OCEAN POWER TECH : 10/12/2009
Ocean Power Technologies Announces Results for the Quarter and Six Months Ended October 31, 2009
PENNINGTON, N.J.--(BUSINESS WIRE)--Ocean Power Technologies, Inc. (Nasdaq: OPTT and London Stock Exchange AIM: OPT) ("OPT" or the "Company") announces its financial results for the second quarter and six months ended October 31, 2009 of its fiscal year ending on April 30, 2010.
Second Quarter and Six Month Highlights
* Cash, cash equivalents, restricted cash, and marketable securities of $76.7 million at October 31, 2009 (April 30, 2009: $82.7 million)
* Contract order backlog increased to $7.1 million at October 31, 2009 compared to $6.4 million at July 31, 2009
* Gross Profit from contracts for the six months ended October 31, 2009 was $0.3 million compared to gross loss of $0.9 million for the six months ended October 31, 2008
* Decline in net loss to $7.3 million for the six months ended October 31, 2009 compared to a $10.0 million net loss for the six months ended October 31, 2008
* Signed exclusive agreement to develop demonstration wave power station in Japan with consortium of three leading Japanese companies including Mitsui Engineering and Shipbuilding
* Awarded new $2.4 million contract to provide PowerBuoy® systems to the US Navys Littoral Expeditionary Autonomous PowerBuoy program for homeland security
* Re-deployed PowerBuoy off the coast of New Jersey. Soon after deployment, the system successfully weathered hurricane-driven storm waves by automatically locking down and restarting power generation after the storm passed
* Strengthened relationship with Lockheed Martin with the signing of a commercial engineering services agreement under which Lockheed will provide its expertise to enhance OPTs PowerBuoy technology to utility scale
* Successful completion of trials of OPTs proprietary Underwater Substation Pod in Spain
* First PB150 PowerBuoy on track for deployment at European Marine Energy Centre, Scotland in mid-calendar year 2010
Mark R. Draper, OPTs Chief Executive Officer, said: We made excellent progress by expanding our global presence while remaining on course to complete the first PB150 PowerBuoy. The PB150 project for Scotland is a major engineering challenge involving the construction of our next generation structure, for ocean deployment by the middle of next year. We made a significant breakthrough into the important Japanese market by entering a partnership with leading local companies, and we also strengthened our relationship with Lockheed Martin.
Mr. Draper continued, Building on these achievements during the second quarter, OPT with its partners received in early November a vote of confidence with a substantial grant from the Australian Federal Government for a utility-scale wave power project in Victoria, Australia. We believe that these milestones demonstrate how OPT is leading the commercialization of wave power as climate change and the need for renewable energy become critical global issues.
OPT maintained excellent operational momentum during the second quarter of fiscal 2010 with several major achievements that have significantly increased the level of the Companys commercial activities. As a result, OPT is now actively engaged on projects in Asia, Australia, Europe and North America. The Company also remained focused on its near-term goal to complete the construction of the first of its latest wave generation device, the PB150, for deployment in the Orkney Islands off the coast of Scotland during the middle of calendar year 2010.
During the second quarter of fiscal year 2010, OPT strengthened its strategic partnership with Lockheed Martin by signing a commercial engineering services agreement to develop OPTs wave energy systems for future utility-scale power generation projects in North America.
Contract backlog increased to $7.1 million at October 31, 2009, from $6.4 million at July 31, 2009, with a significant proportion relating to the PB150 device.
OPTs patent portfolio continued to grow as one new US patent was issued during the second quarter of fiscal year 2010. The Companys technology base now includes a total of 41 issued US patents, with 16 US patent applications pending.
These achievements come against a backdrop of increasing global commitment to tackle climate change, as evidenced by this weeks international summit in Copenhagen to reduce carbon emissions and foster renewable energy. As a result, OPT is very optimistic about the long-term fundamentals of the Companys business.
Progress was made with several key projects, summarized below:
ORKNEY ISLANDS, UK The construction of the first PB150 PowerBuoy, earmarked for the European Marine Energy Centre (EMEC), is at an advanced stage and remains on track for deployment at OPTs 2 MW berth site by the middle of calendar year 2010. The steel structure, being built by engineering firm Isleburn Ltd of Inverness, UK, is nearing completion, while testing of OPTs energy conversion and power take-off sub-assemblies continues ahead of their integration into the buoy structure. Work is also proceeding with the manufacture of mooring systems for the device.
