
|
|
0.12% - 0.13 |
% |
|
Expected
life (years) |
|
|
0.1 |
|
|
|
0.8 - 1.1 |
|
|
Expected
volatility |
|
|
122.2 |
% |
|
|
139.1 |
% |
Transfers
into or out of any hierarchy level are recognized at the end of the
reporting period in which the transfers occurred. There were no
transfers between any hierarchy levels during each of the three and
six months ended October 31, 2021 and 2020.
(15)
Commitments and
Contingencies
Employment
Litigation
On August
28, 2018, counsel for Charles Dunleavy, the Company’s former
President & Chief Executive Officer who was terminated for
cause effective June 9, 2014, filed a demand for arbitration,
captioned Charles F. Dunleavy v. Ocean Power Technologies, Inc.,
Case No. 01-18-0003-2374, before the American Arbitration
Association in New Jersey. The demand alleged various claims
relating to Mr. Dunleavy’s termination. After the hearings in the
proceeding were conducted, on December 11, 2020, the arbitration
panel issued an interim award finding, among other things, that the
termination for cause of Mr. Dunleavy was in breach of his
employment contract and awarded him compensatory damages in the
amount of $438,254.54.
On May 3, 2021, the panel issued a second interim award and therein
awarded Mr. Dunleavy attorneys’ fees, costs and pre-judgment
interest. The Company agreed, on May 24, 2021, to pay Mr. Dunleavy
$1,223,963.14,
representing the total compensatory damages, attorneys’ fees, costs
and pre-judgment interest, which is the full amount awarded by the
arbitration panel. The Company made the required payment on May 26,
2021, and the matter is now closed.
Spain
Income Tax Audit
The Company
underwent an income tax audit in Spain for the period from 2011 to
2014, when our Spanish branch was closed. On July 30, 2018, the
Spanish tax inspector concluded that although there was no tax owed
in light of losses reported, the Company’s Spanish branch owed
penalties for failure to properly account for the income associated
with the funding grant. During the six months ended October 31,
2020, the Company received notice from the Spanish Central Economic
and Administrative Tribunal that it agreed with the inspector and
ruled that the Company owes the full amount of the penalty in the
amount of €279,870
or
approximately $331,000.
On January 25, 2021, the Company paid to the Spanish Tax
Administration €279,870.
Notwithstanding that payment, on April 30, 2021, the Company filed
its appeal of the decision of the Central Court to the Spanish
National Court. There is no schedule for a ruling from the Spanish
National Court.
(16)
Income
Taxes
Uncertain
Tax Positions
The Company
applies the guidance issued by the FASB for the accounting and
reporting of uncertain tax positions. The guidance requires the
Company to recognize in its consolidated financial statements the
impact of a tax position if that position is more likely than not
to be sustained upon examination, based on the technical merits of
the position. At October 31, 2021, the Company had no unrecognized
tax positions. The Company does not expect any material increase or
decrease in its income tax expense in the next twelve months,
related to examinations or uncertain tax positions. U.S. federal
and state income tax returns were audited through fiscal 2014 and
fiscal 2010 respectively. Net operating loss and credit carry
forwards since inception remain open to examination by taxing
authorities and will continue to remain open for a period of time
after utilization.
Income
Tax Benefit
The Company sold New
Jersey State net operating losses and research development credits
(“NJ NOL”) under the NJEDA Tax Transfer program in the amount of
approximately $12
million for the year ended April 30, 2021, for net proceeds of
approximately $1.0 million which was received in May
2021 and recorded in the Company’s Statement of Operations in
fiscal year 2022.
(17)
Operating Segments and
Geographic Information
The
Company’s business consists of
one segment as this
represents how our Chief Operating Decision Maker views the
Company’s operations and financial position. The Company operates
on a worldwide basis with one operating company in the U.S. and
subsidiaries in the UK and in Australia. Revenues and expenses are
generally attributed to the operating company that bills the
customers. During each of the six months ended October 31, 2021 and
2020, the Company’s primary business operations were in North
America.
