Financial Analysis

(14) Acquisition of In-Process Research and Development Assets On July 22, 2026, the Company entered into and closed an Asset Purchase Agreement with Columbia Power Technologies, Inc. (C-Power), pursuant to which the Company acquired certain intellectual property, engineering materials, and developmental work related to a subsurface wave energy converter technology known as SubWEC. The Company also obtained a license to certain background intellectual property used in connection with the acquired technology. The acquired technology is intended to support the Companys development of subsea power capabilities and complement its existing offshore power and autonomous maritime systems. As consideration for the acquired assets, the Company issued 366,162 restricted shares of its common stock to C-Power. The number of shares issued was determined using a contractually agreed value of $ 2.9 million and a trailing 30-day volume-weighted average price of approximately $ 8.10 per share. The Company also paid C-Power $ 0.1 million in cash as reimbursement of certain expenses. For accounting purposes, the common stock issued was measured at its acquisition-date fair value rather than the historical volume-weighted average price used to determine the number of shares issued. Based on the quoted market price of the Companys common stock of $ 5.40 per share on July 22, 2026, the 366,162 shares had a fair value of approximately $ 2.0 million on the acquisition date. Including the $ 0.1 milli …

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(15) Commitments and Contingencies General Legal Matters From time to time, the Company is involved in legal and administrative proceedings and claims of various types. The Company records a liability in its consolidated financial statements for these matters when a loss is known or considered probable and the amount can be reasonably estimated. The Company reviews these estimates each accounting period as additional information is known and adjusts the loss provision when appropriate. If a matter is both probable to result in a liability and the amounts of loss can be reasonably estimated, the Company estimates and discloses the possible loss or range of loss to the extent necessary to make the consolidated financial statements not misleading. If the loss is not probable or cannot be reasonably estimated, a liability is not recorded in its consolidated financial statements. Onerous Contract The Company has one contract with a customer that has been determined to be an onerous contract, which means that the expected costs of the contract are expected to exceed the revenue. The total value of this contract is $ 1.4 million. As of July 31, 2026, total revenue recognized for this contract was $ 0.7 million, with total costs incurred of $ 3.6 million. The Company estimates total future costs associated with this contract of $ 2.8 million, which will be incurred over the next 24 months.

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The table below represents the total revenue recognized under ASC 606 and ASC 842 for the three months ended July 31, 2026 and 2025. Schedule of Revenue Recognized Under ASC 606 and ASC 842 ASC 606 ASC 842 Total ASC 606 ASC 842 Total Three months ended July 31, 2026 Three months ended July 31, 2025 ASC 606 ASC 842 Total ASC 606 ASC 842 Total (in thousands) (in thousands) Product Line: WAM-V $ 321 $ 68 $ 389 $ 1,038 $ 67 $ 1,105 Buoy 27 589 616 66 66 Services 698 698 11 11 Total $ 1,046 $ 657 $ 1,703 $ 1,115 $ 67 $ 1,182 Region: North and South America $ 768 $ 589 $ 1,357 $ 134 $ $ 134 EMEA 21 68 89 980 67 1,047 Asia and Australia 257 257 1 1 Total $ 1,046 $ 657 $ 1,703 $ 1,115 $ 67 $ 1,182 Revenues $ 1,046 $ 657 $ 1,703 $ 1,115 $ 67 $ 1,182 …

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(11) Share-Based Compensation In 2015, upon approval by the Companys shareholders, the Companys 2015 Omnibus Incentive Plan (the 2015 Plan) became effective. A total of 44,402 shares were authorized for issuance under the 2015 Omnibus Incentive Plan, including shares available for awards under the 2006 Stock Incentive Plan remaining at the time that plan terminated, or that were subject to awards under the 2006 Stock Incentive Plan that thereafter terminated by reason of expiration, forfeiture, cancellation or otherwise. If any award under the 2006 Stock Incentive Plan or 2015 Plan expires, is cancelled, terminates unexercised or is forfeited, those shares become again available for grant under the 2015 Plan. Most recently in January 2026, the shareholders approved an amendment and restatement of the 2015 Plan to, among other things, provide an aggregate increase to the 2015 Plan of 166,666 shares resulting in total shares authorized for issuance of 1,076,068 as of July 31, 2026 based on 909,402 available before the amendment. The 2015 Plan will now terminate in January 2035, but is subject to earlier termination as provided in the 2015 Plan. On January 18, 2018, the Companys Board of Directors adopted the Companys Employment Inducement Incentive Award Plan (the 2018 Inducement Plan) pursuant to which the Company reserved 834 shares of common stock for issuance under the Inducement Plan in accordance with Rule 711(a) of the NYSE American Company Guide. On February 9, 2022, th …

