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What changed in Ocean Power Technologies, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Ocean Power Technologies, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+454 added−388 removedSource: 10-K (2023-07-28) vs 10-K (2022-07-13)

Top changes in Ocean Power Technologies, Inc.'s 2023 10-K

454 paragraphs added · 388 removed · 297 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

156 edited+78 added−59 removed43 unchanged
Biggest changeMaritime Domain Awareness Solution (“MDAS”) The International Maritime Organization defines Maritime Domain Awareness (“MDA”) as the effective understanding of any activity that could impact the security, safety, economy, or environment related to and within our oceans and seas. Since 2002, the United States of America has had an active strategy to secure the Maritime Domain, primarily through the U.S. Navy.
Biggest changeThe project will be deployed in support of security efforts to detect illegal, unreported, and unregulated (“IUU”) fishing, dark vessels, and human/drug trafficking in operation 24/7/365 and is scheduled to begin during the first half of fiscal 2024. 2 Maritime Domain Awareness Solution The International Maritime Organization defines Maritime Domain Awareness (“MDA”) as the effective understanding of any activity that could impact the security, safety, economy, or environment related to and within our oceans and seas.
Many proposals contain provisions which would provide the option to purchase or lease of our PowerBuoy® or WAM-V® product upon successful conclusion of the demonstration project.
Many proposals contain provisions which would provide the option to purchase or lease our PowerBuoy® or WAM-V® product upon successful conclusion of the demonstration project.
Despite our size, the Company views itself as a responsible corporate citizen throughout the execution of its operations, as emphasized by its goal to provide low-carbon power and data solutions for offshore industries, scientific research, and territorial security. It is the Company’s goal that all products have minimal environmental impact footprint compared to alternative solutions.
Despite our size, the Company views itself as a responsible corporate citizen throughout the execution of its operations, as emphasized by its goal to provide low-carbon power and data solutions for offshore industries, scientific research, and territorial security. It is the Company’s goal that all products have a minimal environmental impact footprint compared to alternative solutions.
In addition, certain technologies that we developed with U.S. federal government funding are subject to certain government rights as described in “Risk Factors - Risks Related to Intellectual Property.” 16 We use trademarks on nearly all our products and believe that having distinctive marks is an important factor in marketing our products.
In addition, certain technologies that we developed with U.S. federal government funding are subject to certain government rights as described in “Risk Factors - Risks Related to Intellectual Property.” We use trademarks on nearly all our products and believe that having distinctive marks is an important factor in marketing our products.
At OPT, we foster a culture of inclusion, embrace diversity, and seek to listen without judgement to all voices and opinions. Therefore, OPT is committed to creating and maintaining a workplace in which all employees have an opportunity to participate and contribute to the success of the business and are valued for their skills, experience, and unique perspectives.
At OPT, we foster a culture of inclusion, embrace diversity, and seek to listen without judgement to all voices and opinions. OPT is committed to creating and maintaining a workplace in which all employees have an opportunity to participate and contribute to the success of the business and are valued for their skills, experience, and unique perspectives.
The subsea battery provides both long 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 subsea battery provides both long or short-term power supply from its integrated energy storage system, enabling us to supply a range of industries and applications, from backup power to critical subsea infrastructure to continuous operation of subsea equipment, such as electric valves.
Our energy storage system (“ESS”) has a 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 offshore locations.
Our Energy Storage System (“ESS”) has a capacity of up to a nominal 150 kW-hours to meet specific application requirements. 4 The PB3 is designed to generate power for use independent of the power grid in offshore locations.
Other examples of applications include perimeter security, early detection and warning systems, remote sensing stations, high frequency radar, sonar, electro-optical and infrared sensors for maritime security, network communications systems, and unmanned underwater vehicle docking stations.
Other examples of such applications include perimeter security, early detection and warning systems, remote sensing stations, high frequency radar, sonar, electro-optical and infrared sensors for maritime security, network communications systems, and unmanned underwater vehicle docking stations.
Our Solutions Data as a Service Our Data as a Service solution is at the forefront of our strategic plan to be a leader in offshore data collection, integration, analytics and real time communication for a variety of important applications.
Our Solutions Data as a Service Our DaaS solution is at the forefront of our strategic plan to be a leader in offshore data collection, integration, analytics and real time communication for a variety of important applications.
For example, our solutions can track surface movement for maritime border enforcement, illegal fishing interdiction, provide security for offshore wind farms and oil and gas fields, or provide harbor or port security as well as logistics support.
For example, our solutions can track surface vessel movement for maritime border enforcement and illegal fishing interdiction, provide security for offshore wind farms and oil and gas fields, or provide harbor or port security as well as logistics support.
As a result, our success depends in part on our ability to obtain and maintain proprietary protection for our products, technology and know-how, to operate without infringing upon the proprietary rights of others, and to prevent others from infringing upon our proprietary rights.
As a result, our success depends in part on our ability to obtain and maintain protection of our proprietary products, technology, and know-how, to operate without infringing upon the rights of others, and to prevent others from infringing upon our rights.
Further, we are working to integrate PB3 and WAM-V ® capabilities by adding WAM-V recharging capabilities to our PB3’s and MDAS capabilities to our WAM-V’s ® , thus extending WAM-V endurance, our reach, and providing both fixed and mobile MDAS offerings to our customers.
Further, we are working to integrate PB3 and WAM-V ® capabilities by adding WAM-V® recharging capabilities to our PB3’s and MDAS’ capabilities to our WAM-V’s ® , thus extending WAM-V® endurance, our reach, and providing both fixed and mobile MDAS offerings to our customers.
Multiple WAM-V’s ® can also autonomously work together to provide a security perimeter and coordinate to intercept suspicious vessels and provide valuable information before the threat gets near the protected asset. WAM-Vs ® can coordinate to intercept suspicious vessels and provide valuable information before the threat gets near the protected asset.
Multiple WAM-V’s ® can also autonomously work together to provide a security perimeter and coordinate to intercept suspicious vessels and provide valuable information before the threat gets near the protected asset.
We have the ability to support aquaculture and gather information on ocean currents, water quality, wind and other weather metrics, and map shorelines or subsurface areas. Additionally, we offer 24/7 monitoring solutions that can provide meaningful real time information, and long term data collection and analytics for sophisticated applications across many industries and scientific applications.
We have the ability to support aquaculture and gather information on ocean currents, water quality, wind and other weather metrics, and map shorelines or subsurface areas. We also offer 24/7 monitoring solutions that can provide meaningful real time information, and long-term data collection and analytics for sophisticated applications across many industries and scientific applications.
Autonomous Vehicles (“WAM-V ® ”) On November 15, 2021, the Company acquired all of the outstanding equity interest of Marine Advanced Robotics, Inc. (“MAR”). Founded in 2004, MAR is the developer of the patented Wave Adaptive Modular Vessel (WAM-V®) technology, which enables roaming capabilities for uncrewed maritime systems in waters around the world.
Autonomous Vehicles (“WAM-V ® ”) On November 15, 2021, the Company acquired all of the outstanding equity interest of Marine Advanced Robotics, Inc. (“MAR”). Founded in 2004, MAR is the developer of the patented Wave Adaptive Modular Vessel (WAM-V®) technology, which enables roaming capabilities for unmanned maritime systems in waters around the world.
The offshore wind fleet is forecast to grow 15-fold by 2040 and move further offshore with Europe alone connecting over 500 turbines in 2019. While these turbines develop significant power, there are opportunities pre-installation of the turbines to autonomously collect ocean data during the early stages and monitoring of marine habitats during construction.
The offshore wind fleet is forecast to grow 15-fold by 2040 and move further offshore with Europe alone connecting over 500 turbines in 2019. While these turbines develop significant power, there are opportunities pre-installation of the turbines to autonomously collect ocean data during the early stages and monitor marine habitats during construction.
We believe that providing our employees with the appropriate resources will allow our employees to use their creativity and talent to invent new solutions, meet new demands, and offer the most effective services/products in the industry. The Company is committed to provide its employees with a healthy and safe work environment, which include policies to guide our efforts.
We believe that providing our employees with the appropriate resources will allow our employees to use their creativity and talent to invent new solutions, meet new demands, and offer the most effective services/products in the industry. 18 The Company is committed to providing its employees with a healthy and safe work environment, which include policies to guide our efforts.
The hybrid PB is intended to provide a stable energy platform for our MDAS solution, and for agile deployment of subsea power applications, such as a surface communications hub for electric remotely operated vehicles (“eROV”) and autonomous underwater vehicles (“AUV”) used for underwater inspections and short-term maintenance, and subsea equipment monitoring and control.
The NextGen PB is intended to provide a stable energy platform for our MDAS solution, and for agile deployment of subsea power applications, such as a surface communications hub for electric remotely operated vehicles (“eROV”) and autonomous underwater vehicles (“AUV”) used for underwater inspections and short-term maintenance, and subsea equipment monitoring and control.
The design has a high payload capacity for surveillance and communications equipment, with the capability of being tethered to subsea payloads such as batteries, or with a conventional anchor mooring system. Energy is stored in onboard lithium ion batteries which can power subsea and topside payloads.
The design has a high payload capacity for surveillance and communications equipment, including subsea acoustics, with the capability of being tethered to subsea payloads such as batteries, or with a conventional anchor mooring system. Energy is stored in onboard lithium ion batteries which can power subsea and topside payloads.
Our WAM-Vs ® exist in three primary sizes, 8, 16, and 22 feet, and many of the design components are common across the sizes, allowing for integration of different payloads and adaption of the payload platforms for larger equipment. All sizes can be adapted to suit different propulsion methods.
Our WAM-Vs ® exist in three primary sizes of 8, 16, and 22 feet, and many of the design components are common across the sizes, allowing for integration of different payloads and adaptation of the payload platforms for larger equipment. All sizes can be adapted to suit different propulsion methods.
As both the renewable energy industry and as the wave energy industries continue to evolve, we anticipate that wave energy technology and our PowerBuoys® and their deployment will be subject to increased oversight and regulation in accordance with international, national and local regulations relating to safety, site approval, and environmental protection. Site Approval.
As both the renewable energy and wave energy industries continue to evolve, we anticipate that wave energy technology and our PowerBuoys® and their deployment will be subject to increased oversight and regulation in accordance with international, national, and local regulations relating to safety, site approval, and environmental protection. 17 Site Approval.
WAM-Vs ® have been demonstrated as suitable for sensitive marine area operations due to their shallow draft and zero emission profile. ● Ocean and factory-tested technology. We have deployed more than 70 WAM-Vs ® to date across the world for commercial customers and government agencies.
WAM-Vs ® have been demonstrated as suitable for sensitive marine area operations due to their shallow draft and zero emission profile. ● Ocean and factory-tested technology. We have deployed more than 80 WAM-Vs ® to date across the world for commercial customers and government agencies.
PB3’s enabled with our MDAS provide actionable intelligence from 24/7/365 radar and AIS vessel tracking (including “dark vessels”), automatic notifications and vessel warnings, real-time visual and Infra-Red video surveillance, with an integrated command and control user interface.
Buoys enabled with our MDAS provide actionable intelligence from 24/7/365 radar and AIS vessel tracking (including “dark vessels”), automatic notifications and vessel warnings, real-time visual and Infra-Red video surveillance, with an integrated command and control user interface.
We have designed our solutions to have multiple offshore applications that can be used globally by customers. Our WAM-V ® autonomous vehicles are designed for inshore and offshore deployments as fully or semi-autonomous systems and can operate in force multiplier mode.
We have designed our solutions to have multiple offshore applications that can be used globally by customers. Our WAM-V ® autonomous vehicles are designed for nearshore and offshore deployments as fully or semi-autonomous systems and can operate in force multiplier mode.
We also may have the opportunity to cooperate with other solution providers, such as other suppliers of subsea batteries where our PowerBuoys® could provide recharging capabilities or other providers of autonomous surface or underwater vessels where our PowerBuoys® could provide charging and enhanced communications capabilities.
We also may have the opportunity to cooperate with other solution providers, such as other suppliers of subsea batteries where our PowerBuoys® could provide recharging capabilities or other providers of autonomous surface or underwater vehicles where our PowerBuoys® could provide charging and enhanced communications capabilities.
Manufacturing Our core in-house manufacturing activity includes the assembly, final systems integration and testing of our products and components, which is conducted at our New Jersey headquarters and at our Richmond, California facility. Our corporate headquarters and manufacturing operations are located in Monroe Township, New Jersey.
Manufacturing Our core in-house manufacturing activity includes the assembly, final systems integration and testing of our products and components, which is conducted at our New Jersey headquarters and at our California facility. Our corporate headquarters and most of our manufacturing operations are located in Monroe Township, New Jersey.
We believe that the modular design of our subsea battery enables clients to specify larger energy storage than would be possible with just buoys and have this placed at the seabed and near existing electric subsea equipment. 6 ● Integrated Designs. All of our products will be designed to operate with each other in mesh or array setups.
We believe that the modular design of our subsea battery enables clients to specify larger energy storage than would be possible with just buoys and have this placed at the seabed and near existing electric subsea equipment. ● Integrated Designs. All our products are designed to operate with each other in mesh or array setups.
Consulting services include simulation engineering, software engineering, concept design and motion analysis. We also offer a full range of high-level offshore engineering to offshore wind developers, offshore construction companies, drilling contractors, major oil companies, service companies, shipyards, and engineering firms. For example, we advise offshore drill rig owners, including owners of floaters, jackups, and lift boats.
