Good morning and welcome to the Ocean Power Technologies fourth quarter and full year fiscal 2022 conference call. A webcast of this call is also available on the company’s website at www.oceanpowertechnologies.com. This conference call is being recorded and will be available for replay shortly after its completion. On the call today are Philipp Stratmann, President and Chief Executive Officer; Bob Power, Senior Vice President and Chief Financial Officer; and Joseph DiPietro, Controller, Treasurer, and Principal Accounting Officer. Following the prepared remarks, there will be a question and answer session. I’m now pleased to introduce Joseph DiPietro.

After the market closed yesterday, we issued our earnings press release and filed our annual report on Form 10-K for the year ended April 30, 2022. All OPT public filings are available on the SEC website and 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, 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 Form 10-K and subsequent filings with the SEC. The company disclaims any obligation or intention to update the forward-looking statements made on this call. Finally, please note that we posted an updated investor presentation on our IR website. Please take a moment to review it as it provides a nice overview of our company and strategy. Now I am pleased to introduce Dr. Philipp Stratmann.

Thank you Joe. Good morning everyone. Our fiscal 2022 proved to be a transformative year for us and was filled with a number of important accomplishments. We identified and pursued new revenue streams, we defined a clear strategy to establish our leadership position in offshore monitoring of assets in areas of our oceans, and we solidified our executive team with key additions in the areas of finance, sales and marketing, engineering, and human resources. Your investment is in excellent hands. Finally, 2022 was a year of meaningful progress for OPT as many elements of our strategy came together. This strategy has us positioned well, and we believe fiscal 2023 should be the first of many years where we are operating the business on a solid foundation and are executing on our mission and plan for growth. To that end, I’d like to give you a quick update on the three components of our strategy. First is data as a service, where we are focused on being the leader of offshore data collection, integration, analytics and real time communication. Our primary revenue drivers within data-as-a-service are expected to be our maritime domain awareness solution and our WAM-V autonomous surface vessels. Throughout fiscal 2022, we invested considerable time, capital and resources towards the development of our proprietary cutting edge MDA technology, and we are close to having it ready for its commercial launch. Our MDA solution is currently undergoing testing and is expected to be operational by the end of Q2 of fiscal 2023. Our software will enable data to be processed onboard power buoys, WAM-Vs, and many other non-OPT offshore assets. Our team is thrilled at the capabilities of our technology and we are excited as we conduct our initial meetings with potential customers for subscriptions. Our selling proposition is strong.…

Thanks Philipp. I will start with the metric we are most closely driving as it validates we are executing on our strategy - revenue. For the fourth quarter of fiscal 2022, our top line was $756,000. This was driven primarily by growth of our strategic consulting services in the quarter. For the year, our revenue was $1.76 million and reflects the growth of our strategic consulting business and our MAR acquisition. While we were pleased with the increase in revenue from the prior year, I cannot stress enough that this is not close to where we think we can be if we are successful in executing on the strategy that Philipp outlined. The traction we gained in fiscal 2022 combined with an environment that is receptive and responsive to our products and service offerings gives us the confidence that we are on the right path. From a cost structure perspective, we continue to manage costs tightly while still investing in the business. Engineering and product development costs came down for the second consecutive quarter and was our lowest quarter of the year, reflecting that we are past the major part of the MDAS development. SG&A costs were $3.9 million for the fourth quarter of 2022, which was sequentially about $1 million more than the third quarter. This was primarily due to non-cash equity compensation awards, increased travel as we get closer to pre-COVID levels, and recruiting and relocation expenses due to increased hiring. We maintained a strong balance sheet, ending the fourth quarter with $57.7 million of total cash, cash equivalents, restricted cash, and short term investments with no bank debt, giving us a long runway of liquidity and flexibility to drive our strategy. Regarding our near term financial use of cash, we continue to expect to use approximately $5 million of cash per quarter to fund our operating expenses. Additionally, we will continue to look for tuck-in acquisition opportunities that reinforce the three components of our growth strategy. As you can tell from both Philipp’s and my comments, fiscal 2022 was a successful year for us in that it brought alignment, focus and energy to our company, but we like to think it is just the start. We believe fiscal 2023 will be even more exciting. With that, Philipp and I are happy to take your questions.

Thank you. Our first question comes from the line of Robert Silvera with RE Silvera & Associates. Please proceed with your question.

Good morning fellows, looks pretty good - $1.76 million in this fiscal year just passing, and you’re looking at $9 million, which is quite a bit of growth. Can you give us some color on the MDA portion of that $9 million?