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(12) Fair Value Measurements ASC 820 - Fair Value Measurements states that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable input and minimizes the use of unobservable inputs. The following is a description of the three hierarchy levels. Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2 Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly. Level 3 Inputs that are unobservable for the asset or liability. ASC 825 Financial Instruments allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (the fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. Disclosure of Fair Values The Companys financial instruments that are not re-measu …

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(16) Income Taxes Uncertain Tax Positions The Company accounts for income taxes in accordance with ASC 740, Income Taxes. The guidance requires the Company to recognize in its consolidated financial statements the impact of a tax position if that position is more likely than not to be sustained upon examination, based on the technical merits of the position. The Company has no current or deferred tax due to current and projected losses for the year. At July 31, 2026, the Company had no uncertain tax positions. The Company does not expect any material increases or decreases in its income tax expense or benefit in the next twelve months, related to examinations or uncertain tax positions. Net operating losses and credit carryforwards since inception remain open to examination by taxing authorities and will continue to remain open for a period of time after utilization. Tax Preservation Plan In June 2023, in order to protect the Companys valuable tax assets related to its net operating losses from being limited or lost under Section 382 of the Internal Revenue Code, the Company adopted a Tax Benefits Preservation Plan (the Plan). Pursuant to the Plan, the Board declared a dividend of one preferred share purchase right (each, a Right) for each outstanding share of common stock of the Company. The dividend was distributed to stockholders of record as of the close of business on July 11, 2023. The Plan substantially diminishes the risk that the Companys ability to utilize its net o …

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(9) Leases Lessor Information As of both July 31, 2026 and April 30, 2026, the Company had four WAM-Vs, as of the same dates, and had three and zero buoys, respectively, leased to customers which have been classified as operating leases per accounting guidance contained within ASC 842. The remaining term on these operating leases is less than 1 year. Lessee Information Right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term at commencement date. When the implicit rate of the lease is not provided or cannot be determined, the Company uses the incremental borrowing rate based on the information available at the effective date to determine the present value of future payments. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. The renewal options have not been included in the lease term as they are not reasonably certain of exercise. The Companys operating leases consist of leases for office facilities and warehouse space. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term and consists of interest on the lease liability and the amortization of the right of use asset. The Company has a lease for its facility located in Monroe Township, New Jersey that is used as warehouse/production space and the Companys principal offices and corporate headquarters. In …

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(s) Recently Issued Accounting Standards In recent periods, the FASB issued certain ASUs that may be relevant to the Companys operations and financial reporting. We are currently evaluating the potential impact of these ASUs and adopting them when applicable based on their effective dates. In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of income tax disclosures by requiring companies to (1) disclose consistent categories and greater disaggregation of information in the effective rate reconciliation and (2) provide information on income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, although early adoption is permitted. The guidance should be applied on a prospective basis with the option to apply the standard retrospectively. The Company adopted ASU 2023-09 on May 1, 2026. The adoption of this standard did not have an impact on the Companys interim consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-3, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses This ASU improves the disclosures about a public business entitys expenses and addresses requests from investors for more detailed information abou …