Consulting services include simulation engineering, developing purpose specific software, concept design and motion analysis. We also offer a full range of high-level offshore engineering to offshore wind developers, offshore construction companies, drilling contractors, major oil companies, service companies, shipyards, and engineering firms. For example, we advise offshore drill rig owners, including owners of floaters, jackups, and lift boats.
Our policy is to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development of our business. We also rely on trade secrets, know-how, and continuous technological innovation and may rely on licensing opportunities to develop and maintain our proprietary position.
Our policy is to protect our position by, among other methods, filing U.S. and foreign patent applications related to our patented technology, inventions and improvements that are important to the development of our business. We also rely on trade secrets, know-how, and continuous technological innovation and may rely on licensing opportunities to develop and maintain our competitive position.
Driven by the growing demand for electrification, we believe that we have opportunities to implement one or more PB3s at some of these sites to displace current power solutions or augment existing technologies.
Driven by the growing demand for electrification, we believe that we have opportunities to implement one or more buoys at some of these sites to displace current power solutions or augment existing technologies.
We believe the sensor suite will be a combination of off-the-shelf components selected to optimize performance and cost. 15 This system could be utilized as a standalone node or in an array, which we believe will provide near real-time information about the marine activity within a customer’s area of interest.
We believe the sensor suite will be a combination of marine environment tested off-the-shelf components selected to optimize performance and cost. This system could be utilized as a standalone node or in an array, which will provide near real-time information about the marine activity within a customer’s area of interest.
Further research is being performed around hazardous materials and any other risks related to our WAM-V ® product line, including risk associated with the batteries we use in this product.
Further research is being performed into hazardous materials and any other risks related to our WAM-V ® product line, including risk associated with the batteries we use in this product.
During the demonstration project specification, negotiation and evaluation period, we are often subject to the prospective customer’s vendor qualification process, which entails substantial due diligence of the Company and its capabilities. Such demonstrations are often a required step prior to leasing and may include negotiation of standard terms and conditions.
During a typical demonstration project’s specification, negotiation and evaluation period, we are often subject to the prospective customer’s vendor qualification process, which entails substantial due diligence of the Company and its capabilities. Such demonstrations are often a required step prior to leasing and may include negotiation of standard terms and conditions.
We continue to increase our commercial capabilities through new hires in sales, engineering, product development, safety, and application support, and through engagement of expert market consultants in various geographies.
We continue to increase our commercial capabilities through new hires in sales, engineering, product development, safety, operations, manufacturing, and application support, and through engagement of expert market consultants in various geographies.
Renewable energy subsidies and incentives are generally applicable only to electric generation and supply to the utility grid. However, our autonomous applications may result in a reduction of carbon emissions, which our potential customers may be able to publicize in their environmental stewardship reports.
Renewable energy subsidies and incentives are generally applicable only to electric generation and supply to the utility grid. However, our autonomous applications may result in a reduction of carbon emissions, which our potential customers may be able to publicize in their environmental stewardship reports upon our review and permission.
Our vehicles can support customized subsea and surface payloads, including other remotely operated or autonomous systems such as aerial drones and remotely operated vehicles (“ROV’s”). Multiple applications exist in the hydrographic survey market, across a range of industries including offshore wind and oceanographic monitoring. Our PB3 is designed for longer-term deployment in moderate to high ocean wave climates.
Our vehicles can support customized subsea and surface payloads, including other remotely operated or autonomous systems such as aerial drones and ROVs. Multiple applications exist in the hydrographic survey market, across a range of industries including offshore wind and oceanographic monitoring. Our PB3 was designed for longer-term deployment in moderate to high ocean wave climates.
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.
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 stored within the ESS.
We take a proactive approach to the identification and control of environment, health and safety hazards and risks. We work to continuously improve our Quality, Health, Safety, and Environment (“QHSE”) performance through methodologies that aim to prevent workplace injuries and illness, emphasis on quality production, and provide ongoing safety education to employees.
We take a proactive approach to the identification and control of environment, health and safety hazards and risks. We work to continuously improve our Quality, Health, Safety, and Environment (“QHSE”) performance through methodologies that aim to prevent workplace injuries and illness, emphasize quality production, and provide ongoing safety education to employees.
This facility offers approximately 56,000 square feet of manufacturing and office space and allows for expansion of our manufacturing capabilities and a move toward higher volume production of our solutions. During fiscal year 2022 we began the process of transferring the majority of the manufacturing activity related to our WAM-V’s from our Richmond, California facility to our New Jersey headquarters.
This facility offers approximately 56,000 square feet of manufacturing and office space and allows for expansion of our manufacturing capabilities and a move toward higher volume production of our solutions. During fiscal year 2022 we began the process of transferring most of the manufacturing activity related to our WAM-Vs® from our Richmond, California facility to our New Jersey headquarters.
We believe these relationships have helped position us within the public and private sectors for future commercial opportunities, which we believe enhances our market visibility and attractiveness to our prospective customers. ● Domestic Supply Chain. Our strategy is to utilize domestic supply chain sources, when available, to improve operations and collaboration with our supply partners.
We believe these relationships have helped position us within the public and private sectors for future commercial opportunities, which enhance our market visibility and attractiveness to our prospective customers. 8 ● Access to domestic supply chain. Our strategy is to utilize domestic supply chain sources, when available, to improve operations and collaboration with our supply partners.
Today, WAM-Vs ® operate in 11 countries for commercial, military and scientific uses. Our WAM-Vs exist in three primary sizes, 8, 16, and 22 feet, however, many of the design components are common across the sizes, allowing for integration of different payloads and adaption of the payload platforms for larger equipment.
Today, WAM-Vs® operates in 11 countries for commercial, military and scientific uses. Our WAM-Vs® exist in three primary sizes of 8, 16, and 22 feet, however, many of the design components are common across the sizes, allowing for integration of different payloads and adaptation of the payload platforms for larger equipment.
The stable platforms of the WAM-Vs ® allow for a broad range of subsea and surface sensors and assets to be integrated. Flexible interfaces reduce cost through simplified integration and deployment. ● Reduced carbon emission, environmentally benign system design. Our PB3 emits no carbon during operation.
The stable platforms of the WAM-Vs ® allow for a broad range of subsea and surface sensors and assets to be integrated. Flexible interfaces reduce cost through simplified integration and deployment. ● Reduced carbon emission, environmentally benign system design. Our PowerBuoys® emit no carbon during operation.
MAR launched the first WAM-V ® in 2007 as a new vessel class to deliver to customers reliable autonomous surface vehicles that could provide robust, real-time data collection and reporting. MAR also provides RaaS (Robotics as a Service) allowing customers to lease WAM-V ® robotics and access information from our WAM-V’s while we maintain ownership and maintenance and repair responsibilities.
MAR launched the first WAM-V® in 2007 as a new vehicle class to deliver reliable autonomous surface vehicles to customers that could provide robust, real-time data collection and reporting. MAR also provides RaaS, allowing customers to lease WAM-V® robotics and access information from our WAM-Vs® while we maintain ownership and maintenance and repair responsibilities.
During fiscal 2023, we have plans to attend and present at various demonstrations, conferences, and trade shows in the U.S., Europe, and Asia. Additionally, we seek to enter into strategic relationships to develop application solutions with commercial and military sensor and equipment manufacturers.
During fiscal 2024, we have plans to continue to attend and present at various demonstrations, conferences, and trade shows in the U.S., Europe, and Asia. Additionally, we seek to enter strategic relationships to develop application solutions with commercial and military sensor and equipment manufacturers.
Association with OPT involves participation in a community where all people are recognized and rewarded on the basis of individual qualifications and abilities. This commitment is embodied in company policy and the way we do business at OPT and is an important principle of sound business management.
Association with OPT involves participation in a community where people are recognized and rewarded based on individual qualifications and abilities. This commitment is embodied in company policy and the way we do business and is an important principle of sound business management.
This hardware can be customized or supplemented by other solutions, depending on our customer’s requirements, These devices are mounted on our products, such as our PB3 PowerBuoy® or WAM-V®, and then utilizing integrated command and control software, data is sent to us and to our customers via secure communications channels.
This hardware can be customized or supplemented by other solutions, depending on the requirements of our customers. These devices can be mounted on our products, such as our PB3 or WAM-V®, and then, utilizing integrated command and control software, data is sent to us and to our customers via secure communications channels.
The WAM-V ® , PB3, and hybrid PB can be equipped with payloads, either mounted on or within the platforms, or tethered to the platforms. The PowerBuoys® have mechanical and electrical interfaces which allow for simplified integration of payloads, creating flexibility for the end-user.
The WAM-V ® and PowerBuoy ® platforms can be equipped with payloads, either mounted on or within the platforms, or tethered to the platforms. The PowerBuoys® have mechanical and electrical interfaces which allow for simplified integration of payloads, creating flexibility for the end-user.
MDAS Expanding on our experience with our own initial prototype Marine Surveillance Solutions (“MSS”) system, we intend for the development of the next generation MDAS, which will combine radar, marine automatic identification system (“AIS”) and camera data with a custom developed command and control system to provide actionable information for our end users.
Research and Development MDAS Expanding on our experience with our own initial prototype Marine Surveillance Solutions (“MSS”) system, we intend for the development of the next generation MDAS, which will combine radar, marine AIS and camera data with a custom developed command and control system to provide actionable information for our end users.
Our hybrid PB is designed to meet the needs of customers with projects in low sea state locations and/or those requiring shorter-term deployments. We believe our subsea battery enables persistent power to be delivered from the seabed to support autonomous, all-electric subsea operations. Together, all these products can be integrated to provide customized power solutions for our customers.
Our NextGen PB is being designed and tested to meet the needs of customers with projects in low sea state locations and/or those requiring shorter-term deployments. Our subsea battery enables persistent power to be delivered from the seabed to support autonomous, all-electric subsea operations. Together, all these products can be integrated to provide customized power solutions for our customers.
Competition We expect to compete with other providers in the Data as a Service, Power as a Service, and Strategic Consulting industries. Our Data as a Service solution competes with other data acquisition companies in a variety of industries, from sensor and measurement equipment providers to other providers of autonomous vehicles.
Competition We expect to compete with other providers in the DaaS, RaaS, PaaS, and Strategic Consulting industries. Our Data as a Service solution competes with other data acquisition companies in a variety of industries, from sensor and measurement equipment providers to other providers of autonomous vehicles.
Based on an article in the 2021 edition of the Offshore Wind Market by the US Department of Energy, the US offshore wind energy and product development pipeline grew to a potential generating capacity of 35,324 megawatts in 2020.
Based on an article in the 2021 edition of the Offshore Wind Market by the U.S. Department of Energy (DOE), the U.S. offshore wind energy and product development pipeline grew to a potential generating capacity of 35,324 megawatts in 2020.
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.
The PTO system includes a mechanical energy conversion system, an electrical generator, a power electronics system, our control system, and our ESS which is sealed within the hull.
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 pressure-tested lithium-ion phosphate subsea batteries supply power that can enable subsea equipment, sensors, communications and AUV and eROV recharge.
It offers customers the option of placing additional modular and expandable energy storage, including non-OPT solutions, on the seabed near existing, or to be installed, subsea equipment. Our pressure-tested lithium-iron phosphate subsea batteries supply power that can enable subsea equipment, sensors, communications and AUV and eROV recharge.
Our recent projects have been in the offshore energy and science and research industries.
Our recent projects have been in the offshore energy, military and government, and science and research industries.
Our PB3 and hybrid PB 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.
Our PB3 and NextGen PB are complementary 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.
While we are marketing our products and services globally, we have focused on several key markets and applications, including U.S. and foreign defense and security applications with our MDAS offering; subsea power for oil and gas; and the hydrographic survey market in U.S., Europe, Canada and Australia with regard to our WAM-V’s ® .
While we are marketing our products and services globally, we have focused on several key markets and applications, including U.S. and foreign defense and security applications with our MDAS offering; subsea power for oil and gas; and the hydrographic survey market with regard to our WAM-Vs®.
These services can be integrated in support of our broader Power and/or Data as a Service solutions, utilizing our products or on an independent basis for third party clients. In the near term, we will focus on increasing our market share in the offshore wind market, the broader floating foundation design market, as well as with our offshore energy customers.
These services can be integrated in support of our broader PaaS and/or DaaS and RaaS solutions, utilizing our products or on an independent basis for third party clients. In the near term, we will focus on increasing our market share in the offshore wind market, the broader floating foundation design market, as well as with our offshore energy customers.
Department of Homeland Security, and NOAA, and our prior and existing relationships with commercial entities have allowed us to further develop our solutions for a variety of needs in various industries.
DHS, and NOAA, and our prior and existing relationships with commercial entities have allowed us to further develop our solutions for a variety of needs in various industries.
Customer feedback obtained through engineering studies with multiple oil and gas customers has helped identify target applications for the PB3 – namely, temporary power for fields experiencing umbilical degradation and subsea docking stations for future resident ROV/AUV applications for inspection, maintenance, and repair.
Customer feedback obtained through engineering studies with multiple oil and gas customers has helped identify target applications for our buoys – namely, temporary power and control communications for subsea fields experiencing umbilical degradation and subsea docking stations for future resident ROV/AUV applications for inspection, maintenance, and repair.
