SOURCE: Kraken Sonar Inc.

Kraken Sonar Inc.

May 03, 2017 07:00 ET

Kraken Reports 2016 Financial Results

Recent Financing and Asset Sale Strengthens Balance Sheet for Growth

ST. JOHN'S, NL--(Marketwired - May 03, 2017) - Kraken Sonar Inc. (TSX VENTURE: PNG) announced it has filed its financial results for the fourth quarter and year ended December 31, 2016. Additional information concerning the Company, including its audited consolidated financial statements and related management's discussion and analysis ("MD&A") for the year ended December 31, 2016, can be found at www.sedar.com. Unless otherwise stated, all dollar amounts are Canadian dollar denominated.

CEO Comments

"With the recent closing of a $2.1 million equity financing, and the upcoming delivery of our first KATFISH to Elbit Systems Ltd., we are excited about our prospects going forward. Over the last 24 months Kraken has continued to evolve our Sensors to Systems strategy," stated Karl Kenny, President and CEO of Kraken. "We are now well positioned to meet the emerging opportunities in the marine robotics industry. We have made significant but prudent investments in the hiring of new personnel, expanding engineering design and manufacturing operations, acquisition and licensing of underwater robotics IP, continued product innovation and development of international distribution channels."

2016 Overview

  • Revenues for the 12 months ended December 30, 2016 were $2.2 million as compared to $1.9 million in the comparable year ago period.

  • The operating loss for 2016 was $1.3 million versus an operating loss of $1.1 million in 2015. These losses exclude share based payments and RTO listing fees. The increase year-over-year reflects investments in new product development, people, and marketing.

  • Kraken ended Q4 2016 with approximately $300,000 in working capital, down from $800,000 at the end of 2015. Subsequent to year-end, Kraken strengthened its balance sheet through the $950,000 million sale of shares in a non-core asset and a $2,100,000 million equity financing.

  • Kraken ended 2016 with 78.5 shares outstanding. Basic and diluted weighted average shares outstanding increased to 73.9 million versus 68.4 million in 2016.

  • Kraken continued to add some of the best minds in the underwater robotics industry to our team in 2016. This expands our knowledge of the sector and enables us to continue with some of the most advanced technical innovations in the industry.

  • At the beginning of 2016, Kraken opened the Dartmouth, Nova Scotia-based Handling Systems Group that designs launch and recovery systems and hired 5 former Rolls Royce Marine employees.

  • In late 2016, Kraken opened a Bremen, German subsidiary and hired new employees who were previously scientists with DFKI (the German Center for Artificial Intelligence). This team has been working with our Canadian engineering team to develop and launch our SeaVision™ laser system and will continue to work in areas of artificial intelligence and machine learning.

  • At the end of 2016, hired Mr. Jeff Bartkowski as Director of Business Development. Jeff is based in Boston and opens relationships into the US defense market, amongst others.

Notable Events Subsequent to the 2016 year-end

  • Kraken disposed of its investment in privately-held Square Robot Inc., a non-core asset, for consideration of $950,000. This investment was made in mid-2016 for $170,000. Half of this amount was paid in Q1/2017 with the balance becoming a note receivable that is due no later than June 28, 2017.
  • Completed a non-brokered private placement of 11,806,660 units at a price of $0.18 raising gross proceeds of $2,125,199. Each unit consists of one common share and one half of one common share purchase warrant. Each full warrant is exercisable at a price of $0.30 for a period of two years.
  • Signed an exclusive licensing agreement for underwater robotics technology with Germany's Fraunhofer Institute for Optronics, System Technologies, and Image Exploitation (IOSB).
  • Was awarded a non-dilutive financial contribution, which will be used to support development of the Company's underwater robotics program, of up to $1,470,000 from the National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP).
  • Announced SeaVision™, the world's first RGB underwater laser imaging system that offers the resolution, range and scan rate to deliver dense full colour 3D point cloud images of subsea infrastructure with millimetre accuracy in real time. The initial system is designed for deployment on underwater robotic platforms such as Remotely Operated Vehicles (ROVs) and Autonomous Underwater Vehicles (AUVs). A hand-held diver system is planned for release later this year. The combination of SeaVision™ with our sonar and underwater robotics technology will become a valuable tool for subsea asset management.

Outlook for 2017

During 2017, Kraken will continue to evolve our Sensors to Systems strategy:

  • In May, Kraken plans to complete Factory Acceptance Tests of its KATFISH™ intelligent towfish system. While extreme winter weather conditions in Newfoundland hampered final sea trials in March and April, the Company is now scheduled to ship the unit to its customer in June. Kraken believes that KATFISH™ will disrupt current industry solutions based on market feedback to-date. The Company is seeing considerable interest from both military and commercial market sectors and are building a second KATFISH for trials with several potential customers. These include a major proposal that Kraken has submitted to an Asian naval customer as well as contract opportunities with several European navies. In addition, there are emerging opportunities in the oil and gas sector -- particularly for oil field decommissioning.
  • In June, Kraken will take delivery of the DEDAVE Autonomous Underwater Vehicle (AUV) from Fraunhofer. DEDAVE is a fully equipped 6000m rated AUV that carries advanced sensors including Kraken's AquaPix® Synthetic Aperture Sonar. DEDAVE will be used as a technology development platform as part of Kraken's ongoing ThunderFish® AUV program. In addition to supporting engineering efforts, the Company expects that the DEDAVE platform will be contracted for a variety of underwater military, commercial and scientific surveys.
  • Kraken is currently engaged in strategic partnering discussions with both military and oil and gas industry leaders. With the growing concern for national security, governments of developed and emerging economies have increased their spending on defense, which is reflecting significantly on the uptake of underwater robots. The extensive investments in military robotics is likely to propel the underwater defence market over the coming years.
  • During the recent Offshore Technology Conference in Houston, Texas, BP announced that by 2020 it aims to reduce pipeline survey costs by 50%. Kraken expects that this trend will be echoed by other major operators and that underwater robotics will be a significant enabling technology and service in achieving this objective. The advancement of underwater robotics will move military and commercial operators to an entirely new class of autonomous underwater platforms that are smaller, agile and more intelligent. They will also be considerably lower in cost than conventional platforms which means more robots can be used to force-multiply data acquisition enabling more informed decisions and real-time actionable intelligence.

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. The company is headquartered in St. John's, Newfoundland with offices in Dartmouth, Nova Scotia; Bremen, Germany; and Fairfax, Virginia. For more information, please visit www.krakensonar.com and www.krakenrobotik.de

Certain information in this news release constitutes forward-looking statements. When used in this news release, the words "may", "would", "could", "will", "intend", "plan", "anticipate", "believe", "seek", "propose", "estimate", "expect", and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. In particular, this news release contains forward-looking statements with respect to, among other things, business objectives, expected growth, results of operations, performance, business projects and opportunities and financial results. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Such statements reflect the Company's current views with respect to future events based on certain material factors and assumptions and are subject to certain risks and uncertainties, including without limitation, changes in market, competition, governmental or regulatory developments, general economic conditions and other factors set out in the Company's public disclosure documents. Many factors could cause the Company's actual results, performance or achievements to vary from those described in this news release, including without limitation those listed above. These factors should not be construed as exhaustive. Should one or more of these risks or uncertainties materialize, or should assumptions underlying forward-looking statements prove incorrect, actual results may vary materially from those described in this news release and such forward-looking statements included in, or incorporated by reference in this news release, should not be unduly relied upon. Such statements speak only as of the date of this news release. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Neither the TSX Venture Exchange Inc. nor its Regulation Services Provide (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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