ST. JOHN’S, NEWFOUNDLAND, July 20, 2021 /GLOBE NEWSWIRE/ — Kraken Robotics Inc. (“Kraken” or the “Company”) (TSX-V: PNG, OTCQB: KRKNF), Canada’s Ocean Company, is pleased to announce that it has signed a definitive share purchase agreement (the “PanGeo Agreement”) whereby Kraken Robotics Systems Inc., a wholly-owned subsidiary of Kraken, will acquire all of the issued share capital of PGH Capital Inc. (“PGH Capital”) on substantially similar terms to those set out in the non-binding letter of intent dated April 8, 2021, and disclosed in the Company’s press release dated April 9, 2021 (the “PanGeo Transaction”). PGH Capital operates its business through its subsidiaries, PanGeo Subsea Inc. and PanGeo Subsea Scotland Limited (collectively with PGH Capital, “PanGeo”). PanGeo is a private Canadian services company specializing in high-resolution 3D acoustic imaging solutions for the sub-seabed with offices in St. John’s, Newfoundland and Aberdeen, United Kingdom. PanGeo’s assets consist primarily of human capital, know-how and equipment comprised mostly of sub bottom imaging units and acoustic imaging units that are used to provide sub-seabed survey services.

The Company is also pleased to announce that it has entered into an agreement with a syndicate of underwriters led by Canaccord Genuity Corp. (the “Underwriters”), under which the Underwriters have agreed to buy on a bought deal basis 20,000,000 units (the “Units”) at a price of $0.50 per Unit for gross proceeds of approximately $10 million (the “Offering”). Each Unit will consist of one common share of the Company (a “Common Share”) and one-half of one Common Share purchase warrant (each whole purchase warrant, a “Warrant”). Each Warrant entitles the holder to acquire one Common Share (a “Warrant Share”) at a price of $0.60 per Warrant Share for a period of two years following the closing of the Offering, subject to acceleration in certain circumstances.

Strategic Benefits of the PanGeo Transaction


Completion of the PanGeo Transaction will significantly accelerate the Company’s vertical move into the provision of offshore survey and inspection services using Kraken technology as part of a robotics/data as a service business model. The PanGeo Transaction will also increase Kraken’s exposure to the non-defense market, including the offshore renewable energy market (PanGeo’s largest market) which will help to diversify its client base. Following closing of the PanGeo Transaction, Kraken will be able to offer a holistic solution of world-leading technologies and services in subsea acoustic and optical imaging using Kraken’s suite of ultra-high resolution seabed 3D acoustic imaging sensors, autonomous robotics, and optical laser scanning paired with PanGeo’s suite of leading-edge sub-seabed high-resolution 3D acoustic imaging capabilities.

Transaction Details

The aggregate purchase price for PanGeo is up to $23 million comprised of the following:

  • $3 million payable in immediately available funds (the “Cash Consideration”) on the closing date of the PanGeo Transaction (the “Closing Date”);
  • 12,068,965 Common Shares having a deemed value of $0.58 each and $7 million in the aggregate to be issued on the Closing Date;
  • $4 million to be paid in cash, plus interest at a rate of 6% per annum, on the second anniversary of the Closing Date, to be evidenced by non-transferable promissory notes (the “Promissory Notes”); and
  • Up to an aggregate of $9 million to be paid pursuant to an earn-out on the following terms:
    • an amount equal to 300% of the amount by which certain qualifying revenue in the one-year period immediately following the Closing Date exceeds $9,500,000, up to a maximum payment of $4,500,000 (the “First Earn-Out Amount”); and
    • the amount equal to 300% of the amount by which certain qualifying revenue in the two-year period immediately following the Closing Date exceeds $21,500,000, up to a maximum payment of $4,500,000 less any amount paid pursuant to the First Earn-Out Amount (the “Second Earn-Out Amount”, and together with the First Earn-Out Amount, the “Earn-Out Amounts”).