As of April 30, 2022, we have been issued 70 U.S. patents, of which 39 are active, 20 have expired and 11 were abandoned. Outside of the U.S., we have been issued 280 patents across 25 countries with 26 of the active U.S. patents having at least one corresponding issued foreign patent.
As of April 30, 2023, we have been issued 70 U.S. patents, of which 38 are active, 20 have expired and 12 were abandoned. Outside of the U.S., we have been issued 280 patents across 25 countries with 26 of the active U.S. patents having at least one corresponding issued foreign patent.
The expiration dates for our issued U.S. patents range from 2023 to 2040. We do not consider any single patent or patent application that we hold to be material to our business. The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions.
The expiration dates for our issued U.S. patents range from fiscal year ending 2024 to 2041. We do not consider any single patent or patent application that we hold to be material to our business. The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions.
Material contained on our website is not incorporated by reference in this report. Our executive offices are located at 28 Engelhard Drive, Suite B, Monroe Township, New Jersey, 08831, and our telephone number is (609) 730-0400. The information on our website is not a part of this Annual Report.
Material contained on our website is not incorporated by reference in this report. Our executive offices are located at 28 Engelhard Drive, Suite B, Monroe Township, New Jersey, 08831, and our telephone number is (609) 730-0400.
Because our solutions use technology that is not yet fully adopted by customers within our target markets in every case, we expect that the customer decision process will continue to include substantial time educating end-users and stakeholders, which may result in a continued lengthy sales cycle. We have built a database of companies and organizations who have offshore operations.
Because some of our solutions use technology that is not yet fully adopted by customers within our target markets in every case, we expect that the customer decision process will continue to include substantial time educating end-users and stakeholders, which may result in a continued lengthy sales cycle.
These include large and small engineering firms that specialize in naval architecture, structural engineering, and hydrodynamics as applied to the design of jack-ups, wind turbine installation vessels, and semi-submersibles. We continuously monitor non-traditional competitive threats, such as multi-domain drones and artificial intelligence tools utilizing satellite data.
Our Strategic Consulting Services group competes with specialized offshore engineering firms. These include large and small engineering firms that specialize in naval architecture, structural engineering, and hydrodynamics as applied to the design of jack-ups, wind turbine installation vessels, and semi-submersibles. We continuously monitor non-traditional competitive threats, such as multi-domain drones and artificial intelligence tools utilizing satellite data.
Our PB3 is designed to operate over extended intervals between required maintenance activities. We believe that our PB3 reduces costs over multi-year operations. These cost savings are mostly due to reduced vessel and personnel servicing activities. For short term deployments, our hybrid PB is a cost-efficient means of providing MDA and subsea power solutions.
Our PowerBuoy® platforms are designed to operate over extended intervals between required maintenance activities. We believe that our PowerBuoys® will reduce costs over multi-year operations. These cost savings are mostly due to reduced vessel and personnel servicing activities. For short term deployments, our NextGen PB is a cost-efficient means of providing MDA and subsea power solutions.
Our PB3 and hybrid PB are designed with a modular energy storage systems which allows us to tailor its configuration to specific application requirements, including expansion of energy storage capacity, potentially allowing for a more customized solution and potential cost savings for our customers.
Our PowerBuoy ® platforms are designed with a modular energy storage system which allows us to tailor its configuration to specific application requirements, including expansion of energy storage capacity, potentially allowing for a more customized solution and potential cost savings for our customers.
We believe our Data and Power as a Service solutions, together with our platforms, are well suited to enable uncrewed, autonomous (non-grid connected) offshore applications, such as topside and subsea surveillance and communications, subsea equipment monitoring, early warning systems platform, subsea power and buffering, and weather and climate data collection.
We believe our DaaS, RaaS and PaaS solutions, together with our platforms, are well suited to enable unmanned, autonomous (non-grid connected) offshore applications, such as topside and subsea surveillance and communications, surveying, subsea equipment monitoring, early warning systems platform, subsea power and buffering, and weather and climate data collection.
In the USA specifically, IUU fishing is considered a major maritime threat by the Department of Homeland Security. 8 Offshore Oil and Gas We believe the offshore oil and gas industry is undergoing a significant transformation as it continues to invest in new technologies that enable carbon reduction, cost savings, and the electrification and digitization of operations.
In the U.S. specifically, IUU fishing is considered a major maritime threat by the DHS. 9 Offshore Oil and Gas We believe the offshore oil and gas industry is undergoing a significant transformation as it continues to invest in new technologies that enable carbon reduction, cost savings, and the electrification and digitization of operations.
This strategy includes partnerships with leading companies and organizations in adjacent and complementary markets. We continue to develop our PowerBuoy® and WAM-V® products for use in offshore power, data acquisition, and real-time data communications applications, and in order to achieve this goal, we are pursuing the following business objectives: ● Integrated turn-key solutions, purchases or leases.
We continue to develop our PowerBuoy® and WAM-V® products for use in offshore power, data acquisition, and real-time data communications applications, and in order to achieve this goal, we are pursuing the following business objectives: ● Integrated turn-key solutions, purchases or leases.
We believe that our autonomous surveillance solution, which can be combined with satellite imagery, from our WAM-V ® , can deliver substantial economic impact to governments over incumbent solutions in securing remote fisheries and MPAs.
We believe that our autonomous MDAS solution, which can be combined with mobile assets such as our WAM-V® or satellite imagery, can deliver substantial economic impact to governments over incumbent solutions in securing remote fisheries and MPAs.
Each deployed PB3 utilized in place of fossil fuel-based power in Power as a Service applications can displace four tonnes of carbon annually, or roughly the amount of carbon produced by two average automobiles.
Each deployed PB3 operating in place of fossil fuel-based power in PaaS applications can directly displace four tonnes of carbon annually, or roughly the amount of carbon produced by two average automobiles.
Our patent portfolio includes patents and patent applications with claims directed to: ● System design, including buoy, battery chargers, generators, power take off, printed circuit boards, and wave energy convertor (“WEC”); ● WEC control systems; ● Wave power and thermal motor power conversion; ● Buoy anchoring and mooring design and power cable connection; and ● Wave WEC farm architecture.
Our patent portfolio includes patents and patent applications with claims directed to: ● System design, including buoy, battery chargers, generators, power take off, printed circuit boards, and WEC; ● WEC control systems; ● Wave power and thermal motor power conversion; ● Buoy anchoring and mooring design and power cable connection; ● Wave WEC farm architecture; ● Systems and methods for vehicle charging; and ● WAM-V® technology.
To integrate our solutions and add roaming as an option or enhancement to our MDAS, we are advancing developments to further integrate MDAS into the WAM-V® platform and develop additional autonomy capabilities. ● Focus sales and marketing efforts in global markets.
To integrate our solutions and add roaming as an option or enhancement to our MDAS, we are advancing developments to further integrate MDAS into the WAM-V® platform and develop additional autonomy capabilities. ● Focus sales efforts on key global markets in the U.S., Europe, Canada, Asia and Australia.
As our MDAS development continues, we expect that this will also include data and cloud services. ● Expand customer system solution offerings through new complementary products that enable shorter and more cost-efficient deployments. We are continuously improving our technology solutions.
As our MDAS development continues, we expect that this will also include data and cloud services. 11 ● Expand customer system solution offerings through new complementary products that enable more cost-efficient deployments that make shorter missions more feasible.
All sizes can be adapted to suit different propulsion methods. This acquisition immediately provided the Company with an established product line that highly complements the Company’s business strategy and can be used inshore, nearshore, and offshore.
All sizes can be adapted to suit electric or liquid fuel propulsion methods. 3 The acquisition of MAR immediately provided the Company with an established product line that highly complements the Company’s business strategy and can be used inshore, nearshore, and offshore.
With the addition of our WAM-V ® products, we are able to increase our ability to lease vehicles specifically to support shoreline and off-shore survey markets as well as security applications while integrating MDA into these solutions. 11 Marketing and Sales We continue to enhance our marketing capabilities across our target markets, and we are actively marketing our products and solutions.
Through our WAM-V® products, we can increase our ability to lease vehicles specifically to support shoreline and offshore survey markets as well as security applications while integrating MDA into these solutions. Marketing and Sales We continue to enhance our marketing capabilities across our target markets, and we are actively marketing our products and solutions.
Our common stock was listed under the symbol “OPTT” on Nasdaq until June 2021, when the listing was transferred to the NYSE American. The public may also read and copy any materials that we file with the Securities and Exchange Commission (“SEC”) at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.
Since June 2021, our common stock has traded on the NYSE American exchange under the symbol “OPTT”, and previously, it traded on Nasdaq under the same symbol. The public may also read and copy any materials that we file with the Securities and Exchange Commission (“SEC”) at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.
We continue to develop and commercialize our proprietary power platforms that generate electricity primarily by harnessing the renewable energy of ocean waves for our PowerBuoy® (“PB3”), solar power for our hybrid PowerBuoy® (the “hybrid PB”) and have the option of adding small wind turbines to supplement power generation.
We continue to develop and commercialize our proprietary power platforms that generate electricity primarily by harnessing the renewable energy of ocean waves. We continue to offer our commercial PB3 and are adding solar power options to our next generation PowerBuoy® (the “NextGen PB”) and have the option of adding small wind turbines to supplement power generation.
Further, the Company’s recent acquisition of MAR provides an unmanned surface vehicle platform for use in oil & gas, renewable energy, hydrographic survey, and security and defense markets largely in North America and Europe.
Further, the Company’s unmanned surface vehicle platform provides opportunities in oil & gas, renewable energy, hydrographic survey, and security and defense markets largely in North America and Europe.
Our batteries contain no toxic or rare earth metals and have a minimal risk of fires or explosion. In the unlikely event that water comes into contract with live batteries, wireless remote operation allows for the immediate discharge of energy to mitigate the risk of electrolysis that could create an explosive mixture of hydrogen and oxygen within the buoy.
In the unlikely event that water comes into contract with live batteries, wireless remote operation allows for the immediate discharge of energy to mitigate the risk of electrolysis that could create an explosive mixture of hydrogen and oxygen within the buoy.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

83 edited+42 added−4 removed96 unchanged
Biggest changeIn addition, if we are not successful in commercializing our new products, or are significantly delayed in doing so, our business, financial condition and results of operations will be adversely affected. If we are unable to attract and retain management and other qualified personnel, we may not be able to achieve our business objectives.
Biggest changeIf demand for our solutions and products fails to develop sufficiently, it is unlikely that we will be able to grow our business or generate sufficient revenues. 22 In addition, if we are not successful in commercializing our new solutions and products, or are significantly delayed in doing so, our business, financial condition and results of operations will be adversely affected.
If we or our clients are unable to obtain necessary permits and approvals in connection with any or all of our projects, those projects would not be implemented, and our business, financial condition and results of operations would be adversely affected.
If we or our clients are unable to obtain necessary permits and approvals in connection with any or all our projects, those projects would not be implemented, and our business, financial condition and results of operations would be adversely affected.
Although we maintain insurance coverage, we cannot assure that this insurance coverage will be sufficient to cover the substantial fees of lawyers and other professional advisors relating to these pending lawsuits or any future litigation, our obligations to indemnify our officers and directors who may become parties to such pending and future actions, or the amount of any judgments or settlements that we may be obligated to pay in connection with these lawsuits.
Although we maintain insurance coverage, we cannot assure you that this insurance coverage will be sufficient to cover the substantial fees of lawyers and other professional advisors relating to these pending lawsuits or any future litigation, our obligations to indemnify our officers and directors who may become parties to such pending and future actions, or the amount of any judgments or settlements that we may be obligated to pay in connection with these lawsuits.
In addition, the need for substantial numbers of our employees to work remotely, such as due to the COVID-19 pandemic, could create additional data security risks. Cyber-security breaches of our systems and information technology could adversely impact our ability to operate or meet contractual obligations. We utilize, develop, install and maintain a number of information technology systems.
In addition, the need for substantial numbers of our employees to work remotely, such as due to the COVID-19 pandemic, could create additional data security risks. 25 Cyber-security breaches of our systems and information technology could adversely impact our ability to operate or meet contractual obligations. We utilize, develop, install, and maintain a number of information technology systems.
Even if we do achieve commercialization of our products and services and become profitable, we may not be able to achieve or, if achieved, sustain profitability on a quarterly or annual basis. We may not be able to raise sufficient capital to continue to operate our business. Historically, we have funded our business operations through sales of equity securities.
Even if we do achieve commercialization of our products and services and become profitable, we may not be able to achieve or, if achieved, sustain profitability on a quarterly or annual basis. 20 We may not be able to raise sufficient capital to continue to operate our business. Historically, we have funded our business operations through sales of equity securities.
Our development and use of our MDAS platforms, cloud-based offerings, as well as our evolution toward DaaS and RaaS models, require us to host increasing amounts of our own and customer data, and increases the risk that our and our customers’ data and financial and proprietary information could be more susceptible to such failures and data breaches.
Our development and use of our MDAS platforms, cloud-based offerings, as well as our evolution toward DaaS, PaaS and RaaS models require us to host increasing amounts of our own data as well as customer data and increases the risk that our and our customers’ data and financial and proprietary information could be more susceptible to such failures and data breaches.
