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What changed in Coda Octopus Group, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Coda Octopus Group, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+320 added−328 removedSource: 10-K (2026-01-29) vs 10-K (2025-01-29)

Top changes in Coda Octopus Group, Inc.'s 2025 10-K

320 paragraphs added · 328 removed · 195 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

82 edited+49 added−51 removed59 unchanged
Biggest changeNewly Acquired Third Business Unit into the Group’s Products Segment On October 29, 2024 we acquired Precision Acoustics Limited (hereinafter referred to as “PAL”), a company established under the laws of England. This Company is a recognized leader in the ultrasound and acoustic measurement field.
Biggest changeThese activities were interrupted by the Coronavirus Pandemic in 2020 and since then we have not had personnel on the ground and therefore these operations have been slow to regain momentum. On October 29, 2024, we acquired into the Group, Precision Acoustics Limited - “PAL” - a company established under the laws of England.
DAVD’s concept of using a pair of glasses, which is capable of augmented reality display, inside the face mask, helmet or other diving suits is protected by patent. The Company has an exclusive license to exploit this utility patent.
DAVD’s concept of using a pair of glasses, which is capable of augmented reality display, inside the face mask, helmet or other diving suits is protected by a patent. The Company has an exclusive license to exploit this utility patent.
Building on 4G developments, we continued our innovation and in 2021 released our latest generation of sonar, Echoscope PIPE ® to the market which advanced the capabilities of the technology and antecedent sonar products significantly.
Building on our 4G developments, we continued our innovation and in 2021 released our latest generation of sonar, Echoscope PIPE ® to the market which advanced the capabilities of the technology and antecedent sonar products significantly.
Each of these systems typically have an independent display, typically on the device or wrist worn. Video systems generally provide no direct benefit to the diver and are intended for top-side visualization. The DAVD provides video data to the diver directly.
Each of these systems typically have an independent display, typically on the device or wrist worn. Video systems generally provide no direct benefit to the diver and are intended for top-side visualization. The DAVD provides video data directly to the diver.
These are not intended for long term use and more for occasional glance at data for reference.
These are not intended for long term use and are more for occasional glance at data for reference.
The DAVD system provides the following capabilities: ● Fully Transparent High-Definition Head-Up Display mounted internally within supported Dive Helmets and Dive Masks, including Kirby Morgan KM37, KM37SS, KM97 and SL17 Helmets, as well as the Interspiro Divator MK II, OTS Guardian and Dräger Panorama Nova Dive ● Fully integrated 1st person perspective digital low-light camera with advanced video processing and real-time edge enhancement for Diver and Dive Supervisor ● Fully integrated noise-cancelling Digital Audio at source, replacing legacy communications ● Integrated Diver Head Tracking for accurate 3D scene visualization with full support for subsea positioning systems for accurate Diver positioning ● Telemetry Information on demand including Dive Timers, Depth and Compass Heading, Live position Lat/Long (when connected to external diving positioning system), Waypoint Range and Bearing as well as external Dive Computer data ● Instant Digital Voice and Text Communication between Dive Supervisor and Diver, including auto and pre-defined messaging ● Transmit unlimited on-demand media to Diver including Images, Instructional Videos, Technical Drawings and other assets to assist in live operations ● Creation and transfer of unlimited step-by-step mission instructions with text, video and image support for common diver tasks and operations ● Full Mixed-Reality 3D Display for Diver using live Sonar, pre-surveyed Sonar data and 3D models ● Divers HUD Display fully adjustable between 2D Mode, and 3D Mode with 1st person and 3rd person perspective There are several diver related products and sensors that can be worn by the diver such as telemetry systems, navigational aids, dive computers, video and sonar systems and probes and sensors such as magnetic and thickness.
The DAVD system provides the following capabilities: ● Fully Transparent High-Definition HUD mounted internally within supported Dive Helmets and Dive Masks, including Kirby Morgan KM37, KM37SS, KM97 and SL17 Helmets, as well as the Interspiro Divator MK II, OTS Guardian and Dräger Panorama Nova Dive, Diveways and DSENDs. ● Fully integrated 1st person perspective digital low-light camera with advanced video processing and real-time edge enhancement for Diver and Dive Supervisor ● Fully integrated noise-cancelling Digital Audio at source, replacing legacy communications ● Integrated Diver Head Tracking for accurate 3D scene visualization with full support for subsea positioning systems for accurate Diver positioning ● Telemetry Information on demand including Dive Timers, Depth and Compass Heading, Live position Lat/Long (when connected to external diving positioning system), Waypoint Range and Bearing as well as external Dive Computer data ● Instant Digital Voice and Text Communication between Dive Supervisor and Diver, including auto and pre-defined messaging ● Transmit unlimited on-demand media to Diver including Images, Instructional Videos, Technical Drawings and other assets to assist in live operations ● Creation and transfer of unlimited step-by-step mission instructions with text, video and image support for common diver tasks and operations ● Full Mixed-Reality 3D Display for Diver using live Sonar, pre-surveyed Sonar data and 3D models ● Divers HUD Display fully adjustable between 2D Mode, and 3D Mode with 1st person and 3rd person perspective There are several diver related products and sensors that can be worn by the diver such as telemetry systems, navigational aids, dive computers, video and sonar systems and probes and sensors such as magnetic and thickness.
Combining this with unreliable audio communication can lead to mission failures or disasters. ” It further describes the objective of the Invention as: “ Accordingly, it is an object of the present invention to provide an underwater diver with real-time visual information available to topside personnel.
Combining this with unreliable audio communication can lead to mission failures or disasters. ” 12 It further describes the objective of the Invention as: “ Accordingly, it is an object of the present invention to provide an underwater diver with real-time visual information available to topside personnel.
In addition, we have registered several internet domain names including www.codaoctopus.com ; www.codaoctopusgroup.com ; www.colmek.com and www.martechsystems.co.uk; www.codaoctopusmartech.com; and www.acoustics.co.uk . Research and Development (“R&D”) Research and Development is foundational to our business strategy to ensure our growth strategy and maintain our competitiveness.
In addition, we have registered several internet domain names including www.codaoctopus.com ; www.codaoctopusgroup.com ; www.codaoctopusengineering.com ; www.colmek.com and www.martechsystems.co.uk; www.codaoctopusmartech.com; and www.acoustics.co.uk . Research and Development (“R&D”) Research and Development is foundational to our business strategy to ensure our growth strategy and maintain our competitiveness.
Coda Octopus Group, Inc., is organized under the laws of the State of Delaware as a holding company that conducts its business through its subsidiaries, several of which are organized under the laws of foreign jurisdictions, including England, Scotland, Denmark, The Netherlands, Australia and India.
Coda Octopus Group, Inc., is organized under the laws of the State of Delaware as a holding company that conducts its business through its subsidiaries, several of which are organized under the laws of foreign jurisdictions, including England, Scotland, Denmark, Australia and India.