US NAVY LEAP PROJECT A new $2.4 million contract was won from the US Navy to provide a wave energy conversion system for the Navy's Littoral Expeditionary Autonomous PowerBuoy (LEAP) program. This contract, to be performed over a one year period, is the initial award under a proposed four-year $15 million project to establish near-shore maritime surveillance for homeland security. Under the initial contract, OPT will provide its PowerBuoy wave energy conversion technology for testing with sensor-based communications systems, with the ultimate aim under the four-year program of developing a LEAP-based vessel detection system testbed.
JAPAN OPT signed a breakthrough agreement in Japan for the development of the countrys first utility-scale wave power station with a consortium of three leading Japanese companies: Idemitsu Kosan Co., Mitsui Engineering & Shipbuilding Co. Ltd., and Japan Wind Development Co. Subject to the successful identification of a project site and completion of economic assessments, the parties plan to enter into an agreement to build a demonstration plant with up to three of the OPT PowerBuoys. The trial plant would provide the basis for the expected building of a commercial-scale OPT wave power station with an initial capacity of 10 MW or more enough power for up to 3,000 households in Japan.
VICTORIA, AUSTRALIA In November 2009, Ocean Power Technologies (Australasia) Pty Ltd (OPTA) received, in partnership with Leighton Contractors Pty Ltd (Leighton), a AU$66.46 million grant from the Federal Government of Australia towards building a 19 MW wave power project off the coast of Victoria, Australia. The award was one of four renewable energy projects approved by the Federal Government of Australia after considering over 30 applications, and is the only wave energy venture to receive a grant. The funding is intended to be used to advance the construction of a wave power station to be built in three phases to supply electricity to up to 10,000 homes. The project is to be developed by a special purpose company, Victorian Wave Partners Pty Ltd, that was formed by OPTA and Leighton following the signing of an agreement (as announced on December 19, 2008) to collaborate in pursuing wave power projects off the east and south coasts of Australia. The grant is conditional on the signing of a Funding Deed which will set out the terms of the grant, including funding milestones. Further, Victoria Wave Partners will be required to seek additional funding to enable the completion of the 19 MW wave power station.
CORNWALL, UK Following UK government go-ahead with £42m funding for the 20 MW Wave Hub project, the final cabling and subsea infrastructure is expected by the South West of England Regional Development Agency (SWRDA) to be installed by the engineering contractor by the end of calendar year 2010. OPT has signed a commitment agreement with SWRDA to advance the development of one of the four wave power stations that will comprise the Wave Hub one of the worlds largest proposed renewable marine energy projects. OPT was the first company to sign the agreement, ratifying its long-standing involvement with this project.
OREGON, US Construction of the steel structure for the first PB150 PowerBuoy for a 1.5 MW commercial-scale project at Reedsport, Oregon has been started by Oregon Iron Works, a prominent local company. With support from Pacific Northwest Generating Cooperative (PNGC Power) and funding from the US Department of Energy, OPT continued to work extensively with interested stakeholder groups at local, county, state and federal agency levels to launch this project.
SPAIN A significant milestone was achieved under OPTs contract with Iberdrola S.A. with the completion of in-ocean trials of OPTs unique Underwater Substation Pod (USP) product. The testing was successful and opens a new revenue opportunity for OPT. The USP was designed in-house by OPT for use in a utility-scale wave power station at a site approximately three miles off the coast of Santoña, Spain. Based on the Company's proprietary design, it has been developed to facilitate the collection, networking and transforming of power generated by up to 10 of its PowerBuoys for transmission to a shore-based electricity grid by one subsea power cable. It has been built as an open platform, and can therefore provide "plug and play" connectivity for any offshore energy device linked to it.
Second Quarter -
Revenues decreased slightly in the three months ended October 31, 2009 to $0.6 million as compared to $0.7 million in the three months ended October 31, 2008. The decrease in revenues was primarily reflective of a lower level of activity in connection with OPTs contract with the US Navy for ocean data gathering. However, work on this project is expected to increase during the three months ending January 31, 2010. Revenues relating to the Companys utility PowerBuoy projects were approximately the same compared with the corresponding period last year as a decrease in revenues from the Reedsport project in Oregon was offset by increases in revenue from OPTs Hawaii project with the US Navy and EMEC project in the Orkney Islands, Scotland.
