UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

      [X]   QUARTERLY  REPORT  UNDER  SECTION  13 OR  15(d)  OF  THE  SECURITIES
            EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 2007

      [ ]   TRANSITION  REPORT  UNDER  SECTION 13 OR 15(d) OF THE  SECURITIES
            EXCHANGE ACT OF 1934

                  For the transition period from _____ to _____

Commission File Number: 1-5742

                             OCEAN POWER CORPORATION
                 (Name of small business issuer in its charter)

                 Delaware                                        94-3350291

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

   c/o Halperin Battaglia Raicht, LLP
      555 Madison Avenue, 9th Floor
           New York, New York                                      10022

(Address of principal executive offices)                         (Zip Code)

                                 (212) 765-9100
                           (Issuer's telephone number)

Check  whether  the issuer  (1) has filed all  reports  required  to be filed by
section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or
for such shorter  period that the registrant was required to file such reports),
and (2) has been subject to such filing  requirements  for the past 90 days.
[ ] Yes [X] No

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [X] Yes [ ] No

Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. [ ] Yes [X] No

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

              56,182,746 shares outstanding as of January 28, 2008

Transitional Small Business Disclosure Format: [ ] Yes [X] No
<PAGE>
NOTE:  Unless otherwise  indicated,  this Form 10-QSB of Ocean Power Corporation
(the "Company")  speaks as of the date of the filing thereof with the Securities
and  Exchange  Commission  ("SEC").  On March 1,  2002,  due to  non-payment  of
applicable taxes the Company's  original charter became inoperative and void. On
October 25, 2007,  the Company filed a certificate of renewal and revival of its
charter  in the state of  Delaware.  During  the  period  from  March 1, 2002 to
October 25, 2007, the name Ocean Power was obtained by an unrelated  entity upon
proper  filing with the State of  Delaware.  As such,  as part of the  Company's
renewal and  revival of its  charter,  the  Company  changed its name from Ocean
Power Corporation to OPC Liquidation Corporation.
<PAGE>

                         PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements

                           OPC LIQUIDATION CORPORATION
               (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)

                   UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 2007

<PAGE>
                           OPC LIQUIDATION CORPORATION
               (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)
                           Consolidated Balance Sheet

                                                                  September 30,
                                                                       2007
                                                                  -------------
                                                                   (Unaudited)

                                     ASSETS

CURRENT ASSETS

   Cash - restricted                                              $     238,322
                                                                  -------------

      Total Current Assets                                              238,322
                                                                  -------------

TOTAL ASSETS                                                      $     238,322
                                                                  =============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

   Accounts payable                                               $   2,906,113
   Accrued expenses                                                   9,876,792
   Notes payable - related parties                                    1,033,469
   Notes and convertible debentures payable - current portion         8,438,066
                                                                  -------------

      Total Current Liabilities                                      22,254,440
                                                                  -------------

      Total Liabilities                                              22,254,440
                                                                  -------------

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; 56,182,746 shares issued
     and outstanding                                                    561,827
   Additional paid-in capital                                        35,169,137
   Deficit accumulated during the development stage                 (57,747,082)
                                                                  -------------

      Total Stockholders' Equity (Deficit)                          (22,016,118)
                                                                  -------------

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
       (DEFICIT)                                                  $     238,322
                                                                  =============

The  accompanying  notes are an integral  part of these  unaudited  consolidated
financial statements.

                                        2

<PAGE>

                           OPC LIQUIDATION CORPORATION
               (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)
                Consolidated Statements of Operations (Unaudited)

<TABLE>
<CAPTION>
                                                                                                             From
                                                   For the                         For the              Inception on
                                              Three Months Ended              Nine Months Ended           March 26,
                                                September 30,                   September 30,            1992 Through
                                        -----------------------------   -----------------------------   September 30,
                                             2007            2006            2007            2006            2007
                                        -------------   -------------   -------------   -------------   -------------
<S>                                     <C>             <C>             <C>             <C>             <C>
REVENUES                                $          --   $          --   $          --   $          --   $          --
                                        -------------   -------------   -------------   -------------   -------------
EXPENSES

   General and administrative                  95,130          29,763         352,809          88,982       1,029,239
   Depreciation and amortization                   --              --              --              --          15,964
                                        -------------   -------------   -------------   -------------   -------------

      Total Expenses                           95,130          29,763         352,809          88,982       1,045,203
                                        -------------   -------------   -------------   -------------   -------------

      LOSS FROM OPERATIONS                    (95,130)        (29,763)       (352,809)        (88,982)     (1,045,203)
                                        -------------   -------------   -------------   -------------   -------------