Our future success depends on our ability to significantly increase both our manufacturing capacity and production throughput in a cost-effective and efficient manner, and to manage multiple vendors with several orders on specific deadlines. In order to meet our growth objectives, we will need to increase our engineering, contract management, and manufacturing staff.
Our future success depends on our ability to significantly increase both our manufacturing capacity and production and service throughput in a cost-effective and efficient manner, and to manage multiple vendors with several orders on specific deadlines. In order to meet our growth objectives, we will need to increase our engineering, contract management, and manufacturing staff.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. 27 Our contracts with governmental entities could negatively affect our intellectual property rights, and our ability to commercialize our products could be impaired.
Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources. Our contracts with governmental entities could negatively affect our intellectual property rights, and our ability to commercialize our products could be impaired.
Accordingly, our third-party contractors and we are subject to foreign, federal, state and local laws governing the protection of the environment and human health and safety, including those relating to the use, handling and disposal of these materials. We cannot completely eliminate the risk of accidental contamination or injury from these hazardous materials.
Accordingly, our third-party contractors and we are subject to foreign, federal, state, and local laws governing the protection of the environment and human health and safety, including those relating to the use, handling and disposal of these materials. We cannot eliminate the risk of accidental contamination or injury from these hazardous materials.
ITEM 1A. RISK FACTORS You should carefully consider the following risk factors together with the other information contained in this Annual Report, and in prior periodic and current reports. If any of the following risks actually occur, they may materially harm our business and our financial condition and results of operations.
ITEM 1A. RISK FACTORS You should carefully consider the following risk factors together with the other information contained in this Annual Report, and in prior periodic and current reports. If any of the following risks occur, they may materially harm our business and our financial condition and results of operations.
As a result of patent or trademark infringement claims, or in order to avoid potential claims, we may choose or be required to seek a license from the third party and be required to pay license fees, royalties or both. These licenses may not be available on acceptable terms, or at all.
As a result of patent or trademark infringement claims, or in order to avoid potential claims, we may choose or be required to seek a license from a third party and be required to pay license fees, royalties or both. These licenses may not be available on acceptable terms, or at all.
In addition to infringement claims against us, we may become a party to other types of patent or trademark litigation and other proceedings, including proceedings declared by the U.S. Patent and Trademark Office and proceedings in the European Patent Office, regarding intellectual property rights with respect to our products and technology.
In addition to infringement claims against us, we may become a party to other types of patents or trademark litigation and other proceedings, including proceedings declared by the U.S. Patent and Trademark Office and proceedings in the European Patent Office, regarding intellectual property rights with respect to our products and technology.
Our assumptions could prove to be materially different from the actual performance of our products, causing us to incur substantial expense to repair or replace defective systems in the future. We will bear the risk of claims long after we have sold our products and recognized revenue.
Our assumptions could prove to be materially different from the actual performance of our products, causing us to incur substantial expense to repair or replace defective systems in the future. We could bear the risk of claims long after we have sold our products and recognized revenue.
Any litigation is costly, and time consuming to defend and may distract our management from the daily operations of our business. We may be the subject of additional future litigation, which could a material adverse effect on our business, financial condition, results of operations or cash flows.
Any litigation is costly, and time consuming to defend and may distract our management from the daily operations of our business. We may be the subject of additional future litigation, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.
New regulations surrounding the deployment of autonomous vessels could restrict or limit our ability to deploy WAM-Vs ® in certain jurisdictions. Successful challenges by any parties opposed to our deployments could result in increased costs, or in the denial of necessary permits and approvals.
New regulations surrounding the deployment of autonomous vessels could restrict or limit our ability to deploy WAM-Vs ® in certain jurisdictions. Successful challenges by parties opposed to our deployments could result in increased costs, or in the denial of necessary permits and approvals.
Any one of these outcomes could have an adverse effect on our business, financial condition and results of operations. Failure by third parties to supply or manufacture components of our products or to deploy our systems timely or properly could adversely affect our business, financial condition and results of operations.
Any one of these outcomes could have an adverse effect on our business, financial condition, and results of operations. 23 Failure by third parties to supply or manufacture components of our products or to deploy our systems timely or properly could adversely affect our business, financial condition, and results of operations.
The COVID-19 outbreak has caused significant disruption in the financial markets and supply chains both globally and in the U.S., as well as increased travel restrictions and disruption and shutdown of certain businesses in the U.S. and abroad, including disruptions to our own business.
The COVID-19 outbreak caused significant disruption in the financial markets and supply chains both globally and in the U.S., as well as increased travel restrictions and disruption and shutdown of certain businesses in the U.S. and abroad, including disruptions to our own business.
This factor, when combined with the technical complexity of some of our development efforts, may result in our inability to meet certain customer expectations or deadlines and could result in the amendment to, or termination of, customer contracts or relationships.
This factor, when combined with the technical complexity of some of our development efforts, may result in our inability to meet certain customer expectations or deadlines and could result in an amendment to, or termination of, customer contracts or relationships.
However, we have only manufactured our products in limited quantities for use in development and testing and have limited commercial manufacturing and deployment experience, and our work with our vendors has not included work on multiple orders on time-critical deadlines.
We have only manufactured our products in limited quantities for use in development and testing and have limited commercial manufacturing and deployment experience, and our work with our vendors has not included work on multiple orders on time-critical deadlines.
If new product development and commercialization efforts are not successful, our financial results could be adversely affected. Product and technological developments are accomplished primarily through internally funded R&D projects.
If new product development and commercialization efforts are not successful, our financial results could be adversely affected. 28 Product and technological developments are accomplished primarily through internally funded R&D projects.
Qualified individuals, including engineers, project managers and sales leadership, are in high demand, and we may incur significant costs to attract and retain them. All of our employees are at-will employees, which means they can terminate their employment relationship with us at any time, and their knowledge of our business and industry would be difficult to replace.
Qualified individuals, including engineers, software developers, project managers and sales leadership, are in high demand, and we may incur significant costs to attract and retain them. All our employees are at-will employees, which means they can terminate their employment relationship with us at any time, and their knowledge of our business and industry would be difficult to replace.
Periods of transition in senior management leadership are often difficult as new executives gain detailed knowledge of our operations. Cultural differences may also impact changes in strategy and style. Without consistent and experienced leadership, customers, employees, creditors, shareholders and others may lose confidence in us. To be successful, we need to retain key personnel.
Periods of transition in senior management leadership are often difficult as new executives gain detailed knowledge of our operations. Cultural differences may also impact changes in strategy and style. Without consistent and experienced leadership, customers, employees, suppliers, creditors, shareholders, and others may lose confidence in us. To be successful, we need to attract and retain key personnel.
Our pending and future patent applications may not issue as patents or, if issued, may not be issued in a form that will be advantageous to us.
Our pending and future patent applications may not be issued as patents or, if issued, may not be issued in a form that will be advantageous to us.
Accordingly, we have incurred and may continue to incur substantial legal expenses, judgments and/or settlements relating to pending and future litigation and our management’s time and attention may be diverted from the operation of our business, which could materially and adversely affect the Company. 29 We may become the target of securities litigation, which is costly and time-consuming to defend.
Accordingly, we have incurred and may continue to incur substantial legal expenses, judgments and/or settlements relating to pending and future litigation and our management’s time and attention may be diverted from the operation of our business, which could materially and adversely affect the Company. 32 We may become the target of securities litigation, which is costly and time-consuming to defend.
If we issue additional securities to raise capital, our existing shareholders could experience dilution or may be subordinated to any rights, preferences or privileges granted to the new security holders. In particular, any new securities issued could have rights senior to those associated with our common stock and could contain covenants that could restrict our operations.
If we issue additional securities to raise capital, our existing shareholders could experience dilution or may be subordinated to any rights, preferences or privileges granted to the new security holders. Any new securities issued could have rights senior to those associated with our common stock and could contain covenants that could restrict our operations.
In the past, companies that experience significant volatility in the market price of their publicly traded securities have become subject to class action securities litigation. Our stock price has been volatile, and class action securities litigation and derivative lawsuits have been filed against us and it is possible that additional lawsuits could be brought against us in the future.
In the past, companies that experienced significant volatility in the market price of their publicly traded securities have become subject to class action securities litigation. Our stock price has been volatile, and class action securities litigation and derivative lawsuits have been filed against us, and it is possible that additional lawsuits could be brought against us in the future.
In addition, competition may arise from other companies manufacturing similar products, developing different products that produce energy more efficiently than our products, or developing autonomous vessels that perform better or have other characteristics that customers prefer could make our products less attractive or render them obsolete.
In addition, competition may arise from other companies manufacturing similar products, developing different products that produce energy more efficiently than our products, or developing autonomous vehicles that perform better or have other characteristics that customers prefer, could make our products less attractive or render them obsolete.
Even if wave energy and maritime domain awareness technology achieve broad commercial acceptance, our products, including our PowerBuoys® and WAM-V ® autonomous surface vessels may not prove to be commercially viable technologies.
Even if wave energy and maritime domain awareness technology achieve broad commercial acceptance, our products, including our MDAS offering, PowerBuoys® and WAM-V ® autonomous surface vessels may not prove to be commercially viable technologies.
Our manufacturing operations, particularly some of the activities undertaken by our third-party suppliers and manufacturers, involve the controlled use of hazardous materials. These include batteries for the PB3 and WAM-V ® , propane for the hybrid and various lubricants and oils.
Our manufacturing operations, particularly some of the activities undertaken by our third-party suppliers and manufacturers, involve the controlled use of hazardous materials. These include batteries for the PB3 and WAM-V ® , and various lubricants and oils.
Risks inherent in international operations include, but are not limited to, the following: ● changes in general economic and political conditions in the countries in which we operate; ● unexpected adverse changes in foreign laws or regulatory requirements, including those with respect to renewable energy, environmental protection, permitting, export duties and quotas; ● trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make us less competitive in some countries; ● fluctuations in exchange rates may affect demand for our products and may adversely affect our profitability in U.S. dollars to the extent the price of our products and cost of raw materials and labor are denominated in a foreign currency; ● difficulty with staffing and managing widespread operations; 23 ● complexity of, and costs relating to compliance with, the different commercial and legal requirements of the overseas markets in which we offer and sell our products; ● inability to obtain, maintain or enforce intellectual property rights; and ● difficulty in enforcing agreements in foreign legal systems.
Risks inherent in international operations include, but are not limited to, the following: ● changes in general economic and political conditions in the countries in which we operate; ● unexpected adverse changes in foreign laws or regulatory requirements, including those with respect to renewable energy, environmental protection, permitting, export duties and quotas; ● trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make us less competitive in some countries; ● fluctuations in exchange rates that may affect demand for our products and may adversely affect our profitability in U.S. dollars to the extent the price of our products and cost of raw materials and labor are denominated in a foreign currency; ● difficulty with staffing and managing widespread operations, including managing the complexity of international labor laws as we send staff and hire consultants to support our international deployments; ● complexity of, and costs relating to compliance with, the different commercial and legal requirements of the overseas markets in which we offer and sell our products; ● inability to obtain, maintain or enforce intellectual property rights; and ● difficulty in enforcing agreements in foreign legal systems.
In addition, prior judgements and settlements have caused our insurance premiums and retention amounts to increase, and we may be subject to additional increases in the future or be subjected to other changes in our insurance coverages.
In addition, prior judgements and settlements have caused our insurance premiums and retention amounts to increase, and we may be subject to additional increases in the future or be subjected to other changes in our insurance coverage.
If we lose the services of key personnel, or do not hire or retain other personnel for key positions, this could have a material adverse effect on our business, financial condition, results of operations or cash flows. 21 If we are unable to effectively manage our growth, this could adversely affect our business and operations.
If we lose key personnel, or do not hire or retain other personnel for key positions, this could have a material adverse effect on our business, financial condition, results of operations or cash flows. If we are unable to effectively manage our growth, this could adversely affect our business and operations.
The market price for our common stock may be influenced by many factors, including the items identified within these Risk Factors and the other information included within this annual report. 30 Provisions in our corporate charter documents and under Delaware law may delay or prevent attempts by our shareholders to change our management and hinder efforts to acquire a controlling interest in us.
The market price for our common stock may be influenced by many factors, including the items identified within these Risk Factors and the other information included within this annual report. 33 Provisions in our corporate charter documents and under Delaware law may delay or prevent attempts by our shareholders to change our management or our Board of Directors and hinder efforts to acquire a controlling interest in us.
Tariffs imposed by foreign countries on imports of our products could also adversely affect our international sales. Any increase in manufacturing costs, the cost of our products or limitation on the amount of products we are able to purchase, could have a material adverse effect on our financial condition and results of operations.
Tariffs imposed by foreign countries on imports of our products could also adversely affect our international sales. Any increase in manufacturing costs, the cost of our products or limitation on the amount of products we can purchase, could have a material adverse effect on our financial condition and results of operations.
We may not be successful in our efforts to establish additional strategic relationships or other alternative arrangements. The terms of any additional strategic relationships or other arrangements that we establish may not be favorable to us. Furthermore, even if we are able to find, negotiate and enter these relationships, such arrangements may be conditional upon our receipt of additional funding.
We may not be successful in our efforts to establish additional strategic relationships or other alternative arrangements. The terms of any additional strategic relationships or other arrangements that we establish may not be favorable to us. Furthermore, even if we can find, negotiate and enter into these relationships, such arrangements may be conditional upon our receipt of additional funding.
