ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this Annual Report, and elsewhere in this report, for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year ends on April 30. References to fiscal 2024 are to the fiscal year ended April 30, 2025.
Business Overview
Ocean Power Technologies, Inc. (“OPT,” “we,” “our,” or “the Company”) is a Maritime Domain Awareness (MDA) company specializing in innovative intelligent maritime solutions. These solutions include a variety of “as a service” systems, including Data as a Service (DAAS), Robotics as a Service (RAAS), and Power as a Service (PAAS). These systems consist of a variety of platforms including the PowerBuoy®, our persistent sensor and power solution, the WAM-V® (Wave Adaptive Modular Vessel), our autonomous unmanned surface vehicle, and Merrows™, our user interface and command and control (C2) system that integrates multiple sensor feeds using software and hardware and enables artificial intelligence and machine learning (AI/ML) integration. We design, manufacture, deploy, and operate these systems for defense, security, subsea infrastructure, offshore oil and gas, offshore energy, marine research, and communication markets. We operate primarily through a combination of direct sales and leases, strategic partnerships, and long-term service agreements. Our business model emphasizes capital-light deployments, recurring revenue from service and maintenance contracts, and high-margin technology sales and leases.
We serve a global customer base, including the U.S. and allied defense agencies, offshore energy operators, and commercial interests. The common thread across these markets is the growing need for persistent, autonomous, and sustainable offshore presence, a need we are uniquely positioned to fulfill.
The Company holds numerous patents and leverages decades of research including control systems, energy storage, and marine integration. Our headquarters and assembly operations are located in New Jersey, and we maintain an additional manufacturing and robotics development facility in Richmond, CA.
OPT is committed to enabling a smarter, safer ocean economy through innovation in ocean intelligence and power. As we look forward, our strategic priorities include expanding our customer base and geographic footprint, accelerating technology adoption, enhancing recurring revenue, and driving margin growth through platform scalability and supply chain efficiencies.
We were incorporated under the laws of the State of New Jersey in April 1984 and began commercial operations in 1994. On April 23, 2007, we reincorporated in Delaware.
Business Update Regarding Macroeconomic Condition
During fiscal year 2025, our macroeconomic business environment was affected by geopolitical instability, persistent inflationary pressures, global supply chain constraints, tightening monetary policy, and recent shifts in international trade and tariff regimes. While our long-term demand outlook remains strong, these conditions could present operational and financial challenges, particularly in procurement, logistics, and cost control.
The U.S. federal election cycle in late 2024, followed by an extended period of political and administrative transition through late January 2025, resulted in a temporary standstill across multiple federal agencies, procurement offices, and budgeting authorities. This standstill delayed the finalization of fiscal year 2025 appropriations and temporarily paused decision-making within key federal entities, including those critical to our government-facing business lines such as the DoD, Department of Homeland Security (DHS), Department of Energy (DOE), and intelligence community customers.
As a result, we experienced delays in program funding visibility, new contract solicitations, and procurement-related communications from certain U.S. government customers during this transitional period. Although normal operations have largely resumed since late January 2025, the delayed award cycle may shift the timing of revenue recognition, contract execution, and cash collections associated with targeted government opportunities. While we remain confident in the long-term demand for our autonomous platforms and maritime intelligence solutions, the early portion of calendar year 2025 reflected an uncertain operating environment marked by deferred awards and extended federal acquisition timelines.
We continue to monitor federal budget developments, appropriations activity, and agency guidance to assess downstream effects on pipeline conversion and resource allocation. We believe our active positioning in mission-critical domains, including persistent maritime surveillance, energy resilience, and multi-domain autonomy, will allow us to capitalize on pent-up demand as deferred contract opportunities move forward in the second half of calendar year 2025. However, additional political disruptions or appropriations delays could further affect our operating results and cash flow.
Inflationary pressures may impact the cost of key inputs used in products. Although pricing volatility began to moderate in the latter half of fiscal 2025, we may experience elevated vendor pricing compared to pre-pandemic levels. To partially offset these pressures, we have implemented cost optimization measures, adjusted pricing on new contracts, and re-evaluated supplier agreements.
