Kraken Robotics, the St. John’s-based OceanTech company, announced two sales last week, the total value of which is worth more than all its revenues in its most recent quarter.
Publicly listed Kraken, which specializes in making software-based sensors and underwater robotics systems, said last Wednesday that its client Ocean Infinity issued a $6.5 million purchase order for Kraken’s deep-sea batteries. The order is an acceleration of a contract announced last summer.
Two days earlier, Kraken announced it had won a $468,000 contract with the federal government. Kraken will provide the Department of National Defence with the testing, repair and upgrade of sensors it placed in autonomous underwater vehicles four years ago.
The sales announcements are the highlights of a slew of announcements in which the company is bringing in more revenues, strengthening its balance sheet, and increasing its stake in a German unit. The biggest announcement was the sales agreement with Houston-based Ocean Infinity.
“Using Kraken’s pressure tolerant gel encapsulation battery technology, we can increase our energy capacity by over 50% in the same physical form factor as our existing conventional batteries,” said Ocean Infinity President and CEO Oliver Plunkett. “From an operational perspective, this gives us considerable flexibility to optimise mission plans, increase area coverage, manage weather impact and ultimately increase value for our customers in even the most remote portions of the world’s oceans.”
In August, Ocean Infinity agreed to purchase $9 million worth of deep-sea, pressure-resistant batteries to be used in its fleet of UAVs, which are capable of operating to depths of up to 6,000 metres. Ocean Infinity issued an initial $2.5 million purchase order and the next $6.5 million purchase order had been expected by March.
Now, Ocean Infinity has accelerated the delivery schedule by about six months. Kraken will start shipping this month and finish by the end of March.
To provide for cash flow, Kraken has been invoicing Ocean Infinity in November and January for advance payments of about $5 million.
To put the $7 million value of these two sales in perspective, Kraken reported record revenue of $2.7 million in the three months ended June 30, an improvement of more than 12 times over the same period a year earlier. The huge revenue jump is the big reason the company’s shares on teh TSX Venture exchange have soared about 150 percent in the past year.
Kraken also expects a follow-on order from Ocean Infinity in the second half of 2019 for additional batteries and spares, beyond the initial $9 million contract.
The batteries for Ocean Infinity will be built by Germany-based Kraken Power GmbH, a unit in which Kraken now holds a 19.9 percent interest. Kraken said it intends to increase this stake to 75 percent this month by swapping a convertible note of €110,000 (C$165,000) into equity and paying €111,200 in cash.
Meanwhile, Kraken also said it was receiving about $600,000 due to the exercise of warrants.
“We are very pleased to support Ocean Infinity’s AUV fleet battery upgrade,”said Kraken’s President and CEO Karl Kenny. “In simple terms, within the existing battery compartment footprint, our drop-in, field swappable batteries allow Ocean Infinity’s AUVs to increase underwater mission time from 50-55 hours to 80-85 hours.”