For more information on our legal proceedings, see Item 3 “Legal Proceedings” of this Annual Report and Note 17 “Commitments and Contingencies - Litigation” in the accompanying consolidated financial statements for the fiscal year ended April 30, 2022.
For more information on our legal proceedings, see Item 3 “Legal Proceedings” of this Annual Report and Note 16 “Commitments and Contingencies - Litigation” in the accompanying consolidated financial statements for the fiscal year ended April 30, 2023.
As we seek to manufacture, market, sell and deploy our PowerBuoys® and WAM-Vs ® in greater quantities, we may encounter unforeseen hurdles that would limit the commercial viability of these products, including unanticipated manufacturing, deployment, operating, maintenance and other costs.
As we seek to manufacture, market, sell and deploy our PowerBuoys® and WAM-Vs ® in greater quantities, we may encounter unforeseen hurdles that would limit the commercial viability of these products, including unanticipated manufacturing, deployment, operating, maintenance, and other costs. We may also encounter technical obstacles to deploying, operating, and maintaining PowerBuoys®, WAM-Vs ® , or other products.
Revenues from customers who are based outside of the U.S. accounted for 84% of our revenues in fiscal 2022 and 86% of our revenues in fiscal 2021.
Revenues from customers who are based outside of the U.S. accounted for 88% of our revenues in fiscal 2023 and 84% of our revenues in fiscal 2022.
Purchasers of our common stock could incur substantial losses relating to their investment in our stock as a result. For the fiscal year ended April 30, 2022, the 52-week low and high prices for our common stock was $0.93 and $3.28, respectively.
Purchasers of our common stock could incur substantial losses relating to their investment in our stock as a result. For the fiscal year ended April 30, 2023, the 52-week low and high prices for our common stock was $0.45 and $1.45, respectively.
Currently, we do not engage in any exchange rate hedging activities and, as a result, any volatility in currency exchange rates may have an immediate adverse effect on our business, financial condition and results of operations.
We cannot accurately predict the impact of future exchange rate fluctuations on the results of our operations. Currently, we do not engage in any exchange rate hedging activities and, as a result, any volatility in currency exchange rates may have an immediate adverse effect on our business, financial condition, and results of operations.
There can be no assurance that we will receive such additional funding. In addition, strategic relationships may not be successful, and we may be unable to sell and market our products to these companies, their affiliates and customers in the future, or growth opportunities may not materialize.
There can be no assurance that we will receive such additional funding. In addition, strategic relationships may not be successful, and we may be unable to sell and market our products to these companies, their affiliates and customers in the future, or growth opportunities may not materialize. 27 We have limited manufacturing, deployment, and internal software development experience.
We have invested a significant portion of our time and financial resources since our inception in the development of our PowerBuoys® but have not yet achieved successful large scale or profitable commercialization of our PowerBuoys ® .
We have invested a significant portion of our time and financial resources since our inception in the development of our PowerBuoys® but have not yet achieved successful large scale or profitable commercialization of our PowerBuoys ® . We have also added the WAM-V ® product line, but we have not achieved profitability of this product line.
While we have raised approximately $80.6 million since April 30, 2020 and believe that this is sufficient to fund our operations for the foreseeable future, we do not know whether we will be able to secure additional funding if needed in the future or, if secured, whether the terms will be favorable to us or our investors.
While we believe that this is sufficient to fund our operations for the foreseeable future, we do not know whether we will be able to secure additional funding if needed in the future or, if secured, whether the terms will be favorable to us or our investors.
We have incurred net losses since we began operations in 1994, including net losses of $18.9 million and $14.8 million in fiscal 2022 and 2021, respectively. As of April 30, 2022, we had an accumulated deficit of $253.8 million.
We have incurred net losses since we began operations in 1994, including net losses of $26.3 million and $18.9 million in fiscal 2023 and 2022, respectively. As of April 30, 2023, we had an accumulated deficit of $280.1 million.
The unintentional release of a PowerBuoy® product from its mooring due to extreme environmental conditions and damage caused by its drifting, and other damages which may include damage to our properties, including our products, and the properties of others, or other consequential damages.
These hazards and risks could result in personal injuries or loss of life. The unintentional release of a PowerBuoy® product from its mooring, for example, due to extreme environmental conditions and damage caused by its drifting, and other damages which may include damage to our properties, including our products, and the properties of others, or other consequential damages.
We have not paid any cash dividends on our common stock to date. We currently intend to retain our future earnings, if any, to fund the development and growth of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends.
We have never paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. We have not paid any cash dividends on our common stock to date. We currently intend to retain our future earnings, if any, to fund the development and growth of our business.
Our targeted markets are highly competitive. We compete against incumbent solutions already being utilized by our customers and potential customers. If we are unable to compete effectively, we may be unable to increase our revenues and achieve or maintain profitability. Our principal targeted markets include offshore oil and gas, defense and security, science and research, marine charter, and offshore wind.
Our targeted markets are competitive and highly complex. We compete against incumbent solutions already being utilized by our customers and potential customers. If we are unable to compete effectively, we may be unable to increase our revenues and achieve or maintain profitability.
There is a risk that we will not be able to retain or replace these key employees. Implementation of our business plans will be highly dependent upon our ability to hire and retain senior executives as well as talented staff in various fields of expertise. We made several changes to our senior management team in fiscal 2022.
Implementation of our business plans will be highly dependent upon our ability to hire and retain senior executives as well as talented staff in various fields of expertise. We made several changes to our senior management team in fiscal 2023.
If we fail to maintain the adequacy of our internal controls, including any failure to implement new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed, we could fail to meet our reporting obligations, and there could also be a material adverse effect on our stock price. 28 A portion of products we acquire from our suppliers are manufactured in foreign countries, making the price and availability of these products subject to international trade risks and other international conditions.
If we fail to maintain the adequacy of our internal controls, including any failure to implement new or improved controls, or if we experience difficulties in their implementation, our business and operating results could be harmed, we could fail to meet our reporting obligations, and there could also be a material adverse effect on our stock price.
Moreover, any widespread product failures could adversely affect our business, financial condition and results of operations. We must continually improve existing products, design and sell new products, and invest in research and development in order to compete effectively. The markets for our products are characterized by rapid technological change, evolving industry standards and continuous improvements of products.
Moreover, any widespread product failures could adversely affect our business, financial condition, and results of operations. We must continually improve existing services and products, design and sell new products, and invest in research and development in order to compete effectively.
We market and plan to market our products in multiple global regions, including parts of North and South America, Europe, and Asia, and we are therefore subject to risks associated with having international operations.
If we are unable to manage our international operations effectively, our business, financial condition and results of operations could be adversely affected. We market and plan to market our services and products in multiple global regions, including parts of North and South America, Europe, and Asia, and we are therefore subject to risks associated with having international operations.
We have utilized several different deployment methods, including towing our products to the deployment location and transporting our products to the deployment location by barge or offshore workboat.
In addition, we rely on third parties, under our oversight, for the deployment and mooring for products. We have utilized several different deployment methods, including towing our products to the deployment location and transporting our products to the deployment location by barge or offshore workboat.
Changes in either patent laws or in interpretations of patent laws in the U.S. and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection, which could in turn adversely affect our business, financial condition and results of operations. 26 If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected, which could in turn adversely affect our business, financial condition and results of operations.
Changes in either patent laws or in interpretations of patent laws in the U.S. and other countries may diminish the value of our intellectual property or narrow the scope of our patent protection, which could in turn adversely affect our business, financial condition, and results of operations.
In our targeted markets, which are highly competitive, we compete against incumbent power and maritime domain awareness solutions already being utilized by our customers and potential customers.
Our principal targeted markets include offshore oil and gas, defense and security, science and research, marine charter, and offshore wind. In our targeted markets, which are highly competitive, we compete against incumbent power and maritime domain awareness solutions already being utilized by our customers and potential customers.
As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our shareholders for the foreseeable future.
In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for our shareholders for the foreseeable future.
Our success depends on the skills, experience and efforts of our management and other key product development, manufacturing, and sales and marketing employees. We cannot be certain that we will be able to attract, retain and motivate such employees. The loss of the services of one or more of these employees could have a material adverse effect on our business.
We cannot be certain that we will be able to attract, retain and motivate such employees. The loss of the services of one or more of these employees could have a material adverse effect on our business. There is a risk that we will not be able to retain or replace these key employees.
Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition and prospects could be materially and adversely affected. COVID-19 has, and could continue to, adversely affect the Company’s business, financial condition and results of operations.
Should the financing we require to sustain our working capital needs be unavailable or prohibitively expensive when we require it, our business, operating results, financial condition, and prospects could be materially and adversely affected. Our business could be affected by macroeconomic risks. The Company’s operations and performance depend significantly on global and regional economic conditions.
If we are unable to respond effectively to such competitive forces, our business, financial condition and results of operations could be adversely affected. Our targeted markets are subject to their own inherent risks, and if those risks should materialize, then our business, financial condition and results of operations could be adversely affected.
Our targeted markets are subject to their own inherent risks, and if those risks should materialize, then our business, financial condition and results of operations could be adversely affected. 24 We market and plan to market our services and products in multiple international regions.
If we do not develop ongoing relationships with vendors located in different regions, we may not be successful at controlling unit costs as our manufacturing volume increases.
If we do not develop ongoing relationships with vendors located in different regions, we may not be successful at controlling unit costs as our manufacturing volume increases. Additionally, we may not be able to negotiate new arrangements with these third parties on acceptable terms, or at all.
We may continue to experience impacts from changes in customer behavior, more employees working from home, and less frequent travel for sales and customer meetings, including dealing with potential regulatory limitations on domestic and international travel. Our business benefits from in-person demonstrations and sales meetings, which have been limited due to COVID-19.
Future pandemics could cause changes in customer behavior, more employees working from home, and less frequent travel for sales and customer meetings, including dealing with potential regulatory limitations on domestic and international travel. Our business benefits from in-person demonstrations and sales meetings.
Moreover, if one or more of the analysts who cover our company downgrade our common stock or release a negative report, or if our operating results do not meet analyst expectations, the price of our common stock could decline. 31 We have never paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future.
Moreover, if one or more of the analysts who cover our company downgrade our common stock or release a negative report, or if our operating results do not meet analysts’ expectations, the price of our common stock could decline.
Any of which could adversely affect our business, financial condition and results of operations. We have limited manufacturing and deployment experience. If we are unable to increase our manufacturing capacity in a cost-effective manner, our business will be materially harmed. We manufacture key components of our products, while outsourcing the manufacturing for other components of our products.
If we are unable to increase our internal software development and manufacturing capacity in a cost-effective manner, our business may be materially harmed. We manufacture key components of our products, while outsourcing the manufacturing for other components of our products.
Due to constant changes in our markets, our future success depends on our ability to develop new technologies, products, processes and product applications. New product development and commercialization efforts, including efforts to enter markets or product categories in which we have limited or no prior experience, have inherent risks.
New product development and commercialization efforts, including efforts to enter markets or product categories in which we have limited, or no prior experience have inherent risks.
Risks Related to Product Development and Commercialization We have only manufactured a limited number of PowerBuoys®, and to date we have not produced these products in any significant quantity for commercial production. These products do not have a sufficient operating history to accurately predict how they will perform over their estimated useful life.
These products do not have a sufficient operating history to accurately predict how they will perform over their estimated useful life. To date, we have only manufactured a limited number of PowerBuoys®. As a result, our products may not have a sufficient operating history to confirm how they will perform over their estimated useful life.
If our products perform below expectations, we could lose customers and face substantial repair and replacement expenses which could in turn adversely affect our business, financial condition and results of operations. 24 We face numerous accident and safety risks and hazards, including hazards associated with extreme weather, wind and other environmental conditions, which are inherent in offshore operations.
If our products perform below expectations, we could lose customers and face substantial repair and replacement expenses which could in turn adversely affect our business, financial condition, and results of operations.
Any of these events could damage our reputation, result in litigation and regulatory fines and penalties, or have a material adverse effect on our business, financial condition, results of operations or cash flows.
Any of these events could damage our reputation, result in litigation and regulatory fines and penalties, or have a material adverse effect on our business, financial condition, results of operations or cash flows. Our ability to use net operating loss carryforwards to offset future taxable income for U.S. federal income tax purposes may be limited .
Even if we are successful in developing our manufacturing capabilities and processes, we may not be able to do so in time to meet our commercialization schedule or satisfy the requirements of our customers. 25 Problems with the quality or performance of our products would adversely affect our business, financial condition and results of operations.
If we cannot do so, we may be unable to expand our business and become profitable or do so in time to meet the needs of our customers. Problems with the quality or performance of our products would adversely affect our business, financial condition, and results of operations.
Third parties may own or control these patents, patent applications or trademarks in the U.S. and abroad. Third parties could bring claims against us that would cause us to incur substantial expenses and, if successfully asserted against us, could cause us to pay substantial damages.
Third parties could bring claims against us that would cause us to incur substantial expenses and, if successfully asserted against us, could cause us to pay substantial damages.
Industry-accepted security measures and technology to secure computer systems, and the information stored by cloud vendors on these systems are subject to threats. There can be no assurance that our efforts will prevent these threats. Further, as these security threats continue to evolve, we may be required to devote additional resources to protect, prevent, detect and respond against such threats.