Hey, good morning Robert, thanks for being one of our shareholders, and I appreciate the question. The way we look at this is that a material portion of the $9 million of bookings is going to be generated by data-as-a-service offering in the offshore world, with a large portion of that being MDA, which is largely surface related. Just to give you an idea of where things are at with that right now, we have two systems operating in our internal demonstration array off the coast of New Jersey - in fact, we were out there on Monday doing some testing, and we do have a system currently working on an operation for a potential customer off the coast of California right now. From that perspective, I can’t give you an exact percentage but it will be a material portion of the $9 million as we go forward. It will also include MDA-related services and offerings that can be provided through the utilization of the autonomous vehicles that we acquired through the acquisition of MAR.

Do you have any picture whatsoever of what the MDA revenues can grow to, say through the next three to five years?

Well, we certainly have some internal projections that we are developing at the moment. I think it’s probably useful to point out that the MDA market in general is very sizeable, and as you would have seen in the investor relations materials that we updated yesterday, the U.S. view on MDA is that it is about a $1.5 billion market right now as it stands when it comes to the offshore industry. We see a great degree of interest and growth continuing from the $9 million going forward over the next two to three years.

Wonderful, that sounds very promising, and it sounds like you’ve restructured the company in a very positive way - I give you credit for that. Let me go into a few other things here. You call them contract assets. How do you--what do you mean exactly by a contract asset with a dollar value on it of $386?

Hey Robert, it’s Bob. Thanks for the question. Yes, so because at this time, the majority of our revenue related to specific customers, the way the accounting works is in some cases, we are able to recognize revenue in advance of actually billing those customers, and that’s based upon the work that we’ve actually performed for those customers, so in those cases where we’ve recognized revenue but according to the terms of the contract, we haven’t yet invoiced that customer, that will show up on the balance sheet as a contract asset.

Wonderful, thanks for that clarification. You have $49 million-plus in short term investments. Could you give a little color on what you consider a short-term investment--

Yes--

--as opposed to cash and cash equivalents?

Yes, so we made that move in the fourth quarter of FY22 in order to give us a slightly better return on our cash versus what we had historically. All of our investments are high quality bonds and have a duration of less than 12 months, so that’s why it’s landing in the short term bucket.

I see, and that’s $49 million, so basically it’s bonds. Is it any preferred shares or stuff like that?

No, no preferred shares, all high quality investment-grade bonds.

Bonds - okay, well that’s good that. That’s as secure, I guess, as we can get these days.

I think so.

Yes. The last thing I’m concerned about, of course, is the price of the stock is below a dollar. If you spend a long time below a dollar, then de-listing takes place, and I’m concerned about that. I’m just wondering, are you considering a reverse split, which I am not in favor of at all?

Not at this time. That metric you mentioned with regard to the share price dipping below a dollar, that’s actually specific to the NASDAQ, and we made the move to NYSE American in the past year, which is where we now trade. That specific metric does not apply there--

Hm, good.

--so for that--

I didn’t realize that, so thanks for that clarification.

Yes, that was one of the reasons we moved.

It puts my mind at ease, because we have a lot of stock in OPTT.

Yes.

Okay, that’s it for me. I’m very pleased with what I see, and I think you guys are focused. Keep up the good work.

Great, thank you.

Thank you Robert.

Thank you. Ladies and gentlemen, as a reminder, to join the question queue, please press star, one on your telephone keypad. Our next question comes from the line of Peter Ruggiere with Dawson James. Please proceed with your question.

Good morning.

Good morning.

I have a lot of questions. I’ve been involved in OPT for probably six years now. Anyway, is there--like Premier Oil, there was a lot of stuff in the North Sea done with them over the years, then you had Anadarko with Occidental in the Gulf - that was a big project, which I haven’t heard anything about them. Then you had Mitsui Engineering in Japan, there was a lot of talk on illegal fishing off the coast of Asia around Singapore, or wherever it was over there. Where does that stand? It seems to me it’s all consulting now. You had this one buoy sold in . Another question is--there’s a lot of questions, I apologize for that. How many buoys do you have built right now and how many are in the water?

Thanks for the questions, Peter, and I appreciate you being a long-term investor. The Premier Oil project, obviously Premier Oil, which is now Harbor Energy after their merger with Chrysaor took place, we’ve continued our discussions with Harbor Energy for future developments, for power services around tie-back systems in the North Sea with them. The illegal fishing work hasn’t gone away. Illegal fishing is included under Maritime Domain Awareness, and MDA solutions is the hosting of intelligent surveillance and reconnaissance systems on top of the buoys and our autonomous platforms in order to prevent efforts such as illegal fishing, illegal migration, border intrusions and so on and so forth. None of those have gone away, and we remain in discussions with energy providers to support them during the energy transition. I think it is fair, however, to state that a material portion of our current efforts and forward-looking bookings is stemming more from defense and security applications, none of which are consulting, by the way. They are putting assets into the water. In terms of build numbers, obviously we currently have four buoys in the water - there’s obviously EGP off the coast of Chile, there’s two off the coast of New Jersey, there’s one off the coast of California. There is a further two-plus-one being readied for deployment here in our facility as it stands right now, and there is an ongoing inventory build-out for the vehicle fleet going on. I think, unless I’m--it is somewhere between serial number 1775 that is being built out over the lifetime now when it comes to the autonomous vehicles that were previously being assembled entirely up in Richmond, California and are now moving the bulk of the manufacturing over to New Jersey, with specialized manufacturing and one-off projects remaining over on the Californian side.

