8-K/A 1 opc8ka.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A Amendment No. 2 to CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Act of 1934 Date of Report (Date of earliest event reported) August 23, 2000 Ocean Power Corporation ------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) Delaware 94-3350291 -------- ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 5000 Robert J. Mathews Parkway, El Dorado Hills, CA 95762 --------------------------------------------------------- (Address of principal executive offices) (916) 933-8100 -------------- (Registrant's telephone number including area code) ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS. Ocean Power Corporation (the "Company") entered into a Share Purchase Agreement ("Agreement") with the Shareholders of SIGMA Elektroteknisk, AS ("SIGMA") on July 25, 2000 whereby the Shareholders of SIGMA agreed to a stock for stock exchange as set forth in the Agreement and attached hereto as Exhibit 1. There were no prior material relationships between or among any of the Shareholders of SIGMA and the Company or any of their officers, directors, associates or affiliates. The acquisition was completed on August 10, 2000. It did not require the use of any funds. Pursuant to the terms of the Agreement, the Company acquired 100% of the issued and outstanding shares of SIGMA from its Shareholders in return for 1,718,748 shares of the Company's restricted common stock valued at $3.20 per share or $5,500,000. The common stock of the Company issued in connection with the acquisition have not been registered under the Securities Act of 1933. The acquistion will be accounted for as a purchase per the requirements of APB No. 16. SIGMA is a developer of Stirling engine systems that generate heat and electricity for residential uses. They are leaders in the development of engines that use a wide range of fuels including propane, diesel and natural gas. The assets of SIGMA comprise patents, cash, machinery, tools and fixtures. SIGMA will continue its present operations. It is now a wholly owned subsidiary of the Company. The acquisition is intended to broaden the technology base of the Company and to add a potentially major source of revenue for the Company. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements (i) Audited financial statements of SIGMA pages F-1 - F-18 (b) Pro Forma Financial Information (i) Pro Forma Financial information pages F-19 - F-25 (c) Exhibits 1. Share Purchase Agreement* ----------------- * previously filed SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) FINANCIAL STATEMENTS July 31, 2000 F-1 C O N T E N T S Independent Auditors' Report.............................................. F - 3 Balance Sheet............................................................. F - 4 Statements of Operations and Other Comprehensive Income................... F - 6 Statements of Stockholders' Equity (Deficit).............................. F - 7 Statements of Cash Flows.................................................. F - 8 Notes to the Financial Statements......................................... F - 9 F-2 INDEPENDENT AUDITORS' REPORT Board of Directors Sigma Elektroteknisk, AS Holen, Norway We have audited the accompanying balance sheet of Sigma Elektroteknisk, AS (a development stage company) as of December 31, 1999 and the related statements of operations, stockholders' equity (deficit) and cash flows for the years ended December 31, 1999 and 1998, and from inception on January 6, 1994 through December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly in all material respects, the financial position of Sigma Elektroteknisk, AS (a development stage company) as of December 31, 1999 and the results of its operations and its cash flows for the years ended December 31, 1999 and 1998, and from inception on January 6, 1994 through December 31, 1999, in conformity with generally accepted accounting principles accepted in the United States. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company is a development stage company with no significant operating results to date, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 6. The financial statements do not include any adjustments that might result for the outcome of the uncertainty. HJ & Associates, LLC Salt Lake City, Utah September21, 2000, except as to the Statements of Stockholders' Equity, Statements of Operations and Statements of Cash Flows from inception on January 6, 1994 through December 31, 1997 which is June 4, 2001 F-3 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Balance Sheets ASSETS July 31, December 31, 2000 1999 ------------------ ------------------ (Unaudited) CURRENT ASSETS Cash and cash equivalents $ 137,815 $ 160,782 Restricted cash (Note 2) 4,439 19,241 Accounts receivable -- 59,216 Employee advances 19,930 26,522 Prepaid and other current assets 30,994 22,542 VAT tax receivable 48,469 98,318 ------------------ ------------------ Total Current Assets 241,647 386,621 ------------------ ------------------ FIXED ASSETS, NET (Note 2) 57,866 78,307 ------------------ ------------------ OTHER ASSETS Patents, net (Note 3) 962,558 1,163,163 Deposits 10,322 11,403 ------------------ ------------------ Total Other Assets 972,880 1,174,566 ------------------ ------------------ TOTAL ASSETS $ 1,272,393 $ 1,639,494 ================== ================== The accompanying notes are an integral part of these financial statements. F-4 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ----------------------------------------------

The accompanying notes are an integral part of these financial statements. F-5 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Statements of Operations and Other Comprehensive Income

The accompanying notes are an integral part of these financial statements. F-6 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Statement of Stockholders' Equity (Deficit)