OTHER INCOME (EXPENSE)

   Interest income                              3,422           4,251          12,014          10,185          27,041
   Gain (loss) on sale of assets                   --              --              --              --       2,496,986
   Gain on settlement of debt                  21,768              --          21.768              --          45,704
   Interest expense                            (3,651)         (9,078)        (21,511)        (26,938)     (8,962,431)
                                        -------------   -------------   -------------   -------------   -------------

      Total Other Income (Expense)             21,539          (4,827)         12,271         (16,753)     (6,392,700)
                                        -------------   -------------   -------------   -------------   -------------

INCOME (LOSS) BEFORE
  INCOME TAXES                                (73,591)        (34,590)       (340,538)       (105,735)     (7,437,903)

   Income tax expense                              --              --              --              --         116,883
                                        -------------   -------------   -------------   -------------   -------------

INCOME (LOSS) BEFORE
  DISCONTINUED OPERATIONS                     (73,591)        (34,590)       (340,538)       (105,735)     (7,554,786)

   (Loss) from discontinued
     operations                                    --              --              --              --     (50,192,296)
                                        -------------   -------------   -------------   -------------   -------------

NET INCOME (LOSS)                       $     (73,591)  $     (34,590)  $    (340,538)  $    (105,735)  $ (57,747,082)
                                        =============   =============   =============   =============   =============

BASIC AND DILUTED LOSS PER
  SHARE

   Income (loss) before discontinued
     operations                         $       (0.00)  $       (0.00)  $       (0.01)  $       (0.00)
   Discontinued operations                       0.00            0.00            0.00            0.00
                                        -------------   -------------   -------------   -------------

      Net income (loss)                 $       (0.00)  $       (0.00)  $       (0.01)  $       (0.00)
                                        =============   =============   =============   =============

WEIGHTED AVERAGE NUMBER
  OF SHARES OUTSTANDING                    56,182,746      56,182,746      56,182,746      56,182,746
                                        =============   =============   =============   =============
</TABLE>

The  accompanying  notes are an integral  part of these  unaudited  consolidated
financial statements.

                                        3
<PAGE>

                           OPC LIQUIDATION CORPORATION
               (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)
            Consolidated Statement of Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>
                                                                                                       Deferred       Deficit
                                                                                                      Consulting    Accumulated
                                                 Common Stock           Additional        Other        Expense       During the
                                        ----------------------------     Paid-In     Comprehensive    and Asset     Development
                                            Shares         Amount         Capital     Income (Loss)  Acquisition       Stage
                                        -------------  -------------  -------------  -------------  -------------  -------------
<S>                                        <C>         <C>            <C>            <C>            <C>            <C>
Balance, December 31, 2006                 56,182,746        561,827     35,169,137             --             --    (57,406,544)

Net income for the six months ended
September 30, 2007 (Unaudited)                     --             --             --             --             --       (340,538)
                                        -------------  -------------  -------------  -------------  -------------  -------------

Balance, September 30, 2007 (Unaudited)    56,182,746  $     561,827  $  35,169,137  $          --  $          --  $ (57,747,082)
                                        =============  =============  =============  =============  =============  =============
</TABLE>

The  accompanying  notes are an integral  part of these  unaudited  consolidated
financial statements.

                                        4
<PAGE>

                           OPC LIQUIDATION CORPORATION
              (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Unaudited)

<TABLE>
<CAPTION>
                                                                                                              From
                                                                                                          Inception on
                                                                          For the Nine Months Ended         March 26,
                                                                                September 30,             1992 Through
                                                                       -------------------------------    September 30,
                                                                            2007              2006            2007
                                                                       --------------   --------------   --------------
<S>                                                                    <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net loss                                                            $     (340,538)  $     (105,735)  $  (57,747,082)
   Adjustments to reconcile net loss to net
   cash used by operating activities:
      Depreciation and amortization                                                --               --        2,820,779
      Deferred consulting expense                                                  --               --        2,486,798
      Value of common stock, warrants, options
      and discounts on equity instruments issued
      for services                                                                 --               --        7,962,847
      Loss on sale of assets                                                       --               --          387,649
      Amortization of debenture discount and debt issue costs                      --               --        4,628,538
      Gain on disposition of debt and write off of subsidiary                      --               --       (6,109,475)
      Gain on sale of assets                                                       --               --       (2,496,986)
      Impairment loss                                                              --               --       12,302,123
   Change in operating asset and liability accounts,
     net of amounts acquired in business combination:
      (Increase) decrease in advances to employees,
      prepaid expenses, deposits and debt offering costs                           --               --       (5,772,221)
      Increase (decrease) in accounts payable                                 307,822           79,311        5,913,715
      Increase (decrease) in accrued expenses                                (143,439)          26,938       13,651,033
                                                                       --------------   --------------   --------------