The innovations around Echoscope PIPE ® are the subject of numerous patent applications. We have been awarded US 10,718,865 and US 10,816,652 which concerns a method of compressing beamformed data and method of compressing sonar data, respectively.
The innovations around Echoscope PIPE ® are the subject of numerous patent applications. We have been awarded US 10,718,865 and US 10,816,652 patents which concerns a method of compressing beamformed data and method of compressing sonar data, respectively.
Marine Engineering Business (Services Segment) Our Marine Engineering Businesses are suppliers of embedded solutions and sub-assemblies which they design and manufacture and sell as a component of mission critical integrated defense systems.
Defense Engineering Services Business (Services Segment) Our Defense Engineering Services Businesses are suppliers of embedded solutions and sub-assemblies which they design, manufacture and sell as a component of mission critical integrated defense systems.
Initially, its operations consisted primarily of developing software for subsea mapping and visualization using sidescan sonar (a technology widely used in commercial offshore geophysical survey and naval mine-hunting to detect objects on, and textures of, the surface of the seabed). 8 In June 2002, we acquired Octopus Marine Systems Ltd, a UK corporation, and changed our name to Coda Octopus Limited.
Initially, its operations consisted primarily of developing software for subsea mapping and visualization using sidescan sonar (a technology widely used in commercial offshore geophysical survey and naval mine-hunting to detect objects on, and textures of, the surface of the seabed). 7 In June 2002, we acquired Octopus Marine Systems Ltd, a UK corporation, and changed our name to Coda Octopus Limited.
The main costs that are incurred in this area are wages and salaries, researching, prototyping, and validation and testing. The acquisition of PAL into the Group on October 29, 2024, may result in an increase in R&D expenditures as we seek to take advantage of PAL’s expertise with a view to bringing more products and solutions to the market.
The main costs that are incurred in this area are wages and salaries, researching, prototyping, and validation and testing. The acquisition of PAL into the Group on October 29, 2024, may result in an increase in R&D expenditure as we seek to take advantage of PAL’s expertise with a view to bringing more products and solutions to the market.
In order to grow, the Marine Engineering Business relies on increasing the number of new programs it attracts annually. In addition, we are increasingly combining our engineering capabilities with our product offerings. This enables us to offer systems which are complete with installation and support to maximize the utilization of our collective expertise to advance our technologies.
In order to grow, the Defense Engineering Business relies on increasing the number of new programs it attracts annually. In addition, we are increasingly combining our engineering capabilities with our product offerings. This enables us to offer systems which are complete with installation and support to maximize the utilization of our collective expertise to advance our technologies.
Our diving technology marketed under the name “CodaOctopus ® DAVD” addresses the global defense and commercial diving markets. We have two variants of the DAVD: the tethered and untethered variant. The tethered variant is used with a connection to a surface vessel and the untethered variant is not connected to a surface mothership for air supply.
Our diving technology marketed under the name “CodaOctopus ® DAVD” targets the global defense and commercial diving markets. We have two variants of the DAVD, (the tethered and untethered variants). The tethered variant is used with a connection to a surface vessel, and the untethered variant is not connected to a surface mothership for air supply.
Their work scope typically extends to both hardware and software design. Colmek has the requisite accreditations for its business including being Lloyds Register accredited to ISO 9001:2015 and NIST (National Institute of Science and Technology) 800-171 certification.
Their work scope typically extends to both hardware and software design. COEI has the requisite accreditations for its business, including being Lloyds Register accredited to ISO 9001:2015 and NIST (National Institute of Science and Technology) 800-171 certification.
Martech enjoys pre-approvals to allow it to be short-listed for certain types of government contracts. Much of the more significant business secured by Martech is through the formal government or government contractor tendering process. Martech has the requisite accreditations for its business including being Lloyds Register accredited to ISO 9001:2015 and Cyber Essentials Plus certification. Coda Octopus Colmek, Inc.
Martech enjoys pre-approvals to allow it to be short-listed for certain types of government contracts. Much of the more significant business secured by Martech is through the formal government or government contractor tendering process. Martech has the requisite accreditations for its business including being Lloyds Register accredited to ISO 9001:2015 and Cyber Essentials Plus certification. 14 Coda Octopus Engineering, Inc.
The US Government as represented by Secretary of the Navy (Arlington, VA), describes the challenge for divers in their patent application as follows: “ By their very nature, underwater dive missions are difficult and inherently dangerous. Furthermore, the complexity of underwater missions can make it difficult or impossible for a diver to retain all pre-mission briefing information.
The US Government, as represented by Secretary of the Navy (Arlington, VA), describes the challenge for divers in an abstract from their patent application as follows: “ By their very nature, underwater dive missions are difficult and inherently dangerous. Furthermore, the complexity of underwater missions can make it difficult or impossible for a diver to retain all pre-mission briefing information.
The range of solutions which it offers to the market are complementary and include: Product Family Composition Real time volumetric imaging sonar Echoscope ® / Echoscope PIPE ® range Hardware and Software Diving Technology Diver Augmented Vision Display (DAVD) range Hardware and Software Digital Audio Communications System Voice HUB_4 Hardware and Software GNSS-Aided Navigation Systems (providing heading, pitch, yaw and roll data at sea) F280 Series ® Hardware and Software Geophysical Solutions (used in conjunction with sidescan and sub-bottom data acquisition) DA4G ® , GeoSurvey ® and Survey Engine Hardware and software These products and/or solutions are sold, rented or leased into various marine sectors such as: ● Marine geophysical survey ● Offshore Renewables (“Wind Energy”) ● Underwater construction, inspection and monitoring ● Diving Companies ● Commercial and Defense Diving ● Salvage and decommissioning ● Oil and Gas (O&G”) ● Robotics ● Commercial fisheries ● Environmental, mammal and habitat monitoring ● Underwater Defense Applications ● Marine vehicles and robotics ● Port and Harbor Security, law enforcement and first responders ● Research and education 1.
The range of solutions which it offers to the market are complementary and include: Product Family Composition Real time volumetric imaging sonar Echoscope ® / Echoscope PIPE ® range, Echoscope PIPE NANO Gen Series ® range Hardware and Software Diving Technology DAVD range Hardware and Software Digital Audio Communications System Voice HUB_4 Hardware and Software GNSS-Aided Navigation Systems (providing heading, pitch, yaw and roll data at sea) F280 Series ® Hardware and Software Geophysical Solutions (used in conjunction with sidescan and sub-bottom data acquisition) DA4G ® , GeoSurvey ® and Survey Engine Hardware and software These products and/or solutions are sold, rented or leased into various marine sectors such as: ● Marine geophysical survey ● Offshore Renewables (“Wind Energy”) ● Underwater construction, inspection and monitoring ● Diving Companies ● Commercial and Defense Diving ● Salvage and decommissioning ● Oil and Gas (O&G”) ● Robotics ● Autonomous underwater vehicles ● Commercial fisheries ● Environmental, mammal and habitat monitoring ● Underwater Defense Applications ● Underwater vehicles ● Port and Harbor Security, law enforcement and first responders ● Research and education 1.