In May 2025, the U.S. government expanded tariffs under Section 301 of the Trade Act of 1974 on a variety of Chinese-origin components. OPT sources most of its products from U.S. based companies and sources very little from China, however, these changes could result in higher costs for certain imported materials used in our manufacturing process. In the near term, we expect these tariff changes to have a modest but measurable impact on the cost of goods sold.
Global monetary tightening, led by the Federal Reserve and other central banks, contributed to higher interest rates and constrained liquidity conditions across the capital markets. These conditions have increased the cost of capital for emerging growth companies like OPT and may impact customer funding timelines, particularly in our commercial segments.
Despite these headwinds, our diversified contract base including U.S. federal government agencies, strategic defense contractors, and energy developers—continues to support revenue visibility. We remain focused on cost discipline, capital efficiency, and maintaining operational flexibility as macroeconomic uncertainty persists into fiscal 2026.
Looking ahead, we are monitoring global trade developments, interest rate policy, and energy infrastructure spending trends closely, and will adjust our operating and capital planning assumptions accordingly. Our proactive supply chain and pricing strategies are designed to support margin preservation and competitive positioning in a shifting economic landscape.
Capital Raises
During fiscal year 2025 and subsequently, we undertook two significant capital raising activities to support our strategic initiatives and operational needs.
At-the-Market Offering Agreement
On March 21, 2024, the Company entered into an At-the-Market Offering Agreement with an aggregate offering price of up to $7.0 million (the “2023 ATM Facility”). On August 30, 2024 the aggregate offering price under the 2023 ATM Facility was increased to approximately $16.0 million. It was then reduced to approximately $2.9 million in September 2024 and increased again to approximately $60.0 million in December 2024. As of April 30, 2025, the Company had received proceeds of approximately $17.7 million under this facility and an additional $0.3 million between April 30, 2025 and June 16, 2025.
Fall 2024 Equity Financing
In the fall of 2024, we completed an equity financing round, issuing shares of our common stock to raise approximately $3.0 million in gross proceeds. This capital infusion was instrumental in funding our ongoing product development, expanding our sales and marketing efforts, and enhancing our working capital position. The equity raises also provided us with the financial flexibility to pursue new market opportunities and strategic partnerships.
December 2024 Convertible Debt Issuance
On December 20, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Investor”) under which the Company agreed to issue and sell, in one or more registered public offerings by the Company directly to the Investor (the “Offering”), senior convertible notes for up to an aggregate principal amount of $54.0 million (the “Notes”) that will be convertible into shares of the Company’s common stock. On December 20, 2024 (the “Initial Closing Date”), the Company issued and sold to the Investor a Note in the original principal amount of $4.0 million (the “Initial Note”). Upon our filing of one or more additional prospectus supplements, and our satisfaction of certain other conditions, the Securities Purchase Agreement contemplates additional closings of up to $50 million in aggregate principal amount of additional Notes, upon mutual agreement of the Company and the Investor. The Securities Purchase Agreement contains customary representations, warranties and covenants. It also grants the Investor the right to participate in certain future equity and equity-linked transactions of the Company from the Initial Closing Date through the 3-year anniversary thereof, as well as certain anti-dilution rights applicable to the Notes. No Note may be converted to the extent that such conversion would cause the then holder of such Note to become the owner of more than 4.99%, or, at the option of such holder, 9.99% of the then outstanding common stock, after giving effect to such conversion (the “ Ownership Cap”).
May 2025 Convertible Debt Issuance
Separate from the December 2024 transaction noted above, in May 2025 we issued $10 million in aggregate principal amount of convertible notes with a 24-month maturity to new institutional investors with net proceeds of $9.7 million. The notes are convertible into shares of our common stock under specific terms outlined in the Securities Purchase Agreement and Indenture. This financing was aimed at bolstering our balance sheet, supporting the commercialization of our systems, and advancing our autonomous maritime solutions. The convertible debt structure offers the potential for conversion into equity, which may result in dilution to existing shareholders upon conversion.
These capital raises have strengthened our financial position, enabling us to invest in key growth areas. We remain committed to prudent financial management and will continue to assess our capital needs in alignment with our strategic objectives.