         Net Cash Provided (Used) by Operating Activities                    (176,155)             514      (21,972,282)
                                                                       --------------   --------------   --------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Cash lost in discontinued operation                                             --               --           (4,713)
   Payments on license agreement                                                   --               --         (400,000)
   Cash acquired in Sigma acquisition                                              --               --          142,254
   Proceeds from sale of assets                                                    --          650,000          853,501
   Purchase of fixed assets                                                        --               --       (1,164,570)
   Equipment procurement costs                                                     --               --         (564,110)
                                                                       --------------   --------------   --------------

         Net Cash Provided (Used) by Investing Activities                          --          650,000       (1,137,638)
                                                                       --------------   --------------   --------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Proceeds from notes payable                                                     --               --        4,951,818
   Repayment of related party notes payable                                        --               --       (1,640,226)
   Repayment of notes payable                                                (236,818)              --       (1,755,880)
   Loans from related parties                                                      --               --        7,462,787
   Issuance of convertible debentures                                              --               --        3,100,000
   Common stock issued for cash                                                    --               --       11,256,032
   Stock offering costs                                                            --               --          (26,289)
                                                                       --------------   --------------   --------------

         Net Cash Provided by Financing Activities                           (236,818)              --       23,348,242
                                                                       --------------   --------------   --------------
</TABLE>

The  accompanying  notes are an integral  part of these  unaudited  consolidated
financial statements.

                                        5
<PAGE>

                 OPC LIQUIDATION CORPORATION
    (Formerly Ocean Power Corporation and Subsidiaries)
                   (A Development Stage Company)
Consolidated Statements of Cash Flows (Unaudited) (Continued)

<TABLE>
<CAPTION>
                                                                                                              From
                                                                                                          Inception on
                                                                          For the Nine Months Ended         March 26,
                                                                                September 30,             1992 Through
                                                                       -------------------------------    September 30,
                                                                            2007              2006            2007
                                                                       --------------   --------------   --------------
<S>                                                                    <C>              <C>              <C>
NET INCREASE (DECREASE) IN CASH                                        $     (412,973)         650,514   $      238,322

CASH AT BEGINNING OF PERIOD                                                   651,295            4,069               --
                                                                       --------------   --------------   --------------

CASH AT END OF PERIOD                                                  $      238,322   $      654,583   $      238,322
                                                                       ==============   ==============   ==============
CASH PAID FOR:

   Interest                                                            $           --   $           --   $       16,488
   Income taxes                                                        $           --   $           --   $           --

NON-CASH FINANCING ACTIVITIES

   Value of common stock, warrants, options and
     discounts on equity instruments issued for services               $           --   $           --   $    7,962,847
   Equity instruments issued for deferred consulting
     expense/asset acquisition                                         $           --   $           --   $      740,000
   Common stock issued for recapitalization                            $           --   $           --   $    2,761,773
   Common stock issued for conversion of debt                          $           --   $           --   $    2,963,511
   Acquisition of licenses through license agreement
     Payable                                                           $           --   $           --   $    6,940,000
   Warrants granted in conjunction with debt instruments               $           --   $           --   $    3,261,386
</TABLE>

The  accompanying  notes are an integral  part of these  unaudited  consolidated
financial statements.

                                        6
<PAGE>

                          OPC LIQUIDATION CORPORATION
               (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)
              Notes to Unaudited Consolidated Financial Statements
                               September 30, 2007

NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

      The accompanying  unaudited  consolidated  financial  statements have been
      prepared  by the  Company  pursuant  to the rules and  regulations  of the
      Securities  and  Exchange  Commission.  Certain  information  and footnote
      disclosures   normally  included  in  financial   statements  prepared  in
      accordance  with  generally  accepted  accounting   principles  have  been
      condensed or omitted in accordance  with such rules and  regulations.  The
      information  furnished in the interim  consolidated  financial  statements
      includes normal recurring adjustments and reflects all adjustments, which,
      in the opinion of  management,  are necessary for a fair  presentation  of
      such financial  statements.  Although  management believes the disclosures
      and  information  presented  are  adequate  to make  the  information  not
      misleading,  it is suggested  that these  interim  consolidated  financial
      statements be read in  conjunction  with the Company's most recent audited
      financial  statements and notes thereto  included in its December 31, 2006
      Annual Report on Form 10-KSB.  Operating results for the nine months ended
      September 30, 2007 are not necessarily  indicative of the results that may
      be expected for the year ending December 31, 2007.

