U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

             Quarterly Report Pursuant to Section 13 or 15(d) of the
                             Securities act of 1934

                  For the quarterly period ended June 30, 2000

       [X] Transition Report Under Section 13 or 15(d) of the Exchange Act
               For the transition period from         to
                                              -------   --------

               Commission File Number:       000-29371
                                      --------------------------
                             Ocean Power Corporation
--------------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

          Delaware                                        94-3350291
----------------------------------          ------------------------------------
(State or other jurisdiction                (I.R.S. Employer Identification No.)
of incorporation or organization)

            5000 Robert J. Mathews Parkway, El Dorado Hills, CA 95762
--------------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (916) 933-8100
--------------------------------------------------------------------------------
                (Issuer's telephone number, including area code)

--------------------------------------------------------------------------------
                 (Former Name, Former Address and Former Fiscal
                       Year, of changed since last report)

Check  whether the Issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrants was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                            Yes: [X]       No: [ ]

As of August 11, 2000,  the issuer had 37,119,942  shares of common stock,  $.01
par value outstanding.

Transitional Small Business Disclosure Format      Yes:   [ ]     No:     [X]


<PAGE>


                                      INDEX

                                                                       PAGE NO.
                                                                      ---------=

PART I            FINANCIAL INFORMATION                                  F-1

ITEM 1            FINANCIAL STATEMENTS;                               F-2 - F-22

ITEM 2            MANAGEMENT'S DISCUSSION AND ANALYSIS                    1
                  OR PLAN OF OPERATION

PART II           OTHER INFORMATION                                       2

                  ITEMS 1 - 6                                           2 - 3

SIGNATURES                                                                4


<PAGE>

                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)

                        CONSOLIDATED FINANCIAL STATEMENTS

                       June 30, 2000 and December 31, 1999

                                      F-1

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                           Consolidated Balance Sheet

                                     ASSETS

                                           June 30,
                                            2000       December 31,
                                          (Unaudited)      1999
                                          ----------   ----------
CURRENT ASSETS

   Cash                                    2,387,997   $  368,276
   Prepaid expenses (Note 4)                 535,417         --
                                          ----------   ----------

     Total Current Assets                  2,923,414      368,276
                                          ----------   ----------

EQUIPMENT (Note 2)                           741,986       52,555
                                          ----------   ----------

OTHER ASSETS

   Equipment procurement costs (Note 3)         --        364,110
   Deposits                                   20,402       20,402
                                          ----------   ----------

     Total Other Assets                       20,402      384,512
                                          ----------   ----------

     TOTAL ASSETS                         $3,685,802   $  805,343
                                          ==========   ==========

                                      F-2

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                     Consolidated Balance Sheet (Continued)


                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------
<TABLE>
<CAPTION>

                                                           June 30,
                                                             2000        December 31,
                                                         (Unaudited)         1999
                                                        ------------    ------------
CURRENT LIABILITIES

<S>                                                     <C>             <C>
   Accounts payable                                     $    780,774    $  1,453,908
   Accrued expenses (Note 7)                                 194,562         326,582
   Notes payable - related parties (Note 5)                1,159,095       3,381,086
   Convertible debentures payable (Note 6)                   550,000         650,000
                                                        ------------    ------------

     Total Current Liabilities                             2,684,431       5,811,576
                                                        ------------    ------------

STOCKHOLDERS' EQUITY (DEFICIT)

   Preferred stock: 20,000,000 shares authorized of
    $0.001 par value; no shares outstanding                     --              --
   Common stock: 500,000,000 shares authorized of
    $0.01 par value; 35,301,194 and 32,835,925 shares
    issued and outstanding, respectively                     353,012         328,359
   Additional paid-in capital                             18,602,444       5,782,025
   Deficit accumulated during the development stage      (17,954,085)    (11,116,617)
                                                        ------------    ------------

     Total Stockholders' Equity (Deficit)                  1,001,371      (5,006,233)
                                                        ------------    ------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
      (DEFICIT)                                         $  3,685,802    $    805,343
                                                        ============    ============
</TABLE>

                                      F-3

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Operations
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                                                                                 From
                                                                                                             Inception on
                                                  For the                            For the                   March 26,
                                              Six Months Ended                   Three Months Ended          1992 Through
                                                  June 30,                           June 30,                  June 31,
                                        2000              1999              2000              1999               2000
                                    ----------------  ---------------   ---------------  ----------------  -------========

<S>                                 <C>               <C>               <C>              <C>               <C>
REVENUES                            $         -       $        -        $        -       $         -       $        -

EXPENSES

   General and administrative              6,895,778          741,203         2,529,910           163,513       16,844,037
   Depreciation and amortization              58,594            5,944            43,731             1,281          109,288
                                    ----------------  ---------------   ---------------  ----------------  ---------------

     Total Expenses                        6,954,372          747,147         2,573,641           164,794       16,953,325
                                    ----------------  ---------------   ---------------  ----------------  ---------------

     LOSS FROM OPERATIONS                 (6,954,372)        (747,147)       (2,573,641)         (164,794)     (16,953,325)
                                    ----------------  ---------------   ---------------  ----------------  ---------------

OTHER INCOME (EXPENSE)

   Interest income                            79,578           -                 43,405            -                79,578
   Gain on settlement of debt                165,349           -                 -                 -               165,349
   Loss on sale of assets                     -                -                 -                 -              (387,649)
   Interest expense                         (128,023)        (162,454)          (49,586)          (75,829)        (858,038)
                                    ----------------  ---------------   ---------------  ----------------  ---------------

     Total Other Income (Expense)            116,904         (162,454)           (6,181)          (75,829)      (1,000,760)
                                    ----------------  ---------------   ---------------  ----------------  ---------------

NET LOSS                            $     (6,837,468) $      (909,601)  $    (2,579,822) $       (240,623) $   (17,954,085)
                                    ================  ===============   ===============  ================  ===============

   BASIC LOSS PER SHARE             $          (0.20) $         (0.17)  $         (0.07) $          (0.04)
                                    ================  ===============   ===============  ================