The Services Segment established its business in 1977 and has been supporting a number of significant defense programs of record for over 40 years, including Raytheon’s Close in Weapon Support (CIWS) and Northrop Grumman’s Mine Hunting Systems Program (AQS-24) Program. The Services Segment’s business model entails engineering components for integration into broader defense programs, such as the CIWS program.
The Defense Engineering Services Business established its business in 1977 and has been supporting a number of significant defense programs for over 40 years, including Raytheon’s Close in Weapon Support (CIWS) and Northrop Grumman’s Mine Hunting Systems Program (AQS-24). The Defense Engineering Services business model entails engineering components for integration into broader defense programs, such as the CIWS program.
DAVD is a complete end-to-end diver management solution incorporating as a key element a high-resolution, fully transparent glass head-up display, HUD, integrated directly inside the diving helmet (for hard hat surface air supply diving) or full-facemask (for tethered and untethered defense, commercial and recreational diving applications) or diving suits.
DAVD is a complete end-to-end diver management solution incorporating as a key element a high-resolution, fully transparent glass head-up display (“DAVD HUD”), integrated directly inside the diving helmet (for hard hat surface air supply diving) or full-facemask (for tethered and untethered defense, commercial and recreational diving applications) or diving suits.
These two patents are important method patents since we are handling significantly more data than in our previous generation of sonars. 16 We seek to compete on the basis of producing high quality products employing cutting edge technology that is easy to use by the operators without specialized skills in sonar technology.
These two patents are important “method patents” since we are handling significantly more data than in our previous generation of sonars. 16 We seek to compete on the basis of producing high quality products employing cutting edge technology that is easy to use by the operators without specialized skills in sonar technology.
RISK FACTORS Not required for smaller reporting companies. ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
RISK FACTORS Not required for smaller reporting companies. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 20
The strongest competitors are often the prime contractors themselves as they predominantly have the option to execute the work package internally as opposed to subcontracting these. Intellectual Property We operate in an industry in which innovation, investment in new ideas and protection of our intellectual property rights are critical for our continued success.
The strongest competitors are often the prime contractors themselves as they predominantly have the option to execute the work package internally as opposed to subcontracting with us. Intellectual Property We operate in an industry in which innovation, investment in new ideas and protection of our intellectual property rights are critical for our continued success.
PAL markets its products through its internal sales team, its website and a network of non-exclusive agents in Japan, China, India and Korea. Colmek markets its products through its internal sales team, website, industry events and agents in the US and Canada. Martech markets its products through its internal sales team, website and industry events.
PAL markets its products through its internal sales team, its website and a network of non-exclusive agents in Japan, China, India and Korea. COEI markets its products through its internal sales team, website, industry events and a network of non-exclusive agents in the US and Canada. Martech markets its products through its internal sales team, website and industry events.
US 11,846,733 Concerns a method of stabilizing sonar images October 30, 2035 JP 7403226 Concerns a method of pseudo random frequency sonar ping generation to reduce data and hardware cost April 14, 2038 US 11,874,407 Concerns technologies for dynamic, real time, four-dimensional volumetric multi-object underwater scene segmentation February 19, 2040 US11,789,146 Concerns a combined method of location of sonar detection device August 5, 2039 Trademarks We own the registered trademarks listed below and they are used in conjunction with the products that we market and sell: Coda ® , Octopus ® , CodaOctopus ® , CodaOctopus & Design ® , Octopus & Design ® , F180 ® , F280 ® , F280 Series ® , Echoscope ® , Echoscope 4G® , Echoscope 5D ® , 5D Echoscope ® , Echoscope 6D ® , 6D Echoscope ® , Echoscope PIPE ® Ping-Pong Echoscope Sonar ® , Ping-Pong Echoscope ® , Ping-Pong Sonar ® , Echoscope Sequencer ® 4G Underwater Survey Explorer ® , 4G USE ® , Echoscope Sequencer ® , Survey Engine ® , Dimension ® , DAseries ® , GeoSurvey ® CodaOctopus ® Air, CodaOctopus ® Vantage ® ; CodaOctopus ® UIS; CodaOctopus ® USE, Sentiris ® , Thermite ®; PA and PA Precision Acoustics.
US 11,846,733 Concerns a method of stabilizing sonar images October 30, 2035 JP 7403226 Concerns a method of pseudo random frequency sonar ping generation to reduce data and hardware cost April 14, 2038 US 11,874,407 Concerns technologies for dynamic, real time, four-dimensional volumetric multi-object underwater scene segmentation September 30, 2041 US11,789,146 Concerns a combined method of location of sonar detection device August 5, 2039 Trademarks We own the registered trademarks listed below and they are used in conjunction with the products that we market and sell: Coda ® , Octopus ® , CodaOctopus ® , CodaOctopus & Design ® , Octopus & Design ® , F180 ® , F280 ® , F280 Series ® , Echoscope ® , Echoscope 4G® , Echoscope 5D ® , 5D Echoscope ® , Echoscope 6D ® , 6D Echoscope ® , Echoscope PIPE ® , Ping-Pong Echoscope Sonar ® , Ping-Pong Echoscope ® , Ping-Pong Sonar ® , Echoscope Sequencer ® 4G Underwater Survey Explorer ® , 4G USE ® , Echoscope Sequencer ® , Survey Engine ® , Dimension ® , DAseries ® , Echoscope PIPE NANO Gen Series ® , Echoscope PIPE 6G NANO ® , GeoSurvey ® CodaOctopus ® Air, CodaOctopus ® Vantage ® ; CodaOctopus ® UIS; CodaOctopus ® USE, Sentiris ® , Thermite ®; PA and PA Precision Acoustics.
Coda Octopus Products Limited (Edinburgh based) then developed our visualization software (Underwater Survey Explorer) to control and display the images from the real time 3D sonar device. This patented technology is now marketed by us under the brand name “Echoscope ® ” and Echoscope PIPE ® .
Coda Octopus Products Limited (Edinburgh based) then developed our visualization software (Underwater Survey Explorer) to control and display the images from the real time 3D sonar device. This technology is now marketed by us under the brand name “Echoscope ® ” , Echoscope PIPE ® and Echoscope PIPE NANO Gen Series ® .
Corporate History The Company began as Coda Technologies Limited. This company now operates under the name Coda Octopus Products Limited, a United Kingdom corporation formed in 1994 as a start-up company with its origins as a research group at Heriot-Watt University, Edinburgh, Scotland.