The Earn-Out Amounts will be paid within thirty (30) business days following the filing deadline date or the actual filling date on SEDAR, whichever is the earliest, of Kraken’s quarterly financial statements for the quarter that includes first or second year anniversary of the Closing Date, as the case may be.  At Kraken’s option and, subject always to the approval of the TSX Venture Exchange (the “TSXV”) at the time, payments required to be made in respect of the Earn-Out Amounts may be satisfied by way of a cash payment equal to 50% of the Earn-Out Amount and the issuance of Common Shares having an aggregate value equal to the remaining 50% of the Earn-Out Amount then due and payable.

The Promissory Notes also provide Kraken with the option, subject to TSXV approval at the time, to satisfy up to 40% of any principal amount owing under the Promissory Notes by issuing Common Shares in accordance with the terms of the PanGeo Agreement.

Based on the unaudited consolidated financial statements prepared on a review engagement basis using Canadian accounting standards for private enterprises for the operating entities, being PanGeo Subsea Inc. and PanGeo Subsea Scotland Limited, the consolidated assets at December 31, 2020 were $11.51 million and revenues for the same period were $10.55 million with a corresponding net loss of $1.84 million (which included, among others, a non-cash amortization expense of approximately $1.42 million). These results for the operating entities were down from comparable information (also based on unaudited financial statements) for the year ended December 31, 2019 where the consolidated revenues were $10.93 million with a corresponding net income of $1.26 million. The year-over-year decline was largely due to the impact of COVID on customer activity.

Kraken will also assume ordinary course debt owing to a Canadian chartered bank in the amount of approximately $1.5 million and to the Atlantic Canada Opportunities Agency in the amount of approximately $0.688 million on closing of the PanGeo Transaction (collectively, the “PanGeo Indebtedness”). The Company anticipates that it will also assume approximately $1.1 million in cash at closing of the PanGeo Transaction.

Completion of the PanGeo Transaction is subject to certain closing conditions including all required regulatory and stock exchange approvals and the completion of a financing for gross proceeds of not less than $10 million within 30 days of execution of the PanGeo Agreement. The PanGeo Transaction is expected to occur within 30 days of execution of the PanGeo Agreement.


Management Comments


Commenting on the PanGeo Agreement, Karl Kenny, Kraken President and CEO said, “Since plans for our OceanVision project started in 2018, we have been preparing our industry leading Synthetic Aperture Sonar and 3D underwater laser scanning technologies to be used in a robotics/data as a service (RDaaS) business model as opposed to a product only strategy. While customers in the defense industry generally purchase this technology, in the commercial market customers are more focused on the provision of services by capable third-party companies. We expect that PanGeo will complement Kraken’s existing products and services with a stronger base of recurring revenues. As in the past, we expect PanGeo and Kraken will continue to work with many offshore service companies that prime these jobs and integrate specific scopes of work from various sub-contractors.”

Moya Cahill, PanGeo’s co-founder and CEO noted, “Kraken and PanGeo are world leaders in seabed and sub-seabed technology applications. Our clients are looking to us to offer a broader service offering and a combined Kraken – PanGeo will do just that. PanGeo has more than 10-year commercial track record of providing 3D acoustic imaging solutions to offshore renewable energy, offshore energy, and defense customers. Together we are stronger, more competitive, more resilient, and have the cream of the crop of brilliant minds to deliver unique innovative solutions to our clients worldwide. Fred Cahill, Chair of the PanGeo Board and CEO of the Cahill Group, added “PanGeo has demonstrated a commitment to innovation and the ability to commercialize research-based solutions that are valued by industry leaders in the ocean sector.  The leadership and team at PanGeo have enabled this success through their dedication, commitment to safety and ingenuity – this team will now be able to contribute to the incredible Kraken growth story.”