(18)
Acquisition of
3dent Technologies, LLC
On February
1, 2021, the Company acquired all of the outstanding equity
interest of 3dent Technologies, LLC (“3Dent”), a Houston, Texas
based company that offers offshore energy engineering and design
services that are complementary to the Company’s technology and
products. As consideration for the purchase, the Company issued
361,991 shares of its common
stock to the sellers, subject to a 12-month post acquisition
employment condition. In addition, the former owners of 3Dent will
be eligible for awards of performance stock with a potential value
of $360,000
if certain
revenue targets are achieved over the 12 month-period post
acquisition. There were no changes during the three and six months
ended October 31, 2021 that would affect this valuation.
The Company
accounted for the transaction as a business combination under ASC
805, “Business Combinations.” Accordingly, the assets and
liabilities acquired were recorded at their estimated fair value on
the date of acquisition. Under ASC 805, acquisition-related
transaction costs (such as advisory, legal, valuation, other
professional fees) were expensed in the Consolidated Statement of
Operations in the period incurred.
(19)
Subsequent
Events
On November
15, 2021, the Company acquired all of the outstanding equity
interest of Marine Advanced Robotics, Inc. (“MAR”), a Richmond (San
Francisco Bay Area), California-based developer and manufacturer of
autonomous surface vehicles (ASVs).
The Company
paid $11.0
million at closing, consisting of $4.0
million in cash and $7.0
million in common stock (3,330,162
shares). Additional earn-out opportunities for the selling
shareholders of MAR exist based on revenue performance through
April 2023. The MAR management team and employees have joined the
Company and MAR continues to operate under its current brand name
as a wholly owned subsidiary of the Company.
Item 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The
following discussion and analysis should be read in conjunction
with the accompanying unaudited consolidated financial statements
and related notes included in this Quarterly Report on Form 10-Q.
Some of the information contained in this management’s discussion
and analysis is set forth elsewhere in this Form 10-Q, including
information with respect to our plans and strategy for our
business, pending and threatened litigation and our liquidity,
includes forward-looking statements that involve risks and
uncertainties. You should review the “Risk Factors” section of our
Annual Report on Form 10-K for the year ended April 30, 2021 for a
discussion of important factors that could cause actual results to
differ materially from the results described in or implied by the
forward-looking statements contained in the following discussion
and analysis. References to a fiscal year in this Form 10-Q refer
to the year ended April 30 of that year (e.g., fiscal 2021 refers
to the year ended April 30, 2021).
Overview
We are a
marine power equipment, data solutions and consulting services
provider. We control the design, manufacture, sales, installation,
operations and maintenance of our solutions and services while
working closely with commercial, technical, and other development
partners that provide software, controls, mechatronics, sensors,
integration services, and marine installation services. We believe
our renewable autonomous ocean solutions deliver power and data
collection, analysis and communication in remote ocean
environments, allowing users to generate actionable intelligence
and control certain equipment. Our mission and purpose are 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. We achieve this through our proprietary,
state-of-the-art technologies that are at the core of our clean and
renewable energy platforms upon which we offer our solutions and
services as well as through working with select
partners.
We continue
to develop and commercialize our proprietary systems that generate
electricity by harnessing the renewable energy of ocean waves for
our PowerBuoy® (“PB3”), and solar power for our hybrid PowerBuoy®
(the “hybrid”). The PB3 uses proprietary technologies that convert
the kinetic energy created by the heaving motion of ocean waves
into electricity. Our strategy includes developing complete
solutions and services, including cloud-based delivery systems for
ocean data and predictive analytics to provide actionable
intelligence for our clients. Based on feedback from our current
customers, discussions with potential customers in the defense and
security, offshore oil and gas, science and research, and offshore
wind markets, as well as government applications in fishery
protection and marine protected areas, together with our market
research and publicly available data, we believe that numerous
markets have a direct need for our solutions. Our recent projects
have been in the offshore oil and gas and science and research
industries. We believe there is an increasing need for our products
and services in areas such as fishery protection, offshore windfarm
support, and maritime domain awareness applications. We believe
that having demonstrated the capability of our solutions, we can
advance our product and services and gain further adoption from our
target markets. Our marketing efforts are focused on offshore
locations that require a cost-efficient solution for renewable,
reliable, and persistent power and communications, either by
supplying electric power to payloads that are integrated directly
with our product or located in its vicinity, such as on the seabed
and in the water column. We believe we can become a leader in
offshore autonomous ocean wave power conversion technology which
provides renewable power for offshore operations that were
previously logistically problematic and difficult to
decarbonize.