There can be no assurance that our efforts will prevent these threats, or that we will be able to secure appropriate certifications in this area. Further, as these security threats continue to evolve, we may be required to devote additional resources to protect, prevent, detect, and respond against such threats.
If we infringe or are alleged to have infringed upon intellectual property rights of third parties, our business, financial condition and results of operations could be adversely affected. Our products or use of our trademarks may infringe, or be claimed to infringe, upon patents, patent applications or trademarks under which we do not hold licenses or other rights.
If we are unable to manage our intellectual property rights, our business and operating results may be seriously harmed. 29 If we infringe or are alleged to have infringed upon intellectual property rights of third parties, our business, financial condition, and results of operations could be adversely affected.
Funding from government contracts may also limit when and how we can deploy our technology developed under those contracts. Foreign governments with which we contract to provide funding for our research and development may seek similar rights.
Funding from government contracts may also limit when and how we can deploy our technology developed under those contracts.
The extent to which COVID-19 impacts our results will ultimately depend on future developments and will include future actions which may be taken by governments and businesses to attempt to contain COVID-19. 20 Currency translation and transaction risk may adversely affect our business, financial condition and results of operations.
The extent to which future pandemics impact our results will ultimately depend on future developments and will include future actions which may be taken by governments and businesses to attempt to contain them.
Our reporting currency is the U.S. dollar, and sometimes we incur costs in the local currency of countries in which our customers and suppliers are located. As a result, we are subject to currency translation risk. A percentage of our revenues have historically been generated outside the United States and can be denominated in foreign currencies of our customers.
Currency translation and transaction risk may adversely affect our business, financial condition, and results of operations. Our reporting currency is the U.S. dollar, however sometimes we incur costs in the local currency of countries in which our customers and suppliers are located. As a result, we are subject to currency translation risk.
Our autonomous vessels could cause other types of damage, including collisions with other vessels, property of others, or even swimmers or other persons or property utilizing a body of water where the WAM-V® is operating. This could also lead to the suspension of certain of our operations, large damage claims, damage to our safety reputation and a loss of business.
Certain weather events could increase in frequency or severity requiring potential design changes or limiting the windows available for offshore operations. Our autonomous vessels could cause other types of damage, including collisions with other vessels, property of others, or even swimmers or other persons or property utilizing a body of water where the WAM-V® is operating.
Risks Related to Regulatory and Compliance Matters If we are unable to obtain all necessary regulatory permits and approvals, it is possible that we will not be able to implement our planned projects or business plan. Offshore deployment of our products is heavily regulated. Each of our deployments is subject to multiple permitting and approval requirements.
Foreign governments with which we contract to provide funding for our research and development may seek similar rights. 30 Risks Related to Regulatory and Compliance Matters If we are unable to obtain all necessary regulatory permits and approvals, it is possible that we will not be able to implement our planned projects or business plan.
If we are not successful in manufacturing systems that generate competitively priced power to the capacity required for the application, we may not be able to respond effectively to competitive pressures from other renewable energy technologies or improvements to existing technologies.
If we are not successful in manufacturing systems and solutions required for the application, we may not be able to respond effectively to competitive pressures from competing technologies or improvements to existing technologies. If we are unable to respond effectively to such competitive forces, our business, financial condition, and results of operations could be adversely affected.
We market and plan to market our products in multiple international regions. If we are unable to manage our international operations effectively, our business, financial condition and results of operations could be adversely affected.
If we are unable to protect the confidentiality of our proprietary information and know-how, the value of our technology and products could be adversely affected, which could in turn adversely affect our business, financial condition, and results of operations.
We may also have limited legal recourse in the event we encounter patent or trademark infringement. If we are unable to manage our intellectual property rights, our business and operating results may be seriously harmed.
We may also have limited legal recourse in the event we encounter patent or trademark infringement.
Changes in exchange rates between foreign currencies and the U.S. dollar could affect our revenues and cost of revenues and could result in exchange losses. We cannot accurately predict the impact of future exchange rate fluctuations on our results of operations.
A percentage of our revenues have historically been generated outside the U.S. and can be denominated in foreign currencies of our customers. Changes in exchange rates between foreign currencies and the U.S. dollar could affect our revenues and cost of revenues and could result in exchange losses.
We are dependent on state, federal and regional government agencies for such permits and approvals.
Offshore deployment of our products is heavily regulated. Each of our deployments is subject to multiple permitting and approval requirements. We and our customers are dependent on state, federal and regional government agencies for such permits and approvals.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeFinally, we have a property located in Houston, Texas, where we occupy approximately 28,000 square feet under a lease expiring on January 31, 2023. We use this facility for our consulting services personnel.
Biggest changeFinally, we have a property located in Houston, Texas, under a lease expiring on January 31, 2024. We use this facility for our consulting services personnel. We believe that our facilities are sufficient for our current needs and are in good condition in all material respects.
Additionally, we have a property located on the University of California Berkeley in Berkeley, California, where we occupy 1,220 square feet under a lease expiring on June 30, 2022 which will become a month-to-month lease upon expiration. We use this facility primarily for administration, engineering, and manufacturing of our products.
Additionally, we have a property located on the University of California Berkeley in Berkeley, California, where we occupy 1,220 square feet under a lease which is currently operating month-to-month . We use this facility primarily for administration, engineering, and manufacturing of our products.
Added
Additionally, we have begun leasing a property located in Richmond, California where we will occupy approximately 11,500 square feet under a lease expiring on June 18, 2028. We are currently in the process of moving our California operations to this location and intend to vacate the site at the University of California Berkeley during fiscal 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSpain 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. In connection with the tax audit, the Spanish tax inspector challenged the Company’s recognition of grant funds received in 2011 to 2014 from the European Commission in connection with the Company’s Waveport project.
Biggest changeIn connection with the tax audit, the Spanish tax inspector challenged the Company’s recognition of grant funds received in 2011 to 2014 from the European Commission in connection with the Company’s Waveport project.
Dunleavy compensatory damages in the amount of $438,254.54 for the breach of contract claim, plus additional attorneys’ fees, costs and pre-judgment interest for a total award of $1,223,963.14. The Company paid this amount on May 26, 2021 and the matter is now closed.
Dunleavy compensatory damages in the amount of $438,254.54 for the breach of contract claim, plus additional attorneys’ fees, costs and prejudgment interest for a total award of $1,223,963.14. The Company paid this amount on May 26, 2021 and the matter is now closed.
As of April 30, 2022, the Company had no reserve related to this audit. The Company has appealed the decision of the Tribunal tax assessment to the Spanish National Court. The Company expect a ruling on the appeal prior to the end of fiscal 2023. Item 4. MINE SAFETY DISCLOSURES None. 32 PART II
As of April 30, 2023, the Company had no reserve related to this audit. The Company has appealed the decision of the Tribunal tax assessment to the Spanish National Court. The Company expects a ruling on the appeal prior to the end of fiscal 2024. Item 4. MINE SAFETY DISCLOSURES None. 36 PART II
Added
On June 10, 2014, the Company terminated Charles Dunleavy as its Chief Executive Officer for cause and removed him from the Board of Directors. Legal proceedings commenced in 2018 and an arbitration panel awarded Mr. Dunleavy a total amount of $1,2 million.
Added
The Company paid this amount on May 26, 2021 and the matter was closed. 35 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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeAs of July 13, 2022, there were 131 holders of record for shares of our common stock. Since a portion of our common stock is held in “street” or nominee name, we are unable to determine the exact number of beneficial holders.
Biggest changeAs of July 28, 2023, there were 131 holders of record for shares of our common stock. Since a portion of our common stock is held in “street” or nominee name, we are unable to determine the exact number of beneficial holders.
Transfer Agent Information Our transfer agent is Computershare Trust Company, N.A. Computershare is located at 250 Royall Street, Canton, MA 02021-1011. Its contact information is: United States and Canada: (800) 662 - 7232, International (781) 575–4238, and its website is located at www.computershare.com .
Transfer Agent Information Our transfer agent is Computershare Trust Company, N.A. Computershare is located at 250 Royal Street, Canton, MA 02021-1011. Its contact information is: United States and Canada: (800) 662 - 7232, International (781) 575–4238, and its website is located at www.computershare.com .
Removed
Purchases of Equity Securities by the Issuer There were no purchases of equity securities by the Company for the three months ended April 30, 2022. Equity Compensation Plan Information See “Part III, Item 12- Security Ownership of Certain Beneficial Owners, Management and Related Shareholder Matters- Equity Compensation Plan Information.” Unregistered Sales of Equity Securities and Use of Proceeds Not Applicable.
Added
We adopted a Section 382 Tax Benefits Preservation Plan on June 30, 2023 to diminish the risk we could experience an “ownership change” as defined in Section 382 of the Internal Revenue Code of 1986, as amended, which could substantially limit or permanently eliminate our ability to utilize its net operating loss carryovers to reduce potential future income tax obligations.
Added
Under this plan, a person who acquires, without the approval of our Board of Directors, beneficial ownership of 4.99% or more of the outstanding common stock could be subject to significant dilution. See Note 19 to the consolidated financial statements included herein for more.
Added
Purchases of Equity Securities by the Issuer There were no purchases of equity securities by the Company for the year ended April 30, 2023. 37 Equity Compensation Plan Information The following table sets forth the indicated information as of April 30, 2023, with respect to our equity compensation plans: Plan Category Number of Shares to be Issued Upon Exercise of Outstanding Options and Restricted Stock Weighted-Average Exercise Price of Outstanding Options Number of Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Shares Reflected in First Column) Equity compensation plans approved by shareholders: Stock Options 1,595,852 $ 1.70 221,446 (1) Restricted Stock Units 1,935,994 N/A Equity compensation plans not approved by shareholders: Stock Options — — — Restricted Stock Units 50,000 N/A 161,487 (2) (1) Consists of shares of our common stock available for issuance under the 2015 Omnibus Incentive Plan.
Added
(2) Consists of shares of our common stock available for issuance under the 2018 Employee Inducement Incentive Award Plan. Our equity compensation plans consist of a 2006 Stock Incentive Plan and a 2015 Omnibus Incentive Plan which were approved by our shareholders.
Added
Once the 2015 Omnibus Incentive Plan was approved by the shareholders on October 22, 2015, no further stock options or other awards were awarded under the 2006 Stock Incentive Plan and it was terminated.
Added
Shares that are forfeited under the 2006 Stock Incentive Plan on or after October 22, 2015, will become available for issuance under the 2015 Omnibus Incentive Plan. The equity compensation plan that has not been approved by our shareholders is our 2018 Employee Inducement Incentive Award Plan.
Added
Unregistered Sales of Equity Securities and Use of Proceeds Not Applicable. 38 ITEM 6. [ Reserved]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. Selected Financial Data 33 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42 Item 8. Financial Statements and Supplementary Data 42 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 42 Item 9A. Controls and Procedures 42 Item 9B.
Biggest changeItem 6. Selected Financial Data 39 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 39 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 46 Item 8. Financial Statements and Supplementary Data 46 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 46 Item 9A. Controls and Procedures 46
Removed
Other Information 43 Item 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 43 PART III Item 10. Directors, Executive Officers and Corporate Governance 44 Item 11. Executive Compensation 47 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 52 Item 13. Certain Relationships and Related Transactions, and Director Independence 54 Item 14.
Removed
Principal Accountant Fees and Services 55 PART IV

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

50 edited+27 added−25 removed8 unchanged
Biggest changeOur future capital requirements will depend on a number of factors, including but not limited to: ● our ability to develop, market and 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 continued impact of the COVID-19 pandemic and its variants on our business, operations, customers, suppliers and manufacturers and personnel as well as their effects on supply chain and inflation; ● our acquisitions and our ability to integrate them into our operations may use significant resources, be unsuccessful or expose us to unforeseen liabilities; ● our ability to meet product development, manufacturing and customer delivery deadlines that may be impacted by disruptions to our supply chain, primarily related to labor shortages and manufacturing and transportation delays both here in the U.S. and abroad; ● our estimates regarding future expenses, revenues, and capital requirements; ● 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 and survivability 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, or restrict the use of our products; ● our ability to attract and retain key personnel, including senior management, to achieve our business objectives; ● our history of operating losses, which we expect to continue for at least the short term and possibly longer; and ● our ability to protect our intellectual property portfolio.
Biggest changeOur future capital requirements will depend on several factors, including but not limited to: ● our ability to develop, market and 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; ● our history of operating losses, which we expect to continue for at least the short term and possibly longer; ● our ability to manage and mitigate risks associated with our internal cyber security protocols and protection of the data we collect and distribute; ● our ability to protect our intellectual property portfolio ● the impact of inflation related to the U.S. dollar on our business, operations, customers, suppliers and manufacturers and personnel; ● our ability to meet product development, manufacturing and customer delivery deadlines may be impacted by disruptions to our supply chain, primarily related to labor shortages and manufacturing and transportation delays both here in the U.S. and abroad; ● our acquisitions and our ability to integrate them into our operations which may be unsuccessful or expose us to unforeseen liabilities, and may use significant resources; ● our estimates regarding future expenses, revenues, and capital requirements; ● our ability to identify and penetrate markets for our products, services, and solutions; ● our ability to effectively respond to competition in our targeted markets ● our ability to establish relationships with our existing and future strategic partners which may not be successful; ● 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 increase or more efficiently utilize the power available from our PowerBuoy® product line: ● changes in current legislation, regulations and economic conditions that affect the demand for, or restrict the use of our products; ● our ability to hire and retain key personnel, including senior management, to achieve our business objectives; and ● our ability to establish and maintain commercial profit margins.
