Kraken Sonar Inc. (PNG.V) is a marine technology company dedicated to the production and sale of software-centric sensors, subsea batteries and thrusters, and underwater robotic systems.
Previous coverage was issued in March 2017, October 2017, April 2018, July 2018, December 2018, and August 2019.
Aug. 13 - ThunderFish® Delivered to Defense Research and Development Canada. The delivery to DRDC was facilitated by a $1 million contract award under the Canadian government’s Build in Canada Innovation Program. Aug. 29 - Q2 2019 Results and Reiterates $15M Revenue Guidance and Profitability for Fiscal 2019. Aug. 29 - Awarded $2 Million Deep Sea Battery Contract from a military customer to provide a high capacity battery solution for an underwater robotics application. This is the same customer that placed a $0.6 million order in April 2019. Sep. 9 - Launches OceanVision™ Project. Kraken will deploy its sensors and unmanned underwater platforms to conduct ultra-high definition seabed imaging and mapping on the Grand Banks of Newfoundland and Atlantic Canada.
OceanVision™ is a three-year, $20 million project focused on the development of new marine technologies and products to enable an underwater data acquisition and analytics as a service business. Sep. 23 - Kraken Awarded $2.9 Million KATFISH Contract from ThayerMahan Inc. ThayerMahan will deploy Kraken’s KATFISH 180 as part of its SeaScout® expeditionary system for seabed mapping and intelligence; delivery date Q1 2020. Sep. 24 - Kraken to Establish Robotics-as-a-Service Joint Venture. The joint venture will be called Ocean Discovery Inc. and will operate in Atlantic Canada. It is expected that a definitive agreement will be finalized in Q4 2019. Oct. 2 - Notified of Successful Bid on International Mine Hunting Upgrade Program. Received official notification that the Company was chosen as the successful bidder on a program for the acquisition of new sonar systems for an unnamed international navy. It was a competitive bid process for upgrades of the customer’s mine-hunting equipment.
The total contract value is expected to range from C$35-$40M,with Final contract signing subject to several factors. Oct. 3 - Receives $750,000 of Innovation Funding. from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP). The funding is being used to support research and development of Kraken’s ThunderFish® XL Autonomous Underwater Vehicle (AUV) and is part of Kraken’s $20 million OceanVision™. Oct. 16 - Preliminary Record Q3 Revenue of $7.6 - $7.8 Million. Forecast year-to-date revenue in the first three quarters of between $9.8 - $10 million. Based on continued order and shipment activity, expects momentum into Q4 and 2020.
The Company maintains its guidance for 2019 revenue of $15 million and anticipates being profitable for the year. Nov. 18 - Announces Major Subsea Battery Milestone With Ocean Infinity. Achieved milestones in endurance testing of their Kongsberg Hugin AUVs using new pressure tolerant batteries from Kraken. This included several missions to greater than 5000 meters and an unprecedented mission of over 100 hours without recharging, while running a full survey payload.As a result, using Kraken batteries, Ocean Infinity can operate increased survey ranges. Nov. 26 - Reports Q3 2019 Results. Nov. 27 - To Supply Thrusters to Leader in Robotic Net Cleaners for the Aquaculture Industry. Kraken Power GmbH has signed a multi-year supply agreement with Multi Pump Innovation (“MPI”) of Norway . MPI will purchase RIM-driven thrusters and control systems for use in MPI’s new JetMaster automated cage cleaners used for fish farming. Dec. 17 - Acquires Remaining 25% of Kraken Power. Consideration for the Transaction will be €350,000, consisting of €250,000 in cash and the issuance of 236,258 common shares of the Company at a deemed price of $0.62 per share, representing the Canadian dollar equivalent of €100,000 (the “Consideration Shares”). Jan. 6 - Awarded $0.5 Million SeaVision® Contract from Government of Canada. For Kraken’s SeaVision® 3D laser scanner. Expects to deliver to test partner, Parks Canada - Underwater Archaeology Team (UAT) during Q3 2020. Jan. 20 - Kraken Finalizes OceanVision Contract with Ocean Supercluster and Industry Partners.
OceanVision™ project with the Ocean Supercluster and industry partners (Petroleum Research Newfoundland and Labrador, Ocean Choice International and Nunavut Fisheries Association).
OceanVision™ is a three-year, $18.8 million project focused on the development of new marine technologies and products to enable an underwater robotics data acquisition and data analytics as a service business. Jan. 23 - Signs 8 Year Framework Agreement with International Defense Contractor. Kraken’s Acoustic Signal Processing Group will provide development, maintenance, and training to the customer to enhance and modernize their sonar product. The customer name and additional contract details cannot be disclosed for confidentiality reasons.
Feb. 20 - Chosen for 2020 TSX Venture Top 50 List - Second year in a row. Mar. 16 - Announces $2.8 Million of Contracts and Provides Corporate Update. Recently received orders from four US companies and one Canadian company totaling $2.8M. PNG.V expects to fulfill these contracts in the first half of 2020.