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 cannot be certain that additional equity and/or debt financing will be available to the Company as needed on acceptable terms, or at all. If we are unable to obtain required financing when needed, we may be required to reduce the scope of our operations, including our planned incremental product development and marketing efforts, which could materially and adversely affect our financial condition and operating results. If we are unable to secure additional financing, we may be forced to cease our operations.
Backlog
As of April 30, 2025 and 2024, the Company’s backlog was $12.5 million and $4.9 million, respectively. The backlog represents the value of unfulfilled, purchase orders and agreements with commercial and governmental customers. If any of our contracts were to be terminated, our backlog would be reduced by the expected value of the remaining terms of such contract.
Backlog figures do not necessarily reflect future revenue, as orders may be adjusted, delayed, or canceled, and our recognition of associated revenue is subject to the terms of the underlying agreements. The size of our backlog may also fluctuate materially based on the timing of new awards, contract renewals, or the conclusion of long-term engagements. Consequently, while we view backlog as a useful performance indicator, it should not be relied upon as a predictor of future results.
Critical Accounting Policies and Estimates
To understand our financial statements, it is important to understand our critical accounting policies and estimates. We prepare our financial statements in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). The preparation of financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from the estimates made by our management. 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.
We believe the following accounting policy requires 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. 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. 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. 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 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. 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. Estimates of variable consideration and determination of whether to include such amounts in the transaction price are based largely on the 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, 2025 or 2024. The Company presents shipping and handling costs, that occur after control of the promised goods or services transfer to the customer, as fulfilment costs in costs of revenues and regular shipping and handling activities charged to operating expenses.
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 (e.g., upon shipment, upon delivery, as services are rendered, or upon completion of service), including when performance obligations are satisfied in a bill-and-hold arrangement. 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. 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 hours incurred best represents the measure of progress against the performance obligations incorporated within the contractual agreements. If estimated total costs on any contract project a , the Company charges the entire estimated to operations in the period the becomes known. The cumulative effect of revisions to revenue, estimated costs to complete contracts, including , change orders, , anticipated , and others are recorded in the accounting period in which the events indicating a are known and the can be reasonably estimated. These projections are re-assessed for each subsequent reporting period until the project is complete. Such revisions could occur at any time and the effects may be material. During the fiscal year ended April 30, 2025 the Company recognized approximately $4.9 million in revenue related to performance obligations at a point in time and approximately $1.0 million in revenue related to performance obligations over time as compared to $3.6 million in revenue related to performance obligations at a point in time and $1.9 million in revenue related to performance obligations over time revenue for the fiscal year ended April 30, 2024.
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. Under firm fixed-price contracts, the Company receives an agreed-upon amount for providing products and services specified in the contract, and a profit or loss is recognized depending on whether actual costs are more or less than the agreed-upon amount. Under cost-sharing contracts, the fixed amount agreed upon with the customer is only intended to fund a portion of the costs on a specific project. Under cost-sharing contracts, an amount corresponding to the revenue is recorded in cost of revenue, resulting in gross profit on these contracts of zero. 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, 2025 and 2024, the majority of the Company’s contracts were classified as firm fixed-price and the balance were cost-sharing.
The Company’s contract assets and liabilities primarily relate to the timing differences between cash received from a customer in connection with contractual rights to invoicing and the timing of revenue recognition following completion of performance obligations. The Company’s accounts receivable balance is made up entirely of customer contract-related balances.
The Company’s revenue also includes revenue from certain contracts which do not fall within the scope of ASC 606, but under the scope of ASC 842, “Leases”. 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 842. If the direct financing or sales-type classification criteria are met, then the lease is accounted for as a finance lease. All others are treated as operating leases. The Company recognizes revenue from operating lease arrangements generally on a straight-line basis over the lease term, or as agreed upon in-use days are utilized, both of which are presented in Revenues in the Consolidated Statement of Operations. The Company also enters into operating lease arrangements for its PowerBuoys® and Wave Adaptive Modular Vessels (“WAM-V®”) with certain customers. Revenue related to multiple-element arrangements is allocated to lease and non-lease elements based on their relative standalone selling prices or expected cost plus a margin approach. Lease elements generally include a PowerBuoy®, WAM-V®, and components, while non-lease elements, which the Company expects to become more prevalent, generally include engineering, monitoring and support services. In the lease arrangement, the customer may be provided with an option to extend the lease term or purchase the leased PowerBuoy® or WAM-V® at some point during and/or at the end of the lease term.