Cost of revenues decreased by $0.9 million to $0.5 million in the three months ended October 31, 2009, as compared to $1.4 million in the three months ended October 31, 2008. This decrease in cost of revenues reflected lower levels of activity on revenue-bearing contracts, primarily the Companys project off the coast of Reedsport, Oregon. There was also a $0.4 million decrease in cost of revenues resulting from a net change in provision for contract losses, including the reversal, during the three months ended October 31, 2009, of $0.2 million in the provision for contract losses related to our wave power station off the coast of Spain as the reserve is no longer considered necessary.
Operating loss for the three months ended October 31, 2009 increased by $0.2 million to $5.6 million, as compared to $5.4 million in the three months ended October 31, 2008. This change primarily reflects an increase in product development costs related to OPTs continued work to increase the power output of its utility PowerBuoy system, which was partly offset by improvements in gross profit. The increased levels of product development spending were consistent with planned activity for this fiscal year.
Net loss for the three months ended October 31, 2009 was $5.2 million, compared with $6.1 million in the same period last year. This decrease in net loss reflects the change in operating loss, as well as the increase in foreign exchange gains relative to the change in the value of the British pound sterling, although these were partly offset by a decrease in interest income due primarily to lower interest rates, as well as lower cash balances.
Six Months -
For the six months ended October 31, 2009, OPT reported revenues of $1.9 million compared to $2.5 million in the six months ended October 31, 2008. The change primarily reflected decreased revenues from OPTs wave power station off the coast of Spain, the project off the coast of Reedsport, Oregon, and the autonomous PowerBuoy project with the US Navy for ocean data gathering.
Cost of revenues decreased to $1.6 million in the six months ended October 31, 2009, as compared to $3.3 million in the six months ended October 31, 2008. This decrease reflected lower levels of activity on revenue-bearing contracts, primarily the Companys project off the coast of Spain.
OPT achieved a decline in operating loss and net loss for the six month period. Operating loss for the six months ended October 31, 2009 was $8.8 million compared to $9.8 million in the six months ended October 31, 2008. Net loss for the six months ended October 31, 2009 was $7.3 million compared to a net loss of $10.0 million for the six months ended October 31, 2008. These changes in operating loss and net loss reflect an increase in gross profit, and a decrease in selling, general and administrative costs that are primarily attributable to a decrease in consulting, accounting and investor relations expenses, which more than offset higher levels of product development spending. In addition, foreign exchange gains increased relative to the change in the value of the British pound sterling, and other income increased from the settlement of a claim against a supplier of engineering services during the first quarter of fiscal 2010. These were partially offset by a decrease in interest income due primarily to lower interest rates, as well as lower cash balances.
On October 31, 2009, total cash, cash equivalents, restricted cash and marketable securities were $76.7 million. The Companys 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.
OPT will host an audio webcast to review its results on Thursday, December 10, 2009, at 10:00 a.m. Eastern Time (3:00 p.m. GMT). Mark R. Draper, Chief Executive Officer, and Charles F. Dunleavy, Chief Financial Officer, will host the webcast. Investors and other interested parties may access the webcast by visiting the Companys website at: www.oceanpowertechnologies.com and clicking on the Investor Relations tab, then Webcasts and Presentations. In addition, parties without web access may listen to the presentation by calling: 877-874-1563 (Toll free call in the US) or +1-719-325-4844 (Toll call).
Additional information may be found in the Companys Quarterly Report on Form 10-Q filed with the US Securities and Exchange Commission. The Form 10-Q may be accessed at www.sec.gov or at the Companys website in the Investor Relations tab.
This release may contain "forward-looking statements" that are within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the Company's current expectations about its future plans and performance, including statements concerning the impact of marketing strategies, new product introductions and innovation, deliveries of product, sales, earnings, and margins. These forward-looking statements rely on a number of assumptions and estimates which could be inaccurate and which are subject to risks and uncertainties. Actual results could vary materially from those anticipated or expressed in any forward-looking statement made by the Company. Please refer to the Company's most recent Form 10-K for a further discussion of these risks and uncertainties. The Company disclaims any obligation or intent to update the forward-looking statements in order to reflect events or circumstances after the date of this release.
About Ocean Power Technologies
Ocean Power Technologies, Inc. (Nasdaq: OPTT and London Stock Exchange AIM: OPT) is a pioneer in wave-energy technology that harnesses ocean wave resources to generate reliable, clean and environmentally-beneficial electricity. OPT has a strong track record in the advancement of wave energy and participates in a $150 billion annual power generation equipment market. The Company's proprietary PowerBuoy® system is based on modular, ocean-going buoys that capture and convert predictable wave energy into low-cost, clean electricity. The Company is widely recognized as a leading developer of on-grid and autonomous wave-energy generation systems, benefiting from over a decade of in-ocean experience. OPTs technology and systems are insured by Lloyds Underwriters of London. OPT is headquartered in Pennington, New Jersey with offices in Warwick, UK. More information can be found at www.oceanpowertechnologies.com.