The accompanying notes are an integral part of these financial statements. F-7 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Statement of Stockholders' Equity (Deficit) (Continued)

The accompanying notes are an integral part of these financial statements. F-8 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Statements of Cash Flows

The accompanying notes are an integral part of these financial statements. F-9 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Statements of Cash Flows (Continued)

The accompanying notes are an integral part of these financial statements. F-10 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Notes to the Financial Statements NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Sigma Elektroteknisk, AS (the Company) was incorporated January 6, 1994 under the laws of the country of Norway and is located in Holen, Norway. The Company has had limited operations since inception and is considered a development stage company because no significant revenues have been realized and planned principal operations have not yet commenced. The Company is planning to engage in the business of developing and producing personal combustion power plants (PCP's), an energy converter utilizing a Stirling engine that runs on natural gas or propane and produces heat and electricity for use in micro CHP (combined heat and power) systems, an appliance to produce heat and power in households. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Accounting Method The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year end. b. Basic Loss Per Share The computation of basic loss per share of common stock is based on the weighted average number of shares outstanding during the period of the financial statements. Diluted loss per share is not presented because the dilutive instruments would be antidilutive due to the losses. For the Years Ended December 31, 1999 Loss Shares Per Share (Numerator) (Denominator) Amount ----------------- ---------------- ---------------- $ (1,311,636) 1,744,124 $ (0.75) ================= ================ ================ For the Years Ended December 31, 1998 Loss Shares Per Share (Numerator) (Denominator) Amount ----------------- ---------------- ---------------- $ (2,209,272) 1,038,197 $ (2.13) ================= ================ ================ F-11 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Notes to the Financial Statements NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) c. Provision for Taxes At December 31, 1999, the Company has net operating loss carryforwards of approximately $6,148,000 that may be offset against future taxable income through 2019. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater change the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount. d. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. e. Equipment Office equipment and software are recorded at cost. Major additions and renewals are capitalized and depreciated over their estimated useful lives of 3 to 7 years using the straight-line method. Depreciation expense for operations for the years ended December 31, 1999 and 1998 was $36,653 and $39,402, respectively. Equipment consists of the following: December 31, 1999 ----------------- Office equipment and furniture $ 166,076 Stirling engine 12,440 Artwork 1,555 Accumulated depreciation (101,764) ----------------- Net Equipment $ 78,307 ================= f. Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. F-12 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Notes to the Financial Statements NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) g. Change in Accounting Principle In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" which requires companies to record derivatives as assets or liabilities, measured at fair market value. Gains or losses resulting from changes in the values of those derivatives would be accounted for depending on the use of the derivative and whether it qualifies for hedge accounting. The key criterion for hedge accounting is that the hedging relationship must be highly effective in achieving offsetting changes in fair value or cash flows. SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. The adoption of this statement had no material impact on the Company's financial statements. h. Revenue Recognition Policy The Company currently has no established source of revenues. Revenue recognition policies will be determined when principal operations begin. i. Advertising The Company follows the policy of charging the costs of advertising to expense as incurred. The Company has recorded advertising costs of $13,562 and $29,949 for the years ended December 31, 1999 and 1998, respectively. j. Long-lived Assets All long-lived assets are evaluated as needed for impairment per SFAS 121. Any impairment in value is recognized as an expense in the period when the impairment occurs. k. Research and Development All amounts expended for research and development are charged to expense as incurred. l. Restricted Cash At December 31, 1999, the Company had cash which is in a separate bank account which is restricted for the payment of payroll taxes. The payroll taxes are paid monthly. F-13 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Notes to the Financial Statements NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) m. Interim Financial Information The unaudited interim financial statements as of July 31, 2000 and for the seven-month period then ended have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the seven-month period ended July 31, 2000 is not necessarily indicative of the results that may be expected for the year ending December 31, 2000. NOTE 3 - PATENTS In December 1996, the Company entered into a license agreement with Silent Clean Power (SCP) to purchase licensing rights to the patents owned by SCP relating to the Company's PCP development for $1,667,297. The terms of the payments were as follows: Company would pay $83,365 on signing of the agreement, $541,872 by December 1996 and $660,460 by January 1997. Additionally, SCP could convert $381,600 of the original purchase price set forth in the Agreement into shares of the Company. SCP converted the $381,600 of the original purchase price into 30,000 shares of the Company stock on December 30, 1996. During November 1998, the Company entered into an Amendment to the License Purchase Agreement (the "Amendment") with SCP which superceded the original License Agreement wherein the Company purchased the actual patents, whereas before the Company had only purchased the license to the patents. At the time of the Amendment, the company owed SCP $1,008,048. The Amendment called for the Company to pay an additional $319,645. Because of the decrease in the value of the Norwegian Kronor, the total value attributed to the patents at December 31, 1999 was $1,518,935. Concurrent with the purchase of the patents, the Company issued 57,594 shares of common stock valued at $5.34 per share for the conversion of $307,322 of the purchase price set forth in the Amendment with SCP. In August 1999, the Company issued an additional 40,000 shares of common stock valued at $0.64 per share for the conversion of $25,600 of the remaining amount payable to SCP as set forth by the Amendment. At December 31, 1999, there were no amounts due to SCP which were convertible into the Company's common stock. The patents are being amortized over their estimated useful lives of 111 to 134 months on a straight-line basis. Amortization expense for the years ended December 31, 1999 and 1998 was $146,607 and $116,098, respectively. At December 31, 1999 and 1998, the Company owed SCP $662,803 and $672,536 on the remainder of its patent obligations pursuant to the Amendment, respectively, due in various semi-annual amounts, bearing interest at 12% and secured by the patents. Annual maturities of patents payable are as follows: 2000 $ 233,250 2001 202,150 2002 186,600 2003 40,803 ----------------- $ 662,803 ================= F-14 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Notes to the Financial Statements