Financial Operations Overview
As of the years ended April 30, 2025 and 2024, the Company had three and four customers, respectively, whose revenue accounted for at least 10% of the Company’s consolidated revenue. These customers accounted for approximately 53% and 52% of the Company’s total revenue for the respective periods.
We currently focus our sales efforts in key global markets in North America, South America, Europe and Asia. In fiscal 2025, we made significant progress in diversifying our customer and geographic base. Our strategic efforts to expand into defense, energy, and environmental monitoring markets in Europe, the Middle East, and Africa (EMEA) resulted in a substantial increase in EMEA-sourced revenue. This geographic expansion reflects the increasing global relevance of our autonomous maritime systems, particularly among government and industrial customers. It also demonstrates the early success of our international channel development initiatives, which we intend to further scale in fiscal 2026 through targeted partnerships, regional deployments, and export-driven offerings.
The following table shows the percentage of our revenue by geographical location of our customers for fiscal 2025 and 2024:
Fiscal year ended April 30,
Customer Location
North America & South America
EMEA
Asia and Australia
Total
Cost of revenue
Our cost of revenue consists primarily of subcontracts, incurred material, labor and manufacturing overhead expenses, such as engineering expense, equipment depreciation, maintenance, and facility related expenses, and includes the cost of equipment to customize the PowerBuoy®, WAM-V® and our other products supplied by third-party suppliers. Cost of revenue also includes PowerBuoy® and other product system delivery and deployment expenses and may include losses recorded at the time a loss is forecasted to be incurred on a contract.
Operating Expenses
Engineering and product enhancement costs
Our engineering and product enhancement costs consist of salaries and other personnel-related costs and the costs of products, materials and outside services used in our product enhancement and unfunded research activities. Our product enhancement costs relate primarily to our efforts to increase the power output and reliability of our PowerBuoy® system and other products, to enhance and optimize data monitoring and controls systems, and the development of new products, product applications and complementary technologies. We expense all of these costs as incurred.
Selling, general and administrative costs
Our selling, general and administrative costs consist primarily of professional fees, salaries and other personnel-related costs for employees and consultants engaged in sales and marketing of our products, and costs for executive, accounting and administrative personnel, professional fees and other general corporate expenses.
Interest income, net
Interest income, net consists of interest received on cash, cash equivalents, and short-term investments and interest paid on certain obligations to third parties as well as amortization expense related to the premiums on the purchase of short-term investments.
Foreign exchange gain (loss)
We transact business in various countries and have exposure to fluctuations in foreign currency exchange rates. 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.
While OPT remains committed to expanding its international footprint and serving customers globally, the Company has also taken steps to streamline its legal and operational structure to improve efficiency and reduce administrative overhead. As part of this initiative, the Company completed the wind-down of its Australian subsidiary during fiscal 2024 and began the wind-down of its UK subsidiary during the same period. The wind-down of the UK entity was completed during fiscal 2025. These decisions were not reflective of a diminished international focus, but rather represent a strategic reallocation of resources toward regions and engagement models better aligned with current customer demand, strategic partnerships, and long-term growth potential. OPT’s international business development continues through:
Direct contracting from the United States with allied government and commercial entities;
Regional strategic partners, resellers, and OEM collaborators;
Mobile deployment teams and project-specific operational hubs.
The simplification of OPT’s legal entity structure reduces fixed costs and compliance complexity, enabling a more agile and scalable approach to international market entry and project execution. The unrealized gains or losses resulting from foreign currency translation associated with these entities are included in Accumulated Other Comprehensive Loss within Shareholders’ Equity. Foreign currency transaction gains and losses are recognized within the Company’s Consolidated Statements of Operations.
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.
Results of Operations
This section should be read in conjunction with the discussion below under “Liquidity Outlook”.
