Kraken Robotics Inc. (Re), 2026 CanLII 16845

Ontario Commission des 22^nd Floor 22e étage

Securities valeurs mobilières 20 Queen Street West 20, rue queen ouest

Commission de l’Ontario Toronto ON M5H 3S8 Toronto ON M5H 3S8

March 4, 2026

In the Matter of the Securities Legislation of Ontario (the Jurisdiction)

and

In the Matter of THE PROCESS FOR EXEMPTIVE RELIEF APPLICATIONS

in multiple jurisdictions

and

In the Matter of kraken robotics Inc.

(the Filer)

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under section 5.1 of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) exempting the Filer from the requirements of subsection 3.11(1) of NI 52-107 in connection with the filing by the Filer of acquisition statements in a prospectus supplement to a short form base shelf prospectus (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) the Ontario Securities Commission is the principal regulator for this application; and

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in each of British Columbia, Alberta, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, Yukon, Northwest Territories, and Nunavut.

Interpretation

Terms defined in National Instrument 14-101 Definitions, MI 11-102, and NI 52-107 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer:

1. The Filer is a reporting issuer in each of the provinces and territories of Canada and is not in default of securities legislation in any jurisdiction of Canada.

2. The common shares of the Filer are listed on the TSX Venture Exchange under the symbol PNG and the OTCQB Venture Market under the symbol KRKNF. No securities of the Filer are listed on any other marketplace. Accordingly, the Filer is and will be at the time of filing the Supplement (as defined herein), a venture issuer as such term is defined in National Instrument 41-101 General Prospectus Requirements.

3. The Filer's financial year end is December 31.

4. The Filer's head office is located at 189 Glencoe Drive, Mount Pearl, NL, A1N 4P6.

5. The Filer filed a short form base shelf prospectus dated August 7, 2025 (the Base Shelf Prospectus) with the Ontario Securities Commission as principal regulator, and under MI 11-102 with the regulator in each of the provinces and territories of Canada.

6. The Ontario Securities Commission issued a receipt in respect of the Base Shelf Prospectus on August 7, 2025.

7. The Filer has entered into a share purchase agreement dated March 3, 2026 with Kraken Robotic Systems Inc. (the Buyer), and Sonardyne Holdings Limited (the Seller), providing for the acquisition by the Buyer from the Seller of all the issued and outstanding shares of Covelya Group Limited (Covelya Group) for an aggregate purchase price of $615 million, subject to certain adjustments (the Acquisition), and reasonably believes that the likelihood of the Filer completing the Acquisition is high.

8. Covelya Group is a private company organized under the laws of the United Kingdom and Wales.

9. Covelya Group’s financial year end is December 31.

10. To finance a portion of the purchase price for the Acquisition, the Filer anticipates undertaking an underwritten public offering of subscription receipts convertible into common shares (the Public Offering) pursuant to a prospectus supplement (the Supplement) to be filed in each of the provinces of Canada under its Base Shelf Prospectus.

11. The Acquisition will constitute a significant acquisition for the Filer under section 8.3 of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102). As a result, the Filer will be required to include financial statements of Covelya Group in the Supplement in accordance with subsection 10.2(3) of Form 44-101F1 Short Form Prospectus (Form 44-101F1).

12. Subsection 10.2(3) of Form 44-101F1 requires an issuer to include financial statements or other information about a proposed acquisition if the inclusion of the financial statements is necessary for the short form prospectus to contain full, true and plain disclosure of all material facts relating to the securities being distributed.

13. Subsection 10.2(4) of Form 44-101F1 provides that the disclosure required by subsection 10.2(3) of Form 44-101F1 must be satisfied by including (a) the financial statements or other information that are required to be included in, or incorporated by reference into, a business acquisition report filed under Part 8 of NI 51-102, or (b) satisfactory alternative financial statements or other information.

14. Pursuant to paragraph 10.2(4)(a) of Form 44-101F1 and section 8.4 of NI 51-102, for purposes of the Supplement, the financial statements or other information that would be required to be included in, or incorporated by reference into a BAR would include the comparative annual financial statements of Covelya Group for the most recently completed financial year ended on or before the date of the Supplement, audited for the most recently completed financial year.

15. Pursuant to subsection 4.9(2) of Companion Policy 44-101CP Short Form Prospectus Distributions, satisfactory alternative financial statements or other information may be provided to satisfy the requirements of subsection 10.2(3) of Form 44-101F1 when the financial statements or other information that would be required by Part 8 of NI 51-102 relate to a financial year ended within 90 days before the date of the prospectus.

16. The Filer expects to file the Supplement before March 31, 2026, at which time the most recently completed financial year of Covelya Group will have ended on December 31, 2025, which is within 90 days before the date of the Supplement. Accordingly, the Filer intends to include satisfactory alternative financial statements of Covelya Group as permitted by paragraph 10.2(4)(b) of Form 44-101F1 to satisfy the requirements of subsection 10.2(3) of Form 44-101F1.