WEIGHTED AVERAGE SHARES
 OUTSTANDING                              34,725,423        5,373,608        35,240,478         5,805,928
                                    ================  ===============   ===============  ================
</TABLE>


                                      F-4

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
            Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>

                                                                                                      Deficit
                                                                                                     Accumulated
                                                                                   Additional        During the
                                                        Common Stock                Paid-In          Development
                                                  Shares            Amount          Capital            Stage
                                            ----------------  ---------------   ---------------  -----------------
<S>                                         <C>               <C>               <C>              <C>
Inception, March 26, 1992                             -       $        -        $        -       $          -

Net loss from inception on
 March 20, 1992 through
 December 31, 1997                                    -                -                 -              (2,306,366)
                                            ----------------  ---------------   ---------------  -----------------

Balance, December 31, 1997                            -                -                 -              (2,306,366)

Common stock issued for cash
 at $0.003 per share                                 949,420            9,494            (6,923)            -

Common stock issued for
 conversion of debt at $0.003
 per share                                        24,094,726          240,947          (157,066)            -

Net loss for the year ended
 December 31, 1998                                    -                -                 -              (2,917,964)
                                            ----------------  ---------------   ---------------  -----------------

Balance, December 31, 1998                        25,044,146          250,441          (163,989)        (5,224,330)

Recapitalization (Note 1)                          6,426,450           64,265         3,524,750             -

September 2, 1999, common
 stock issued for services valued
 at $0.29 per share                                   20,000              200             5,600             -

September 9, 1999, options
 issued below market value                            -                -                190,000             -

September 9, 1999, common
 stock issued for cash at $1.00
 per share                                           100,000            1,000            99,000             -

October 1, 1999, cancellation of
 common stock valued at zero.                       (502,500)          (5,025)            5,025             -

November 16, 1999, warrants
 issued below market value                            -                -                650,000             -
                                            ----------------  ---------------   ---------------  -----------------

Balance forward                                   31,088,096  $       310,881   $     4,310,386  $      (5,224,330)
                                            ----------------  ---------------   ---------------  -----------------
</TABLE>



                                      F-5

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
<TABLE>
<CAPTION>

                                                                                    Deficit
                                                                                  Accumulated
                                                                  Additional      During the
                                             Common Stock           Paid-In       Development
                                        Shares        Amount        Capital          Stage
                                   ------------   ------------   ------------    ------------
<S>                                  <C>          <C>            <C>             <C>
Balance forward                      31,088,096   $    310,881   $  4,310,386    $ (5,224,330)

November 29, 1999, common
 stock issued for finders fee
 valued at $1.34 per share              400,000          4,000        533,200            --

Stock offering costs                       --             --         (537,200)           --

December 10, 1999, common
 stock issued for cash at $0.70
 per share                               71,839            718         49,282            --

December 10, 1999, common
 stock issued for cash at $0.71
 per share                              175,070          1,751        123,249            --

December 13, 1999, common
 stock issued for cash at $0.84
 per share                              160,131          1,601        133,399            --

December 15, 1999, common
 stock issued for cash at $0.90
 per share                               33,333            333         29,667            --

December 20, 1999, common
 stock issued for cash at $0.83
 per share                              193,939          1,939        158,061            --

December 23, 1999, common
 stock issued for cash at $0.83
 per share                              120,773          1,208         98,792            --

December 31, 1999, common
 stock issued for conversion of
 related party debt at $1.50 per
 share                                  592,744          5,928        883,189            --

Net loss for the year ended
 December 31, 1999                         --             --             --        (5,892,287)
                                   ------------   ------------   ------------    ------------

Balance, December 31, 1999           32,835,925   $    328,359   $  5,782,025    $(11,116,617)
                                   ------------   ------------   ------------    ------------
</TABLE>

                                      F-6

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
      Consolidated Statements of Stockholders' Equity (Deficit) (Continued)

<TABLE>
<CAPTION>

                                                                                       Deficit
                                                                                      Accumulated
                                                                       Additional     During the
                                               Common Stock              Paid-In      Development
                                            Shares        Amount         Capital         Stage
                                        ============   ============   ============   ============
<S>                                       <C>          <C>            <C>            <C>
Balance, December 31, 1999                32,835,925   $    328,359   $  5,782,025   $(11,116,617)

January 4, 2000, common stock
 issued for debt and services
 at $2.75 per share (unaudited)              147,580          1,476        404,369           --

January 5, 2000 common stock
 issued for services at $4.34
 per share (unaudited)                        60,000            600        259,800           --

March 9, 2000, common stock
 issued for cash purchase of
 warrants at $1.99 per share
 (unaudited)                                  62,792            628        124,391           --

March 16, 2000, common stock
 issued for convertible debenture
 at $1.50 per share (unaudited)               66,667            667         99,333           --

March 16, 2000, common stock
 issued for cash purchase of
 warrants at $0.75 per share
 (unaudited)                                 133,333          1,333         98,667           --

March 27, 2000, 3 stock
 issuances for payment of debt at
 average price of $4.95
 per share
 (unaudited)                                  46,486            465        231,347           --

January 1 - March 31, 2000,
 63 stock issuances  pursuant
 to a private  placement
 memorandum at average
 price of $3.50 per share (unaudited)      1,948,411         19,484      6,805,377           --

January 1 - June 30, 2000,
 warrants issued below market
 value (unaudited)                              --             --        3,524,940           --

May 26, 2000, issuance of options
 below market value to purchase
 598,680 shares at $1.50 (unaudited)            --             --        1,272,195           --

Net loss for the six months
 ended June 30, 2000 (unaudited)                --             --             --       (6,837,468)
                                        ------------   ------------   ------------   ------------

Balance, June 30, 2000 (unaudited)        35,301,194   $    353,012   $ 18,602,444   $(17,954,085)
                                        ============   ============   ============   ============
</TABLE>