Fiscal Years Ended April 30, 2025 and 2024
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, 2025 and 2024:
Fiscal years ended April 30,
(in thousands)
Revenue
Cost of revenue
Gross profit
Change in fair value of contingent consideration
Other operating expenses
Total operating expenses
Operating loss
Interest income, net
Other (expense)/income
Loss on disposition of assets
Loss on extinguishment of debt
Foreign exchange (loss)/gain
Loss before income taxes
Income tax benefit
Net loss
Revenue
Revenue for the fiscal years ended April 30, 2025 and 2024 were approximately $5.9 million and $5.5 million, respectively, representing an increase of approximately $0.4 million. The year-over-year increase primarily reflects higher levels of revenue stemming from the sales and leases of WAM-Vs.
Cost of revenues
Cost of revenues for the fiscal years ended April 30, 2025 and 2024 were approximately $4.2 million and $2.7 million, respectively, representing an increase of approximately $1.5 million. The year-over-year increase is related to an increase in revenue and a change in product mix, and some current year product offerings at lower margin as a means to gain market share.
Change in fair value of contingent consideration
The change in fair value of contingent consideration for the fiscal year ended April 30, 2025, and 2024 was zero and a gain of $0.1 million, respectively. The prior year amount was due to changes in actual and forecasted bookings relating to the WAM-V offerings.
Operating Expenses
Our operating expenses include both product development costs (substantially completed during fiscal year 2024) as well as administrative costs, including the costs of products, materials and outside services used in our product development and unfunded research activities. 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. Operating expenses during the fiscal year ended April 30, 2025 were $23.3 million as compared to $32.2 million for fiscal year 2024. The decrease of approximately $8.9 million was primarily the result of the significant cost reduction activities we implemented at the end of fiscal 2024 including headcount optimization, material reductions in third party spend, and efforts to tightly control and contain costs.
Interest income, net
Total cash, cash equivalents, and restricted cash was $6.9 million as of April 30, 2025, compared to $3.3 million as of April 30, 2024. Interest income, net was approximately $47,000 and $800,000 for fiscal 2025 and 2024, respectively, and reflects no short-term investments during fiscal 2025 and the decreased balance of our short-term investments throughout fiscal 2024. Short-term investments balance was higher throughout fiscal 2024 and yielded higher interest rates than cash held in bank accounts during fiscal 2025.
Other (expense)/income
Other (expense)/income for the fiscal year ended April 30, 2025 and 2024 was (23,000) and $2,000, respectively.
Loss on extinguishment of debt
The loss on extinguishment of debt of $0.8 million as of April 30, 2025 relates to convertible notes that were issued in December 2024 and were converted to common stock in December 2024 loss on disposition of assets.
The loss on disposition of assets of $0.2 million as of April 30, 2024 relates to the disposal of intangible and fixed assets related to the disposition of 3Dent Technology, LLC in November 2023.
Foreign exchange gain/(loss)
Foreign exchange loss was $45,000 for fiscal year 2025 as compared to a foreign exchange gain of approximately $2,000 for fiscal year 2024. The difference was attributable to the relative change in value of the British pound sterling dollar compared to the U.S. dollar.
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 $1.0 million and $1.3 million of tax benefit related to the fiscal year ended April 30, 2025 and 2024, respectively.
Net cash used in operating activities
During the fiscal year ended April 30, 2025, net cash flows used in operating activities was $18.6 million, a decrease of $11.1 million compared to net cash used in operating activities during the fiscal year ended April 30, 2024. This primarily reflects a decrease in the net loss of $5.4 million and increases in the current year on non-cash expenses, such as depreciation and stock-based compensation.
Net cash used in/provided in investing activities
Net cash used in investing activities was approximately $0.5 million for fiscal year 2025 versus net cash provided by investing activities of approximately $25.5 million for fiscal year 2024. During fiscal 2025, the Company purchased $0.5 million in property and equipment, down from $2.6 million during fiscal 2024. The remainder of the difference relates to purchases and redemptions of short-term investments during fiscal 2024, which fully matured in fiscal 2024.
Net cash provided by/used by financing activities
Net cash provided by financing activities during the fiscal year ended April 30, 2025 was approximately $22.7 million compared to net cash used in financing activities during the fiscal year ended April 30, 2024 of $0.5 million. The increase in net cash provided by financing activities during the fiscal year ended April 30, 2025 was driven by the issuance of common stock under the Company’s At the Market Facility and proceeds from the issuance of stock and convertible debt, discussed under “Capital Raises” above.
