Good morning. Welcome to Ocean Power Technologies Third Quarter Fiscal Year 2022 Conference Call. A webcast of this call is also available on the company’s website at oceanpowertechnologies.com. This conference call is being recorded and will be available for replay shortly after its completion. On today’s call are Dr. Philipp Stratmann, President, Chief Executive Officer; Bob Powers, Senior Vice President and Chief Financial Officer; and Joseph DiPietro, Controller, Treasurer and Principal Accounting Officer. Following their prepared remarks, there will be a question-and-answer session. I am now pleased to introduce Joseph DiPietro.

Thank you. After the market closed on March 14, 2022, OPT issued its earnings press release and filed its quarterly report on Form 10-Q for the quarter that ended January 31, 2022. All OPT public filings are available on the SEC website at sec.gov or within the Investor Relations section of the OPT website. This call will include forward-looking statements that are within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include financial projections or other statements of the company’s plans, objectives, expectations or intentions. These statements are based on assumptions made by management regarding future circumstances over which the company may have little or no control and involve risks, uncertainties and other factors that may cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. Additional information about these risks and uncertainties can be found in the company’s most recent Form 10-K and subsequent filings with the SEC. The company disclaims any obligation or intent to update the forward-looking statements made on this call. Now, I am pleased to introduce Dr. Philipp Stratmann.

Thank you, Joe. Good morning and thank you for taking the time to join us for our business update. I will start with a broad overview of our strategy. We are moving fast and I want to make sure everyone fully understands what we are doing, why we are doing it and where we are heading. I feel that it is important, since we’ve added several new revenue streams to what we have been known for in recent years, the PowerBuoy. Our vision is to be the first company that someone thinks of when it comes to monitoring assets or areas in our visions. This vision is bold and our recently expanded business strategy has three main components. First is Data-as-a-Service. Here, we are providing robust data to customers. We believe long-term that this will be the part of our strategy that is our largest recurring revenue producer. We can do this through our Maritime Domain Awareness software and WAM-V autonomous surface vessels. Our MDA software and development will be used with our PowerBuoys and WAM-Vs. Plus it can also work with other vessels, offshore assets and structures to provide real-time data. Applications for trucking and monitoring include illegal fishing, crude oil theft and national security. Second is Power-as-a-Service. We will continue to manufacture and upgrade our category leading PowerBuoys, which can be leased or let. For example, we are making interactive design changes to our hybrid PowerBuoy to increase solar power conversion capabilities and improved stability. We are also developing the next generation PowerBuoy with the development of the Mass-on-Spring Wave Energy Converter, or what we refer to as MOSWEC. We are in the final stage of the Phase 1 study for this development with the U.S. Department of Energy and we have already commenced scoping our submission for…

Thanks, Philipp. I will start my comments with my initial observations of our finance function since I now have my first quarter under my belt. I have been pleased by what I’ve seen to date. This is not a situation that needs an overhaul or a big fix. The team is lean and strong. We have an excellent balance sheet, and the process and control environment met my expectations for our company our size. But as with everything in business, if there is a vision, things can become even stronger. The company’s strategy is bold and achievable. Our number one job within finance is to make sure we stay a step ahead and to ensure we can scale and provide the analytic visibility to our sales and operations teams to drive growth. It has not been lost on me that revenue traction has been slow over the years. However, I joined OPT, because I see where Philipp and the operations teams are heading, and it is exciting. Our finance team will continue to work hard to maintain strong cost management and optimal visibility to our sales pipeline. Moving to our financial highlights during the quarter, I’ll start with revenues. Revenue for the third quarter of fiscal ‘22 increased to $484,000 compared to $317,000 in the third quarter of fiscal year 2021. As Philipp mentioned, this is due to revenue contributed by Marine Advanced Robotics following the acquisition and continued growth of our Strategic Consulting Services. Due to lower project costs, engineering and product development costs were down sequentially, $617,000 from the previous quarter. As you can appreciate, projects like our MDA software development do not come in at the same level each quarter. Omicron resulted in some slowdowns in the third quarter due to absenteeism. Generally speaking, we expect our engineering and product development to be somewhere between the second quarter and third quarter levels over the next few quarters as we advance this initiative. SG&A costs increased by approximately $925,000 from the third quarter of fiscal year 2021 compared to the third quarter of fiscal year 2022, primarily due to approximately $300,000 of costs related to our acquisition of Marine Advanced Robotics and an increase of approximately $225,000 to share-based compensation. We expect SG&A to be around $2.3 million near term. We continue to operate with a strong balance sheet, ending the third quarter with $63.9 million of total cash, cash equivalents and restricted cash and no bank debt, which continues to give us significant flexibility to drive our strategy. Regarding our near-term plans for the use of cash, we continue to expect to use approximately $5 million of cash per quarter to cover our operating expenses. Additionally, we will continue to look for tuck-in acquisition opportunities to reinforce the three components of our growth strategy. Now Philipp and I are happy to take your questions. Operator?

Our first question is from Jeffrey Campbell with Alliance Global Partners. Please proceed.

Good morning. Philipp, you have guided approximately $2 million in WAM-V revenues for fiscal year ‘23. I was just wondering what sort of work supports this revenue during the fiscal year?

Thanks for the question, Jeff. Good morning, good to hear from you again. The primary assets that WAM-Vs are being used for are – is hydrographic survey assets when it comes to the smaller WAM-Vs. And it is government and defense work when it comes to the 16 and 22 footers that we are building out.

