Paragon Technologies Calls on Ocean Power Technologies to Defend its 30 Year Record of Consecutive Losses, Precipitous Decline in Shareholder Value, and Entrenchment Tactics to Insulate Board from Accountability - Seite 2

In 2020 OPT, realizing the continued failure of its business, appointed its current CEO and added 3 new directors.

From fiscal year starting May 1, 2020, through Jan. 31, 2023:

• OPT has generated total revenues of approximately $4.8 million and reported net losses of $50.2 million.
• Annual operating expenses have skyrocketed from $12 million to over $21 million in less 3 years.
• During the last three quarters, OPT's expenses totaled $19.5 million for $1.7 million in revenues.
• Unable to raise debt due to lack of any profitable business operations when interest rates were at historic lows, OPT diluted shareholders by issuing an unprecedented amount of stock to fund these staggering losses and continue paying executives and directors generous compensation packages without showing any demonstrable improvement in operations or results.
• Shares outstanding have increasedby over 700% from 7.2 million shares to 58.7 million shares (as of June 30, 2023).

In our May 19 letter, we alluded to all the above and, additionally:

• OPT's management and board appear to have no articulated strategy or measurable business plan to indicate to shareholders that company results will be demonstrably different in the future, but rather, management and the board continue to express a strategy based solely on hope.
• OPT's continued cash burn rate of $5-6 million per quarter implies that the company only has 5 quarters before it becomes insolvent.
• Management's publicly stated goal of $9 million in new bookings, if achievable, only generates one additional quarter of solvency further indicating that OPT management fails to recognize the impact of the company generating staggering losses given annual operating expenses that exceed $21 million.

OPT's response to our May 2023 letter failed to address a single one of our concerns related to the business but instead stated:

"We note and appreciate your interest in working constructively with us to help drive value for all OPT shareholders…We do hope ongoing communications can be held on a professional, respectful and productive basis."

However, OPT did nothing of the sort. Instead, they offered us an opportunity to submit resumes and applications for potential Board members that required our nominees to subject themselves to significantly more onerous requirements than current board members had been subjected to as a condition of their election to the board. Paragon responded that we would be happy to submit our nominees to the same customary nomination process as their current directors.