                                      F-7

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                                                 From
                                                                                                             Inception on
                                                       For the                          For the                 March 26,
                                                   Six Months Ended                 Three Months Ended       1992 Through
                                                       June 30,                         June 30,                 June 31,
                                                  2000           1999            2000            1999            2000
                                             ------------    ------------    ------------    ------------    ------------
<S>                                          <C>             <C>             <C>             <C>             <C>
CASH FLOWS FROM OPERATING
 ACTIVITIES

   Net loss                                  $ (6,837,468)   $   (909,601)   $ (2,579,822)   $   (240,623)   $(17,954,085)
   Adjustments to reconcile net loss to
    net cash provided (used) by
    operating activities:
     Depreciation                                  58,594           5,944          43,731           1,281         109,288
     Common stock issued for services
       and equity discounts                     5,263,380         752,157       1,497,195         278,568       6,109,180
     Loss on sale of assets                          --              --              --              --           387,649
   Change in operating asset and liability
   accounts:
     (Increase) decrease in overpayment
      receivable                                     --              --            74,700            --              --
     (Increase) decrease in prepaid
      assets                                     (535,417)           --           (82,917)           --          (535,417)
     (Increase) decrease in other assets          725,980        (177,275)        351,870        (105,955)       (317,497)
     Increase (decrease) in accounts
      payable                                    (465,124)        221,223         (60,295)         58,191       1,813,905
     Increase (decrease) in accrued
      expenses                                   (110,628)        109,734           3,759           3,559         215,954
                                             ------------    ------------    ------------    ------------    ------------

       Net Cash Provided (Used) by
        Operating Activities                   (1,900,683)          2,182        (751,779)         (4,979)    (10,171,023)
                                             ------------    ------------    ------------    ------------    ------------

CASH FLOWS FROM INVESTING
 ACTIVITIES

   Purchase of fixed assets                      (745,615)           --           (30,854)           --          (851,946)
                                             ------------    ------------    ------------    ------------    ------------

       Net Cash (Used) by Investing
        Activities                               (745,615)           --           (30,854)           --          (851,946)
                                             ------------    ------------    ------------    ------------    ------------

CASH FLOWS FROM FINANCING
 ACTIVITIES

   Repayment of note payable                   (2,566,039)           --          (790,878)           --        (2,814,274)
   Loans from related parties                      82,178            --            33,530            --         7,638,907
   Issuance of convertible debentures                --              --              --              --           650,000
   Common stock issued for cash                 7,149,880            --           250,000            --         7,936,333
                                             ------------    ------------    ------------    ------------    ------------

       Net Cash Provided (Used) by
        Financing Activities                 $  4,666,019    $       --      $   (507,348)   $       --      $ 13,410,966
                                             ------------    ------------    ------------    ------------    ------------
</TABLE>



                                      F-8

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                                     From
                                                                                                  Inception on
                                                 For the                      For the               March 26,
                                             Six Months Ended            Three Months Ended       1992 Through
                                                 June 30,                     June 30,              June 30,
                                            2000          1999          2000          1999            2000
                                        ===========   ===========   ===========    ===========    ===========
<S>                                     <C>           <C>           <C>            <C>            <C>
NET INCREASE (DECREASE) IN
CASH AND CASH  EQUIVALENTS              $ 2,019,721   $     2,182   $(1,289,981)   $    (4,979)   $ 2,387,997

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF PERIOD                        368,276         3,184     3,677,978         10,345           --
                                        -----------   -----------   -----------    -----------    -----------

CASH AND CASH EQUIVALENTS AT
 END OF PERIOD                          $ 2,387,997   $     5,366   $ 2,387,997    $     5,366    $ 2,387,997
                                        ===========   ===========   ===========    ===========    ===========

CASH PAID FOR:

   Interest                             $    12,946   $      --     $      --      $      --      $    12,946
   Income taxes                         $      --     $      --     $      --      $      --      $      --

NON-CASH FINANCING ACTIVITIES

   Common stock issued for services
    and  equity discounts               $ 5,263,380   $      --     $ 1,497,195    $      --      $ 6,109,180
   Common stock issued in acquisition
    of subsidiary                       $      --     $      --     $      --      $      --      $ 3,589,015
   Common stock issued for conversion
    of accounts payable                 $   210,420   $      --     $      --      $      --      $   210,420
   Common stock issued for conversion
    of debt                             $   100,000   $      --     $      --      $      --      $   100,000
   Common stock issued for conversion
    of accrued  interest                $    21,392   $      --     $      --      $      --      $    21,392
</TABLE>

                                      F-9

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 1 -      ORGANIZATION AND DESCRIPTION OF BUSINESS

              The consolidated financial statements presented are those of Ocean
              Power Corporation and its wholly-owned Subsidiaries (the Company).

              The Company  has had limited  activities  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  marketing  water  desalination  and
              renewable power  generation  systems that will be modular and mass
              produced.  The Company plans to pursue  regional joint ventures in
              water and power  challenged  markets to build,  own,  operate  and
              transfer modular seawater desalination and power plants.

              PTC  Holdings,  Inc.  (Holdings)  (formerly H Power  Technologies,
              Inc.) was  incorporated  on March 26,  1992  under the laws of the
              State of  Delaware  to engage in any  lawful act or  activity  for
              which corporations may be organized under the General  Corporation
              Laws of Delaware.

              PTC Group, Inc., (Group) (formerly Intryst, Inc.) was incorporated
              under the laws of the State of Idaho on April 24, 1969.

              On June 22, 1999,  Group and Holdings  completed an Agreement  and
              Plan of  Merger  whereby  Group  issued  25,044,146  shares of its
              common stock in exchange for all of the  outstanding  common stock
              of  Holdings.  Immediately  prior  to the  Agreement  and  Plan of
              Merger,  Group had  6,426,450  shares of common  stock  issued and
              outstanding.    The   acquisition   was   accounted   for   as   a
              recapitalization  of Holdings because the shareholders of Holdings
              controlled  Group after the acquisition.  Therefore,  Holdings was
              treated as the acquiring entity for accounting  purposes and Group
              was  the  surviving  entity  for  legal  purposes.  There  was  no
              adjustment to the carrying  value of the assets or  liabilities of
              Holdings.  On August 19,  1999,  the  shareholders  of the Company
              authorized  a 1 for 10 reverse  stock  split.  All  references  to
              shares of common stock have been retroactively restated.