      On December 1, 2002, the Company filed a voluntary  petition under Chapter
      11 of the bankruptcy code with the United States Bankruptcy Court Southern
      District  of  New  York.  See  Note 5 for  the  discussion  regarding  the
      bankruptcy filing.

      On March 1, 2002,  due to  non-payment  of applicable  taxes the Company's
      original  charter  became  inoperative  and void. On October 25, 2007, the
      Company filed a  certificate  of renewal and revival of its charter in the
      state of  Delaware.  During the period  from March 1, 2002 to October  25,
      2007, the name Ocean Power was obtained by an unrelated entity upon proper
      filing  with the  State of  Delaware.  As such,  as part of the  Company's
      renewal and  revival of its  charter,  the  Company  changed its name from
      Ocean Power Corporation to OPC Liquidation Corporation.

NOTE 2 - ACCRUED EXPENSES

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

                                                                  September 30,
                                                                      2007
                                                                  -------------
                                                                   (Unaudited)

      Accrued payroll taxes payable                               $      60,266
      Accrued interest payable - payroll                                 52,717
      Accrued payroll tax penalty                                        98,845
      Accrued taxes payable                                             277,624
      Accrued payroll payable                                         2,103,656
      Aquamax/Keeran license fee payable                              3,600,000
      Accrued STM license fee payable                                 2,000,000
      Due to third parties                                               35,550
      Accrued legal settlement - Mchargue                                66,683
      Accrued interest payable                                        1,359,040
      Accrued contingency for additional post petition claims           222,411
                                                                  -------------

         Total                                                    $   9,876,792
                                                                  =============

NOTE 3 - 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  operating
      revenues, and planned principal operations have not yet commenced.

                                        7
<PAGE>

                           OPC LIQUIDATION CORPORATION
               (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)
              Notes to Unaudited Consolidated Financial Statements
                               September 30, 2007

NOTE 3 - GOING CONCERN (Continued)

      The Company has incurred losses from its inception  through  September 30,
      2007  of  approximately   $57,747,082.   The  Company  does  not  have  an
      established source of funds sufficient to cover its operating costs, has a
      working  capital  deficit  of   approximately   $22,016,000,   has  relied
      exclusively  on debt and  equity  financing.  Additionally  the  Company's
      wholly-owned  subsidiary  Sigma was  forced  into  bankruptcy  because  of
      non-payment of employee salaries.  Accordingly, there is substantial doubt
      about its ability to continue as a going concern.

      In  October  of 2006,  the  Company  signed a term sheet with a company to
      sponsor a plan of reorganization.  Prior to confirmation of the Chapter 11
      plan of reorganization,  the plan sponsor will identify a merger candidate
      to be merged  into the  Company.  Before the merger  can take  place,  the
      Company is  required  to bring all of its  financial,  tax and SEC filings
      current  from the last filing  date of 6/30/02.  Pursuant to orders of the
      United States  Bankruptcy Court for the Southern District of New York, the
      Company has engaged accountants, auditors and SEC counsel to complete this
      task. Under the terms of the proposed plan,  creditors of the Company will
      receive a cash payment and stock  consideration  in the new merged entity.
      The  aforementioned  consideration will be distributed to creditors of the
      Company under the plan of reorganization.

      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
      accompanying   consolidated   financial  statements  do  not  include  any
      adjustments  that might be  necessary if the Company is unable to continue
      as a going concern.

NOTE 4 - DILUTIVE INSTRUMENTS

   a. Stock Options

      The Company had outstanding stock options to purchase 87,132 shares of the
      Company's  common stock to  non-employees  as of September 30, 2007. These
      options expire in January 2012.

      The following table  summarizes  information  about employee stock options
      outstanding at September 30, 2007:

<TABLE>
<CAPTION>
                                Number of        Weighted
                                 Options          Average         Weighted         Number of
                               Outstanding       Remaining         Average      Exercisable at
               Exercise       September 30,     Contractual       Exercise      September 30,
                 Price            2007             Life             Price            2007
            --------------   --------------   --------------   --------------   --------------
            <S>                   <C>             <C>          <C>                   <C>
            $         1.00        3,007,456       4.25 years   $         1.00        3,007,456
            $         0.05          387,694       4.75 years   $         0.05          387,694
</TABLE>

      Had compensation cost for the Company's stock-based compensation plan been
      determined  based on the fair value at the grant  dates for  awards  under
      such plan  consistent  with the method of FASB Statement 123,  "Accounting
      for  Stock-Based  Compensation,"  the  Company's  net  income  (loss)  and
      earnings (loss) per share would have been reduced to the pro forma amounts
      indicated below:

<TABLE>
<CAPTION>
                                               For the Three Months Ended    For the Nine Months Ended
                                                     September 30,                 September 30,
                                              ---------------------------   ---------------------------
                                                  2007           2006           2007           2006
                                              ------------   ------------   ------------   ------------
                                               (Unaudited)   (Unaudited)     (Unaudited)   (Unaudited)
            <S>                               <C>            <C>            <C>            <C>
            Net income (loss) as reported     $    (73,591)  $    (34,590)  $   (340,538)  $   (105,735)
            Proforma                               (73,591)       (34,590)      (340,538)      (105,735)
            Basic and diluted income (loss)
              per share as reported                  (0.00)         (0.00)         (0.01)         (0.00)
            Pro forma                                (0.00)         (0.00)         (0.01)         (0.00)
</TABLE>

                                        8
<PAGE>

                          OPC LIQUIDATION CORPORATION
              (Formerly Ocean Power Corporation and Subsidiaries)
                         (A Development Stage Company)
              Notes to Unaudited Consolidated Financial Statements
                               September 30, 2007

NOTE 4 - DILUTIVE INSTRUMENTS (Continued)

      There were no stock options granted during the nine months ended September
      30, 2007.

      b. Warrants

      A summary of the Company's  outstanding warrants as of September 30, 2007,
      and changes during the nine months then ended is presented below:

                                                                    Weighted
                                                                    Average
                                                                    Exercise
                                                       Shares        Price
                                                    -----------   -----------
                  Outstanding, December 31, 2006      3,554,944   $      0.74

                  Granted                                    --            --
                  Expired/Cancelled                  (3,554,944)        (0.74)
                  Exercised                                  --            --
                                                    -----------   -----------

                  Outstanding, September 30, 2007            --   $        --
                                                    ===========   ===========

                  Exercisable, September 30, 2007            --   $        --
                                                    ===========   ===========

NOTE 5 - BANKRUPTCY

      In September 2002, the Company was without  sufficient capital to continue
      to  operate  and  had  been  unable  to  identify  sources  of  additional
      financing.  The Board of  Directors  of the Company was  concerned  that a
      sudden  cessation  of  operations  would  not  provide  the best  means to
      maximize  asset  values.  Therefore,  at an October 3, 2002 meeting of the
      Company's Board of Directors,  the Board approved a resolution to commence
      negotiations  with the  Company's  secured  creditors,  Algonquin  Capital
      Management, L.L.C. and Hibernia Capital Management,  L.L.C., to commence a
      voluntary  bankruptcy  filing under chapter 11 of the Bankruptcy  Code and
      immediately  thereafter a sale of the Company's assets pursuant to section
      363 of the Bankruptcy Code.

      The Company has a history of being financed  primarily by raising  capital
      through  private  placements of its stock and/or loans from third parties.
      The proceeds  from the  financing  have been used to develop the Company's
      technologies,  pursue  acquisitions  and make strategic  alliances and pay
      operating costs.  Over the past twelve months,  the Company has endeavored
      to stem severe cash flow shortages through, among other things,  workforce
      and overhead reductions, and the consolidation of its business operations.
      Due to persistent cash flow shortages the Company terminated substantially
      all of its employees.  As a result of a confluence of events,  including a
      general  contraction of available  financing from capital  markets and the
      recent  bankruptcy in Norway of Sigma  Elektroteknisk,  AS, a wholly owned
      subsidiary, at a Special Meeting of the Board of Directors on November 27,
      2002, the Board unanimously consented to authorizing the Company to file a
      voluntary petition under Chapter 11 of the Bankruptcy Code.

      On December 1, 2002, the Company filed a voluntary  petition under Chapter
      11 of the bankruptcy Code with the United States Bankruptcy Court Southern
      District of New York.  On December 16,  2002,  the United  States  Trustee
      appointed  a  creditors'  committee  pursuant  to  section  1102(a) of the
      Bankruptcy Code (the "Committee").

      Simultaneously  with filing the Chapter 11 petition,  the Company filed an
      emergency  motion to authorize  it to obtain  loans and  advances  under a
      Debtor-In-Possession  Loan Agreement with  Algonquin  Capital  Management,
      L.L.C.  in order to continue  operations so that the Company could attempt
      to maximize the value of its  assets.  The  Bankruptcy  Court  entered  an

                                        9
<PAGE>

                           OPC LIQUIDATION CORPORATION
               (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)
              Notes to Unaudited Consolidated Financial Statements
                               September 30, 2007