Consolidated Balance Sheets as of
October 31, 2009, April 30, 2009 and October 31, 2008 (Unaudited)
October 31, April 30, October 31,
ASSETS $ $ $
Cash and cash equivalents 6,347,906 12,267,830 11,390,768
Marketable securities 30,184,439 40,849,736 45,934,653
Accounts receivable 835,901 985,149 988,285
Unbilled receivables 863,745 988,418 951,321
Other current assets 962,842 1,082,696 1,343,664
Total current assets 39,194,833 56,173,829 60,608,691
Marketable securities 38,868,340 28,619,528 32,285,422
Restricted cash 1,316,032 951,552 939,960
Property and equipment, net 898,506 897,718 808,307
Patents, net 940,610 909,727 785,274
Other noncurrent assets 1,558,302 1,241,552 1,237,328
TOTAL ASSETS 82,776,623 88,793,906 96,664,982
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable 836,966 908,837 1,231,338
Accrued expenses 3,291,160 3,853,437 3,616,379
Unearned revenues 554,687 281,570 375,888
Total current liabilities 4,682,813 5,043,844 5,223,605
Other non-current liabilities 113,246 - -
Long-term debt 345,386 345,386 126,491
Deferred rent 10,825 21,649 18,943
Deferred credits 600,000 600,000 600,000
Total liabilities 5,752,270 6,010,879 5,969,039
OCEAN POWER TECHNOLOGIES, INC.
Preferred stock, $0.001 par value; authorized
5,000,000 shares; none issued or outstanding
Common stock, $0.001 par value; authorized 105,000,000
shares; issued and outstanding 10,210,354 shares
Additional paid-in capital 155,268,900 154,568,931 153,896,651
Accumulated deficit (78,533,039 ) (71,242,791 ) (62,936,507 )
Accumulated other comprehensive income (loss) 225,049 (553,323 ) (274,411 )
Total Ocean Power Technologies, Inc. stockholders'
76,971,120 82,783,027 90,695,943
Noncontrolling interest in Ocean Power Technologies
(Australasia) Pty, Ltd
53,233 - -
77,024,353 82,783,027 90,695,943
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 82,776,623 88,793,906 96,664,982
Consolidated Statements of Operations
For the quarter ended October 31, 2009 and 2008 (Unaudited)
REVENUES 581,875 667,124
COST OF REVENUES 528,148 1,369,578
Gross profit (loss) 53,727 (702,454 )
PRODUCT DEVELOPMENT COSTS 3,425,348 2,330,073
SELLING, GENERAL AND ADMINISTRATIVE COSTS 2,191,233 2,393,738
Operating expenses 5,616,581 4,723,811
Operating loss (5,562,854 ) (5,426,265 )
INTEREST INCOME 247,601 514,446
OTHER INCOME 24,960 -
FOREIGN EXCHANGE GAIN (LOSS) 100,698 (1,203,882 )
Net loss (5,189,595 ) (6,115,701 )
Less: Net income attributable to the noncontrolling interest
in Ocean Power Technologies (Australasia) Pty, Ltd
(2,176 ) -
NET LOSS attributable to Ocean Power Technologies, Inc. (5,191,771 ) (6,115,701 )
Basic and diluted net loss per share (0.51 ) (0.60 )
Weighted average shares used to compute
basic and diluted net loss per share
Consolidated Statements of Operations
For the six months ended October 31, 2009 and 2008 (Unaudited)
REVENUES 1,892,812 2,453,752
COST OF REVENUES 1,552,375 3,317,724
Gross profit (loss) 340,437 (863,972 )
PRODUCT DEVELOPMENT COSTS 4,786,748 4,033,022
SELLING, GENERAL AND ADMINISTRATIVE COSTS 4,357,504 4.945.554
Operating expenses 9,144,252 8,978,576
Operating loss (8,803,815 ) (9,842,548 )
INTEREST INCOME 532,821 1,062,038
OTHER INCOME 531,590 -
FOREIGN EXCHANGE GAIN (LOSS) 502,389 (1,228,355 )
Net loss (7,237,015 ) (10,008,865 )
Less: Net income attributable to the noncontrolling interest
in Ocean Power Technologies (Australasia) Pty, Ltd
NET LOSS attributable to Ocean Power Technologies, Inc. (7,290,248 ) (10,008,865 )
Basic and diluted net loss per share (0.71 ) (0.98 )
Weighted average shares used to compute
basic and diluted net loss per share
Consolidated Statements of Cash Flows
For the six months ended October 31, 2009 and 2008 (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net loss to net cash used in operating activities: (7,290,248) (10,008,865)
Foreign exchange (gain) loss (502,389) 1,228,355
Depreciation and amortization 184,424 144,233