We were
incorporated under the laws of the State of New Jersey in April
1984 and began commercial operations in 1994. On April 23, 2007, we
reincorporated in Delaware. We are continuing to build upon our
mission of connecting the oceans with those who operate, and manage
the resource, in that environment. We do this through our
solutions’ offerings, that are based on our proprietary renewable
power platforms and engineering skills. Our solutions focus on
three major services areas, Data as a Service, supported and
enabled by Power as a Service, and underpinned by our Strategic
Consulting Services, which we expanded with the acquisition of
3dent Technology, LLC (“3Dent”), in February 2021. Over the course
of fiscal 2022, we intend to continue to grow our service sectors
and develop, evolve, and strengthen our solutions through internal
developments, partnerships, and potential acquisitions. On November
15, 2021, the Company acquired all of the outstanding equity
interest of MAR. This acquisition immediately provided the Company
with an established, innovative offshore product line that features
roaming capability that highly complements the Company’s business
strategy.
Founded in
2004, MAR is the developer of Wave Adaptive Modular Vessel (WAM-V®)
technology, which enables roaming capabilities for uncrewed
equipment in waters around the world. MAR launched the first WAM-V
in 2007 as a new vessel class with a mission to manufacture and
deliver to customers the most reliable and robust ASVs available on
the market.
Our Power as
a Service solutions deliver value to customers by utilizing our
managed power platforms, such as the PB3 PowerBuoy® or hybrid
PowerBuoy®, and subsea battery for topside and subsea power
applications. Our focus for these solutions is on bringing
autonomous clean power to our customers wherever it is required. On
our project with Eni S.p.A. (“Eni”), we utilized a PB3 PowerBuoy®,
which operated in the Adriatic Sea for over 700 days of continuous
operation as part of Eni’s resident autonomous underwater vehicle
(“AUV”) feasibility studies. During commercial operations, an AUV
would remain on site to perform various inspection, maintenance,
and repair tasks. As demonstrated during our project with Eni, our
solutions generated sufficient power that could, with client
assets, extend missions for longer durations.
Our Data as
a Service solution, initially based on the work we did for Harbour
Energy (formerly known as Premier Oil) in 2019 in the North Sea,
has further evolved based on feedback from participants in the
government, defense, and security markets. We have been developing
a Maritime Domain Awareness solution (“MDA-S” or “MDA”) to
introduce edge computing and artificial intelligence modules that
can be delivered to customers via cyber secure cloud
environments.
Our
Strategic Consulting Services, materially strengthened by the
acquired 3Dent team, focus on delivering value to our customers in
the areas of ocean engineering, structural and dynamic analysis,
Front End Engineering and Design (“FEED”) studies, and motion
simulation. These services can be delivered as part of our broader
Power and/or Data as a Service solution utilizing our solutions or
on a standalone basis. In the near term, we will focus on
increasing our market share in the offshore wind market and the
broader floating foundation design market, as well as our business
with offshore oil and gas customers.
Throughout
fiscal 2021 we delivered several transactions and projects laying
the foundation for our growth in fiscal 2022. We have identified,
and are pursuing, several new applications for our PowerBuoys® in
the areas of defense, security and maritime domain awareness
solutions. In February 2021, the Company acquired all the
outstanding equity interest of 3Dent, a company based in Houston,
Texas, that offers offshore engineering and design services that
are complementary to our technology and products and strengthen our
Strategic Consulting Services. During the first quarter of fiscal
2022, we initiated several research and development (“R&D”) and
commercial development programs, including commencing our custom
software development efforts with Greensea and Fathom5 to further
extend our edge computing and cloud hosting
capabilities.
In November
2020, the Company entered into an agreement with the Offshore
Operators Committee (“OOC”) under which the Company provided
engineering and technical services for a new project under the
DeepStar Global Technology Consortium Program. This project
showcased our Power as a Service offering among well-known
operators in the industry. This project completed in July 2021, and
we have used the findings of the study to advance marketing
activities for our Power as a Service solution.