NOTE 5 - BANKRUPTCY (Continued)

      interim  order  approving  the  financing  on December 5, 2002 and a final
      order was entered on December 20, 2002.  In addition,  the Company filed a
      motion  in  the   bankruptcy   case  to  approve  the  proposed   sale  of
      substantially  all of its assets to Algonquin Capital  Management,  L.L.C.
      and  Hibernia  Capital  Management,  L.L.C.,  subject to higher and better
      offers.  By order dated February 6, 2003, the Bankruptcy  Court authorized
      the asset sale agreement  with Algonquin  Capital  Management  L.L.C.  and
      Hibernia Capital Management L.L.C. as modified by the Creditor  Settlement
      Agreement and assumption and  assignment of certain  executory  contracts,
      licenses and intellectual  property rights for a credit bid of $2,000,000.
      As part of the Creditor Settlement Agreement, Algonquin Capital Management
      L.L.C. and Hibernia Capital Management L.L.C. reconveyed to the bankruptcy
      estate a 60%  ownership in the Water  Assets of the  Company.  The Bill of
      Sale  consummating  the sale was  signed  on  February  19,  2003.  During
      September 2003, an additional $80,000 was paid to the Company by PowerPlay
      Energy pursuant to the creditor settlement agreement.

      Having  sold its assets and ceased  operations,  the  Company was not in a
      financial  position to support the on-going  operations  needed to develop
      the Water Assets.  On May 20, 2003, the Bankruptcy Court approved the sale
      of the  Company's  interest  in the  Water  Assets  to Oases  Desalination
      International,  Ltd. in exchange for their covenant to commercialize those
      assets and make certain  royalty  payments.  Since that time, and although
      they have  made  certain  minimal  payments,  Oases  has been in  default.
      Subsequently,  Oases Desalination  International,  Ltd. and ReEnergy Group
      entered  into an asset  purchase  agreement  in which  Oases  Desalination
      International,  Ltd.  would sell all of its  assets,  including  the Water
      Assets, to ReEnergy Group. Because Oases Desalination International,  Ltd.
      is in  default  with the  Company  and has not paid for the Water  Assets,
      Oases  Desalination  International,  Ltd.  and  Renergy  Group  sought the
      Company's consent wherein ReEnergy Group would directly purchase the Water
      Assets from the Company.  After significant  negotiations,  the Creditors'
      Committee,  Oases  Desalination  International,  Ltd. and  ReEnergy  Group
      entered  into the Consent  Agreement,  in order to,  among  other  things,
      provide the  Company's  consent to transfer  the Water  Assets to ReEnergy
      Group for a modified  consideration  of $750,000 for the Water Assets.  On
      October 26, 2005, an application  was filed with the  Bankruptcy  Court to
      approve this  arrangement  and the arrangement was approved by order dated
      November  16,  2005.  The  Company has  received  all of the funds in this
      transaction  which are being held in an account  maintained  by bankruptcy
      counsel for the Committee.

      In October of 2006,  the Company  signed a term sheet with Trinad  Capital
      Master Fund Ltd. (the Sponsor) to sponsor a plan of reorganization.  Prior
      to confirmation of the Chapter 11 plan of reorganization, the Sponsor will
      identify a merger candidate to be merged into the Company.  The Sponsor is
      currently in negotiations  with NorthStar Systems  International,  Inc. as
      the  potential  merger  candidate.  Before the merger can take place,  the
      Company is  required  to bring all of its  financial,  tax and SEC filings
      current from the last filing date of June 30, 2002.  Pursuant to orders of
      the United States  Bankruptcy Court for the Southern District of New York,
      the Company has engaged accountants,  auditors and SEC counsel to complete
      this task. Under the terms of the proposed plan,  creditors of the Company
      will  receive a pro rata cash payment and stock  consideration  in the new
      merged entity.  The  aforementioned  consideration  will be distributed to
      creditors of the Company under the proposed plan of reorganization.

      In January  2008,  the Company and the  Official  Committee  of  Unsecured
      Creditors jointly filed a proposed plan of reorganization  and its related
      disclosure  statement  with the  United  States  Bankruptcy  Court for the
      Southern  District of New York. The plan is subject to further reviews and
      hearings prior to confirmation.