              On  July  12,  1999,   Group  changed  its  name  to  Ocean  Power
              Corporation (Idaho).

              On July 21, 1999,  Ocean Power  Corporation  (Delaware) was formed
              for  the  purpose  of  changing   the   domicile  of  Ocean  Power
              Corporation (Idaho).

              On July 28, 1999, Delaware and Idaho merged to change the domicile
              from Idaho to Delaware with Delaware being the surviving entity.

                                      F-10

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 1 -      ORGANIZATION AND DESCRIPTION OF BUSINESS (Continued)

              The Subsidiaries:

              Integrated Water and Power  Corporation  (IWP) (formerly Clean Air
              Power Technologies  Corporation)  (formerly Advanced  Technologies
              Manufacturing  Corporation)  was incorporated on December 11, 1996
              under the laws of the State of  Delaware  to engage in any  lawful
              act or activity for which  corporations may be organized under the
              General Corporation Laws of Delaware. IWP is currently inactive.

              Advanced  Power  Sources   Corporation  (APS)  (formerly  ZE-Power
              Technologies   Corporation)  (formerly  P.T.C.   Corporation)  was
              incorporated  on March  26,  1992  under  the laws of the State of
              Delaware  to  engage  in any  lawful  act or  activity  for  which
              corporations  may be organized under the General  Corporation Laws
              of Delaware. APS is currently inactive.

              Manufacturing  Technologies  Corporation (MTC) was incorporated on
              January 7, 1997 under the laws of the State of  Delaware to engage
              in any  lawful  act or  activity  for  which  corporations  may be
              organized under the General  Corporation Laws of Delaware.  MTC is
              currently inactive.

NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              a.  Accounting Method

              The Company's consolidated financial statements are prepared using
              the  accrual  method of  accounting.  The  Company  has  elected a
              December 31 year end.

                                      F-11

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              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.  Fully diluted loss per share
              is not presented  because of the antidilutive  nature of the stock
              equivalents.
<TABLE>
<CAPTION>

                                                     For the                        For the
                                                 Six Months Ended               Three Months Ended
                                                    June 30,                        June 30,
                                              2000            1999           2000            1999
                                          (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
                                          ------------    ------------    ------------    ------------
<S>                                       <C>             <C>             <C>             <C>
                Net (loss)
                  (numerator)             $ (6,837,468)   $   (909,601)   $ (2,579,822)   $   (240,623)

                Weighted average
                 shares outstanding
                  (denominator)             34,725,423       5,373,608      35,240,478       5,805,928
                                          ------------    ------------    ------------    ------------

                Basic (loss) per
                 share                    $      (0.20)   $      (0.17)   $      (0.07)   $      (0.04)
                                          ============    ============    ============    ============
</TABLE>

              c.  Provision for Taxes

              At June 30, 2000, the Company has net operating loss carryforwards
              of  approximately  $17,950,000  that may be offset  against future
              taxable  income  through 2020. No tax benefit has been reported in
              the financial  statements  because the Company believes there is a
              50% or  greater  chance  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.  Principles of Consolidation

              The June 30, 2000 unaudited financial  statements are consolidated
              with  Ocean  Power   Corporation,   Integrated   Water  and  Power
              Corporation,  Advanced Power Sources Corporation and Manufacturing
              Technologies  Corporation.  All significant  intercompany accounts
              and transactions have been eliminated.

                                      F-12

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              f.  Equipment

              Equipment is recorded at cost.  Major  additions  and renewals are
              capitalized and depreciated over their estimated useful lives of 5
              to 39 years using the straight-line  method.  Depreciation expense
              for the six months  ended June 30,  2000 and 1999 was  $58,594 and
              $5,944, respectively.

              Equipment consists of the following:
<TABLE>
<CAPTION>
                                                                    June 30,
                                                                     2000             December 31,
                                                                   (Unaudited)           1999
                                                              ------------------  ------------------
                           <S>                                <C>                 <C>
                           Equipment                          $          709,310  $           -
                           Office equipment and furniture                 45,105              36,748
                           Computers and software                         65,192              46,834
                           Phone system                                   19,667              19,667
                           Leasehold improvements                          9,590              -
                           Accumulated depreciation                     (106,878)            (50,694)
                                                              ------------------  ------------------

                           Net Equipment                      $          741,986  $           52,555
                                                              ==================  ==================
</TABLE>

              g.  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  at the  date  of the  financial  statements  and  the
              reported  amounts of revenues  and expenses  during the  reporting
              period. Actual results could differ form those estimates.

              h.  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,  2000.  The  adoption of this  statement  had no material
              impact on the Company's financial statements.

              i.  Revenue Recognition Policy

              The  Company   currently  has  no  source  of  revenues.   Revenue
              recognition  policies will be determined when principal operations
              begin.

                                      F-13

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 2 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              j.  Advertising

              The  Company   follows  the  policy  of  charging   the  costs  of
              advertising to expense as incurred.

              k.  Long-lived Assets

              All long-lived assets are evaluated yearly for impairment per SFAS
              121,  "Accounting for the Impairment of Loing-Lived Assets and for
              Long-Lived  Assets to Be Disposed Of". Any  impairment in value is
              recognized as an expense in the period when the impairment occurs.

              l.  Unaudited Financial Statements

              The  accompanying   unaudited  consolidated  financial  statements
              include  all  of  the   adjustments   which,  in  the  opinion  of
              management,   are   necessary  for  a  fair   presentation.   Such
              adjustments are of a normal recurring nature.

NOTE 3 -      EQUIPMENT PROCUREMENT COSTS

              During July and August 1999,  the Company made deposits on a vapor
              compression distillation unit to be used in the development of its
              water desalination system in the amount of $300,000.