In October
2020, the Company entered into an agreement with Adams
Communication & Engineering Technology, Inc. (“ACET”) to
conduct a feasibility study for the evaluation of a PB3 power and
5G communications solution in support of the U.S. Navy’s Naval
Postgraduate School’s Sea, Land, Air, Military Research Initiative
(“SLAMR”). This forms part of our Data as a Service division. The
project sponsor released an update to the market on November 1, 2021, which showcased
the concept of operations for the vehicles and buoy system under
consideration.
Business
Update Regarding COVID-19
The COVID-19
pandemic presented substantial health and economic risks,
uncertainties and challenges to our business, the global economy
and financial markets. In March 2020, one of the Company’s
customers cancelled a portion of their contract due to the outbreak
of COVID-19 and instead extended an existing lease. 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.
For additional information on various uncertainties and risks posed
by the COVID-19 pandemic, see Part I, Item 1A “Risk Factors” of our
Annual Report on Form 10-K for the year ended April 30,
2021.
On March 27,
2020, the U.S. Government passed into law the Coronavirus Aid,
Relief and Economic Security Act, or the (“CARES Act”). On May 3,
2020, the Company signed a Paycheck Protection Program (“PPP”) loan
with Santander as the lender for approximately $891,000 in support
through the Small Business Association (“SBA”) under the PPP loan.
The PPP loan was unsecured and evidenced by a note in favor of
Santander as the lender and governed by a Loan Agreement with
Santander. The loan contained an interest rate of 1% and was
repayable over two years. The loan contained customary events of
defaults relating to, among other things, payment defaults or
breaches of the terms of the loan. Upon the occurrence of an event
of default, the lender could have required immediate repayment of
all outstanding amounts under the loan. Interest and principal
payments were deferred for the first 6 months from the date of the
loan. Principal and interest were payable monthly commencing 6
months after the disbursement date and were allowed to be repaid by
the Company at any time prior to maturity with no prepayment
penalties. The Company received the proceeds on May 5,
2020.
The Company
filed its loan forgiveness application at the end of February 2021
asking for 100% forgiveness of the loan. In June 2021, the Company
was informed that its application was approved, and that the loan
is now fully forgiven. The Company recognized a gain on
extinguishment of PPP loan of approximately $891,000 in the
Consolidated Statement of Operations for the six months ending
October 31, 2021.
Our
Solutions and Power Generating Platform Services
PB3
PowerBuoy®
The PB3
generates electricity by harnessing the renewable energy of ocean
waves. The PB3 features a unique onboard power take-off (“PTO”)
system, which incorporates both energy storage and energy
management and control systems. The PB3 generates a nominal
name-plated capacity rating of up to 3 kilowatts (“kW”) of peak
power during recharging of the onboard batteries. Power generation
is deployment-site dependent. Our standard energy storage system
(“ESS”) has an energy capacity of up to a nominal 150 kW-hours to
meet specific application requirements.
The PB3 is
designed to generate power for use independent of the power grid in
remote offshore locations. The hull consists of a main spar
structure loosely moored to the seabed and surrounded by a floating
annular structure that can freely move up and down in response to
the passage of the waves. The PTO system includes a mechanical
actuating system, an electrical generator, a power electronics
system, our control system, and our ESS which is sealed within the
hull. As ocean waves pass the PB3, the mechanical stroke action
created by the rising and falling of the waves is converted into
rotational mechanical energy by the PTO, which in turn, drives the
electric generator. The power electronics system then conditions
the electrical output which is collected within an ESS. The
operation of the PB3 is controlled by our customized, proprietary
control system.
The control
system uses sensors and an onboard computer to continuously monitor
the PB3 subsystems. We believe that this ability to optimize and
manage the electric power output of the PB3 is a significant
advantage of our technology. In the event of large storm waves, the
control system automatically locks the PB3, and electricity
generation is suspended. However, the load center (either the
on-board payload or one in the vicinity of the PB3) may continue to
receive power from the ESS. When wave heights return to normal
operating conditions, the control system automatically unlocks the
PB3 and electricity generation and ESS replenishment recommences.