Okay. So there’s 55 million shares as of April 30, correct?

That’s correct.

Okay, because I still have some of these warrants, even for myself, at $385. How many of those are left, because I know I’ve got something in the mail that they converted, but they go out about another year to April of ’24, I think it is. The $385 warrants--?

Yes, I think it’s less than a million. I’d have to--off the top of my head, I can’t remember.

All right. Bob, Microsoft was doing all these data centers, and I was thinking years ago, you guys would be powering them possibly with the buoys. Is there anything going on with those guys, with them, or--?

We can’t divulge any specific customers that we’re in conversations with, and we certainly have conversations ongoing around areas that aren’t just data-as-a-service but rather power-as-a-service. I would say the bulk of those discussions is around efforts having to do with meta ocean data, defense and security, and energy transition support.

Okay. Another thing, before this COVID problem happened, was going to put a buoy--move its stuff from the north, from their area up there to off the coast of France. Is anything happening with that project?

I’m not aware of any efforts as it comes to the Mediterranean E&P work that they have got planned or are repositioning as a result of COVID and oil price movements. We remain in conversations with them about future deployment and utilizations and use cases for buoys to support them with their efforts particularly around vehicles, be that on the sub-sea or surface side.

Yes, because , is that particular buoy still in the water in the Adriatic Sea with , maybe doing autonomous vehicles and certain battery systems with NEC, I believe it was?

No, that buoy was recovered during the pandemic and is finishing its refurb - that’s one of the assets we’ve got here in the shop to go and be readied for its next deployment.

Okay. Another thing - you’re spending $5 million a quarter. That’s a lot more than you were doing a couple years ago. How many employees do you have right now?

We’ve got 55 staff right now.

Okay. You might actually--I’m figuring if you take $5 million, that’s $20 million this year, so it will bring your cost base is cash but you’re $0.54 and you’re close to that right now, but you might want to do a reverse stock split. I hate to say it because I’ve been through one before with the company, bring the share count, take the stock at a higher price, but I’m just wondering what’s a big catalyst, because $9 million of revenue a year to support the market cap right here, I’m wondering what kind of catalyst should I really look for that could actually come out of left field, that may boost the revenue 28 to $50 million?

Well I think, Peter, as we said, we’ve got--you know, we’ve restructured the company over the past year. We’ve put all the building blocks in place in order to accelerate our growth, and we see the $9 million of bookings as the foundation to then go and continue doing ongoing, accelerated growth to get ourselves to break even on the profitability positions over--in the future period. I would love to be able to go back in time and change things, which I can’t do that, but what I can say to you is that with the team we’ve got in place now, the solutions that we’ve built out, the acquisitions that we’ve made, we are in a very strong position to continue an accelerated growth path going forward so that we provide the necessary returns to all of our investors, short term and long term.

I was--there’s a ton of buoys that were in a lot of different companies. You guys have been doing this for close to 30 years, almost, and I always figured that you’d have a fleet of buoys and you’d have a big partnership and you’d lay them all over the ocean and stuff like that, and you’d have hundreds of millions of dollars of revenue. Everything sounds great with the technology, I’m just wondering why it’s taking so long.

Well, I think you’re right that the technology is great and it’s an ideal platform to host other payload systems and solutions and integrate it with other solutions that exist out in the ocean. I can’t comment on global market trends, to be honest with you, but I do know that the conversations we’re having and where we’re sitting and where we’re seeing pipeline and bookings develop is on an accelerated growth path going forward.

Yes, there was a big project, like Project Loon that Google was going - they had that balloon that goes up and down in the stratosphere and stays there, and if you bounced off your buoys on islands that can’t get Wi-Fi and all this other 4G stuff, I thought that your solution would be perfect for something like that. I guess they ditched that project, but--anyway. Listen, thank you very much, and it sounds like things are going in the right direction.

Appreciate it, thank you Peter.

Thank you. Ladies and gentlemen, that concludes our question and answer session. I’ll turn the floor back to Dr. Stratmann for any final comments.

Thank you. Fiscal 2022 was a pivotal year and provides a foundation of what we are to become. I hope it is clear that we are very excited about where we are headed. Thank you for your continued interest, support, confidence, and investment in our company. We never take it for granted. Have a great rest of your day.

Thank you. This concludes today’s conference. You may disconnect your lines at this time. Thank you for your participation.