              During September 1999, the Company paid moving, storage and set up
              costs on the above mentioned equipment of $64,110.

              During March 2000, the Company paid the remaining $200,000 on this
              equipment and capitalized a total of $564,110.

NOTE 4 -      PREPAID EXPENSES

              The Company's prepaid expense is comprised of the following items:

                                                     June 30,
                                                       2000     December 31,
                                                   (Unaudited)      1999
                                                   -----------  ------------
                     Prepaid services              $   160,417  $     -

                     Prepaid license agreement         375,000        -
                                                   -----------  ------------

                                Total              $   535,417  $     -
                                                   ===========  ============

                                      F-14

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 4 -      PREPAID EXPENSES (Continued)

              During  March  2000,  the  Company   purchased  a  motor  for  the
              development of its desalination equipment for $132,200. As part of
              this  purchase,  the Company  entered  into a thirty year  license
              agreement,  which  began in April 2000,  for a minimum  payment of
              $500,000 per year. At June 30, 2000, the Company prepaid  $375,000
              towards this license agreement.

              The Company also entered  into a service  agreement  for the motor
              beginning  May 2000.  The  agreement  called  for the  payment  of
              $192,500  for one year.  At June 30,  2000,  the  Company  prepaid
              $160,417 of this agreement.

NOTE 5 -      NOTES PAYABLE - RELATED PARTIES

<TABLE>
<CAPTION>

<S>                                                                                  <C>
              Notes payable at June 30, 2000 consist of the following:

              Unsecured note payable to a related party bearing  interest at 10%
               per annum, all unpaid interest and principle due
               on demand.                                                            $     85,159

              Unsecured note payable to a related party bearing  interest at 10%
               per annum, all unpaid interest and principle due
               upon demand.                                                               281,975

              Unsecured note payable to a related party bearing interest at
               10% per annum, due upon demand.                                            535,827

              Unsecured note payable to a related party bearing interest at
               10% per annum, due upon demand.                                             53,827

              Unsecured note payable to a related party bearing interest at
               10% per annum, due upon demand.                                            243,768

              Unsecured note payable to a related party bearing interest at
               10% per annum, due upon demand.                                             64,979

              Unsecured note payable to a related party bearing interest at
               10% per annum, due upon demand.                                            115,544

              Unsecured note payable to a related party bearing interest at
               10% per annum, due upon demand.                                              5,308
                                                                                     ------------

              Balance forward                                                        $  1,386,387
                                                                                     ------------
</TABLE>

                                      F-15

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 5 -      NOTES PAYABLE - RELATED PARTIES (Continued)

<TABLE>
<CAPTION>

<S>                                                                              <C>
              Balance Forward                                                    $  1,386,387

              Unsecured note payable to a related party bearing interest at
               10% per annum due upon demand.                                          69,803

              Less advances to employees:

                  1999                                                                292,095
                  2000                                                                  5,000
                                                                                 ------------

                      Total advances                                                  297,095
                                                                                 ------------

              Total Notes Payable - Related Parties, Net                         $  1,159,095
                                                                                 ============

              Annual  maturities  of notes  payable  -  related  parties
              are as follows:

                         Year

                         2000                                                    $  1,159,095
                                                                                 ============
</TABLE>


              Total  interest  expense  to  related  parties  was  $111,773  and
              $158,965  for the  six  months  ended  June  30,  2000  and  1999,
              respectively.

              During 1997,  1998,  1999 and 2000, the Company made cash advances
              of $663,965 to employees. The advances were formalized through the
              signing of notes receivable bearing interest at 10% per annum with
              each  employee  at the end of each  year.  This  amount  is netted
              against the notes  payable - related  parties  balance at June 30,
              2000 due to management's  intent to net these receivables with the
              respective related party notes when settled in 2000.

                                      F-16

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 6 -      CONVERTIBLE DEBENTURES

              During  November  1999,  the  Company  issued  three   convertible
              debentures for $100,000 each. Two of the debentures are due August
              1, 2004 and the third is due  November  1,  2004.  The  debentures
              accrue  interest at 12% per annum.  The holders of the  debentures
              retain  the  option  to  convert  for a period  of five  years any
              portion of the debt into the Company's  restricted common stock at
              a price of $1.50 per share. Any shares issued under the conversion
              privileges  of  these  debentures  carry  two  purchase   warrants
              allowing the holder to purchase one  additional  restricted  share
              for each  share  purchase  warrant  held at a price  of $0.75  per
              share. The share purchase  warrants are valid for five years after
              the date of  purchase.  Interest  expense  associated  with  these
              debentures amounted to $12,500 at June 30, 2000.

              During  March 2000,  66,667  shares of common stock were issued to
              convert one of the three debentures and 133,333 shares were issued
              in conjunction with the warrants.

              During  November 1999, the Company issued a convertible  debenture
              for  $350,000.  The  debenture  is due August 1, 2004 and  accrues
              interest at 12% per annum. The holder of the debenture retains the
              option to convert  for a period of five  years any  portion of the
              debt  into the  Company's  restricted  common  stock at a price of
              $1.50 per share. Any shares issued under the conversion privileges
              of this  debenture also carry two purchase  warrants  allowing the
              holder to purchase one additional  restricted share for each share
              purchase  warrant  held at a price of $0.75 per  share.  The share
              purchase  warrants  are  valid  for five  years  after the date of
              purchase. Interest expense associated with this debenture amounted
              to $17,500 at June 30, 2000.

              The Company recognized additional compensation expense of $650,000
              during 1999 to reflect the discount on the warrants.