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.
A contract may contain a single performance obligation 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.
We offer our products and services to a wide-range of customers, including those in government and offshore energy, oil and gas, construction, wind power and other industries. We are involved in the entire life cycle of product development, from product design through manufacturing, testing, deployment, maintenance and upgrades. working closely with partners across our supply chain.
We offer our products and services to a wide range of customers, including those in government and offshore energy, oil and gas, construction, wind power and other industries. We are involved in the entire life cycle of product development, from product design through manufacturing, testing, deployment, maintenance and upgrades, while working closely with partners across our supply chain.
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 outstanding common stock on the date of 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 exceeded the 19.99% limit of the outstanding common stock on the date of the agreement.
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 or labor hour incurred best represents the measure of progress against the performance obligations incorporated within the contractual agreements.
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 labor hours best represents the measure of progress against the performance obligations incorporated within the contractual agreements.
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 April 30, 2022 and 2021.
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 April 30, 2023 or 2022.
Interest income, net and other income (loss) Interest income, net consists of interest received on cash and cash equivalents, investments in money market accounts and short-term investments and is net of interest expense paid on certain obligations to third parties.
Interest income, net Interest income, net consists of interest received on cash and cash equivalents, investments in money market accounts and short-term investments and is net of interest expense paid on certain obligations to third parties.
Management believes the Company’s current cash, cash equivalents, and short-term investments are sufficient to fund its planned expenditures through at least July 31, 2023. 41 Off-Balance Sheet Arrangements Since inception, we have not engaged in any off-balance sheet financing activities.
Management believes the Company’s current cash, cash equivalents, and short-term investments are sufficient to fund its planned expenditures through at least July 31, 2024. Off-Balance Sheet Arrangements Since inception, we have not engaged in any off-balance sheet financing activities.
Recent Accounting Pronouncements In June 2016, the Financial Accounting and Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “ Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments.” The amendment in this update 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.
Recent Accounting Pronouncements 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.
Cost of revenues also includes PowerBuoy® and WAM-V® system delivery and deployment expenses and may include anticipated losses at completion on certain contracts. Cost of revenues for the fiscal years ended April 30, 2022 and 2021 were approximately $1.9 million and $2.3 million, respectively.
Cost of revenues also includes PowerBuoy® and WAM-V® system delivery and deployment expenses and may include anticipated losses anticipated at completion on certain contracts. Cost of revenues for the fiscal years ended April 30, 2023 and 2022 were approximately $2.5 million and $1.9 million, respectively.
Our business is capital intensive, and up through fiscal 2022, we have been funding our business principally through sales of our securities.
Our business is capital intensive, and up through fiscal 2023, we have been funding our business principally through sales of our securities.
Since we conduct our business in U.S. dollars and our functional currency is the U.S. dollar, our main foreign exchange exposure, if any, results from changes in the exchange rate between the U.S. dollar and other foreign currencies. We maintain cash accounts that are denominated in British pounds sterling, Euros and Australian dollars in addition to U.S. dollars.
Since we conduct our business in U.S. dollars and our functional currency is the U.S. dollar, our main foreign exchange exposure, if any, results from changes in the exchange rate between the U.S. dollar and transactions settled in foreign currencies. In addition to U.S. dollars, we maintain cash accounts that are denominated in British pounds sterling.
Backlog As of April 30, 2022, the Company’s backlog was $0.6 million. As of April 30, 2021, backlog was $0.2 million. Our backlog can include unfilled firm orders for our products and services from commercial or governmental customers.
Backlog As of April 30, 2023, the Company’s backlog was $4.0 million. As of April 30, 2022, backlog was $0.6 million. Our backlog can include unfilled firm orders for our products and services from commercial or governmental customers.
As of April 30, 2022, the cash, cash equivalents, restricted cash, and short-term investments balance was $57.7 million and we expect to fund our business with this amount and, to a limited extent, with our revenues until we generate sufficient cash flow to internally fund our business.
As of April 30, 2023, the cash, cash equivalents, restricted cash, and short-term investments balance was $34.9 million, and we expect to fund our business with this amount and, to a limited extent, with our revenues until we generate sufficient cash flow to internally fund our business.
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 or labor hours incurred are utilized to assess progress against specific contractual performance obligations for the Company’s services.
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 are utilized to assess progress against specific contractual performance obligations for the Company’s services.
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 Company anticipates establishing a new ATM facility during fiscal 2024. 39 Equity Line Common Stock Purchase Agreements On September 18, 2020, 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 $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.
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.
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.
The following table shows the percentage of our revenues by geographical location of our customers for fiscal 2022 and 2021: Twelve months ended April 30, Customer Location 2022 2021 North America 84 % 14 % South America 9 % 61 % Europe 1 % 25 % Asia 6 % — % Total 100 % 100 % Foreign exchange loss We transact business in various countries and have exposure to fluctuations in foreign currency exchange rates.
The following table shows the percentage of our revenues by geographical location of our customers for fiscal 2023 and 2022: Fiscal years ended April 30, Customer Location 2023 2022 North America 88 % 84 % South America 3 % 9 % Europe — % 1 % Asia and Australia 9 % 6 % Total 100 % 100 % Foreign exchange gain /loss We transact business in various countries and have exposure to fluctuations in foreign currency exchange rates.
References to fiscal 2021 are to the fiscal year ended April 30, 2021. 33 Business Overview We provide ocean data collection and reporting, marine power, offshore communications, and Maritime Domain Awareness (“MDA”) products and consulting services.
References to fiscal 2023 are to the fiscal year ended April 30, 2023. Business Overview We provide ocean data collection and reporting, marine power, offshore communications, and Maritime Domain Awareness System (“MDA” or “MDAS”) products, integrated solutions, and consulting services.
If additional funds are raised through the issuance of debt securities or preferred stock, these securities could have rights senior to those associated with our common stock and could contain covenants that would restrict our operations.
The sale of additional equity under new facilities could result in dilution to our shareholders. If additional funds are raised through the issuance of debt securities or preferred stock, these securities could have rights senior to those associated with our common stock and could contain covenants that would restrict our operations.
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.
In relation to ASC 606, which states that 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 as 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.
Net cash used in operating activities During the fiscal year ended April 30, 2022, net cash flows used in operating activities was $21.3 million, an increase of $9.6 million compared to net cash used in operating activities during the fiscal year ended April 30, 2021.
Net cash used in operating activities During the fiscal year ended April 30, 2023, net cash flows used in operating activities was $21.7 million, an increase of $0.4 million compared to net cash used in operating activities during the fiscal year ended April 30, 2022.
For the two years ended April 30, 2022 and 2021, our aggregate revenues were $3.0 million, our aggregate net losses were $33.5 million and our aggregate net cash used in operating activities was $33.1 million. 40 We expect to devote substantial resources to continue our development efforts for our products and to expand our sales, marketing and manufacturing programs associated with the continued commercialization of our products.
For the two-year period ended April 30, 2023 our aggregate revenues were $4.5 million, our aggregate net losses were $45.2 million and our aggregate net cash used in operating activities was $43.0 million. 44 We expect to devote substantial resources to continue our development efforts for our products and to expand our sales, marketing and manufacturing programs associated with the continued commercialization of our products.
Our product development costs relate primarily to our efforts to increase the power output and reliability of our PowerBuoy® system, production of our WAM-Vs®, and to the development of new products, product applications and complementary technologies.
Our product development costs relate primarily to our efforts to increase the power output and reliability of our PowerBuoy® system, and to the development of new products, product applications and complementary technologies. We expense all our engineering and product development costs as incurred.
The effect of exchange rates on cash and cash equivalents results primarily from gains or losses on consolidation of foreign subsidiaries and foreign denominated cash and cash equivalents. Liquidity Outlook Since our inception, the cash flows from customer revenues have not been sufficient to fund our operations and provide the capital resources for our business.
Liquidity Outlook Since our inception, the cash flows from customer revenues have not been sufficient to fund our operations and provide the capital resources for our business.
To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Capital Raises At the Market Offering Agreements On January 7, 2019, the Company entered into an At the Market Offering Agreement (“2019 ATM Facility”) with AGP, under which the Company may 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.
Capital Raises At the Market Offering Agreements On November 20, 2020, the Company entered into an At-the-Market Offering Agreement (“ATM”) with AGP (the “2020 ATM Facility”) pursuant to which the Company could issue and sell, from time to time, shares of the Company’s common stock having an aggregate offering price of up to $100.0 million.
Through April 30, 2022, 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. The sale of additional equity or convertible securities could result in dilution to our shareholders.
Through April 30, 2023, 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. The Aspire Capital agreement automatically terminated on March 18, 2023, the maturity date of the equity line of credit.
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 of it.
The Company presents shipping and handling costs, that occur after control of the promised goods or services transfer to the customer, as fulfillment costs in costs of goods sold and regular shipping and handling activities charged to operating expenses. 40 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.
We also assess the need and cost to utilize financial instruments to hedge currency exposures on an ongoing basis and may hedge against exchange rate exposure in the future. 37 Results of Operations This section should be read in conjunction with the discussion below under “- Liquidity and Capital Resources.” Fiscal Years Ended April 30, 2022 and 2021 The following table contains selected Consolidated Statements of Operations information, which serves as the basis of the discussion of our results of operations for the years ended April 30, 2022 and 2021: Twelve months ended April 30, 2022 2021 (in thousands) Revenues $ 1,759 $ 1,206 Cost of revenues 1,860 2,279 Gross loss (101 ) (1,073 ) Total operating expenses 21,512 12,519 Operating loss (21,613 ) (13,592 ) Litigation settlement — (1,224 ) Interest income, net 124 124 Other income 60 — Gain on forgiveness of PPP loan 890 — Loss on liquidation of subsidiary (157 ) — Other expense, net — (83 ) Foreign exchange gain/(loss) (1 ) 15 Loss before income taxes (20,697 ) (14,760 ) Income tax benefit 1,823 — Net loss $ (18,874 ) $ (14,760 ) Revenues Revenues for the fiscal years ended April 30, 2022 and 2021 were approximately $1.8 million and $1.2 million, respectively, representing an increase of approximately $0.6 million, or 46%, from 2021.
Results of Operations This section should be read in conjunction with the discussion below under “Liquidity and Capital Resources.” Fiscal Years Ended April 30, 2023 and 2022 The following table contains selected Consolidated Statements of Operations information, which serves as the basis of the discussion of our results of operations for the fiscal years ended April 30, 2023 and 2022: Fiscal years ended April 30, 2023 2022 (in thousands) Revenues $ 2,732 $ 1,759 Cost of revenues 2,496 1,860 Gross profit (loss) 236 (101 ) Change in fair value of consideration 1,112 (60 ) Other operating expenses 28,340 21,512 Total operating expenses 29,452 21,452 Operating loss (29,216 ) (21,553 ) Interest income, net 902 124 Other income, employee retention credit 1,251 — Other income, proceeds from insurance claim 458 — Gain on extinguishment of PPP loan — 890 Loss on liquidation of subsidiary — (157 ) Foreign exchange gain/(loss) 1 (1 ) Loss before income taxes (26,604 ) (20,697 ) Income tax benefit 278 1,823 Net loss $ (26,326 ) $ (18,874 ) Revenues Revenues for the fiscal years ended April 30, 2023 and 2022 were approximately $2.7 million and $1.8 million, respectively, representing an increase of approximately $1.0 million, or 55%, from 2022.
The Company currently has committed sources of equity financing through it’s At the Market Offering Agreement with A.G.P/Alliance Global Partners (“AGP”) and the Aspire Capital financing (see Note 12), 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.
The Company has obtained equity financing through its ATM Agreement and the Aspire Capital financing, but the Company cannot be certain that additional equity and/or debt financing will be available to the Company as needed on acceptable terms, or at all.
None of these occurred in the current year. Effect of exchange rates on cash and cash equivalents The effect of exchange rates on cash and cash equivalents was a decrease of approximately $32,000 in fiscal year 2022, and an increase of $134,000 for fiscal year 2021, respectively.
Effect of exchange rates on cash and cash equivalents The effect of exchange rates on cash and cash equivalents was approximately zero in fiscal year 2023, and an increase of $32,000 for fiscal year 2022, respectively. The effect of exchange rates on cash and cash equivalents results primarily from gains or losses on foreign denominated cash and cash equivalents.
We also work closely with our third party partners that provide us with, among other things, software, controls, sensors, integration services, and marine installation services. Our solutions enable technologies for data collection, analysis, and communication in ocean and other offshore environments, and generate actionable intelligence via a variety of inputs.
We also work closely with our third-party partners that provide us with, among other things, software, controls, sensors, integration services, and marine installation services. Our solutions are based on proprietary technologies that enable autonomous, zero or low carbon emitting, and cost-effective data collection, analysis, transportation and communication.
We expense all of our engineering and product development costs as incurred. 38 Operating expenses during the fiscal year ended April 30, 2022 were $21.5 million as compared to $12.5 million for fiscal year 2021.
Operating expenses during the fiscal year ended April 30, 2023 were $28.3 million as compared to $21.5 million for fiscal year 2022.
