Ocean Power Technologies Announces Results for the Quarter and Nine Months Ended January 31, 2010

Ocean Power Technologies, Inc. (Nasdaq: OPTT and London Stock Exchange AIM: OPT) (“OPT” or the “Company”) announces its financial results for the third quarter and nine months ended January 31, 2010 of its fiscal year ending on April 30, 2010.

Operational and Financial Highlights

* Cash, cash equivalents, restricted cash, and marketable securities of $71.3 million at January 31, 2010 (April 30, 2009: $82.7 million)
* Gross profit from contracts of $0.5 million for the nine months ended January 31, 2010 compared to gross loss of $0.5 million for the nine months ended January 31, 2009
* Net loss declined for the nine months ended January 31, 2010 to $12.9 million from $13.6 million net loss for the nine months ended January 31, 2009
* Charles F. Dunleavy elected Chief Executive Officer. Mr. Dunleavy has been a key contributor to the Company’s growth over the past fifteen years of operations. This change reflects the Company’s increased focus on achieving its goal of commercial roll-out of its technology
* Successful completion of trials of OPT’s unique Underwater Substation Pod in Spain
* Award of A$66.5 million grant to OPT partnership with Leighton Contractors Pty Ltd to build a 19 MW wave power project off the coast of Victoria, Australia
* Successful deployment of PowerBuoy system at the Marine Corps Base in Hawaii, and award of $380,000 in additional funding for the project
* Commenced construction of PB150 PowerBuoy for commercial-scale project at Reedsport, Oregon
* Signed a Memorandum of Understanding with the State of Oregon, setting forth an approach for developing wave power projects within the State’s coastal waters

Financial Review

Third Quarter -

Revenues increased 47% for the three months ended January 31, 2010 to $0.9 million as compared to $0.6 million for the three months ended October 31, 2009, but declined 11% compared to the three months ended January 31, 2009. The decrease in revenues compared with the same period last year was largely attributable to a decline in billable work for OPT’s Hawaii project for the US Navy, offset by an increased level of work on the Company’s US Navy project for deep ocean data gathering.

Cost of revenues increased slightly to $0.7 million for the three months ended January 31, 2010, as compared to $0.6 million in the three months ended January 31, 2009. This primarily reflects the change in the costs recorded on our Hawaii project with the US Navy.

Operating loss for the three months ended January 31, 2010 increased to $6.1 million, as compared to $3.9 million for the three months ended January 31, 2009. This change primarily reflects an increase in product development costs related to OPT’s continued work to increase the power output of its utility PowerBuoy system.

Net loss for the three months ended January 31, 2010 was $5.7 million, compared with $3.6 million in the three months ended January 31, 2009. This increase in net loss reflects the change in operating loss as well as a decline in interest income due primarily to lower interest rates and a decrease in cash, cash equivalents and marketable securities, although these were partly offset by an increase in foreign exchange gain primarily attributable to the relative change in the value of the British pound sterling compared to the US dollar.

Nine Months -

For the nine months ended January 31, 2010, OPT reported revenues of $2.7 million compared to $3.4 million for the nine months ended January 31, 2009. The change primarily reflects decreased revenues from OPT’s wave power station off the coast of Spain as the project neared completion, the Company’s Hawaii project with the US Navy and the project in Scotland. However, revenues relating to OPT’s autonomous PowerBuoy system increased due to a greater level of activity on the Company’s project with the US Navy for deep ocean data gathering.

Cost of revenues decreased by $1.8 million, or 43%, to $2.2 million in the nine months ended January 31, 2010, as compared to $4.0 million in the nine months ended January 31, 2009. This decrease reflects lower levels of activity on revenue-bearing contracts, primarily the Company’s project off the coast of Spain.

Operating loss for the nine months ended January 31, 2010 increased to $14.9 million compared with $13.7 million for the nine months ended January 31, 2009. This reflects higher product development costs, primarily attributable to OPT’s efforts to increase the power output of the Company’s utility PowerBuoy system.

OPT achieved a decline in net loss for the nine months ended January 31, 2010, which decreased to $12.9 million, as compared to $13.6 million for the nine months ended January 31, 2009. This decrease primarily reflects an increase in gross profit, and an increase in foreign exchange gains offset by an increase in product development costs and a decrease in interest income as a result of lower interest rates and a decline in cash, cash equivalents and marketable securities. Other income also increased in the nine months ended January 31, 2010 from the settlement of a claim against a supplier of engineering services during the first quarter of fiscal 2010.

As of January 31, 2010, total cash, cash equivalents, restricted cash and marketable securities were $71.3 million. The Company’s balance sheet remains strong, and its cash, cash equivalents and investments are highly liquid investments consisting primarily of term deposits with large commercial banks and US Treasury bills and notes.