This safety feature helps to prevent the PB3 from being damaged by
storms.
The PB3 can
be transported over land to the deployment port using conventional
transportation methods. Once at port, the PB3 can be lifted into
the water or onboard a vessel using a readily available crane of
appropriate capacity. The PB3 may then be towed to a site using a
standard vessel (if the location is within an appropriate distance
from the port), or the PB3 may be carried aboard a vessel to its
offshore location and craned into the water at site. The PB3 is
then attached to the mooring system, which is installed during a
separate operation, after which a brief commissioning process
places the PB3 into operation.
We believe
that using wave energy for electricity generation has the following
potential benefits, compared to existing incumbent
solutions.
|
|
● |
Scalability within a
small site area. Due to the dense energy in ocean waves, we
believe that the electricity may be aggregated to supply larger
payloads, as a result, for example, of multiple PB3s which are
placed in an array, occupying a relatively small area. We believe
the array of a larger number of PB3s could offer end users a
variety of advantages in availability, reliability and
scalability. |
|
|
● |
Predictability.
The generation of power from wave energy can be forecasted several
days in advance. Available wave energy can be calculated with a
high degree of accuracy based on satellite images and
meteorological data, even when the wave field is hundreds of miles
away and days from reaching a PB3. Therefore, we believe end-users
relying on PB3 for power may be able to proactively plan their
logistics, payload scheduling and other operational activities
based on such data. |
| |
|
|
| |
● |
Constant
source of energy. The annual occurrence of waves at specific
sites can be relatively persistent and defined with relatively high
accuracy. Based on our studies and analyses of various sites of
interest, we believe that we will be able to deploy our PB3 in
locations where the waves could produce usable electricity for most
of the year. |
Based on our
market research and publicly available data, including but not
limited to the U.S. Department of Energy (“DOE”) 2019 Powering the
Blue Economy Report, the Westwood Energy World ROV Operations
Forecast 2019-2023, and the World Bank Database, we believe that
numerous markets may have a direct need for our PB3, including
defense and security, offshore oil and gas, science and research,
and offshore wind, as well as government applications in fishery
protection and marine protected areas. Depending on payload power
requirements, sensor types and other considerations, we have found
that our PB3 could satisfy several application requirements within
these markets. The Company believes that the PB3 can generate
sufficient power to meet the requirements of many potential
customer applications within our target markets, and that the
hybrid could provide ample power in geographies where wave
conditions may not be sufficient to allow the PB3 to generate
sufficient power.
hybrid
PowerBuoy®
The Company
has product launched a hybrid PowerBuoy® (“hPB”) that is a solar
powered surface buoy, compared to the wave power generating PB3.
The hybrid PowerBuoy® is powered primarily through solar panels
with an efficient and clean burning external combustion Stirling
engine to provide back-up power and is capable of providing
reliable power in remote offshore locations, regardless of ocean
wave conditions. We believe this product is complementary to the
PB3 by providing the Company the opportunity to address a broader
spectrum of customer deployment needs, including low-wave
environments, with the potential for greater product integration
within each customer project. It is intended for agile deployment
applications, such as recharging and surface communications hub for
electric remotely operated vehicles (“eROV”) and autonomous
underwater vehicles (“AUV”) used for underwater inspections and
short-term maintenance, subsea equipment monitoring and control,
and provides a flexible platform to optimize power storage based on
the environment and the application. The hybrid can be quickly
deployed and offers customers a cost-effective solution. The design
has a high payload capacity for communications and surveillance,
with the capability of being tethered to subsea payloads such as
batteries, or with a conventional anchor mooring system. The hybrid
generates power from both an array of solar panels and an
efficient, clean burning 1 kW Stirling engine fueled by liquid
propane. This energy is stored in onboard batteries which power
subsea and topside payloads. The Company has designed the hybrid
with a Stirling engine backup system to outperform traditional
diesel buoys, which we believe have more frequent service and
refueling intervals and higher carbon intensities. We believe the
hybrid will be able to operate over a broad range of temperature
and ocean wave conditions.
