EASTON, PA / ACCESSWIRE / June 7, 2024 / Paragon Technologies, Inc. ("Paragon"), a diversified holding company and a large shareholder of Ocean Power Technologies, Inc. (NYSE American:OPTT), ("Company" or "OPT"), issues the following statement.
On April 28th Paragon announced its willingness to consider investing up to $3 million in non-dilutive preferred equity in OPT. In exchange for making this investment, Paragon put forward a general framework of terms customary for distressed investments. Paragon agreed to drop existing lawsuits pending against OPT should a suitable financing solution be agreed upon.
Despite the Company's precarious financial condition, the OPT Board has decided not to make a good faith effort to engage Paragon to discuss this potentially crucial investment instead making unreasonable demands of Paragon a condition for such discussions.
Instead of engaging with Paragon, OPT continues to issue press releases touting completed testing studies or partnerships that are vague and lack any substance as to the impact of these awards, contracts or results on OPT's operating performance which has been dismal. OPT CEO Phillip Stratmann continues to make optimistic remarks putting a positive spin on the announcements without quantifying their impact on the Company's future financial performance.
In an SEC filing on December 13, 2023, OPT's Board issued a statement that OPT would generate "positive cash flow in calendar year 2025 using current cash available" which also lacked any specificity that would create accountability for management or the Board in achieving this objective.
Over the past several weeks, while continuing to issue vague press releases, OPT trading volume has surged to millions of shares per today. We believe this increased volume reflects OPT initiating sales of millions of additional shares in the open market at punishing prices to raise cash that serves to only severely dilute existing shareholders. All of this occurred just months after OPT's CEO assured shareholders the Company had sufficient capital to achieve profitability.
In our opinion, shareholders should be concerned that Ocean Power is issuing these cryptic press releases in hopes of temporarily boosting the share price to support the equity sales necessary to raise cash for operations that management just months ago said would not be necessary to achieve positive cash flow.
The market has clearly not responded positively to any of OPT's news as the share price has continued to decline, down by approximately 50% over the past three months since the conclusion of the last annual meeting. OPT shares are now down over 90% since OPT's refreshed its Board and appointed Stratmann as CEO in 2021.
The refusal of OPT's Board to consider Paragon's offer of critical non-dilutive capital funding suggests that, rather than evaluate a viable financing option, Ocean Power's Board prefers to dilute existing shareholders to maintain their failed oversight of OPT's operations.
We invite Mr. Stratmann to communicate to shareholders now as directly as he did when soliciting their votes for the annual meeting when he painted what appears to have been an overly optimistic near-term outlook for OPT. Additionally, Stratmann should address:
1. Whether OPT is still expected to achieve cash flow positive and profitable operations in 2025.
2. Whether OPT has, in fact, been selling stock to raise capital only months after telling shareholders the Company would not need to take such action.
3. Quantifying the financial impact and timing of the revenue impact associated with each of the recent press releases purporting to demonstrate the success of the Company's products with respect to the Company's progress in achieving acceptable financial results.
We strongly believe in corporate transparency which we believe OPT lacks. Mr. Stratmann should provide shareholders with the full story, not just pieces that support his narrative. Shareholders are entitled to all the facts, not just positive spin.
Contact at [email protected].
SOURCE: Paragon Technologies Inc.