Loss (gain) on disposals of property, plant and equipment - 256,378
Treasury note premium/discount amortization, net 93,691 128,093
Compensation expense related to stock option grants and restricted stock 739,969 879,371
Deferred rent (10,824) 2,706
Noncontrolling interest in Ocean Power Technologies (Australasia) Pty, Ltd 53,233 -
Changes in operating assets and liabilities:
Accounts receivable 206,452 538,254
Unbilled receivables 213,990 (561,703)
Other current assets 150,207 (98,392)
Other noncurrent assets (192,362) (779,718)
Accounts payable 13,652 (56,328)
Accrued expenses (767,723) (784,535)
Unearned revenues 273,117 (323,864)
Other noncurrent liabilities 110,955 -
Net cash used in operating activities (6,723,856) (9,436,015)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (35,407,938) (73,025,156)
Maturities of marketable securities 35,863,482 6,910,425
Restricted Cash (250,000) -
Purchases of equipment (155,298) (611,324)
Payments of Patent costs (61,054) (97,188)
Net cash used in investing activities (10,808) (66,823,243)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (93,398) (42,801)
Net cash used in financing activities (93,398) (42,801)
EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
NET DECREASE IN CASH AND CASH EQUIVALENTS (5,919,924) (77,445,536)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,267,830 88,836,304
CASH AND CASH EQUIVALENTS, END OF PERIOD 6,347,906 11,390,768
- 11 décembre 2009•06:28
Focused on near term goal to complete PB150
Lockheed Martin relationship is stronger, commercial agreement
First project in Asia thru Japan, Exclusive MOU (that means they sign with nobody else)Joining Tokyo WavePower init
Contract order backlog increasing, went from $6.4M to $7.1M
Profitable, making $54K on REV of .6K, but cash burn of $5.6M due to project dev costs
Cash burn in 2010 to be less than that of 2009
Ended Q with $76.7M cash liquidity
Oregon PB150 powerbuoy at Reedsport being built
More MOU with Gov of OR for more WEC off OR coast
Received $66M Grant from AU at Victoria for 19MW WEC
USP testing 'very' successful at Iberdrola, possible new rev source
New $2.4M LEAP contract, full contract is $15M over 4 yrs.
Redeployed NJ PB40, worked correctly in 'Hurricane' conditions
PB150 for Orkney is on track, Commitment agreement signed for SWRDA wavehub
One more patent granted
Fundamentals are bright as evidenced by Copenhagen summit on GHG reductions and AE thru non-carbon sources.
There were 1.632M stock options outstanding as of 30Apr09 with weighted ave exercise price of $13.43, over the last 6 months, there were 20,238 forfeited, 31,500 expired, and 239,558 new ones issued with lower ave exercisable price of $5.98, for a new total outstanding of 1.820M with ave exercisable price of
Ocean Power Technologies, Inc. (OPPT)
F2Q10 (Qtr End 10/31/09) Earnings Call
December 10, 2009 10:00 am ET
Mark Draper Chief Executive Officer
Charles Dunleavy Chief Financial Officer
Welcome to the Ocean Power Technologies second quarter 2010 audio webcast. Todays call is being recorded and webcast. At this time for opening remarks I would like to turn the call over to Chief Financial Officer of Ocean Power Technologies, Mr. Charles Dunleavy.
Good morning and welcome to Ocean Power Technologies audio webcast for the second quarter ended October 31, 2009. Today we issued our second quarter earnings press release and we will be filing our quarterly report on Form 10-Q with the Securities and Exchange Commission. Our public filings can be viewed on the SEC website at sec.gov or you may go to our website, oceanpowertechnolgies.com. Ill be joined on todays webcast by Mark Draper, our Chief Executive Officer.
Please advance to Slide 2. During the course of this conference call, management may make projections or other forward-looking statements regarding future events or financial performance of the company within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.
