Paragon Technologies Files Complaint Alleging Ocean Power Technologies Failed to Achieve a Legitimate Quorum at its Annual Meeting of Shareholders
Key Summary: Paragon Technologies (3.9%) has raised concerns about Ocean Technologies' financials and initiated legal action following the company's declaration of their nomination letter as invalid. Despite Paragon continuing to seek votes for its nominees, the company has urged shareholders to ignore the nomination letter, stating that such votes will not be counted. On Feb 8, 2024, Paragon Tech criticized OPTT's annual meeting delays due to quorum issues. At the AGM held on Feb 28, 2024, company's nominees were re-elected to the Board. On April 12, 2024, Paragon Technologies filed complaint alleging that the company failed to achieve a legitimate quorum at its AGM Market Cap: $17 million | Ocean Power Technologies, Inc. develops and commercializes proprietary systems that generate electricity by harnessing the renewable energy of ocean waves in North America, South America, Europe, and Asia.
On July 7, 2023, Paragon Technologies (3.9%) provided a letter to the stockholders with respect to its views regarding the Company’s financial condition and the performance of the board. It expressed its concerns about the company's ongoing cash burn and lack of a coherent plan for profitability. It highlighted the company's history of net losses since its inception in 1994, declining share price, failed commercialization efforts, and high operating expenses. Paragon intends to provide a slate of director nominees with the aim of reducing losses, addressing the cash burn, and implementing a go-to-market strategy to create profitable operations at the company.
On July 14, 2023, Paragon Technologies (4%) expressed its concerns about alleged wrongdoing and mismanagement by the board and management. It has requested access to the company's records and will pursue litigation if the board does not comply. Furthermore, it stated that it may make binding or non-binding stockholder proposals or may nominate one or more individuals as nominees for election to the board. Source
On July 17, 2023, Paragon sent an Inspection Demand to the company, requesting access to the company's books and records for the purpose of investigating apparent wrongdoing and/or mismanagement by the Board and/or management. Source
On July 27, 2023, Paragon filed a complaint in the Delaware Court of Chancery to enforce for inspecting Company's books and records.
On August 2, 2023, Paragon Technologies, Inc. issued a press release regarding the company, demanding clear explanations from the board on how the company will fund operations beyond July 31, 2024.
On August 11, 2023, Paragon Technologies (4%) calls on the company to REFRAIN from ALL future equity share sales that will dilute shareholders and immediately announce a significant cost cutting plan to demonstrate the Board’s commitment to protecting shareholder value. Source
On August 25, 2023, Paragon demands corporate governance adherence and shareholder value enhancement, urging to:
Reinstate the Company’s bylaws to their original form prior to Paragon’s calling out the Company’s worsening financial performance
Terminate the Company’s poison pill and grant Paragon its limited waiver
Allow Paragon, as is Paragon’s right as a shareholder, to examine the Company’s books and records
Reconstitute its Board to appoint Paragon’s directors to the Company’s Board.
On August 25, 2023, Paragon Technologies notified its intent to nominate five directors for the company's board at the 2023 annual meeting. On August 29, 2023, Paragon Technologies submitted a second request for an exemption related to the "Section 382 Tax Benefits Preservation Plan" adopted by the company's board on June 29, 2023, limiting ownership to 19.9% of the company's outstanding shares. The company's board has not responded to these exemption requests. Source
On October 9, 2023, Paragon Technologies stated that it has initiated legal action against the board and CEO for alleged breach of fiduciary duties. They sought to appoint three directors to the board and requested an exemption from poison pill provision. Paragon criticized the management for self-serving actions and misleading statements. Source
On October 20, 2023, the Delaware Court of Chancery ruled in favor of Paragon Technologies (OTC PINK:PGNT), ordering Ocean Power Technologies (OPT) to provide Paragon with certain books and records for an investigation. Paragon had made a books and records demand on July 17, 2023, which OPT initially refused, leading to litigation. During the trial, Paragon raised concerns about OPT's financial losses, expenses, and director/officer compensation, as well as actions by OPT's board seemingly aimed at interfering with Paragon's efforts to elect new directors. The Court found that Paragon had a credible basis to suspect wrongdoing and rejected OPT's claim of an improper motive for the demand. Sham Gad, Chairman of Paragon, expressed satisfaction with the decision and urged OPT to work constructively with shareholders. Source
On October 24, 2023, Paragon Technologies sent a letter to the independent directors of the company, raising concerns about recent decisions made by the board. The letter questioned whether the actions taken by the directors are in the best interest of shareholders and suggests that these actions may be aimed at preventing certain director candidates from being presented to shareholders. Paragon highlights several actions, including the adoption of new by-laws, the implementation of a poison pill, engagement of multiple law firms and a proxy defence firm, and the refusal to provide access to company records. Paragon calls for transparency and questions the board's spending decisions in light of OPT's financial situation.
