Paragon calls on Ocean Power to refrain from equity issuances

Paragon Technologies, a diversified holding company which owns approximately 4.0% of the outstanding shares of Ocean Power Technologies, calls on OPT to REFRAIN from ALL future equity share sales that will dilute shareholders and immediately announce a significant cost cutting plan to demonstrate the Board’s commitment to protecting shareholder value. Paragon said, “On August 2, 2023 Paragon issued a press release asking OPT to answer critical questions regarding the future viability of the Company in response to OPT’s 10-K filing disclosure that the Company has enough cash to last through at least July 31, 2024, or less than one year from today. As shareholders, we asked the Board to demonstrate its stated commitment to enhancing ALL shareholder value by addressing: How the Company will fund its business without diluting shareholders. Provide shareholders with an accountable business plan to get OPT to cash flow breakeven. Reducing Board and named executive compensation given that such compensation has historically EXCEEDED the TOTAL ANNUAL REVENUE of the Company. In response to our questions, on August 7, OPT announced a share offering whereby the Company intends to sell up to $13.8 million of its shares in the market. Seeking to raise $13.8 million when OPT has $34.8 million and adequate time to reduce expenses seems to indicate no desire to cut costs. Since the August 7 announcement, OPT’s share price has DECLINED by nearly 15% from $0.55 to $0.47. Rather than reduce expenses, OPT instead continues to take actions that are not enhancing shareholder value but, as the market has indicated, destroying shareholder value. OPT continues to ignore shareholders’ request for a viable and measurable business plan that shows a significant reduction in annual expenses. What is the OPT Board hiding from shareholders? We call on OPT’s Board and management to cease from issuing any further equity issuances which are likely to harm shareholders. The Company needs implement an immediate and significant cost cutting plan. Instead of diluting shareholders by 50% – while the Board and management continue to pay themselves fees and salaries that exceed OPT’s annual revenues – management should take immediate action and announce a 50% reduction in quarterly and annual cash burn. With approximately $34 million in cash and ST investments as of April 30, 2023, OPT needs to immediately implement a business plan that reduces quarterly expenses to $2.5 million or approximately $10 million per year. We believe this cost structure will create a more disciplined organization and allow OPT the appropriate time to focus on the most promising areas of its business. We believe the announcement of an aggressive and necessary cost cutting plan is the critical first step for OPT and that the market would view this plan favorably. If Paragon’s nominees are elected to the Board, we will take immediate steps to: immediately and significantly reduce expenses. develop a measurable plan that will bring OPT to cash flow break even. Implement a disciplined and focused capital allocation strategy. focus on the potential growth of the Company’s intelligence data and leverage the possible market opportunities of Marine Advanced Robotics.”