The towable,
boat-shaped hull design of the hybrid is appropriate for deployment
throughout the world. Power is generated independent of wave
activity, making it a good solution for providing power in
relatively calm, low wave environments with high solar intensity
and is complimentary to the PB3.
As with the
PB3, the control system uses sensors and an onboard computer to
continuously monitor the hybrid subsystems. We believe that this
ability to optimize and manage the electric power output of the
hybrid is a significant advantage of our technology. In the event
of extended cloudy periods, the control system automatically
switches electricity generation from the solar panels to the backup
engine. However, the load center, either the on-board payload or
one in the vicinity of the hybrid, may continue to receive power
from the on-board ESS. When more suitable solar power generation
conditions return, the control system automatically stops the
backup up engine and ESS replenishment recommences by way of solar
electricity generation.
The hybrid
is designed for use with a single point umbilical and mooring but
can be adapted for a 3-point mooring installation for use as a
temporary replacement for PB3 installations during planned
maintenance or repairs.
The hybrid
can be transported over land to the deployment port using
conventional transportation methods. Once at port, the hybrid can
be fitted with additional stabilizing outriggers if required for
the specific solution, and then can be lifted into the water or
onboard a vessel using a readily available crane of appropriate
capacity. The hybrid may then be towed to a site using a standard
vessel (if the location is within an appropriate distance from the
port), or the hybrid may be carried aboard a vessel to its offshore
location and craned into the water at site. The hybrid is then
attached to the single point mooring system, which is installed
during a separate operation, after which a brief commissioning
process places the hybrid into operation.
The hybrid
is configured with a nominal 30 kW-hours of battery energy storage
and approximately 1 megawatt-hour (“MWh”) of stored energy in the
propane system. While the batteries are primarily charged through
solar power generation, the propane powered Stirling engine system
on the hybrid can be considered reserve energy storage, with
propane having a much higher energy storage density than
lithium-ion batteries. It can be utilized when needed based on load
demand and will provide approximately 1 MWh of stored energy
capacity. We believe that this amount of stored energy offers an
attractive local, autonomous energy solution for clients in a range
of industries, including but not limited to offshore oil and gas
and marine observation, particularly for shorter term
deployments.
During the
first six months of fiscal 2022, we commenced efforts to upgrade
the current version of the hPB to host our MDA-S (as defined below)
offering by adding further stabilizing features. During the second
quarter of fiscal 2022, these efforts were largely completed
together with our manufacturing partners.
Subsea
Battery
We have
product launched a subsea battery that is complementary to both the
PB3 and hybrid products and can be deployed together with our
PowerBuoys® or on its own. It offers customers the option of
placing additional modular and expandable energy storage on the
seabed near existing, or to be installed, subsea equipment. Our
lithium-ion subsea batteries supply power that can enable subsea
equipment, sensors, communications and AUV and eROV recharge. Our
PB3 and hybrid are complimentary to the subsea batteries by
providing a means for recharging during longer term deployments, or
the batteries can be used independently for shorter term
deployments.
The subsea
battery has been designed to provide continuous and/or short-term
power supply from its integrated energy storage system, enabling us
to supply into a range of industries and applications, from backup
power to critical subsea infrastructure to continuous operation of
subsea equipment, such as electric valves. The base design of the
subsea battery has a nominal 100 kW-hours of energy storage. The
subsea battery can be transported over land to the deployment port
using conventional transportation methods. Once at port, the subsea
battery can be lifted onboard a vessel using a readily available
crane of appropriate capacity. The battery can then be carried
aboard a vessel to its offshore location and craned into the water
at site. It comes installed on a ready deployable subsea skid
suitable for installation on the seabed. The subsea battery can be
integrated into other subsea equipment on land prior to deployment.
The battery is then connected to the other components on the seabed
with the use of an eROV.
Maritime
Domain Awareness Solution (“MDA-S”)
The
International Maritime Organization defines Maritime Domain
Awareness as the effective understanding of any activity that could
impact upon the security, safety, economy, or environment. Since
2002 the United States of America, for example, has had an active
strategy to secure the Maritime Domain. Furthermore, in 2020 the
U.S. Coast Guard elevated Illegal, Unreported and Unregulated
(“IUU”) fisheries, one aspect of MDA security, as the leading
global maritime threat. It is estimated that tens of billions of
Dollars are lost every year to IUU fishing alone.