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(17) Operating Segments and Geographic Information The Company operates as one operating segment. The Companys chief operating decision maker (the CODM) is its Chief Executive Officer, who reviews financial information on a consolidated basis and utilizes net loss for purposes of making operating decisions, assessing financial performance of the consolidated Company, and making resource allocation decisions. The CODM also reviews total assets. While assets may move throughout the world to support our revenue projects, for reporting purposes they are included in North America total assets. Revenue and expenses are generally attributed to the operating unit that bills the customers. The following table presents selected financial information with respect to the Companys single operating segment and its significant segment expenses for the three months ended July 31, 2026 and 2025, respectively: Schedule of Operating Segment Expenses 2026 2025 Three month ended July 31, 2026 2025 (in thousands) Revenue $ 1,703 $ 1,182 Less: Cost of sales 4,534 1,205 Product development costs 2,719 136 Employee-related costs 3,046 2,285 Professional, consulting and contractor fees 1,645 977 General and administrative costs 2,225 652 Facilities costs 463 379 Share-based compensation 1,829 2,399 Depreciation and amortization expense 319 227 Other expense, net (1 ) Interest (income)/expense, net 373 310 Change in fair value of derivatives 4,912 Loss on extinguishment of debt Net loss $ (10,537 ) $ ( …

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(2) Summary of Significant Accounting Policies (a) Consolidation The accompanying consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries, Marine Advanced Robotics Inc. (CA), referred to herein as MAR, Oregon Wave Energy Partners I LLC (DE), and ReedSport OPT WavePark, LLC (OR). Ocean Power Technologies Ltd. in the United Kingdom was dissolved on April 22, 2025. All significant intercompany balances and transactions have been eliminated in consolidation. (b) Use of Estimates The preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States (US GAAP) requires management of the Company to make several estimates and assumptions relating to the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the period. Significant items subject to such estimates and assumptions include, among other items, share-based compensation based on the likelihood of meeting performance obligations, over time revenue recognition, valuation consideration related to business combinations, including contingent consideration based on actual and projected revenues, in addition to discount rates and present values, valuation of derivative liabilities, valuation of debt instruments for which the Company has elected the fair value option, evaluation of net realizable value of inventory, and o …

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(13) Equity At-the-Market Offering Agreement On August 8, 2025, the Company entered into an At Market Issuance Sales Agreement with Ladenburg Thalmann &Co. Inc. (the Ladenburg Sales Agreement), under which the Company may, from time to time, offer and sell shares of its common stock having an aggregate gross sales price of up to $ 40.0 million. The shares will be offered pursuant to the Companys shelf registration statement on Form S-3, including the related prospectus supplement filed with the SEC on August 8, 2025. Sales, if any, will be made in transactions deemed to be at the market offerings as defined in Rule 415(a)(4) under the Securities Act, directly on or through the NYSE American or in negotiated transactions as otherwise permitted under the Sales Agreement. The Company is not obligated to sell any shares under the Ladenburg sales agreement and may suspend or terminate the offering at any time. A total of 189,797 shares were sold under the Ladenburg Sales Agreement during the three-month period ended July 31, 2026 totaling proceeds of $ 1.4 million. The agreement was terminated effective July 22, 2026. On July 27, 2026, the Company entered into an at-the-market offering agreement (the Wainwright Sales Agreement) with H.C. Wainwright & Co., LLC (Wainwright), pursuant to which the Company may offer and sell, from time to time through Wainwright acting as sales agent, shares of the Companys common stock having an aggregate offering price of up to $ 20.0 millio …

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(18) Subsequent Events Reverse Stock Split On September 10, 2026, the Companys stockholders approved an amendment to the Companys Certificate of Incorporation authorizing the Board of Directors to effect a reverse stock split of the Companys common stock at a ratio within a specified range, with the exact ratio to be determined by the Board of Directors. On the same date, the Board of Directors approved a reverse stock split at a ratio of one-for-thirty (the Reverse Stock Split). The Reverse Stock Split became effective on September 11, 2026 upon the filing and effectiveness of a Certificate of Amendment with the Secretary of State of the State of Delaware, and the Companys common stock began trading on a split-adjusted basis on the NYSE American on September 14, 2026 under the existing trading symbol OPTT but under a new CUSIP number. As a result, every thirty shares of the Companys issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders otherwise entitled to receive a fractional share received one whole share of common stock in lieu of the fractional share. The Reverse Stock Split did not change the number of authorized shares of common stock or the par value of the common stock. Proportionate adjustments were made to the number of shares issuable upon the exercise, vesting or conversion of the Companys outstanding stock op …

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