Our corporate structure is as follows: Corporate History The Company began as Coda Technologies Limited. This company now operates under the name Coda Octopus Products Limited, a United Kingdom corporation formed in 1994 as a start-up company with its origins as a research group at Heriot-Watt University, Edinburgh, Scotland.
This allows for different data sets to be provided to different parts of the survey team in real time (thus consolidating the sensors and the associated costs and effectiveness of the solution). We are not aware of any sonars that offer either 5D or 6D Capability.
This allows for different data sets to be provided to different parts of the survey team in real time (thus consolidating the sensors and the associated costs and effectiveness of the solution). We are not aware of any sonar that offers either 5D or 6D Capability.
Real Time Volumetric Imaging Sonars (ranging from 3D/4D, 5D and 6D) We design, develop and supply what we believe is the world’s most advanced series of real time volumetric imaging sonar (Echoscope® and Echoscope PIPE®). This is the culmination of over 25 years of research and development.
Real Time Volumetric Imaging Sonars (ranging from 3D/4D, 5D and 6D) We design, develop and supply what we believe is the world’s most advanced series of real time volumetric imaging sonar (Echoscope®, Echoscope PIPE® and recently added Echoscope PIPE® NANO Gen Series ). This is the culmination of over 25 years of research and development.
These arrangements often give the Marine Engineering Business long term preferred/sole supplier status for the sub-components they supply into these programs and provide them with opportunity to participate in any requirements for technology refresh or obsolescence management for the components supplied. They generally use these long-standing relationships to win more contracts with these customers.
These arrangements often give the Defense Engineering Services Businesses long term preferred/sole supplier status for the sub-components they supply into these programs and provide them with opportunity to participate in any requirements for technology refresh or obsolescence management for the components supplied. They generally use these long-standing relationships to win more contracts with these customers.
It owns key proprietary and unique technology comprising its real time volumetric imaging sonar technology (Echoscope ® technology) and diving technology (Diver Augmented Vision Display - “DAVD”), both of which are applicable to the underwater market, and which are used in the commercial offshore and defense sectors.
It owns key proprietary and unique technology comprising its real time volumetric imaging sonar technology (Echoscope ® technology) and diving technology (“DAVD” (Diver Augmented Vision Display)), both of which are intended for the underwater market, and which are used in the commercial offshore and defense sectors.
These divers are typically military divers performing special forces operations, mine detection and clearance or reconnaissance and surveillance. Similar to the tethered variant, the DAVD HUD is used for displaying a range of mission-related information to the diver.
These divers typically performs special forces operations, mine detection and clearance or reconnaissance and surveillance. Similar to the tethered variant, the DAVD HUD is used for displaying a range of mission-related information to the diver.
The DA4G ® is the hardware acquisition system and both GeoSurvey ® and Survey Engine ® are complementary software packages which are used for processing the data post-acquisition. 10 2. Inertial Positioning and Attitude Measurement Systems (“Motion Products”) We have been selling our GNSS Aided Inertial Measurement Systems for over 15 years.
DA4G is a hardware acquisition system and both GeoSurvey ® and Survey Engine ® are complementary software packages which are used for processing the data post-acquisition. 9 2. Inertial Positioning and Attitude Measurement Systems (“Motion Products”) We have been selling our GNSS Aided Inertial Measurement Systems for over 20 years.
As part of our patent strategy, we endeavor to actively protect our innovations by seeking patent protection where appropriate. 4 Our imaging sonar series is marketed under the name Echoscope ® and Echoscope PIPE ® and are used primarily in the underwater construction, offshore renewables, and offshore oil and gas, complex underwater mapping, salvage operations, dredging, bridge inspection, navigation of underwater hazard, port and harbor security, mining, commercial and defense diving, marine sciences sectors and more broadly applications for real time 3D monitoring, inspection and visualization underwater.
As part of our patent strategy, we endeavor to actively protect our innovations by seeking, where appropriate, patent protection. 4 Our imaging sonar series which is marketed under the name Echoscope ® , Echoscope PIPE ® and Echoscope PIPE NANO Gen Series ® are used primarily in the underwater construction, offshore renewables, and offshore oil and gas, complex underwater mapping, salvage operations, dredging, bridge inspection, navigation of underwater hazard, port and harbor security, ship hull scanning, mining, commercial and defense diving, robotics, autonomous underwater vehicle market, marine sciences sectors and more broadly applications for real time 3D monitoring, inspection and visualization underwater.
Colmek’s business model entails designing sub-assemblies which are components of broader defense programs. Colmek is the sole source for the parts that they supply to these programs. This business model ensures recurring and long tail revenues since we continue to supply parts, typically for the life of the program, which can span decades.
COEI’s business model entails designing sub-assemblies which are components of broader defense programs. COEI is the sole source for the hardware and software components that they supply to these programs. This business model ensures recurring and long tail revenues since we continue to supply parts, typically for the life of the program, which can span decades.
The share exchange was accounted for as a reverse acquisition of Panda by Coda. Subsequently, Panda was reincorporated in Delaware and changed its name to Coda Octopus Group, Inc. In June 2006, we acquired Coda Octopus Martech Limited, which is part of our Services Segment or Marine Engineering Business. This is an English corporation.
The share exchange was accounted for as a reverse acquisition of Panda by Coda. Subsequently, Panda was reincorporated in Delaware and changed its name to Coda Octopus Group, Inc. In June 2006, the Company acquired Coda Octopus Martech Limited (“Martech”), which is part of our Defense Engineering Services Business. This is an English corporation.
In any one financial year, between 20% to 30% of our consolidated revenues may be derived from these customers either alone or collectively. 5 The Services Segment operates through our wholly owned subsidiaries, Coda Octopus Colmek, Inc (“Colmek”), which is based in Salt Lake City, Utah and which we acquired in 2007, and Coda Octopus Martech Limited (“Martech”), which is based in Portland, United Kingdom and which we acquired in 2006.
In any one financial year, between 20% to 30% of our consolidated revenues may be derived from these customers either alone or collectively. 5 The Defense Engineering Services Businesses operate through our wholly owned subsidiaries, Coda Octopus Engineering, Inc (“COEI”), which is based in Salt Lake City, Utah and which we acquired in 2007, and Coda Octopus Martech Limited (“Martech”), which is based in Portland, United Kingdom which we acquired in 2006.
Martech and Colmek compete with larger contractors, such as the primes, in the defense industry. Typical among these are Ultra Electronics, BAE Systems, Thales, Raytheon and Northrop Grumman, all of whom are also partners on various projects.
Defense Engineering Services Businesses COEI and Martech compete with larger contractors, such as the primes, in the defense industry. Typical among these are Ultra Electronics, Atlas, BAE Systems, Thales Underwater, Raytheon and Northrop Grumman, all of whom are also partners on various projects.
We expend a material part of our resources in building our Patent Portfolio. We also incentivize our staff to contribute to our Patent Portfolio by having in place a competitive Patent Reward Scheme. 18 Our patent portfolio consists of the following: Patent No.