On November 13, 2023, Paragon Technologies notified the Company that Robert J. Tannor notified them of his withdrawal as a nominee, due to health reasons that he is still recovering from, for election to the Company’s board of directors at the Company’s 2023 AGM. Paragon Technologies intends to proceed to nominate the four other candidates previously notified to the Company. Source
On November 17, 2023, a Delaware Chancery Court ruling and evidence suggest a gap between OPT's public statements and financial reality. Paragon calls on OPT to implement a substantial cost-cutting plan and cease issuing equity to safeguard shareholder interests. Source
On November 28, 2023, Paragon Technologies filed proxy materials seeking support for its nominees.
On November 30, 2023, the Delaware Court of Chancery denied Paragon's request for injunctive relief filed on October 9, 2023. As a result, Paragon's nominations and exemption request remain rejected, and they cannot nominate their candidates for the OPT Board at the 2023 Annual Meeting. Source
On December 4, 2023, Paragon Technologies stated that it intends to move forward with its election contest at the Company’s 2023 annual meeting of shareholders (scheduled by the Company to be held on January 31, 2024) and intends to nominate its four director candidates at the annual meeting. Source
On December 11, 2023, Paragon Technologies reiterated its concerns and urges shareholders to vote for its nominees. Source
On December 18, 2023, Paragon Technologies reiterated its concerns and urges shareholders to vote for its nominees. Source
On December 21, 2023, the company announced shareholders may receive materials from Paragon Technologies but advised discarding them, as votes for Paragon's nominees on the blue proxy card will not be counted
On December 29, 2023, Paragon Technologies reiterated its concerns and urges shareholders to vote for its nominees. Source
On January 4, 2024, Paragon Technologies, Inc. reminded shareholders to DISREGARD any WHITE proxy from OPT and issued a presentation on how to vote the BLUE proxy card.
Valuation insight
Paragon believes OPT could be worth +$3 a share, or 10x return, with an improved operating cost structure, disciplined capital allocation, and a realigned focus on potential growth of Marine Advanced Robotics.
On January 15, 2024, Paragon Technologies issued a presentation reiterating its concerns and reminded shareholders to vote for its nominees.
On January 18, 2024, Paragon Technologies (4.8%) challenged OPT's CEO, Phillip Stratmann, over his conflicting statements regarding OPT's profitability in 2025. Stratmann had claimed OPT would be profitable using current capital, but Paragon pointed out discrepancies between this and OPT's EBITDA breakeven projection, questioning the lack of a clear cost-cutting strategy. Paragon criticized Stratmann's management, noting OPT's ceased R&D disclosures since he became CEO and escalating expenses. They accused OPT's Board of self-serving actions and misleading shareholders, failing to commercialize products or present a viable strategy. Paragon urged shareholders to vote using their BLUE proxy card for change and transparency in OPT's management and strategy. Source
On January 22, 2024, Paragon Technologies, Inc. issued a statement and a presentation relating to Ocean Power Technologies, Inc
On February 1, 2024, Paragon Technologies criticized OPT's annual meeting postponement due to a lack of quorum. Paragon questions the board's focus on entrenchment over financial responsibility and transparency. Source
On February 2, 2024, Paragon urges shareholders to disregard all messages from OPT and not vote on any white proxy card.
On February 8, 2024, Paragon Technologies criticized OPTT's repeated postponement of its annual meeting due to a failure in obtaining a quorum. It urged shareholders to disregard OPTT's white proxy and vote against the then-current board, citing ongoing destruction of shareholder value and the futility of supporting the status quo. Source
At the AGM held on February 28, 2024, shareholders re-elected all the company's director nominees to the Board.
On April 12, 2024, Paragon Technologies, Inc filed a lawsuit in the Delaware Court of Chancery, alleging that the company failed to achieve a quorum at its 2023 Annual Meeting on February 28, 2024. Paragon claims OPT miscounted votes and misled shareholders, which potentially manipulated election outcomes to favor current board members. Additionally, Paragon criticizes OPT for misleading financial statements and plans to dilute shareholder value through a new equity offering. Paragon is seeking a court-ordered new annual meeting and plans to continue challenging OPT's governance practices. Source
On April 17, 2024, Paragon Technologies revealed that the company intends to sell up to $7.0 million in new equity, potentially diluting existing shareholders significantly. Paragon estimates the Company spent over $6.0 million to block Paragon from presenting alternative directors for a shareholder vote. Despite this, Paragon intends to persist through press releases and other avenues, inviting shareholders to support their cause. Source