NOTE 6 - SALE OF ASSETS

      During the six months ending June 30, 2003,  the Company filed a motion in
      the bankruptcy case to approve the proposed sale of  substantially  all of
      its assets to Algonquin  Capital  Management,  L.L.C. and Hibernia Capital
      Management,  L.L.C.,  subject to higher and better offers.  By order dated
      February 6, 2003, the Bankruptcy Court authorized the asset sale agreement

                                       10
<PAGE>

                          OPC LIQUIDATION CORPORATION
               (Formerly Ocean Power Corporation and Subsidiaries)
                          (A Development Stage Company)
              Notes to Unaudited Consolidated Financial Statements
                               September 30, 2007

NOTE 6 - SALE OF ASSETS (Continued)

      with Algonquin Capital  Management L.L.C. and Hibernia Capital  Management
      L.L.C. as modified by the Creditor Settlement Agreement and assumption and
      assignment  of certain  executory  contracts,  licenses  and  intellectual
      property  rights for a credit bid of  $2,000,000.  As part of the Creditor
      Settlement  Agreement,  Algonquin  Capital  Management L.L.C. and Hibernia
      Capital  Management  L.L.C.  reconveyed  to the  bankruptcy  estate  a 60%
      ownership  in  the  Water  Assets  of  the  Company.   The  Bill  of  Sale
      consummating the sale was signed on February 19, 2003. As a result of this
      asset sale the Company  recognized  a gain on sale of assets in the amount
      of  $1,723,486.  The Company had no basis in the water assets prior to the
      original sale and therefore recognized no gain on the subsequent return of
      those assets.

      During the quarter ended December 31, 2005, the Company sold its ownership
      interest in the water assets pursuant to an order dated November 16, 2005,
      by the United  States  Bankruptcy  Court for the Southern  District of New
      York. As  consideration  for this ownership  interest the Company received
      total cash proceeds of $750,000 paid in three installments.  The first two
      installments  were made prior to December 31, 2005, and totaled  $100,000.
      The  remaining  $650,000 was recorded as a receivable  balance at December
      31, 2005, and was subsequently received during January 2006.

NOTE 7 - DEBTOR-IN-POSSESSION FINANCING

      During the three months  ending  December 31, 2002,  the Company  received
      $100,000   from  the  issuance  of  notes  and  advances   pursuant  to  a
      debtor-in-possession  financing facility, approved pursuant to an order by
      the United States  Bankruptcy Court for the Southern District of New York.
      The applicable interest rate was 15%.

      During the six months ending June 30, 2003, the Company received  $136,818
      from the issuance of notes and advances pursuant to a debtor-in-possession
      financing  facility,  approved  pursuant to an order by the United  States
      Bankruptcy  Court for the Southern  District of New York.  The  applicable
      interest rate was 15%.

      During  August 2007 the Company  entered  into a  settlement  agreement in
      connection  with the  debtor-in-possession  financing  whereby  the  total
      balance of  principal  and  accrued  interest  was  settled for a one time
      payment of $380,000.  As a result of the settlement the Company recognized
      a gain on settlement of debt of approximately $21,700.

                                       11
<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations

Readers should refer to the  description of the Company's  bankruptcy  case (the
"Bankruptcy Case") described in the Notes to the Financial  Statements  included
in Item 1 of this Form  10-QSB and in the  Company's  Form 10-KSB for the annual
period ended December 31, 2006.

Three Month Periods Ended September 30, 2007 and 2006
-----------------------------------------------------

The business of the Company during the quarter ended September 30, 2007 included
only its  consideration  of various  plan of  reorganization  opportunities  and
incurring  administrative expenses in connection with the Bankruptcy Case, e.g.,
related  to legal,  accounting  and  administrative  activities.  There  were no
revenue-generating  activities. The Company has had no employees since 2003. The
administrative  activities of the Company are  performed by outside  consultants
and advisors.  Direct administrative expenses of the Company totaled $95,130 and
$29,763  for  the  three-month  periods  ended  September  30,  2007  and  2006,
respectively.  The increase in the current period compared to the same period in
the prior year is due primarily to legal,  auditing and  consulting  fees as the
Company  attempts to complete and exit  bankruptcy and bring its filings current
with the SEC.

Nine Month Periods Ended September 30, 2007 and 2006
----------------------------------------------------

The  business of the Company  during the nine months  ended  September  30, 2007
included only its consideration of various plan of reorganization  opportunities
and incurring  administrative  expenses in connection with the Bankruptcy  Case,
e.g., related to legal, accounting and administrative activities.  There were no
revenue-generating  activities. The Company has had no employees since 2003. The
administrative  activities of the Company are  performed by outside  consultants
and advisors. Direct administrative expenses of the Company totaled $352,809 and
$88,982  for  the  nine-month   periods  ended  September  30,  2007  and  2006,
respectively.  The increase in the current period compared to the same period in
the prior year is due primarily to legal,  auditing and  consulting  fees as the
Company  attempts to complete and exit  bankruptcy and bring its filings current
with the SEC.