NOTE 7 -      ACCRUED EXPENSES

              The  company's  accrued  expenses are  comprised of the  following
              items:

<TABLE>
<CAPTION>

                                                                 June 30,    December 31,
                                                                  2000           1999
                                                            --------------  ------------
                                                               (Unaudited)
<S>                                                         <C>             <C>
                  Accrued payroll taxes payable             $       -       $     50,411
                  Accrued interest payable - payroll                52,717        52,717
                  Accrued payroll tax penalty                       98,845        98,845
                  Accrued interest payable - notes                  43,000       124,609
                                                            --------------  ------------

                                Total                       $      194,562  $    326,582
                                                            ==============  ============

</TABLE>

              During 1997,  1998,  1999 and 2000, the Company made cash advances
              of $678,965 to employees.  Due to the advances  resembling payroll
              activities,   the  Company  has  accrued  payroll  taxes  for  the
              employer's  portion at 7.65%,  interest at 8% and penalties at 15%
              for each  year.  During the six months  ended June 30,  2000,  the
              Company repaid  $889,389 of the accrued  payroll amounts for 1997,
              1998 and 1999 through payroll in 2000, resulting in a reduction in
              accrued payroll taxes of $50,411.

                                      F-17

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 8 -      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
              incurred  losses from its  inception  through June 30,  2000.  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.  It is the intent of the Company to seek additional
              financing  through  private  placements of its common  stock.  The
              Company  expects that it will need  $4,000,000  to  $6,000,000  of
              additional funds for operations and expansion in 2000.

NOTE 9 -      COMMITMENTS AND CONTINGENCIES

              a.  Employment Agreements

              During June 1998, the Company  entered into a five year employment
              agreement  with its  President.  The  agreement  calls  for a base
              salary of $182,000 per year allowing for increases each year based
              on the Consumer  Price Index,  merit  increases  and  increases in
              salary  or bonus as deemed  appropriate  to  reflect  the value of
              services  provided.  The agreement also calls for the extension of
              certain executive benefits.

              During June 1998, the Company  entered into a five year employment
              agreement with its Secretary/Treasurer.  The agreement calls for a
              base salary of $130,000 per year allowing for increases  each year
              based on the Consumer Price Index,  merit  increases and increases
              in salary or bonus as deemed  appropriate  to reflect the value of
              services  provided.  The agreement also calls for the extension of
              certain executive benefits.

              During June 1998, the Company  entered into a four year employment
              agreement with an employee.  The agreement calls for a base salary
              of $55,000 per year allowing for increases  each year based on the
              Consumer Price Index,  merit  increases and increases in salary or
              bonus as deemed  appropriate  to  reflect  the  value of  services
              provided.  The  agreement  also calls for the extension of certain
              executive benefits.

              During June 1998, the Company  entered into a five year employment
              agreement with its Vice President.  The agreement calls for a base
              salary of $182,000 per year allowing for increases each year based
              on the Consumer  Price Index,  merit  increases  and  increases in
              salary  or bonus as deemed  appropriate  to  reflect  the value of
              services  provided.  The agreement also calls for the extension of
              certain executive benefits.

              During   May   2000,   the   Company   granted   a  bonus  to  its
              Secretary/Treasurer  in the  amount  of  $37,500,  which  has been
              accrued at June 30, 2000.

              b.  Consulting Agreements

              During July 1997, the Company entered into a consulting  agreement
              with Richard Morris Associates.  The agreement is for one year and
              calls for the  payment of $1,000 per month plus  expenses.  During
              June 1998, the Company  extended this agreement  through  December
              1998.  During  January 1999,  the Company  extended this agreement
              through  December 1999.  During January 2000, the Company extended
              this agreement through December 2000.

                                      F-18

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 9 -      COMMITMENTS AND CONTINGENCIES (Continued)

              During June 1999, the Company entered into a consulting  agreement
              with  D.  Weckstein  & Co.,  Inc.  as  financial  consultants  and
              investment  bankers for a period of two years. The agreement calls
              for the Company to issue options to purchase 300,000 shares of the
              Company's  common stock at a price of $5.00 per share for a period
              of three years from the date of the agreement.  The agreement also
              calls for cash  payments  in  connection  with  certain  financial
              transactions  consummated as a result of introduction by Weckstein
              such as  mergers,  acquisitions,  joint  ventures,  debt or  lease
              placements and similar or other,  on-balance or off-balance  sheet
              corporate finance transactions as follows:

              a.  7% of the first $1,000,000 of the  consideration  paid in such
                  transaction;
              b.  6% of the  consideration  in  excess of  $1,000,000  and up to
                  $3,000,000;
              c.  5% of the  consideration  in  excess of  $3,000,000  and up to
                  $5,000,000;
              d.  4% of the  consideration  in  excess of  $5,000,000  and up to
                  $7,000,000;
              e.  3% of the  consideration  in  excess of  $7,000,000  and up to
                  $9,000,000; and
              f.  2% of the consideration in excess of $9,000,000.

              During December 1999, the agreement was amended whereby  Weckstein
              will  receive  options to purchase up to 125,000  shares of common
              stock at a price of $1.00  per  share  until  December  31,  2003.
              During 1999, the Company paid $10,000 in commissions to Weckstein.
              No options were exercised as of December 31, 1999 (see Note 10).

              During March 1999, the Company entered into a consulting agreement
              with Richard Brown.  The agreement  calls for the payment of a 10%
              commission  for any and all funds  delivered to the Company during
              1999.  No funds were  delivered  to the Company and no  commission
              payments were made during 1999.

              During July 1999,  the Company  entered into a six month  business
              consulting  agreement  with Xcel  Associates,  Inc.,  which may be
              renewed for a provisional three month period upon mutual agreement
              of the  parties.  The  agreement  calls for the  Company  to issue
              500,000  shares  of the  Company's  common  stock as  follows:  1)
              150,000  shares  within  one week of  signing  the  agreement;  b)
              150,000  shares  within  30 days  based on  mutually  agreed  upon
              performance;  and 3) 200,000 within the following 60 days based on
              mutually agreed upon  performance as well as the right to purchase
              up to 1,000,000  shares of common stock at $0.50 per share and the
              payment of expenses incurred.