As indicated in the slide, these forward-looking statements are subject to numerous assumptions made by management regarding future circumstances over which the company may have little or no control and involve risks and uncertainties and other factors that may cause actual results to be materially different from any future results expressed or implied in such forward-looking statements.
We refer you to the companys Form 10-Q and other recent filings with the Securities and Exchange Commission for a further description of these and other risk factors. Ill now turn the call over to Mark Draper, our Chief Executive Officer.
Moving to Slide 3, Thank you Chuck and thank you everyone for joining todays webcast. OPT maintained strong operational momentum during the second quarter of fiscal 2010 with several notable achievements that have increased the companys commercial activities to the highest level in our history.
We also remained focused on our near term goal to complete construction of the first of our latest wave generation devices, the PB150, which will be deployed in the Orkney Islands off the coast of Scotland in mid calendar year, 2010.
We strengthened our relationship with Lockheed Martin by entering into a commercial services agreement to develop OPTs wave energy systems for future utility scale power generation projects in North America.
Lockheed has outstanding experience in applying new technology and managing volume manufacturing across a wide variety of sectors and it has also been increasing its involvement with renewable energy.
We also had a major breakthrough in Japan by teaming up with three leading Japanese companies to kick start the countrys first commercial scale wave power station and OPTs first project in Asia.
Our contract order backlog increased compared to the previous quarter. We also made a gross profit for the second consecutive quarter as well as a gross profit for the six months compared to a gross loss for the corresponding period last year. That helped reduce our net loss for the three and six months periods ended October 31, 2009.
In addition, construction of the steel structure for the PB150 PowerBuoy for our project at Reedsport, Oregon has been started by Oregon Iron Works a private company, and this week were delighted to announce the signing of a memorandum of understanding with the government of Oregon to explore development of new wave power projects in the States coastal waters.
Chuck will go through the financials in more detail shortly, but first Ill take a few minutes to update you with more information about our activities during the quarter and since the end of that period.
Turning to Slide 4, as part of our global strategy, we made two major breakthroughs recently, reinforcing OPTs position as one of the worlds leading wave power companies. As a result we are now engaged in projects in Oregon and Hawaii in the U.S.A., Scotland and Southwest England, Spain, Australia and Japan.
In early October we expanded our global presence by signing an exclusive memorandum of understanding with a consortium of three leading Japanese companies to develop and demonstrate a wave power station in Japan.
The companies are: [Ebitmitsu Cosa], a leading Japanese energy company, [Mitsui Engineering Ship Building] a major industrial business focused on machinery and ship building and Japan Wind Development which primarily develops and operates wind power stations.
As one of the worlds largest economies, with a dense urban population and an extensive coastline, Japan plays a significant regional role in promoting technical innovation and clean energy and we are delighted to be involved in this project.
In addition, OPT has been invited to become a member of the Tokyo wave power initiative, a committee including the City of Tokyo, regional governments and national agencies involved in the promotion of new energy sources.
The initial phase of the project will be for OPT and our partners to work with the Japanese government to increase the recognition of wave power in Japanese energy policy and to identify favorable sites for OPT power stations and assess their commercial prospects.
Subject to the successful identification of a project site and completion of economic assessments, OPT and our partners intend to enter into an agreement to build a demonstration plant with up to three of our PowerBuoys. This trial plant should provide the basis for the expected building of a commercial scale OPT power station with an initial capacity of ten megawatts or more.
Just after the end of the quarter, our second major breakthrough came as we served to strengthen our position off the Latia region with receipt of a $66 million Australian grant from the federal government of Australia. This award was received in partnership with Latent Contractors with whom we signed an agreement last year to collaborate in pursuing wave power projects off the east and south coast of Australia.
With additional funding to be paid for the project, the government funding will be used by OPT and Latent to advance the construction of a wave power station to be build in three phases off the coast of Victoria near the city of Portland.
With a total expected capacity of 19 megawatts, it will be sufficient to fulfill the energy needs of approximately 10,000 homes. The award was one of four renewable energy projects approved by the federal government under its renewable energy demonstration program and is the sole wave energy program to be selected, thus providing validation of OPTs strength and potential.
Moving to Slide 5, a significant milestone was achieved under our contract with Iberdrola with the completion of in ocean trials of our unique underwater substation pod or USP product. The testing was very successful and this opens a potentially new revenue opportunity for the company.
The USP was designed in house by OPT for use in utility scale wave power stations to be built at a site approximately three miles off the coast of Santaren, Spain.