We also incentivize our staff to contribute to our Patent Portfolio by having in place a competitive Patent Reward Scheme. 18 Our patent portfolio consists of the following: Patent No.
It also sells other proprietary subsea products such as its geophysical hardware and software solutions and inertial navigation systems. All innovations, design, development and manufacturing of our products are performed within the Company.
It also sells other proprietary subsea products such as its geophysical hardware and software solutions, inertial navigation systems and digital audio communications system for underwater applications. All innovations, design, development and manufacturing of our products are performed within the Company.
Moreover, we may incur significant research and development expenditures without realizing viable products. 19 Government Regulation We sell our products and services internationally and therefore we are subject to numerous laws concerning general business regulations in the various jurisdictions in which we operate.
Furthermore, even following the launch of any product we may not succeed. Moreover, we may incur significant research and development expenditures without realizing viable products. 19 Government Regulation We sell our products and services internationally and therefore we are subject to numerous laws concerning general business regulations in the various jurisdictions in which we operate.
For its fibre-optic hydrophones range of products, its main competitors are Onda Corporation, Sunnyvale, CA, USA, RP Acoustics, Stuttgart, Germany and Muller Instruments, Oberursel, Germany. Single element Transducers Market PAL supplies single element transducers.
The principal competitors offering both needle and membrane hydrophones are Onda Corporation, Sunnyvale, CA, USA and Gampt, Merseberg, Germany. For its fibre-optic hydrophones range of products, its main competitors are Onda Corporation, Sunnyvale, CA, USA, RP Acoustics, Stuttgart, Germany and Muller Instruments, Oberursel, Germany. Single element Transducers Market PAL supplies single element transducers.
The delivery of the new generation of DAVD HUD is a key milestone under the funded DUS Hardening Program. 13 Problem In Context The concept of using a pair of transparent glasses in the HUD to render real time information for underwater applications is protected by patent and Coda Octopus has an exclusive license from United States Department of the Navy at NSWC PCD to exploit this patent for all underwater diving activities.
Problem In Context The concept of using a pair of transparent glasses in the HUD to render real time information for underwater applications is protected by patent and Coda Octopus has an exclusive license from United States Department of the Navy at NSWC PCD to exploit this patent for all underwater diving activities.
Prior to 2018, we were selling our third generation of Echoscope imaging sonar (3G Sonar Series). In January 2018, we launched our 4G Sonar Series which were largely form factor revisions, and removed several barriers to adoption, (size, weight, power and price).
Prior to 2018, we were selling our third generation of Echoscope imaging sonar (3G Sonar Series which were of limited application due to size, weight, power and price (SWAPs)). In January 2018, we launched our 4G Sonar Series which were largely form factor revisions, and removed the SWAPs issues.
Uniquely, the Echoscope ® technology is a single sensor for multiple underwater applications that can be used to image in 3D, moving objects in zero visibility water conditions. Competing technologies such as the multibeam primary function is for mapping the seabed and are not real time 3D sonars.
Uniquely, the Echoscope ® technology is a single sensor for multiple underwater applications that can be used to image in 3D, moving objects in zero visibility water conditions. Competing technologies such as the multibeam is intended for mapping the seabed. However, they are not designed for imaging moving objects.
A significant part of the revenues generated by the Marine Engineering Business is highly concentrated and are usually derived from a small number of prime defense contractors such as Raytheon or Northrop.
A significant part of the revenue generated by the Defense Engineering Services Business is highly concentrated and is usually derived from a small number of prime defense contractors such as Raytheon, Northrop, Atlas Electronics or Thales Underwater.
Uniquely also, using a single sensor (our Echoscope PIPE ® ) range we can provide different data outputs to the various parts of the survey team, thus reducing the number of different sensors required on these underwater projects, and ultimately reducing the costs associated with these operations. 11 About the Company’s 5D and 6D Sonars Innovations 5D and 6D imaging sonars are new to the subsea market and constitute an innovation by the Company.
Uniquely also, using a single sensor (our Echoscope PIPE ® ) range we can provide different data outputs to the various parts of the survey team, thus reducing the number of different sensors required on these underwater projects, and ultimately reducing the costs associated with these operations. 10 About the Company’s 5D and 6D PIPE Sonars Innovations The acronym PIPE stands for Parallel Intelligent Processing Engine. 5D and 6D imaging sonars are new to the subsea market and constitute an innovation by the Company. 5D Sonars (Echoscope PIPE ® ) The Company’s 5D Sonars is capable of processing and utilizing much more of the data that is acquired and processed by our latest PIPE volumetric imaging sonars.
Typically, they supply prototypes units which are validated for integration and thereafter, subject to meeting the acceptance criteria, these lead to contracts for manufacture, repair and upgrade for the life of the program, which can span decades. We enjoy sole source status for the parts that we design and supply into these programs.
Typically, they are contracted to develop and supply prototypes units which are validated for broader integration into these Defense programs and thereafter, subject to meeting the acceptance criteria, these lead to contracts for manufacture, repair and upgrade for the life of the program, which can span decades.
Governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs) may have a material impact on our business and directly affect our revenue. We are also subject to compliance with the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties.
Governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs) may have a material impact on our business and directly affect our revenue and business prospects. We are also subject to compliance with the U.S.
Employees As of the date hereof, we employ approximately 103 employees worldwide, of which 15 hold management positions. A large majority of our employees have a background in science, technology, software and hardware engineering, with a substantial part being educated to a degree level. A number of our employees hold PhD’s in the area of their specialization.
A large majority of our employees have a background in science, technology, software and hardware engineering, with a substantial part being educated to a degree level. A number of our employees hold PhD’s in the area of their specialization.
Our products are complex and therefore we can give no assurance that even with spending a significant part of our resources on R&D, we will be successful in our development goals or realize significant monetization of these developments. Furthermore, even following the launch of any product we may not succeed.
Our products are complex and therefore we can give no assurance that even with spending a significant part of our resources on R&D, we will be successful in our development goals or realize significant monetization of these developments or new technologies may not surpass our R&D innovation by the time these are realized as products or capabilities.
In the previous generation of sonars (3G and 4G series), we could image and display one 3D image in real time. Our PIPE technology generates multiple 3D images simultaneously in real time using different sonar/acoustic parameters (such as different beamforming methods, frequency, range, field of view, pulse length and other acoustic filters or shading).
The latest PIPE technology generates multiple 3D images simultaneously in real time using different sonar/acoustic parameters (such as different beamforming methods, frequency, range, field of view, pulse length and other acoustic filters or shading).
It is also the platform for our DAVD software, and this module is marketed under the brand 4G USE ® DAVD Edition.
It is also the platform for our DAVD software, and this module is marketed under the brands 4G USE ® DAVD Edition and 4G USE ® DAVD Flex Edition and our new 4G USE ® Obstacle Detection/Avoidance software.