              During November 1999, the Company entered into a 30 day consulting
              agreement with International Capital Corp. The agreement calls for
              the Company to pay $42,000 for  services,  $6,000 for expenses and
              issue 60,000  shares of the Company's  common  stock.  The Company
              paid all fees and  expenses  and  issued  60,000  shares of common
              stock in conjunction with this agreement and allowed the agreement
              to expire.

                                      F-19

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 9 -       COMMITMENTS AND CONTINGENCIES (Continued)

              During  January  2000,  the  Company  entered  into a  three  year
              consulting  agreement  with Clement J.  Wohlreich.  The  agreement
              calls for the  Company to issue  100,000  units at $3.00 per unit,
              consisting  of one  share of the  Company's  common  stock and one
              warrant.  The  warrants  will  have a life of  three  years  and a
              purchase price of $1.50 per warrant.

              During  January  2000,  the  Company  entered  into a  three  year
              consulting  agreement  with EBM, Inc. The agreement  calls for the
              Company to pay $4,000 per month until the Company  secures a total
              of $5,000,000  in financing,  then the Company will pay $6,000 per
              month for 12 months  and grant  100,000  options to  purchase  the
              Company's common stock. The options will have a four year life and
              will be priced at $1.50 per share.

              During  January  2000,  the  Company  entered  into  a  consulting
              agreement with Donner Corp. International. The agreement calls for
              the Company to pay a retainer of $2,500,  $100,000 for services in
              connection  with  assisting  the Company to implement its business
              objectives  and issue 10,000  warrants to purchase  the  Company's
              common stock at a strike price equal to 80% of the lowest five-day
              average stock closing price from January 2-31,  2000. The warrants
              are exercisable for three years beginning February 1, 2000.

              During  February  2000,  the Company  signed an  amendment  to its
              agreement  for  consulting  services  with D.  Weckstein & Co. The
              amendment  calls  for the  Company  to  issue  75,000  options  to
              purchase the Company's common stock exercisable at $6.00 per share
              for three years.

              c.   Office Lease

              The  Company  leases  its  office  space  under a  non-cancellable
              operating  lease which expires on April 30, 2002. The monthly rent
              amount is $15,312 with yearly  increases of  approximately  2% per
              year. Rent expense for the six months ended June 30, 2000 and 1999
              was $86,730 and $85,742, respectively.

NOTE 10 -     DILUTIVE INSTRUMENTS

              The Company applied Accounting Principles Board ("APB") Option 25,
              "Accounting   for  Stock   Issued  to   Employees,"   and  related
              Interpretations  in accounting  for all stock option plans.  Under
              APB Option 25,  compensation  cost is recognized for stock options
              granted to employees when the option price is less than the market
              price of the underlying common stock on the date of grant.

                                      F-20

<PAGE>



                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 10 -     DILUTIVE INSTRUMENTS (Continued)

              FASB  Statement 123,  "Accounting  for  Stock-Based  Compensation"
              ("SFAS  No.1  23"),  requires  the  Company  to  provide  proforma
              information  regarding  net  income and net income per share as if
              compensation  costs for the Company's stock option plans and other
              stock awards had been determined in accordance with the fair value
              based method prescribed in SFAS No. 123. The Company estimates the
              fair  value of each  stock  award at the  grant  date by using the
              Black-Scholes  option  pricing model with the  following  weighted
              average assumptions used for grants, respectively;  dividend yield
              of zero percent for all years;  expected  volatility of 32 percent
              for all  years;  risk-free  interest  rates  of 10.0  percent  and
              expected lives of 4.5 years.

              The company has granted the  following  warrants and options as of
              March 31, 2000:
<TABLE>
<CAPTION>

                                   Date of           Exercise    Exercise
                 Type               Grant             Number       Price          Date
               --------          --------------     ---------    --------     -------------
<S>                              <C>                <C>          <C>          <C>
               Options           Mar.16, 1999          30,000    $   5.00     Mar. 16, 2002
               Warrants          May 17, 1999         654,061    $   1.50     May 17, 2004
               Option            July 12, 1999        100,000    $   5.00     July 12, 2000
               Warrants          Nov. 16, 1999      1,733,333    $   0.75     Nov. 16, 2004
               Warrants          Jan.-June 2000     1,948,411    $   3.50     Jan.-June 2003
               Option            May 26, 2000         598,680    $   1.50     June 1, 2003
</TABLE>

              The  Company has  recognized  additional  compensation  expense of
              $6,000 for the options  issued on March 16, 1999 which is recorded
              as part of the recapitalization.

              The  Company has  recognized  additional  compensation  expense of
              $250,000  for the  options  granted  on July  12,  1999  which  is
              recorded as part of the recapitalization.

              The  Company has  recognized  additional  compensation  expense of
              $650,000 for the warrants granted on November 16, 1999.

              The  Company has  recognized  additional  compensation  expense of
              $3,524,940  for  the  warrants  granted  January  - June  2000  in
              conjunction with a private placement memorandum.

              The  Company has  recognized  additional  compensation  expense of
              $1,272,195 for the options granted on May 26, 2000.

              The compensation  expenses recorded reflect the discounts from the
              trading value of the stock on the date of grant.

                                      F-21

<PAGE>


                    OCEAN POWER CORPORATION AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                       June 30, 2000 and December 31, 1999


NOTE 11 -     RESCINDED STOCK

              During  June 2000,  the Board of  Directors  resolved  to void and
              cancel a  certificate  of the Company's  outstanding  common stock
              representing 354,400 shares and issue a new certificate reflecting
              34,800  shares  due  to  the  original  issue  being  granted  for
              inappropriate  consideration.  This  transaction  has not yet been
              reflected in the Company's  outstanding  stock due to the original
              certificate not yet being returned.

NOTE 12 -     SUBSEQUENT EVENTS

              During July 2000, the Company entered into an agreement to acquire
              100% of the outstanding common stock of Sigma Elektroteknisk,  AS,
              a Norway corporation,  for 1,718,748 shares of common stock valued
              at $3.20 per share, or $5,500,000.

                                      F-22

<PAGE>




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following  discussion  should be read in conjunction  with the  accompanying
consolidated  financial  statements and notes thereto included in Item 1 of this
quarterly report.

