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Ocean Guardian to make boat and beach market Shark Shield debuts before new IPO bid

Proactive Investors Thursday, 19 July 2018
Ocean Guardian Holdings Limited (ASX:OCG) has rejigged its commercialisation strategy and will launch a series of Shark Shield Technology products for beach users and boat owners before it returns to the market for an initial public offering (IPO). The company is seeking $2 million from private investors in a pre-IPO round ahead of an IPO now planned for early 2019. Ocean Guardian had sought $5-6 million from investors for an IPO in May but withdrew its prospectus in June. This decision was taken in order to develop and launch a number of planned products into new markets, build the order book, and then see this reflected in a new valuation by the March 2019 quarter. READ: Ocean Guardian of Shark Shield fame set to make a splash as it plans IPO The Western Australian company plans to grow the potential user base for its dive series line by 11 times over the initial target to more than 66 million people worldwide. Sydney-based Ocean Guardian chief executive Lindsay Lyon told Proactive Investors there were three factors that were key to commercialising the company’s shark-deterrent technology. Do Shark Shield products work? The first factor was the question of whether the technology, which has been around since the 1990s, actually works. The consumer-critical question has been asked and firmly answered by scientists at Flinders University in a study funded by the New South Wales Government. The study, led by Associate Professor Charlie Huveneers and commissioned by the Department of Primary Industries, found Ocean Guardian’s FREEDOM+ Surf was the only product on the market that significantly deterred white sharks from taking a bait, and it did so 60% of the time. “Ours is the only product that is effective,” Lyon said of the Shark Shield Technology device co-designed with surfer Tom Carroll. Without the company’s technology, sharks would take the bait 96% of the time. The other products had limited or no effects. After the public endorsement from NSW, the WA Government prompted a run-out of stock after putting a $200 rebate on the company’s FREEDOM+ Surf product, costing $599 in a bundle, and its $749 FREEDOM7 device for divers. In the US, the company is trying out a different pricing strategy, pitching them at US$499. The company rebranded as Ocean Guardian in March, leaving behind Shark Shield as a company name. Ocean Guardian is also opting to license out its Shark Shield Technology and partner with influential organisations that are having a friendlier reaction to its new name. Who will buy Shark Shield products? The second factor important to Ocean Guardian commercialisation is the ergonomics or specifics on how the products can be used in the water and, therefore, what markets the company can target. There are about six million scuba divers and spearfishers worldwide, 25 million surfers, 20 million snorkellers and 15 million registered boat owners. The growth in its audiences is reflected in the double-digit compound growth the company had in 2015-16 and 2016-17 — and its 49% growth in 2017. How should Ocean Guardian scale up? A third commercialisation aspect is cost drivers — how to reduce the prices of its products, achieve economies of scale and get products out to market. Among the cheaper goodies Ocean Guardian is cooking up is the e-spear handheld device for divers and snorkellers currently priced at $199. The 260-millimetre device expands out to a 600-millimetre spear for poking sharks and is perfect for spearfishers and shallow-water swimmers — like tourists keeping regional communities afloat. The product the company plans to market to boaties, the Ocean Guardian BOAT01 (previously the LR10), will cost $2,499. Another product targeted at beach users, the Ocean Guardian FISH01 (formerly the LR10FP) is aimed at surf clubs and events operators and will also be retail for about $2,499. A matter of psychology When Lyon surfs with his shark deterrent he stays out longer, sits at the back and is happy in the water, even when the conditions look a little “sharky”. “It makes a different to my psychology,” he said. Seventy per cent of shark victims are surfers and divers, and a number of shark attack victims have personally called Lyon to get the lowdown on the effectiveness of Ocean Guardian’s products. With the backing of the WA and NSW governments and similar regulators, the product line has a better chance for success when compared to other operators’ offerings. As Lyon returns to investors with a different proposal, he’s conscious that part of the battle converting water users and regulators alike lies with educating people. He said drumlines and the other popular measures had their place, but the solutions people adopted should be based on science — not public pressure. “If you want to invest in proven shark deterrent technology, invest in Ocean Guardian,” he said. “Increased adoption of Ocean Guardian products, driven by programs such as the shark deterrent rebate, will allow us to increase our manufacturing volumes, which will enable us to lower the price over time.” By building public confidence in its products and gaining the support of key government figures, Ocean Guardian is quickly building a company, one that is also improving public safety.

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