Where our products are subject to such export control requirements, they may only be exported to our customers if there is a valid export license granted by the relevant government body.
Furthermore, many of our products are subject to export control regimes including in the United States, United Kingdom, Denmark, and Australia. Where our products are subject to such export control requirements, they may only be exported to our customers if there is a valid export license granted by the relevant government body.
We have also filed several provisional patents around our 4G USE ® which is a multi-sensor platform allowing users to bring in and utilize a variety of sensor data including sonar, positioning, camera, lidar, video processing and other sources of point cloud data and seamlessly merging above and below the water data captured from the sonar and camera.
We have now launched our fourth-generation multi-sensor software platform which is marketed under the name “4G USE ® ”, which is a multi-sensor platform allowing users to bring in and utilize a variety of sensor data including sonar, positioning, camera, lidar, video processing and other sources of point cloud data and seamlessly merging above and below the water data captured from the sonar and camera.
This business model ensures recurring and long tail revenues. Coda Octopus Colmek, Inc. and Coda Octopus Martech Ltd, qualify as small businesses. This opens opportunities under state requirements to collaborate with Prime Defense Contractors on these programs.
We enjoy sole source status for the parts that we design and supply into these programs. This business model ensures recurring and long tail revenues. Coda Octopus Engineering, Inc. and Coda Octopus Martech Ltd, qualify as small businesses. This opens opportunities under state requirements to collaborate with Prime Defense Contractors on these programs.
Overview Coda Octopus Group, Inc. (“Coda” “the Company” or “we”), through its wholly owned subsidiaries, operates two distinct segments: ● the Marine Technology Business (also referred to in this Form 10-K as “Products Business”, “Products Operations” or “Products Segment”); and ● the Marine Engineering Business (also referred to in this Form 10-K as “Engineering Business”, “Engineering Operations”, or “Services Segment”).
(“Coda” “the Company” or “we”), through its wholly owned subsidiaries, operates three distinct segments: ● the Marine Technology Business (also referred to in this Form 10-K as “Products Business”, or “Products Segment” or “Core Business”); ● Acoustic Sensors and Materials Business (also referred to in this Form 10-K as “PAL”); ● the Defense Engineering Services Business (also referred to in this Form 10-K as “Engineering Business”, or “Engineering Segment” or “Services Business”).
To secure certain types of Defense contracts, we need as a pre-requisite to meet Defense Federal Acquisition Regulations on security (including regulations on the type of IT system which must be in place, receiving, handling and storing certain classes of materials).
To secure certain types of Defense contracts, we need as a pre-requisite to meet DFAR on security (including regulations on the type of IT system which must be in place, receiving, handling and storing certain classes of materials). In many instances we do not hold these credentials, and we may therefore not qualify to compete for such contracts.
Diver Augmented Vision Display (DAVD) System – Diving Technology Funded by the Office of Naval Research (“ONR”) through its Future Naval Capabilities (FNC) program, and in close collaboration with NAVSEA 00C3 and Naval Surface Warfare Center, Panama City Division (“NSWC PCD”) we have developed a diver see-through integrated information display system (DAVD).
Diver Augmented Vision Display (DAVD) System – Diving Technology Funded by the Office of Naval Research (“ONR”) through its Future Naval Capabilities (FNC) program, and in close collaboration with NAVSEA 00C3 and Naval Surface Warfare Center, Panama City Division (“NSWC PCD”) we have developed a cutting-edge Augmented Reality (AR) technology (DAVD), purpose-built product to enhance diver safety, performance and situational awareness in low-visibility and technically demanding underwater environments.
Our software development capability is an important part of our strategy to maintain our lead in designing, manufacturing, and selling state-of-the-art real time volumetric imaging sonars and our DAVD System. It also allows us to be responsive to our customers’ requirements for new features and capabilities around our solutions.
The software is a critical component of the capabilities and features of our sonar series. Our software development capability is an important part of our strategy to maintain our lead in designing, manufacturing, and selling state-of-the-art real-time volumetric imaging sonars and our DAVD System.
The DAVD solution has the potential to radically change how diving operations are performed globally because it delivers real time information simultaneously to the divers underwater and their surface-based dive supervisors. The DAVD Head- Up Display (“HUD”) is used as a data portal for the diver while underwater.
The target market for the untethered variant is the military and special forces operations divers. The DAVD solution has the potential to radically change how diving operations are performed globally because it delivers real time information simultaneously to the divers underwater and their surface-based dive supervisors.
We are therefore dependent on obtaining, on a timely basis, export licenses to many foreign jurisdictions including China. In addition, as a provider for the US Government, we may be subject to numerous laws and regulations relating to the award, administration, Defense Federal Acquisition Regulations (“DFARs”) and performance of US Government contracts, including the False Claims Act.
In addition, as a supplier to US Government Bodies such as the Department of Defense (“DoD”), we may be subject to numerous laws and regulations relating to the award, administration, Defense Federal Acquisition Regulations (“DFARs”) and performance of US Government contracts, including the False Claims Act.
In our Services Segment, we are exposed to the following competitive challenges: Newly acquired business unit, PAL PAL sells several products some of which are customized for the customer’s specific application. It is exposed to the following competitive challenges: Needle and Membrane Hydrophones and Fibre-Optic Hydrophones Market.
Acoustic Sensors and Materials Business PAL sells several products, some of which are customized for the customer’s specific application. It is exposed to the following competitive challenges: Needle and Membrane Hydrophones and Fibre-Optic Hydrophones Market. For its needle and membrane hydrophone ranges, which are a highly specialized range of products, competition is limited.
In our industry we are widely considered the leading solution provider for underwater real time 3D visualization. 6 We also believe that the DAVD solution is poised to radically change the way diving operations are performed by providing a fully integrated suite of sensor data which can be shared in real time by the dive supervisor on the surface vessel and the diver by displaying the required data in the DAVD HUD.
We also believe that the DAVD system, which is a relatively new technology and presents significant capabilities to the diving market, is poised to radically change the way diving operations are performed globally by providing a fully integrated suite of sensor data shared in real time by the diver and the dive supervisor on the surface.
Marine Technology Business Accreditations Coda Octopus Products Limited has the requisite accreditations for its business including being Lloyds Register accredited to ISO 9001:2015 and Cyber Essentials Plus certification. 14 Newly Acquired Business Unit - Precision Acoustics Limited (“PAL”) PAL, which is UK based, was acquired into the Group on October 29, 2024.
Marine Technology Business Accreditations Coda Octopus Products Limited has the requisite accreditations for its business including being Lloyds Register accredited to ISO 9001:2015 and Cyber Essentials Plus certification. 13 Acoustic and Materials Business (Precision Acoustics Limited (“PAL”)) PAL is a recognized leader in the ultrasound and acoustic measurement field.