Offering Details

In connection with the Offering, the Company will file a prospectus supplement (the “Prospectus Supplement”) to its short form base shelf prospectus dated April 6, 2021 (the “Base Shelf Prospectus”) with securities commissions or similar regulatory authorities in each of the provinces of Canada.

The net proceeds from the Offering will be used: (i) to fund the Cash Consideration; (ii) to provide working capital to PanGeo to accelerate the growth of its service business; (iii) to repay a portion of the PanGeo Indebtedness; and (iv) for general working capital for Kraken to strengthen its balance sheet and provide flexibility to position the Company for future growth.

The Company has granted the Underwriters an option (the “Over-Allotment Option”) to cover over-allotments and for market stabilization purposes, exercisable at any time, in whole or in part, until the date that is 30 days following the closing of the Offering, to purchase up to an additional number of Units equal to 15% of the Units sold pursuant to the Offering on the same terms and conditions of the Offering.  The Over-Allotment Option will be exercisable to acquire Units, Common Shares and/or Warrants (or any combination thereof) at the discretion of the Underwriters.

The closing of the Offering is expected to occur on or about July 26, 2021 (the “Closing”) and is subject to the Company receiving all necessary regulatory and TSXV approvals.

A copy of the Base Shelf Prospectus can be obtained on SEDAR at and from Canaccord Genuity Corp., 2100, 609 Granville St, Vancouver BC V7Y 1H2. A copy of the Prospectus Supplement will also be available on SEDAR and form Canaccord Genuity Corp. once filed. The Prospectus Supplement and the Base Shelf Prospectus contain important detailed information about the Company and the proposed Offering. Prospective investors should read the Prospectus Supplement and the Base Shelf Prospectus and the other documents the Company has filed or will be filing on SEDAR at before making an investment decision.

The Units, and the Common Shares and Warrants comprising the Units, have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws. Accordingly, Units may not be offered or sold within the United States, its territories or possessions, any state of the United States or the District of Columbia (collectively, the “United States”) except in transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Units in  the United States or any  jurisdiction  in  which  such  offer,  solicitation  or  sale  would  be  unlawful  prior  to  registration  or  qualification under the securities laws of that jurisdiction. The securities referenced herein have not been approved or disapproved by any regulatory authority.













Kraken Robotics Inc. (TSX.V:PNG) (OTCQB: KRKNF) is a marine technology company dedicated to the production and sale of software-centric sensors, subsea batteries and thrusters, and underwater robotic systems. The company is headquartered in Newfoundland with offices in Canada, U.S., Germany, Denmark, and Brazil. Kraken is ranked as a Top 100 marine technology company by Marine Technology Reporter.

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, the completion of the PanGeo Transaction, including the satisfaction of all closing conditions, potential business synergies as a result of the PanGeo Transaction, the anticipated market for Kraken’s products and services following completion of the PanGeo Transaction, business objectives, expected growth, results of operations, performance, business projects and opportunities, financial results, and statements relating  to  the Offering, including the terms, timing, potential completion and the use of proceeds of the Offering. 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, the ability of the Company to satisfy all closing conditions of the PanGeo Transaction; the ability to integrate the operations of PanGeo into Kraken’s Robotics and Data as a Service business model; the positive reception of the PanGeo Transaction by Kraken’s target market for sub-seabed acoustic imaging; changes in market; competition; governmental or regulatory developments; the ability of Kraken to satisfy the conditions to closing of the Offering, including obtaining approval of the TSXV on a timely basis, or  at  all;  that  the  Offering  may  not  be  completed  on  the  terms  and  timeline  indicated,  or  at  all;  that  the  Company’s  use  of  proceeds  of  the  Offering  may  differ  from  those  indicated;  additional  financing  requirements, 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 Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release, and the OTCQB has neither approved nor disapproved the contents of this press release.


For further information, please contact:

Joe MacKay, Chief Financial Officer
(416) 303-0605

Greg Reid, Chief Operating Officer
(416) 818-9822

Sean Peasgood, Investor Relations
(647) 955-1274