Based on our proprietary design, the UPS, resembling a giant electrical socket, has been developed for the collection, networking and transforming of power and data generated by up to ten of our PowerBuoys for transmission to shore based electricity grid by one subsea power cable. It has been built with an open platform and can therefore provide plug and play connectivity for any offshore energy device linked to it.
OPT has created considerable offshore power infrastructure capability including development of its unique USP. Since its completion, OPT has been attracting substantial interest from industry players and public bodies with possible application in a variety of marine energy projects.
Turning to Slide 6, Id like to discuss other projects which highlight areas of progress of our technology. Weve broadened our product application with the award of a new $2.4 million contract from the U.S. Navy to provide our wave energy conversion system under the Navys Literal Expeditionary Autonomous PowerBuoy elite program established in the Navys anti-terrorism and homeland protection capability.
This contract to be delivered over a one year period is the initial award under a proposed four year $15 million project to establish near shore maritime surveillance for homeland security. Some of you may recall that OPT is already involved in a separate U.S. Navy contract to provide autonomous buoys for deep water ocean data gathering.
During the quarter we also re-deployed a PowerBuoy off the coast of New Jersey. Soon after re-deployment during the second quarter it successfully weathered hurricane driven storm waves by automatically locking down and restarting power generation after the storm passed.
Originally deployed in 2005, the system has generated power and served as an effective marketing and technology test bed. The buoys performance is testimony to more than decades of technology development and significant in ocean experience resulting in product designed for long economic life and capable of withstanding the hundred year storm conditions.
Moving to Slide 7, we are also very pleased with the progress made on other key projects currently underway in Europe and the U.S. In Scotland, the construction on OPTs first PB150 for the European marine energy center in the Orkney zones is on track for deployment of the companys two megawatt birth during the middle of the calendar year of 2010.
This is a major engineering feat involving a 35 meter long structure weighing approximately 200 tons. The steel structure has been built by our engineering contractors in Inverness, Scotland and is nearing completion while testing of the energy conversion and power take up system continues before integration into the buoy structure. Work is also proceeding on the manufacture of the mooring systems full device.
In total, Suffolk, England, the pace of activity continues to gain momentum for the wave project which received $14 million pounds of government funding earlier this year for an over 40 megawatt project. The Southwest Regional Development Authority which is developing the project expects cabling and subsea infrastructure to be stored by the end of calendar year 2010.
OPT has signed a commitment agreement to advance the development of one of the four wave power stations that will comprise the wave. To date, we are the only company to sign such an agreement.
Work also continues to move ahead in the U.S. where both state and federal governments are stepping up their initiatives to promote the commercialization of wave energy. A major boost came last week after the company awarded a contract to Oregon Iron Works to build its first PB150 for a 1.5 megawatt demonstrator wave power station at Reedsport.
Construction of this buoy has now commenced and represents phase one of an expected ten buoy deployment at Americas first commercial scale wave power facility. Earlier this week, the company further extended its activities in Oregon by signing a memorandum of understanding with the government of Oregon that involves the approach of developing wave power projects in Oregon.
Important points set forth in the agreement will be applied to OPTs projects including a planned wave power station which may develop phases up to 100 megawatts. As discussed earlier, the company has also completed the underwater substation port in Spain.
On Slide 8 we show views of our fabricator showing the PB150 steel work nearing completion. With that, Ill hand the presentation over to Chuck to discuss the second quarters financial results.
Moving to Slide 9, our contract order backlog remains strong as Mark noted, increasing to $7.1 million as compared to $6.4 million for the previous quarter, and with a significant proportion relating to the PB150 device.
We achieved a gross profit for the second consecutive quarter with amounted to $54,000 compared to a gross loss of $702,000 in the corresponding period last year.
Revenues for the quarter decreased slightly to $.6 million as compared to $.7 million for the comparable period last year. This decrease was primarily reflective of a lower level of activity in connection with our contract with the U.S. Navy for ocean data gathering. However, work on this project is expected to increase during the three months ending January 31, 2010.
Revenues relating to OPTs utility PowerBuoys projects were approximately the same compared with the corresponding period last year as a decrease in revenues from the Reedsport projects in Oregon was offset by increases in revenue from our Hawaii project, with the U.S. Navy and our project in the Orkney Islands, Scotland.
Cost of revenues decreased to $.5 million in the three months ended October 31, 2009 as compared to $1.4 million in the three months ended October 31, 2008. This decrease in the cost of revenues reflected lower levels of activity on revenue bearing contracts and a $.4 million favorable decrease in cost of revenues resulting from a net change in provisions for contract losses including the provision for contract losses related to our wave project off the coast of Spain.