17. Satisfactory alternative financial statements or other information required to be included in the Supplement under paragraph 10.2(4)(b) of Form 44-101F1 may include:

(a) comparative consolidated annual financial statements of Covelya Group for the financial year ended December 31, 2024, together with the comparative financial year ended December 31, 2023 (the Annual Financial Statements), audited for the most recently completed financial period in accordance with NI 52-107, and reviewed for the comparative period in accordance with section 4.3 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101); and

(b) unaudited consolidated interim financial statements of Covelya Group (the Interim Financial Statements) for the interim period ended September 30, 2025, together with the comparative interim period ended September 30, 2024, reviewed in accordance with section 4.3 of NI 44-101.

18. The Annual Financial Statements and Interim Financial Statements are acquisition statements because they are financial statements for a business to be acquired that are required to be included in a prospectus under NI 44-101.

19. Paragraph 3.11(1)(b) of NI 52-107 permits a reporting issuer to file acquisition statements prepared in accordance with IFRS.

20. The Filer intends to include in the Supplement the Annual Financial Statements, prepared in accordance with IFRS.

21. The Filer intends to include in the Supplement the Interim Financial Statements, prepared in accordance with IFRS, except for the omission of comparative information for the interim period ended September 30, 2024, as further described below.

22. Section 8.9 of NI 51-102 (the Prior Period Exemption) provides that a reporting issuer is not required to provide comparative information for an interim financial report required under subsection 8.4(3) of NI 51-102 for an acquired business if:

(a) to a reasonable person it is impracticable to present prior-period information on a basis consistent with the most recently completed interim period of the acquired business;

(b) the prior-period information that is available is presented; and

(c) the notes to the interim financial report disclose the fact that the prior-period information has not been prepared on a basis consistent with the most recent interim financial information.

23. Covelya Group has represented to the Filer that it has determined that it is impracticable to prepare and present financial information for the interim period of Covelya Group ended September 30, 2024 (the Covelya Group Comparative Interim Information), on a basis consistent with the most recently completed interim period, because:

(a) Covelya Group has not historically been subject to any applicable law that would require it to prepare financial statements for any interim period, and it has not prepared any such interim financial statements; and

(b) Covelya Group lacks financial data to support the preparation and review of financial statements for the interim period ended September 30, 2024.

24. Based on Covelya Group's representations, the Filer intends to rely on the Prior Period Exemption to omit from the Interim Financial Statements included in the Supplement the Covelya Group Comparative Interim Information, without substituting any prior-period information in its place.

25. The Interim Financial Statements will be prepared in accordance with IFRS in all other respects, and the notes to the Interim Financial Statements will disclose the fact that the prior-period information has not been prepared on a basis consistent with the most recent interim financial information.

26. As a result of the Filer's reliance on the Prior Period Exemption, the Interim Financial Statements will not be prepared in accordance with IFRS within the meaning of NI 52-107 because they will lack comparative period information that is required by IAS 34 Interim Financial Reporting (IAS 34).

27. While the Prior Period Exemption exempts a reporting issuer from the requirement to provide financial information for a comparative interim period in a financial report of an acquired business where it would be impracticable to do so, NI 52-107 does not provide a corresponding non-discretionary exemption from the requirement that acquisition statements for an interim period be prepared in accordance with IFRS.

28. Where a reporting issuer is required to file an interim financial report that is not required under securities legislation to provide comparative interim financial information, other than acquisition statements, subsection 3.2(2) of NI 52-107 permits the issuer to file financial statements that do not comply with IAS 34, provided that:

(a) the statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows and explanatory notes are prepared in accordance with IAS 34 other than the requirement in IAS 34 to include comparative financial information; and

(b) the interim financial report discloses that it does not comply with IAS 34 because it does not include comparative interim financial information, and that the statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows and explanatory notes have been prepared in accordance with IAS 34 other than the requirement in IAS 34 to include comparative financial information.

29. The Interim Financial Statements would comply with subsection 3.2(2) of NI 52-107, but for the fact that they are acquisition statements.

Decision

The principal regulator is satisfied that the order meets the test set out in the securities legislation of the Jurisdiction (the Legislation) of the principal regulator to make the decision.

The decision of the principal regulator under the Legislation is that the Exemption Sought is granted, provided that:

(a) the Interim Financial Statements are prepared in accordance with IAS 34, other than the requirement in IAS 34 to include comparative financial information;

(b) the basis of preparation note to the Interim Financial Statements discloses that the Interim Financial Statements, comprising the statement of financial position, statement of comprehensive income, statement of changes in equity, statement of cash flows, and explanatory notes, are prepared in accordance with IAS 34 other than the requirement in IAS 34 to include comparative financial information;

(c) the Filer complies with the conditions of the Prior Period Exemption set out in section 8.9 of NI 51-102; and

(d) the Supplement discloses the fact that this decision has been granted.

“Cameron McInnis”

Cameron McInnis

Chief Accountant, Corporate Finance

Ontario Securities Commission OSC File #: 2026-96