We intend
our MDA-S payload to consist of a high-definition radar,
gyro-stabilized high-definition optical and thermal imaging
cameras, vessel automatic identification system (“AIS”) detection,
and integrated command and control software as customer needs
dictate. Capabilities include 24/7 vessel tracking, automatic radar
plotting, automated vessel warnings, and high-definition optical
and thermal video surveillance capable of providing evidentiary
backup of activity to aid in prosecution.
We intend
data from our MDA-S will be processed onboard our buoys using edge
computing, developed together with our software partners,
transmitted to shore-based command stations via cyber-secure Wi-Fi,
cellular, and/or satellite systems, depending upon location, and
then further processed in our cloud-based analytics platform.
Surveillance data can be integrated with readily available marine
monitoring software or with our own MDA software solution developed
together with leading partners in the technology industry to
provide command and control features of a multi-buoy surveillance
network. The data can also be integrated with satellite, weather,
bathymetric, and other data feeds to form a detailed surface and
subsea picture of a monitored area.
A single
MDA-S equipped PB3 PowerBuoy®, can monitor vessel traffic, with or
without AIS turned on, across an area approximately 1,300 square
nautical miles of ocean territory on a permanent or temporary
basis, with the ability to link multiple surveillance assets
together over large ocean areas giving end-users visibility into
potentially damaging environmental or illegal activities.
Customized solutions are also available including the addition of
subsea sensors to monitor for acoustic signatures, including
tsunami, and water quality.
The
development of our MDA-S is underway, and we launched the first
offshore system supporting the demonstration of the newly developed
system in October 2021. We also installed the mooring systems to
deploy additional demonstration units during the second quarter of
fiscal 2022 and intend to demonstrate the MDA-S on additional
systems during third and fourth quarter of fiscal 2022.
Strategic
Consulting Services
In addition
to work being performed by the Company for the DeepStar project,
through our technology subsidiary, 3Dent, we also offer a full
range of high-level offshore engineering, including providing
consulting engineering and design services to offshore wind
developers, offshore construction companies, drilling contractors,
major oil companies, service companies, shipyards, and engineering
firms. 3Dent’s team of dedicated consultants/designers has
expertise in structural engineering, hydrodynamics and naval
architecture. Among its services is a focus on addressing the
issues current or would-be owners of offshore floaters, jackups,
and lift boats have with their fleet. 3Dent’s services include
simulation engineering, software engineering, concept design and
motion analysis. During the second quarter of fiscal 2022, the
Company saw an increase in consulting services activity for oil and
gas and offshore wind projects.
Commercial
Activities
We continue
to seek new strategic relationships and further develop our
existing partnerships. We collaborate with companies that have
developed or are developing in-ocean applications requiring a
persistent source of power that is also capable of real time data
collection, processing and communication, to address potential
customer needs. The table below shows the percentage of the
Company’s revenues derived from customers whose revenues accounted
for at least 10% of the Company’s consolidated revenues for at
least one of the periods indicated:
|
|
|
Three months
ended October 31, |
|
|
Six months
ended October 31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
Eni
S.p.A. |
|
|
6 |
% |
|
|
61 |
% |
|
|
3 |
% |
|
|
34 |
% |
| Department of
Energy |
|
|
33 |
% |
|
|
— |
% |
|
|
16 |
% |
|
|
— |
% |
| EGP |
|
|
6 |
% |
|
|
36 |
% |
|
|
31 |
% |
|
|
55 |
% |
|
Clark
Hill |
|
|
12 |
% |
|
|
— |
% |
|
|
7 |
% |
|
|
— |
% |
| Matthews |
|
|
12 |
% |
|
|
— |
% |
|
|
6 |
% |
|
|
— |
% |
| Valaris |
|
|
19 |
% |
|
|
— |
% |
|
|
26 |
% |
|
|
— |
% |
|
Other (no
customer over 10%) |
|
|
12 |
% |
|
|
3 |
% |
|
|
11 |
% |
|
|
11 |
% |
|
|
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
109 |
% |