Special Note Regarding Forward-Looking Statements
-------------------------------------------------

These financial  projections as well as statements  contained in Part II contain
information relating to plans, expectations, future results, performance, events
or other  matters that are  "forward-looking  statements"  within the meaning of
Section 27A of the Securities Act of 1933, as amended.  When used in the Plan of
Operations words such as "estimate", "project", "intend", "expect", "anticipate"
and similar expressions are intended to identify forward-looking statements.

Such  forward  looking  statements  involve  numerous  risks and  uncertainties,
pertaining to technology,  development of the Company's products and markets for
such products,  timing and level of customers orders,  competitive  products and
pricing,  changes in economic  conditions and markets for the Company's products
and other risks and uncertainties.

Actual  results,  performance  and  events  are  likely to differ and may differ
materially and adversely. Investors are cautioned not to place undue reliance on
these forward-looking  statements which speak only as to the date of the Plan of
Operation.

The  Company  undertakes  no  obligation  to release  or  deliver  to  investors
revisions to these forward-looking statements to reflect events or circumstances
after the date of the Plan of Operation,  the occurrence of unanticipated events
or other matters.

PLAN OF OPERATION

The Company  began its current  operations  in  January,  1997 as  Manufacturing
Technologies  Corporation  (MTC).  This  was a  Delaware  Corporation  set up to
develop a business manufacturing modular seawater desalination and power plants.
In March 1998, MTC became a wholly owned subsidiary of PTC Holdings, Inc., which
subsequently  merged  with the Company in June 1999.  The Company is  developing
modular seawater  desalination systems integrated with environmentally  friendly
power sources which  ultimately are to be fueled with renewable  energy sources.
The Company  anticipates that these systems will be sold to a series of regional
joint  ventures  that will ideally  take 15-25 year  contracts to sell water and
power.  This is intended to provide the Company  multiple  income  streams  from
equipment  sales and  royalties,  the sale of water and  power,  and the sale of
spare parts, turn-key contracts, and project financing services.

The Company has a limited  operating history on which to evaluate its prospects.
The risks,  expenses and difficulties  encountered by start-up companies must be
considered when evaluating the Company's prospects.

The Company's plan of operation for the next twelve months is as follows:

          (i)       Since  completion  of its  water  quality  certification  on
                    December 9, 1999 the  Company  has raised over $6.5  million
                    pursuant to a private placement  financing which has allowed
                    the Company to implement its Product Development Program, as
                    well as further business  development,  strategic partnering
                    and  acquisition  activities.  Based on an  analysis  of its
                    sales and development costs, the Company intends to raise an
                    additional  $5-10  million  pursuant to a private  placement
                    financing in the third  quarter of 2000,  and,  depending on
                    the pace of actual sales and the  acquisition  activities of
                    the Company, an additional  round of financing in the fourth
                    quarter of 2000. The additional equity raised by the Company
                    is intended  to allow the  Company to execute  its  business
                    plan and  provide  the Company  with  sufficient  capital to
                    bring the Company to profitability in 2001. (ii) The Company
                    expects to develop  technology  and  products in a number of
                    areas, including:



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<PAGE>


         (ii)       The Company expects to develop technology and products  in a
                    number of areas,Including:

                    a)       low-temperature hydrogen generation
                    b)       ejectors
                    c)       chemical-free water pretreatment
                    d)       enhanced heat transfer in plastic heat exchangers
                    e)       high-performance alkaline fuel cells

         (iii)      The  Company  intends  to make a number  of  investments  in
                    facilities  and  acquisitions  in the  next  twelve  months,
                    including:

                    a)       laboratory and test facilities
                    b)       system integration facilities
                    c)       unique power and water technologies
                    d)       operating companies.

         (iv)       Although the Company plans to  subcontract  out as much work
                    as  possible,  it  anticipates   increasing  the  number  of
                    employees from the current 18 full time to  approximately 36
                    full time. Consultants to the Company are expected to remain
                    at four.

                           PART II. OTHER INFORMATION

ITEM 1.  Legal Proceedings.

The Company is not involved in any material legal  proceedings or litigation and
the officers and directors are aware of no other pending  litigation which would
have a material, adverse effect on the Company.

ITEM 2.  Changes in Securities:

(i)  On May 19,  2000,  pursuant to a Private  Placement  Offering,  Ocean Power
     Corporation  sold 3,920 units of its Common Stock, to Patricia M. Diana for
     an aggregate price of $3.82 per unit.

(ii) On June 10, 2000, the Company  completed a transaction by which it acquired
     all of the issued and outstanding shares of SIGMA  Electroteknisk,  A.S. of
     Holen, Norway, in exchange for 1,718,748 shares of the Company's restricted
     common stock.  These shares were issued pursuant to Regulation `S', and are
     included in the number of shares issued and  outstanding on the facing page
     of this Form 10QSB.

SIGMA, is a developer of Stirling  engines for residential  uses, is a leader in
engine development that uses a wide range of fuels including propane, diesel and
natural gas. The acquisition is intended to broaden the technology base of Ocean
Power and to add a potentially major source of revenue for the Company.



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<PAGE>



ITEM 3.          Defaults Upon Senior Securities.

NONE

ITEM 4.          Submission of Matters to a Vote of Security Holders

NONE

ITEM 5.          Other Information

                 See Item 2(ii).

ITEM 6.          Exhibit List and Report on Form 8-K

(a)      The following  exhibits are filed  herewith or  incorporated  herein by
         reference.

         Exhibit Number
         --------------

         2          Share Purchase Agreement

         27         Financial Data Schedule

(b)      The Company filed no reports on Form 8-K during  the quarter  for which
         this report is filed.





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<PAGE>





                                   SIGNATURE:

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunder duly authorized.


                                      OCEAN POWER CORPORATION


August ___, 2000                      By:/s/ Joseph P. Maceda,
                                      ------------------------
                                      Joseph P. Maceda, President

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