Kraken Makes Strategic Investment in Kraken Power GmbH

ST. JOHN'S, NL and ROSTOCK, GERMANY--(Marketwired - May 17, 2017) - Kraken Sonar Inc. (TSX VENTURE: PNG) is pleased to announce that it has acquired a minority interest in ENITECH Subsea GmbH of Rostock, Germany; and that the company has been renamed Kraken Power GmbH. Under the agreement, Kraken has taken a 19.9% equity interest and provided a EUR110,000 convertible loan. The loan pays interest at 5% per annum and has a term of three years. Through the conversion of the loan to equity and a further investment capped at EUR200,000, Kraken can choose to increase its ownership stake to 75% of the common shares of Kraken Power GmbH.

Kraken Power GmbH, led by Dr. Carl Thiede, has been working on pressure tolerant technology and products for the subsea market for the past 10 years. They are internationally recognized for their specialized deep-sea components for Autonomous Underwater Vehicles (AUVs) and Remotely Operated Vehicles (ROVs). Pressure tolerant components are electronic components or assemblies that can operate satisfactorily under high pressure (hyperbaric or hydrostatic, such as oil baths), without the need of a high-pressure enclosure. These components include pressure tolerant thrusters, drives, batteries, battery management systems and electronics. The company's unique pressure tolerant moulding technology enables 6,000 meter rated encapsulation in silicone instead of oil compensated or titanium pressure housings. The technology results in packaging solutions that are less expensive, more compact, lighter and less prone to underwater corrosion and bio-fouling.

Kraken Sonar CEO Comments
"This strategic investment represents a low risk, but significant ROI opportunity," said Karl Kenny, Kraken's President and CEO. "Kraken Power's technology and products enable a significant reduction in bill of material costs for our ThunderFish™ AUV. In addition, Kraken Power will continue to sell its products to the subsea industry. We plan to leverage Kraken Power's pressure tolerant moulding technology into next generation products targeted to deep-sea oil and gas, ocean energy/renewables and ocean science markets."

Kraken's investment triggered the release of additional funding in Germany that will provide Kraken Power with working capital for operations, hiring of additional personnel and funds for the purchase of inventory and capital assets. This is yet another example of how Kraken has used partnerships, small investments, acquisitions and licensing to build a world-class team with innovative technologies for the underwater robotics industry.

Karl Kenny continued, "Kraken Power represents our 3^rd significant German technology partnership in 2017. With the establishment of Kraken Robotik GmbH and a strategic partnering and licensing agreement with Fraunhofer, Kraken Power represents key additional component capabilities. As we execute our Sensors to Systems strategy, Kraken now has key sensor, software and component technologies in place to be a vertically integrated supplier of high performance, differentiated AUVs and other underwater vehicles."

Kraken Power Management Comment
"For us, this partnership is a great opportunity," said Dr. Carl Thiede. "As a leading manufacturer of rim driven thrusters, underwater propulsion and energy supply systems based on pressure tolerant moulding technology, we are looking forward to a new chapter of the company's development."

About ENITECH Subsea GmbH (now renamed Kraken Power GmbH)
Based in Rostock, Germany, ENITECH Subsea GmbH (or "ENISEA"), was founded in the summer of 2016 to acquire the marine technology assets of the insolvent ENITECH Energietechnik-Elektronik GmbH ("ENITECH"). The original ENITECH had been in business since 2001 supplying industrial control cabinets, industrial automation equipment and marine technology. The marine business grew out of the PhD work of Dr. Carl Thiede and had seen more than EUR3 million of R&D invested in this business.

For the marine market, ENITECH's drives, propulsion and power supply systems have been developed and sold to research institutes, defence contractors and oil and gas commercial customers. Customers have included Atlas Elektronik (SeaOtter MKII AUV), DeBeers Marine (Atlas Maridan AUV M600), Fraunhofer IOSB, DFKI/GTR (Flatfish AUV), Bosch Rexroth, Marum, Geomar, AWI, IOW and many others.

ABOUT KRAKEN SONAR INC.
Kraken Sonar Inc. (TSX VENTURE: PNG) is a marine technology company, founded in 2012, that is dedicated to the production and sale of software-centric sensors and underwater robotic systems. For more information, please visit www.krakensonar.com, www.krakenrobotik.de, www.krakenpower.de.

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