Total interest expense was $123,225 and $29,735 for the years ended December 31, 1999 and 1998, respectively. NOTE 5 - COMMITMENTS AND CONTINGENCIES a. Research Advances During 1999, 1998 and 1997, the Company received a total of $439,840 as research advances from an unrelated company for its PCP project, a project to develop an energy converter utilizing a Stirling engine that runs on natural gas or propane and produces electricity and heat for use in the micro CHP (combined heat and power), and appliance to produce heat and power in households. This amount is payable upon demand or may be converted into Sigma's common stock at a rate of $1.87 per share at any time. b. Building Lease During July 1999, the Company signed a one year lease for building and warehouse space with its Chief Executive Officer (CEO). The lease calls for payments of $6,220 per month and is renewable for 2 years at the discretion of the Company. F-15 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Notes to the Financial Statements NOTE 6 - GOING CONCERN The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has had limited activities since inception and is considered a development stage company because it has no significant revenues, planned principal operations have not yet commenced, and the Company has incurred losses from its inception through December 31, 1999. The Company does not have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations, the Company will need, among other things, additional capital resources. Management's plans to continue as a going concern include raising additional capital of approximately $16,800,000 for continued research and development of the PCP and operating expenses to get it to the production stage over the next three years. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The Company has recently completed an agreement with Ocean Power Corporation whereby the Company exchanged 100% of its outstanding stock for Ocean Power stock valued at $5,500,000, thereby giving the Company access to additional equity markets in the United States. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. NOTE 7 - RELATED PARTY TRANSACTIONS During 1999, the Company signed a one year lease for office and warehouse space with its CEO (see Note 5). During 1999 and 1998, the Company had employee receivables for salary advances of $26,522 and $63,396, respectively. These advances are being repaid through salary deductions. NOTE 8 - STOCK ISSUANCES During June 1994, the Company issued 150,000 shares of common stock valued at $0.14 per share for cash of $21,105. During June 1995, the Company issued 400,000 shares of common stock valued at $0.86 per share for the retirement of debt of $63,906. During April 1996, the company issued 100 shares of common stock valued at $12.87 per share for cash of $1,219. F-16 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Notes to the Financial Statements NOTE 8 - STOCK ISSUANCES (Continued) During December 1996, the Company issued 30,000 shares of common stock valued at $386,100 for the retirement of debt to Silent Clean Power for the purchase of license rights. During December 1996, the Company issued 84,000 shares of common stock valued at $12.87 per share for cash of $1,081,080. During August 1997, the Company issued 325,000 shares of common stock valued at $5.21 per share for cash of $1,695,200. During November 1998, the Company issued 414,000 shares of its common stock valued at $3.34 per share for cash of $1,380,690. During November 1998, the Company issued 57,594 shares of its common stock valued at $5.34 per share for the retirement of debt associated with the purchase of the patents from Silent Clean Power of $307,322. During August 1999, the Company issued 383,983 shares of its common stock valued at $0.64 per share for cash of $244,021. During August 1999, the Company issued 463,983 shares of its common stock valued at $0.64 per share for the retirement of debt of $294,861. 40,000 shares were for the partial retirement of the payable for the licenses and patents, and 423,983 were for the partial retirement of a note payable to a bank. During March 2000, the Company issued 836,500 shares of its common stock for cash of $97,894 (or $0.12 per share) (unaudited). During March 2000, the Company issued 280,000 shares of its common stock for retirement of debt of $32,191 (or $0.12 per share) (unaudited). During June 2000, the Company issued 216,000 shares of its common stock for retirement of debt of $24,833 (or $0.12 per share) (unaudited). During July 2000, the Company issued 22,167 shares of its common stock for cash of $40,710 (or $1.83 per share) (unaudited). NOTE 9 - RESEARCH AND DEVELOPMENT During 1999 and 1998, the Company was involved in several research and development projects for the development of its PCP technology. These projects were partially funded by unrelated third parties. Research and development expense for the years ended December 31, 1999 and 1998 was $436,093 and $1,053,503, respectively. F-17 SIGMA ELEKTROTEKNISK, AS (A Development Stage Company) Notes to the Financial Statements NOTE 10 - SUBSEQUENT EVENTS a. Building Lease During July 2000, the Company renewed its one year lease for office and warehouse space with a related party. The lease calls for monthly payments of approximately $6,220. The lease may be extended for 2 years at the Company's discretion. b. Purchase Agreement During August 2000, the Company completed an agreement to be acquired by Ocean Power Corporation. The agreement provides for the shareholders of the Company to exchange all of the outstanding shares of the Company for 1,718,748 shares of Ocean Power common stock valued at $3.20 per share, or $5,500,000. F-18 OCEAN POWER CORPORATION AND SUBSIDIARIES CONSOLIDATED PROFORMA FINANCIAL STATEMENTS F2-1 C O N T E N T S Consolidated Proforma Balance Sheet...................................... 3 Consolidated Proforma Statement of Operations............................ 5 Statement of Assumptions and Disclosures................................. 7 F2-2 OCEAN POWER CORPORATION AND SUBSIDIARIES Consolidated Proforma Balance Sheet (Unaudited)