Mar. 30 - Announces Ultra High Definition Upgrade for AquaPix® Imaging Sonars. Synthetic Aperture Sonar Software Provides 1.9 cm Resolution with Superior Area Coverage Rates, Delivering Best Combination of Speed and Data Quality.
Company is the first to achieve a practical resolution of 2 cm with a Commercial-Off-The-Shelf (COTS) Synthetic Aperture Sonar (SAS), Kraken’s AquaPix® MINSAS. Apr. 8 - Announces Partnership Agreement with Greensea Systems. Greensea will support development, integration, and testing work with Kraken across several of Kraken’s technology platforms.
The companies also intend to work together specifically in the areas of seabed residency and hull inspection and have already demonstrated successful efforts by integrating Kraken sensors into the Greensea OPENSEA Platform and Greensea hardware products, including the newly developed Greensea Hull Crawler system. Apr. 30 - Reports Strong Growth in 2019 Results.
Summary
PNG.V has made some significant progress in the past nine months.
Product Milestones
In November 2019, PNG.V along with Ocean Infinity it announced a Subsea Battery Milestone in which a +5000 meters mission over 100 hours without charging was achieved. Recently on Mar. 30 2020, the company revealed a Ultra High Definition Upgrade for AquaPix® Imaging Sonars. Specifically, the Synthetic Aperture Sonar Software (SAS) can now provide a 1.9 cm resolution with superior area coverage rates.
Partnerships
In September 2019, PNG.V disclosed a Robotic as a Service (RAAS) Joint Venture; Ocean Discovery Inc.. Recently on Apr. 8, 2020, A Partnership Greensea Systems was announced to support development, integration, and testing work across several of PNG.V's technology platforms. Specifically, the areas of seabed residency and hull inspection will be of interest.
OceanVision
In early September 2019, PNG.V launched OceanVision. In January 2020, the company revealed that it had finalized the contract with the Ocean Supercluster and Industry Partners; Petroleum Research Newfoundland and Labrador, Ocean Choice International and Nunavut Fisheries Association.
OceanVision™ is a three-year, $18.8 million project focused on the development of new marine technologies and products to enable an underwater robotics data acquisition and data analytics as a service business.
Over the next 30 months, this funding will allow Kraken and its partners to develop new technologies and provide high resolution seafloor imaging and mapping covering more than 5,000 square kilometers around Atlantic Canada. Kraken and its partners will leverage key enabling technologies (unmanned maritime vehicles, advanced sensors, robotics, autonomous systems, big data machine learning and predictive analytics) to deploy innovative technology platforms across ocean sectors and extend the global reach and market opportunities for Kraken and our partners.
Earnings
Q4 and Q3 2019 earnings represented a departure from Q1 and Q2 2019. Overall, PNG.V meet FY 2019 guidance of $15M (126% YoY) with a net loss of $3M which was flat from 2018. This indicates that the company was able to scale efficiently.
As of Q4 2019, PNG.V the company had $2.1M in Cash and $2.3M in Awarded funds.
Outlook
The recently provided Forecast for Q1 2020 revenue represents a break from historical Q1 results and demonstrates continuation of the growth trend exhibited in the previous two quarters. However, PNG.V provided some context:
While we are not currently experiencing major impacts from the recent oil price collapse and Coronavirus pandemic, we are aware that this could affect our supply chain, customers, employees, and operations. This could impact the number of contracts we close, sales cycle lengths, and our ability to deliver product and services in a timely manner. We will continue to prudently monitor the situation and manage our business accordingly.
Looking back, PNG.V has taken nearly a 20% decline in valuation since March 2. the negative global economic outlook from Covid-19 and oil price decline are certainly at play. Moreover, the expected impact on military spending is uncertain as unemployment and health will take priority for governments. Nonetheless, On Oct 2 2019, PNG.V advised that it was selected for a Mine Hunting Upgrade Program, on January 26 2020, Signed Framework Agreement with Defense Contractor and on March 16 2020, three of the five orders reported involved the Defence industry.
Overall, PNG.V has been able to scale its business while continuing to progress on innovation and product development.
The milestones achieved (Subsea Battery, Synthetic Aperture Sonar Software (SAS) resolutions), Robotic as a Service (RAAS) JV launch; Ocean Discovery Inc., the acquisition of Kraken Powers, and the partnership with Greensea Systems are not haphazard. In addition to further streamline its R&D efforts and product development cycle, its emphasis on seabed residency and hull inspection with GreenSea Systems are aligned with its strategic goals. The Ocean Vision initiative is not to be underestimated, it represents a template that can be exported globally as climate change, food safety, and sustainability are on the agenda for many nations.
In the past nine months, four out of five brokerages have provided target prices over $1.00. Revision on these targets, especially for those who made an assessment prior March 2 2020 will be something to watch for.
Nonetheless, despite the challenges ahead, PNG.V has never been better positioned for continued success.
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