Effect of exchange rates on cash and cash equivalents
The effect of exchange rates on cash and cash equivalents was not material during fiscal 2025 or fiscal 2024.
Liquidity Outlook
Since our inception, our operating cash flows have not been sufficient to fund our operations and provide the capital resources for our business. For the two-year period ended April 30, 2025 our aggregate revenue was $11.4 million, our aggregate net losses were $49.6 million and our aggregate net cash used in operating activities was $48.4 million.
We expect to devote substantial resources to continue our enhancement efforts for our products and to expand our sales, marketing and manufacturing programs associated with the continued commercialization of our products. Our future capital requirements will depend on several factors, including but not limited to:
our ability to improve, market and commercialize our products, and achieve and sustain profitability;
our continued improvement 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;
changes in current legislation, regulations and economic conditions regarding Federal governmental tariffs, the implementation on the new US Department of Governmental Efficiency (“DOGE”) and related DOGE federal governmental budget cuts and the potential that this affects the demand for, or restrict the use 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, our financial condition and our operating performance;
our ability to comply with the covenants and other obligations under our convertible notes;
the ability to continue as a going concern;
our history of operating losses, which we expect to continue for at least the short-term and possibly longer;
our ability to manage challenges and expenses associated with communications and disputes with activist shareholders, including litigation;
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 potential inflation related to the U.S. dollar on our business, operations, customers, suppliers, manufacturers, and personnel;
our ability to meet product enhancement, manufacturing and customer delivery deadlines and the potential impact due to disruptions to our supply chain or our ability to identify vendors that can assist with the prefabrication elements of our products, as a result of, among other things, staff shortages, order delays, and increased pricing from vendors and manufacturers;
our forecasts and estimates regarding future expenses, revenue, gross margin, cash flow 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 and continuous improvement of our technology, products and solutions;
our ability to increase or more efficiently utilize the synergies available from our product lines:
our ability to expand markets across geographic boundaries;
our ability to be successful with Federal government work which is complex due to various statutes and regulations applicable to doing business with the Federal government;
our ability to be successful doing business internationally which requires strict compliance with applicable statutes and regulations;
the current geopolitical world uncertainty, including tariffs, Russia’s invasion of Ukraine, the Israel/Palestine conflict and previous attacks on merchant ships in the Red Sea;
the potential impact that new foreign country tariffs may have on our ability (i) to source and procure necessary raw materials for the manufacture and provision of our products and services; and (ii) to deliver our products to such foreign countries;
our ability to hire and retain key personnel, including senior management, to achieve our business objectives; and
our ability to establish and maintain consistent commercial profit margins.
Our business is capital intensive, and through April 30, 2025, we have been funding our business principally through sales of our securities. As of April 30, 2025, our cash and cash equivalents and long-term restricted cash balance was $6.9 million and we expect to fund our business with this amount, future financings such as the May 2025 convertible debt issuance and, to a lesser extent, with our cash flow generated from operations. Management believes the Company’s current cash and cash equivalents, inclusive of the May 2025 convertible debt, and long-term restricted cash, and future financing will be sufficient to fund its planned expenditures through July 2026.
Off-Balance Sheet Arrangements
Since inception, we have not engaged in any off-balance sheet financing activities.
Recent Accounting Pronouncements
The Company does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.
Recently Issued Accounting Standards
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. We are currently evaluating the impact of adopting this ASU 2023-09 on our consolidated financial statements and disclosures.
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 entity’s expenses and addresses requests from investors for more detailed information about the types of expenses in commonly presented expense captions. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating what the potential impact of adopting this ASU 2024-03 could have on our consolidated financial statements and disclosures
Recently Adopted Accounting Standards
In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures.” This ASU improves financial reporting by requiring disclosure of incremental segment information. The new guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company adopted this standard beginning in fiscal 2025 and all required segment related disclosures are presented within this Form 10-K and will be in subsequent interim reports on Form 10-Q. Refer to Note 15 for further discussion.