See Summary of Assumptions and Disclosures. F2-3 OCEAN POWER CORPORATION AND SUBSIDIARIES Consolidated Proforma Balance Sheet (Unaudited)

See Summary of Assumptions and Disclosures. F2-4 OCEAN POWER CORPORATION AND SUBSIDIARIES Consolidated Proforma Statement of Operations December 31, 1999 (Unaudited)

See Summary of Assumptions and Disclosures. F2-5 OCEAN POWER CORPORATION AND SUBSIDIARIES Consolidated Proforma Statement of Operations June 30, 2000 (Unaudited)

See Summary of Assumptions and Disclosures. F2-6 OCEAN POWER CORPORATION AND SUBSIDIARIES Summary of Assumptions and Disclosures NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Business Organization Ocean Power Corporation (the "Company") entered into a Share Purchase Agreement ("Agreement") with the shareholders of SIGMA Elektroteknisk, AS ("SIGMA") on July 25, 2000 whereby the shareholders of SIGMA agreed to a stock-for-stock exchange as set forth in the Agreement. There were no prior material relationships between or among any of the shareholders of SIGMA and the Company or any of their officers, directors, associates or affiliates. The acquisition was completed on August 10, 2000. It did not require the use of any funds. Pursuant to the terms of the Agreement, the Company acquired 100% of the issued and outstanding shares of SIGMA from its shareholders in return for 1,718,748 shares of the Company's restricted common stock valued at $3.20 per share or $5,500,000. The common stock of the Company issued in connection with the acquisition have not been registered under the Securities Act of 1933. The acquisition will be accounted for as a purchase per the requirements of APB No. 16. SIGMA is a developer of Stirling engine systems that generate heat and electricity for residential uses. They are leaders in the development of engines that use a wide range of fuels, including propane, diesel and natural gas. The assets of SIGMA comprise patents, cash, machinery, tools and fixtures. SIGMA will continue its present operations. The acquisition is intended to broaden the technology base of the Company and to add a potentially major source of revenue for the Company. b. Proforma Adjustments The proforma balance sheet has been prepared as though the acquisition of SIGMA by the Company occurred on July 31, 2000. The balance sheet of the Company as of June 30, 2000 has been presented because it is the most recent balance sheet available for the Company. The proforma statement of operations has been prepared as of June 30, 2000, the most recent interim financial statements of Ocean Power and for the year ended December 31, 1999. The Company has recorded the acquisition of SIGMA through the issuance of 1,718,748 shares of common stock and has elected to amortize the goodwill over a 10-year period. Additionally, the Company has accrued $50,000 of estimated merger costs. The assets and liabilities acquired have been valued at historical cost which management believes represents fair market value. F2-7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has fully caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: September 4, 2001 OCEAN POWER CORPORATION By: /s/ Joseph P. Maceda ------------------------ Joseph P. Maceda, President and Director

OCEAN POWER CORP 8-K/A