You mentioned that 20 WAM-Vs are being constructed. What’s the – let’s try to think of that in terms of what you have currently like what’s the size of the current WAM-V fleet? What sort of units you are building in terms of size? And are any of these units part of your 2023 guidance for the division?

Yes. So, the current fleet is about a handful, just because of the size that MAR has been operating out prior to the acquisition. In terms of where we are going, we took a deep cut of the various proposals that were sitting in MAR’s pipeline. And on that basis, are building 8, 16s and 22s, but with a preference towards the 8s. And yes, you are correct. The 20 vehicles that we are building out are featuring into the ‘23 guidance, so that we can go and enable recurring lease revenues from the fleet.

There is a significant amount of offshore wind development beginning to gather steam in the Eastern U.S. Do you see to having any meaningful prospects in that area? And if so, could you point out which tools would be most applicable to this area?

Yes. So actually, to that point, I will be testifying in front of the New Jersey Legislature on Thursday morning as part of New Jersey’s broader efforts for wind power and ocean technology at large and how wave power features into that mix. Our primary effort on wind development is actually for both sets of our primary products, which is the PowerBuoys to do monitoring of lease sites, to ensure that developers know who is going in and who is going out, doing hydrographic survey development with the WAM-Vs. And then longer term, obviously, looking at supporting inspection maintenance and repair intervals with surface vehicles and with buoys. But obviously, with those development a few years out, that’s going to come down the line. But in the very near-term, there is site monitoring and surveillance that is going to occur.

Okay. And then Bob mentioned some interest in tuck-ins as time goes by. I was just wondering, are there any significant additions left to add to your marine domain awareness tool kit, or do you expect the business to try to score some customer wins as currently configured?

The business can and will score customer wins as currently configured. But obviously, we have an active business development process going on, and we continuously look for opportunities to add to what we have in our toolbox to make us even more attractive for the customers and accelerate revenue growth further.

Okay. Thanks very much for the color.

Thank you, Jeff.

Our next question is from Robert Silvera with R.E. Silvera. Please proceed.

Hi. Thanks for taking my call. My first comment is thank you for telling us an update on the Chile buoy and that it is getting to the point where it can generate some significant revenue. Do you have any other applications out there that are approaching that kind of a point?

No, thanks for dialing in, Robert and thanks for your question. Just to reiterate, the top revenue-producing projects that we currently have. Obviously, there are the efforts with EGP in Chile, which is being in a Data-as-a-Service. There is the ongoing MAR revenues for WAM-Vs. As we said, we see that in terms of the $2 million guidance for FY ‘23. We are finishing the power as a service project, which is the most like efforts for the Department of Energy and are currently working on our submission for Phase 2, which would be a material driver of the development of that system. And we are currently priming to have our MDA software in the next generation that we have, going into the water off the coast of New Jersey, and we have got several government agencies that are already booked to witness various demonstrations of that system. So, that is where we see the bulk of the revenue growth coming from right now.

So, that’s New Jersey. Okay. You mentioned an application that would yield $20,000 to $30,000 per month revenue. Can you expand on that? And how close might that be?

Yes. Essentially, it’s a shift from what the company has historically been focused on, which is trying to find a market to sell our platforms into and it’s shifting to an effort to lease these platforms on a longer-term basis. And by taking a look at how the useful economic life of the assets that we have developed, we can – and by building out – having assets on our own books, we are now in a position where we can go and offer customers, PB3s and/or hybrids and/or WAM-Vs on a lease basis, so that it reduces – it shifts the burden from CapEx to OpEx for the customer. The $20,000 to $30,000 specifically is related to PowerBuoy platforms, and with a primary focus on the PB3. As you will recall, we – obviously, we have refurbished the buoys that we have deployed in the Mediterranean and in the North Sea previously. So, these are now available for customers to utilize and are being specked into proposals right now.

Very good. So, do you have any kind of an estimate when that might actually materialize?

I don’t want to provide you guidance at this time. But based on the way that we have been expanding the business strategy and the growth in the pipeline that we have been seeing in terms of proposals and discussions, we believe the path is well defined, and we will be providing updates on that as they occur.

Very good. You mentioned also a market to monitor crude oil theft. Can you expand on what size of a market that is and how much of that is going on?

Yes. I mean just – yes, absolutely. So, just to mention, crude oil theft, in general, it is a rather large existing issue that exists primarily in parts of West Africa to a large extent. Given the fact that we have a maritime domain awareness system that operates autonomously and alert operators as and when vehicles approach offloading buoys that are otherwise unmanned. That is – that is one of the primary areas that we are focusing on. So, it is another example of us utilizing what we have in our toolbox. In this case, maritime domain awareness on the range of platforms that we have and looking at deploying it into markets where there is a direct need for this type of monitoring application.

Great. Okay. Thank you very much. That’s all – they are all my questions.

Thank you, Robert. I appreciate it.

Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Philipp for closing comments.

Thank you. As I said earlier, I am very optimistic about the future of OPT. Our investments in strategic consulting services and innovative autonomous vehicles are truly transformative for this company. I firmly believe that our concentration on developing Data-as-a-Service capabilities and next-generation power as a service platforms will pay off for the company and our shareholders. I truly appreciate your continued support.

Thank you for your participation today. This concludes today’s teleconference and webcast. You may disconnect your line at this time.