Operating Expenses Our operating expenses consist of salaries and other personnel-related costs and the costs of products, materials and outside services used in our product development and unfunded research activities, professional fees, salaries and other personnel-related costs for employees and consultants engaged in sales and marketing and support of our PowerBuoy® systems and costs for executive, accounting and administrative personnel, and other general corporate expenses.
Also included are professional fees, salaries and other personnel-related costs for employees and consultants engaged in sales and marketing and costs for executive, accounting and administrative personnel, and other general corporate expenses.
Other income (loss) includes a gain on the forgiveness of the PPP loan in fiscal 2022 of $0.9 million and a loss of $0.2 million on the liquidation of Australian subsidiary. Foreign exchange (loss)/gain Foreign exchange loss was approximately ($1,000) for fiscal year 2022 as compared to a foreign exchange gain of $15,000 for fiscal year 2021.
In June 2021, the Company was informed that its application was approved, the loan was fully forgiven, and the Company recognized a gain on extinguishment of PPP loan of $0.9 million in its Consolidated Statement of Operations for the fiscal year ended April 30, 2022. 43 Foreign exchange gain/(loss) Foreign exchange gain was approximately $1,000 for fiscal year 2023 as compared to a foreign exchange loss of $1,000 for fiscal year 2022.
Cost of revenues Our cost of revenues consists primarily of subcontracts, incurred material, lab and manufacturing overhead expenses, such as engineering expense, equipment depreciation and maintenance and facility related expenses, and includes the cost of equipment to customize the PowerBuoy® and WAM-V®, supplied by third-party suppliers.
The $1.0 million increase in revenues for the full year was mainly attributable to increases from sales and/or leases of USV products of $1.2 million partially offset by decreases in consulting services of $0.1 million and other revenue of $0.1 million. 42 Cost of revenues Our cost of revenues consists primarily of direct labor, subcontracts, incurred material, lab and manufacturing overhead expenses, such as engineering expense, equipment depreciation and maintenance and facility related expenses, and includes the cost of equipment to customize the PowerBuoy® and WAM-V®.
These foreign denominated accounts had a balance of $28,000 as of April 30, 2022 and $0.3 million as of April 30, 2021, compared to our total cash, cash equivalents, short term investments, and restricted cash balances of $57.7 million as of April 30, 2022 and $83.6 million as of April 30, 2021.
These foreign denominated accounts had a balance of zero as of April 30, 2023 and $28,000 as of April 30, 2022, compared to our total cash, cash equivalents, short term investments, and restricted cash balances of $34.9 million as of April 30, 2023 and $57.7 million as of April 30, 2022. 41 In addition, should we desire to, a portion of our operations can be conducted through our subsidiary in the United Kingdom, the functional currency of which is the British pound sterling.
Both of these subsidiaries have foreign exchange exposure that results from changes in the exchange rate between their functional currency and other foreign currencies in which they conduct business. As of April 30, 2022, the Company had liquidated our Australian subsidiary.
This subsidiary has foreign exchange exposure that results from changes in the exchange rate between their functional currency and other foreign currencies in which they conduct business. For the fiscal years ended April 30, 2023 and April 30, 2022 there has been little to no activity other than regulatory and tax filings.
The change was primarily the result of the Company investing the majority of its cash into short-term, held to maturity investments of $49.4 million and the acquisition of MAR of $4.1 million. 39 Net cash provided by financing activities Net cash provided by financing activities during the fiscal year ended April 30, 2022 was approximately $87,000 compared to net cash provided by financing activities during the fiscal year ended April 30, 2021 of $84.2 million.
Additionally, in the prior year, the Company acquired MAR using cash of $4.4 million. Net cash (used in)/provided by financing activities Net cash used by financing activities during the fiscal year ended April 30, 2023 was approximately $14,000 compared to net cash provided by financing activities during the fiscal year ended April 30, 2022 of $87,000.
Total cash, cash equivalents, restricted cash, and short-term investments was $57.7 million as of April 30, 2022, compared to $83.6 million as of April 30, 2021. Interest income, net was approximately $124,000 for both fiscal 2022 and 2021. The change was flat year over year due to an increase in interest rates paid, offset by lower interest earning assets.
Total cash, cash equivalents, restricted cash, and short-term investments was $34.9 million as of April 30, 2023, compared to $57.7 million as of April 30, 2022. Interest income, net was approximately $0.9 million and $0.1 million for fiscal 2023 and 2022, respectively, and reflects the rising interest rate environment experienced during fiscal 2023.
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.
The Company determines the standalone selling price based upon the facts and circumstances of each obligated good or service. When no observable standalone selling price is available, the standalone selling price is generally estimated based upon the Company’s forecast of the total cost to satisfy the performance obligation plus an appropriate profit margin.
The decrease in net cash provided by financing activities during the fiscal year ended April 30, 2022 is due to financing activities from prior year of At the Market capital raises of $62.7 million through AGP and ELOC capital raises of $13.4 million with Aspire, $2.8 million from proceeds associated with warrant exercises, $0.2 million proceeds associated with stock option exercises and $0.9 million received from the PPP loan.
The decrease in net cash provided by financing activities during the fiscal year ended April 30, 2023 was due to the Company’s receipt of $90,000 of proceeds from stock option exercises in the prior year.
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 considerations, including unpriced change orders and liquidated damages and penalties.
The nature of the Company’s contracts may give rise to several types of variable consideration, including unpriced change orders, liquidated damages and penalties. Variable consideration can also arise from modifications to the scope of services.
The difference was attributable primarily to the relative change in value of the British pound sterling, Euro and Australian dollar compared to the U.S. dollar. Income tax benefit During the fiscal year ended April 30, 2022, the Company sold New Jersey State net operating losses and research and development credits resulting in the recognition of income tax benefits of $0.4.
Income tax benefit Income tax benefit reflects the sale by the Company of New Jersey State net operating losses and research development credits under the New Jersey Economic Development Authority Tax Transfer programs, resulting in $0.3 million and $1.8 million of tax benefit related to the fiscal year ended April 30, 2023 and 2022, respectively.
The unrealized gains or losses resulting from foreign currency balances translation are included in Accumulated Other Comprehensive Loss within Shareholders’ Equity. We currently do not hedge our exchange rate exposure.
The Company is in the process of winding down its Australian subsidiary, which is expected to be completed during fiscal 2024. The unrealized gains or losses resulting from foreign currency balances translation are included in Accumulated Other Comprehensive Loss within Shareholders’ Equity. Foreign currency transaction gains and losses are recognized within our Consolidated Statements of Operations.
A prospectus supplement was filed on January 10, 2022 to allow the Company to sell an additional $25.0 million (or an aggregate of $75.0 million) under the 2020 ATM Facility, none of which has been sold to date. 34 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.
The Company’s common stock was sold at prevailing market prices at the time of sale. Subsequently, on January 10, 2022, a prospectus supplement was filed that allowed the Company to sell an additional $25.0 million of common stock up to a total of $75.0 million under the 2020 ATM Facility.
This update is intended to provide financial statement users with more decision-useful information about the expected credit losses. This ASU is effective for annual periods and interim periods beginning after December 15, 2022. The Company is currently evaluating the impact the adoption of ASU 2016-13 but does not expect it to be material to its consolidated financial statements.
This update is intended to provide financial statement users with more decision-useful information about the expected credit losses.
We believe that the accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. 35 We believe the following accounting policies require significant judgment and estimates by us in the preparation of our consolidated financial statements.
We believe the following accounting policies require significant judgment and estimates by us in the preparation of our consolidated financial statements. Revenue recognition The Company accounts for revenue in accordance with Accounting Standards Codification 606 (ASC 606) for contracts with customers and Accounting Standards Codification 842 (ASC 842) for leasing arrangements.
However, we assess the anticipated foreign currency working capital requirements and capital asset acquisitions of our foreign operations and attempt to maintain a portion of our cash and cash equivalents denominated in foreign currencies sufficient to satisfy these anticipated requirements.
We currently do not hedge our exchange rate exposure. However, we assess the anticipated foreign currency working capital requirements and capital asset acquisitions of our foreign operations and assess the need and cost to utilize financial instruments to hedge currency exposures on an ongoing basis and may hedge against exchange rate exposure in the future.
Removed
We then channel the information we collect, and other communications, through control equipment linked to edge computing and cloud hosting environments. 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.
Added
Our solutions are primarily suited to ocean and other offshore environments, and support generation of actionable intelligence on a standalone basis or working with other data sources. We channel the information we collect, and other communications, through control equipment linked to edge computing and cloud hosting environments.
Removed
During 2020 we started to experience some delays related to the impact of COVID-19 on the international supply chain. We were able to mitigate much of the impact by consuming not only internal inventory but also by expanding our supply base.
Added
Business Update Regarding Macroeconomic Condition Adverse macroeconomic conditions, including inflation, slower growth or recession, policy changes, higher interest rates, and currency fluctuations may have a negative impact on our business. These adverse conditions could impact the spending budgets of our customers, and therefore could adversely affect the sales of our products and services.
Removed
While our supply chain is primarily domestically oriented with the majority of our products domestically sourced, we obtain some components from Asia and Europe. We use a combination of off-the-shelf components and equipment as well as custom developed parts. There have been a number of disruptions throughout the global supply chain which have impacted our development and manufacturing.
Added
We will continue to monitor these conditions, and, if necessary, adjust our operations in response to these conditions.
Removed
As the global economy continues to open up, it is driving the demand for certain components. This has outpaced the return of the global supply chain to full production.
Added
As of April 30, 2023, an aggregate of $50.0 million remained available under this facility. The 2020 ATM Facility was terminated by the Company effective June 2, 2023.
Removed
Although we have been able to find alternatives for many component shortages without compromising our product standards or integrity, we experienced, and continue to experience, some delays and cost increases with respect to container shortages, ocean shipping and air freight.
Added
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.
Removed
In addition, our key suppliers have experienced longer lead times and cost increases for raw materials and have experienced periods of interruption to production due to COVID-19 and its variants affecting manpower. As of April 30, 2022, local manpower and similar COVID-related problems are starting to ease.
Added
The cumulative effect of revisions to revenue, estimated costs to complete contracts, including penalties, 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.
Removed
Like others in the industry we continue to have concerns over component shortages, particularly for semiconductors, lithium-ion batteries and specialty metals, however, this has not prevented us from manufacturing our products.
Added
Such revisions could occur at any time and the effects may be material. During the fiscal year ended April 30, 2023 the Company recognized approximately $1.0 million in revenue related to performance obligations satisfied at a point in time and approximately $1.7 million in revenue related to performance obligation satisfied over-time.
Removed
If spikes in COVID-19 and its variants occur in regions in which our supply chain operates, we could experience periodic interruptions or impacts due to delays in components and incur further freight price increases. We continue to monitor and adjust our operations, as appropriate. in response to the COVID-19 pandemic.
Added
The Company’s contracts are either cost-plus contracts, fixed-price contracts, time and material agreements, lease or service agreements. Under cost plus contracts, customers are billed for actual expenses incurred plus an agreed-upon fee. The Company has two types of fixed-price contracts, firm fixed-price and cost-sharing.
Removed
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 and paid AGP a sales commission of approximately $0.8 million related to those shares.
Added
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.
Removed
The agreement was fully utilized and terminated on December 8, 2020. On November 20, 2020, the Company entered into an At the Market Offering Agreement with AGP (the “2020 ATM Facility”).
Added
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 revenue, resulting in gross profit on these contracts of zero.
Removed
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.
Added
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 fiscal years ended April 30, 2023 and 2022, the majority of the Company’s contracts were classified as firm fixed-price.
Removed
From inception of the 2020 ATM Facility through April 30, 2022, the Company 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.
Added
The Company’s revenue also includes revenue from certain contracts which do not fall within the scope of ASC 606, but under the ASC 842. At inception of a contract for those classified under ASC 842, the Company classifies leases as either operating or financing in accordance with the authoritative accounting guidance contained within ASC Topic 842, “Leases”.
Removed
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. The agreement was fully utilized and terminated on September 18, 2020.
Added
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.
Removed
Revenue recognition A performance obligation is the unit of account for revenue recognition.
Added
The Company recognizes revenue from operating lease arrangements generally on a straight-line basis over the lease term, or as agreed upon in-use days are utilized, which is presented in Revenue in the Consolidated Statement of Operations. The Company also enters into lease arrangements for its PowerBuoys ® and Wave Adaptive Modular Vessels (“WAM-V®”) with certain customers.
Removed
When the Company’s estimate of total costs to be incurred to satisfy the performance obligations exceeds revenues, the Company recognizes the loss immediately. 36 Financial Operations Overview The following table provides information regarding the breakdown of our revenues by customer for fiscal years 2022 and 2021: Twelve months ended April 30, 2022 2021 (in thousands) Transocean Ltd. $ 254 $ — Valaris PLC 206 — Diamond Offshore Drilling, Inc. 200 — United States Department of Energy 197 — Enel Green Power Chile, LTDA 163 740 Eni S.p.A. 14 271 Other (no other customers over 10%) 725 195 $ 1,759 $ 1,206 We currently focus our sales and marketing efforts globally.
Added
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 PowerBuoy ® , WAM-V®, and components, while non-lease elements, which the Company expects to become more prevalent, generally include engineering, monitoring and support services.

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