Liquidity and Capital Resources
-------------------------------

Primary sources of liquidity since the Company ceased  operations have been cash
balances that have been used to pay administrative expenses.  Operating expenses
of the Company have been funded with  available cash retained from the two asset
sales effected as part of the  Bankruptcy  Case. As of the date of the filing of
this Form 10-QSB with the SEC, cash totals approximately $227,210. Based on such
balance and  management's  forecast of activity levels during the period that it
may remain  without  operations,  the  Company is  uncertain  as to whether  the
present cash balance will be sufficient to pay its current  liabilities  and its
administrative  expenses as such expenses become due; provided that, if the Plan
is  confirmed,  the Company  believes  that the  present  cash  balance  will be
sufficient to pay its current  liabilities  and its  administrative  expenses as
such expenses become due.

Uncertainties Relating to Forward Looking Statements
----------------------------------------------------

"Item 2.  Management's  Discussion  and Analysis or Plan of Operation" and other
parts of this Form 10-QSB contain certain  "forward-looking  statements"  within
the  meaning  of the  Securities  Act of 1934,  as  amended.  While the  Company
believes  any  forward-looking  statements  it has made are  reasonable,  actual
results  could  differ  materially  since the  statements  are based on  current
management expectations and are subject to risks and uncertainties.  These risks
and uncertainties include, but are not limited, to the following:

      o     There can be no assurance that the plan of reorganization filed with
            the United States  Bankruptcy Court for the Southern District of New
            York ("Bankruptcy  Court") on January 15, 2008, or any other plan of
            reorganization,  will  be  approved  by  the  Bankruptcy  Court  and
            effected.

      o     There can be no assurance  that Trinad Capital Master Fund Ltd. (the
            "Plan Sponsor") will reach agreement on definitive documentation for
            a merger with NorthStar Systems International Inc. ("NorthStar"), or
            any other potential merger candidate.

      o     Even if a plan of reorganization is approved by the Bankruptcy Court
            and effected,  there can be no assurance as to the terms of any such
            plan, including without limitation as to the distributions,  if any,
            to be made to existing creditors and stockholders of the Company.

                                       12
<PAGE>

      o     The Plan Sponsor may withdraw at any time prior to confirmation of a
            plan  of  reorganization,   including  without  limitation,  due  to
            unsatisfactory  results of its due diligence on  NorthStar.  In such
            event,  the Company may  substitute  the Plan  Sponsor  with another
            person or entity  offering  to  purchase  stock in the newly  merged
            entity under the plan of reorganization on terms and conditions that
            may not be the same, or as  economically  favorable to the Company's
            estate,  as those are being  offered  by the Plan  Sponsor.  In such
            event,  the  recovery  for  unsecured   creditors  would  likely  be
            dramatically reduced.

      o     No public  market exists for stock in the merged  entity,  and it is
            not anticipated that any will necessarily develop in the foreseeable
            future.  Therefore,  notwithstanding the legal ability to trade such
            stock,  any  recipient  thereof  should expect that it might have to
            hold the stock for an indefinite period of time.

Item 3. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Our management,  with the  participation of our principal  executive officer and
principal  financial officer,  has evaluated the effectiveness of the design and
operation  of our  disclosure  controls  and  procedures  (as  defined  in Rules
13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of 1934, as amended)
as of the end of the period  covered  by this  quarterly  report.  Based on this
evaluation,  our principal  executive  officer and principal  financial  officer
concluded  that these  disclosure  controls and  procedures  are  effective  and
designed to ensure that the information  required to be disclosed in our reports
filed or  submitted  under  the  Securities  Exchange  Act of 1934 is  recorded,
processed, summarized and reported within the requisite time periods.

(b) Changes in internal controls.

There was no change in our internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f)  under the Securities  Exchange Act of 1934, as
amended)  identified in connection  with the evaluation of our internal  control
performed  during the  quarter  ended  September  30,  2007 that has  materially
affected,  or is reasonably  likely to materially  affect,  our internal control
over financial reporting.

                           PART II - OTHER INFORMATION

Item 6. Exhibits

Exhibits  filed  herewith  are  set  forth  in the  Index  to  Exhibits  and are
incorporated herein by reference.

                                   SIGNATURES

In accordance with the requirements of the Securities  Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

/s/ MICHAEL HOPPER
---------------------------
Name: Michael Hopper
Title: Authorized Signatory
Date: January 31, 2008

                                       13
<PAGE>

                                INDEX TO EXHIBITS

Exhibit                           Description of Exhibit
-------                           ----------------------
 Number
-------

31.01     Certification  pursuant to 15 U.S.C.  78m(a) or 78o(d) (Section 302 of
          the Sarbanes Oxley Act of 2002).**

32.01     Certification  pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.**

**        Filed herewith.