NDT is used to validate the viability of structures such as aircraft, ship hulls, wellheads and other subsea structures. Their expertise extends to working closely with national and global standard-setting bodies (such as the National Physical Laboratory of the UK), contributing to the establishment of the primary measurement standards in the industry.
Their expertise extends to working closely with national and global standard-setting bodies (such as the National Physical Laboratory of the UK), contributing to the establishment of the primary measurement standards in the industry. PAL also performs calibration services for medical devices and is accredited to ISO/IEC 17025 standard.
The DAVD is currently in early-stage adoption with the US Navy and enjoys the benefit of the classification Authorization for Navy Use (ANU) item. DAVD also is certified for CE markings which covers compliance with the European Union and the United Kingdom health environmental and health and safety requirements.
DAVD also is certified for CE markings which covers compliance with the European Union and the United Kingdom health environmental and health and safety requirements. We continue to evolve the DAVD technology.
Competition In our Marine Technology Business (Products Business), we are exposed to the following competitive challenges: Data Acquisition Products (Geophysical Products) A small percentage of our revenue is generated from our geophysical range of products.
Competition Marine Technology Business In our Marine Technology Business, we are exposed to the following competitive challenges: 15 Real Time 3D/4D/5D and 6D Volumetric Sonar (Echoscop e® Technology) A significant portion of our revenue is generated from our Echoscope ® technology.
The Marine Technology Business operates through our wholly owned subsidiaries Coda Octopus Products, Inc., (Orlando), Coda Octopus Products Ltd (UK), Coda Octopus Products A/S (Denmark) and branch office Coda Octopus Products A/S in The Netherlands)), and Coda Octopus Products (India) Private Limited (India).
The Marine Technology Business operates through the Company’s wholly owned subsidiaries Coda Octopus Products, Inc., (Orlando), Coda Octopus Products Ltd (UK), Coda Octopus Products A/S (Denmark). Acoustics Sensors and Materials Business The Company acquired Precision Acoustics Limited (PAL) on October 29, 2024. PAL is a supplier of acoustic sensors materials, and consultancy services in the field of acoustics.
This recent patent covers a method which automatically predicts the cable touchdown point and removes the need for the Echoscope ® operator to manually determine and log the cable touchdown point. Patents Our patented inventions along with our strategy to enhance these inventions are at the heart of the Company’s strategy for growth and development.
Patents Our patented inventions along with our strategy to enhance these inventions are at the heart of the Company’s strategy for growth and development. We expend a material part of our resources in building our Patent Portfolio.
(“Colmek”) Colmek, which is USA-based, are suppliers of embedded solutions and sub-assemblies which they design and manufacture and sell into mission critical integrated defense systems such as the Close-In-Weapons System (CIWS). This business was established 1977 and has been supporting several significant US defense programs for over 40 years, including Raytheon’s CIWS and Northrop Grumman’s Mine Hunting Systems Program (AQS-24).
(“COEI”) COEI, which is US-based, is a supplier of embedded solutions and sub-assemblies which they design and manufacture and sell into mission critical integrated defense systems such as the Close-In-Weapons System (CIWS).
ITEM 1. BUSINESS Corporate Information Our principal executive offices are located at 3300 S. Hiawassee Rd, Orlando, FL 32835. Our telephone number is +1 (407) 735-2406. We maintain a corporate website at www.codaoctopusgroup.com. The reference to the Company’s website address does not constitute incorporation by reference of the information on the Company’s website into this Form 10-K.
We maintain a corporate website at www.codaoctopusgroup.com. The reference to the Company’s website address does not constitute incorporation by reference of the information on the Company’s website into this Form 10-K. 8 Marine Technology Business (“Products Segment”) Our Marine Technology Business develops proprietary solutions for both the commercial and defense subsea market.
Moreover, these regulations may change from time to time in these jurisdictions, including the United States, depending on the existing relationship with the country to which the goods are exported. Our international activities are significant to our revenues and profits (see Note 16 Disaggregation of revenue).
Moreover, these regulations may change from time to time in these jurisdictions, including the United States, depending on the existing relationship with the country to which the goods are exported. Increasingly the area of export control of technologies is used as a political tool and therefore inherently fluid and uncertain – making business decisions even more complex.
Marine Engineering Businesses (“Services Segment”) Our Marine Engineering Businesses comprise Coda Octopus Colmek, Inc. which is based in Salt Lake City and Coda Octopus Martech Limited which is based in the United Kingdom.
(“COEI”) which is based in Salt Lake City and Coda Octopus Martech Limited which is based in Portland, UK.
Echoscope ® Software The Echoscope® technology is used in conjunction with our internally developed software (USE, Construction Monitoring System (CMS), 4G USE ® and 4G USE ® DAVD Edition). The software is a critical component of the capabilities and features of our sonar series.
This multi-mission flexibility positions NANO Gen Series as a platform-agnostic technology for AUVs, ROVs, hybrid vehicles, resident subsea systems and future autonomous fleets. 11 Echoscope ® Software The Echoscope® technology is used in conjunction with our internally developed software (USE, Construction Monitoring System (CMS), 4G USE ® , 4G USE ® DAVD Edition and 4G USE ® DAVD Flex Edition).
We are subject to laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes. Furthermore, many of our products are subject to export control regimes including in the United States, United Kingdom, Denmark, and Australia.
Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties. We are subject to laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes.
Various types of information are displayed to the diver in the HUD in real time and there by obviating the need for voice instructions. The DAVD untethered solution (“DUS”) is designed for the Defense and Military market where diving is performed without connection to a surface vessel.
When paired with our Echoscope® technology it forms a comprehensive solution for diving in zero-visibility water conditions, which is one of the biggest challenges for diving operations. The DAVD untethered solution (“DUS”) is designed for the Defense and Military market where diving is performed without connection to a surface vessel.
These companies’ operations must comply with the laws of the countries under which they are incorporated, and these laws are likely to be different from the equivalent laws of the United States. 9 Marine Technology Business (“Products Segment”) Our Marine Technology Business develops proprietary solutions for both the commercial and defense subsea market.
These companies’ operations must comply with the laws of the countries under which they are incorporated, and these laws are likely to be different from the equivalent laws of the United States. Corporate Information Our principal executive offices are located at 3300 S. Hiawassee Rd, Orlando, FL 32835. Our telephone number is +1 (407) 735-2406.
Current diving is done largely by poor analog voice command missions (with the diver supervisor on the surface providing verbal instructions to the diver underwater) using a disparate suite of systems for video data, communications, and positioning, which is not available to the diver firsthand.