Operating loss for the quarter increased by $.2 million to $5.6 million as compared to $5.4 million for the same period last year. This change reflects an increase in product development costs related to OPTs continued work to increase the power output of our utility PowerBuoy system which was partially offset by improvements in gross profit and lower selling, general and administrative spending.
The increased levels of product development costs were consistent with planned activity for this fiscal year.
Net loss for the quarter declined to $5.2 million compared with a net loss of $6.1 million for the same period last year. This decrease in net loss reflects the change in operating loss as well as the increase in foreign exchange gains relative to the change in the value of the British Pound Sterling as partly offset by a decrease in interest income.
Turning to six month period, OPT reported revenues of $1.9 million compared to $2.5 million for the six months ended October 31, 2008. This change primarily reflects decreased revenues associated with our wave power station off the coast of Spain, our product off the coast of Reedsport, Oregon and our autonomous PowerBuoy project with the U.S. Navy for ocean data gathering.
Cost of revenues decreased to $1.6 million in the six months ended October 31, 2009 as compared to $3.3 million in the prior years comparable period. This decrease reflects lower levels of activity in revenue bearing contracts primarily our project off the coast of Spain.
OPT achieved a decline in operating loss and net loss for the six month period. Operating loss was $8.8 million compared to $9.8 million in the same period the prior year. Net loss for the six months ended October 31, 2009 was $7.3 million compared to a net loss of $10 million for the prior years comparable period.
These changes in operating loss and net loss reflect an increase in gross profit and a decrease in selling, general and administrative costs which offset higher levels of product development spending. The decrease in SG&A is primarily attributable to a decrease in consulting, accounting and investor relations expenses.
In addition, foreign exchange gains increased relative to the change in the value of the British Pound Sterling and other income increased from the settlement of the claim against a supplier of both engineering services during the first quarter of fiscal 2010. These were partially offset by a decrease in interest income.
At noted on Slide 10, OPT finished the quarter with total cash, cash equivalents, restricted cash and marketable securities of $76.7 million. As such, the companys balance sheet remains strong and its cash and investments are highly liquid, consisting primarily of term deposits with large commercial banks and U.S. Treasury bills and notes.
Turning to Slide 11, net cash used in operating activities was $6.7 million for the six months ended October 31, 2009 as compared to $9.4 million for the prior year. This change was a result of a decrease in net loss of $2.7 million and an increase in net operating assets and liabilities of $2.1 million offset by a decrease in non cash operating activities of $2.1 million.
Net cash used in investing activities was $11,000 for the six months ended October 31, 2009 compared to $66.8 million for the prior years period. This change was primarily a result of a net decrease in the current period in purchases of securities with maturities longer than 90 days as well as a $.5 million decrease in purchases of equipment and additional restricted cash of $.3 million.
Going forward, we continue to expect our cash burn for the full fiscal year of 2010 to be less than that experienced in the prior fiscal year 2009. Now, Ill turn the call back over to Mark for a summary of the companys growth strategy.
If you turn to Slide 12, our growth strategy remains on course. That is to say, well continue to focus on selling turnkey power stations and operations and maintenance contracts while also increasing our revenue streams from the sale of autonomous PowerBuoy systems and marine energy infrastructure systems including our underwater substation pods.
Our PowerBuoy product will concentrate on building the Smart Pod of OPTs technology while outsourcing functions such as fabrication of steel structures as were doing for the PB150.
The focus of OPTs engineering development efforts is continuing to make improvements to the 150 kilowatt buoy system to facilitate our future transitions to the market by a 100 kilowatt buoy. This includes increasing the power output and maintainability of the 150 kilowatt PowerBuoy system and exploring design and construction techniques that are expected to enable the large efficiency build, deployed and maintained as a significantly reduced cost.
We also to improve economics by growing production volumes as well as maximizing customer funding of technology development. We will continue to build on existing commercial relationships and expand the number and size of projects we have with our current customers.
While the progress we anticipate in the both our products and business come against the backdrop of increasing global commitment to tackle climate change as evidenced by this weeks summit in Copenhagen to reduce carbon emissions and foster renewable energy. As a result, OPTs long term fundamentals are brighter than ever before.
With that, Id like to thank you all for attending todays webcast and your continued support and interest as we work towards making Ocean Power Technologies a leading player in the worldwide energy market place.
That concludes todays webcast.
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