Current diving is done largely by voice command missions from the topside using disparate suite of systems for video data, communications, and positioning. The DAVD tethered variant is now a commercial offering and is in the early stages of adoption with the US Navy in over 14 commands. We continue to work to achieve adoption in the global market.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest change(V) We run monthly cybersecurity awareness training with our employees, and this is documented in our internal periodic reporting. Governance Our Board of Directors holds oversight over the Company’s cyber security risk management strategy and protocols and has amongst its composition an expert on this subject who has been appointed as having the lead in this area.
Biggest change(V) We run monthly cybersecurity awareness training with our employees, and this is documented in our internal periodic reporting. Governance Our Board of Directors holds oversight over the Company’s cyber security risk management strategy and protocols. The Company’s internal CSMC works closely with the Board’s expert appointee.
This certification is issued by third party service providers who review annually the Company’s security controls around its Information Technology Infrastructure (“ITI”) and business practices to determine the Company’s vulnerability to cyber security threats. We also implement all recommendations which may come out of the certification assessments process.
This certification is issued by third party service providers who annually review the Company’s security controls around its Information Technology Infrastructure (“ITI”) and business practices to determine the Company’s vulnerability to cyber security threats. We also implement all recommendations which may come out of the certification assessments process.
The CSMC, under the guidance of the Board of Directors, is responsible for the risk management strategy and governance of this critical business area. Under the CSMC, a formal monthly reporting on cyber security related matters has been implemented and this is provided to the Management of Company for ongoing review.
The CSMC, under the guidance of the Board of Directors, is responsible for the risk management strategy and governance of this critical business area. Under the CSMC, a formal monthly reporting on cyber security related matters has been implemented and this is provided to the Management of the Company for ongoing review.
Our business strategy, results of operations, and financial condition have not been materially affected by risks from cybersecurity threats, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents. 20
All ITI changes, proposed through the CSMC, are routed through approval processes, and testing before implementation. Our business strategy, results of operations, and financial condition have no t been materially affected by risks from cybersecurity threats, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents. 21
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The Company’s internal CSMC works closely with the Board’s expert appointee. All ITI changes, proposed through the CSMC, are routed through approval processes, and testing before implementation.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe building comprises both office space and manufacturing and testing facilities. The rent paid to Coda Octopus Products Limited is $59,109 per annum. Higher Bockhampton, Dorset, United Kingdom Precision Acoustics Limited leases business premises comprising 6,501 square feet used for both office space, manufacturing and testing facilities.
Biggest changeHigher Bockhampton, Dorset, United Kingdom PAL leases business premises comprising 6,501 square feet used for both office space, manufacturing and testing facilities. The lease is for a fixed period (with no provision for early termination) and expires on March 31, 2033. The annual rent for these premises is currently $61,500 per annum.
ITEM 2. PROPERTIES Orlando, Florida Our corporate offices are co-located with our subsidiary Coda Octopus Products, Inc. in Orlando. We own these business premises comprising 3,000 square feet, that include office space, training center and light manufacturing facilities.
ITEM 2. PROPERTIES Orlando, Florida Our corporate offices are co-located with our subsidiary Coda Octopus Products, Inc. in Orlando. We own these business premises comprising 3,000 square feet, that include office space, a training center and light manufacturing facilities.
Edinburgh, Scotland, UK Coda Octopus Products Limited (Edinburgh based) operates from its premises comprising 21,313 square feet of internal space and includes office space, R&D Facilities, and manufacturing. These premises are owned by Coda Octopus Products Limited.
Edinburgh, Scotland, UK Coda Octopus Products Limited (Edinburgh based) operates from two premises together comprising 21,313 square feet of internal space and includes office space, R&D Facilities, a Training Facility, Manufacturing and Warehousing. These premises are owned by Coda Octopus Products Limited.
Salt Lake City, Utah, USA Coda Octopus Colmek operates from its premises which comprises 16,000 square feet and includes manufacturing, R&D Facilities, and office space. These premises are owned by Coda Octopus Colmek.
Annual rent is currently DKK 165,763 plus Value Added Tax (being an equivalent of $24,286 per annum) with an annual increase of 3%. Salt Lake City, Utah, USA Coda Octopus Engineering, Inc operates from its premises which comprises 16,000 square feet and includes manufacturing, R&D Facilities, and office space. These premises are owned by Coda Octopus Engineering, Inc.
Annual rent is DKK 142,893 plus Value Added Tax (being an equivalent of $22,903) per annum) with an annual increase of 3%. Portland, Dorset, UK Martech uses premises owned by Coda Octopus Products Limited. These premises are located in the Marine Center in Portland, Dorset, United Kingdom, and comprise 9,890 square feet.
Portland, Dorset, UK Martech uses premises owned by Coda Octopus Products Limited. These premises are located in the Marine Center in Portland, Dorset, United Kingdom, and comprise 9,890 square feet. The building comprises both office space and manufacturing and testing facilities. The rent paid to Coda Octopus Products Limited is currently $63,568 per annum.
The lease is for a fixed period (with no provision for early termination) and expires on March 31, 2033. The annual rent for these premises is $58,350 per annum. All non-US Dollar denominated rents are stated according to prevailing exchange rates as of the date of each respective lease agreement.
All non-US Dollar denominated rents are stated according to prevailing exchange rates as of the date of each respective lease agreement.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are currently not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results. ITEM 4. MINE SAFETY DISCLOSURES. Not Applicable. 21 PART II
Biggest changeWe are currently not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results. ITEM 4. MINE SAFETY DISCLOSURES. Not Applicable. 22 PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 21 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 22 ITEM 6. SELECTED FINANCIAL DATA 22 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 23
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 22 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 23 ITEM 6. SELECTED FINANCIAL DATA 23 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 24

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeYear Ended October 31, 2024 HIGH LOW First Quarter $ 7.12 $ 5.21 Second Quarter $ 7.04 $ 5.26 Third Quarter $ 7.49 $ 5.86 Fourth Quarter $ 9.03 $ 6.80 Year Ended October 31, 2023 HIGH LOW First Quarter $ 8.22 $ 5.88 Second Quarter $ 8.19 $ 6.13 Third Quarter $ 11.09 $ 7.75 Fourth Quarter $ 8.76 $ 5.70 We have not declared or paid any cash dividends on our common stock, and we currently intend to retain future earnings, if any, to finance the expansion of our business, and we do not expect to pay any cash dividends in the foreseeable future.
Biggest changeYear Ended October 31, 2025 HIGH LOW First Quarter $ 9.89 $ 7.73 Second Quarter $ 8.58 $ 5.76 Third Quarter $ 8.75 $ 5.98 Fourth Quarter $ 10.54 $ 7.01 Year Ended October 31, 2024 HIGH LOW First Quarter $ 7.12 $ 5.21 Second Quarter $ 7.04 $ 5.26 Third Quarter $ 7.49 $ 5.86 Fourth Quarter $ 9.03 $ 6.80 We have not declared or paid any cash dividends on our common stock, and we currently intend to retain future earnings, if any, to finance the expansion of our business, and we do not expect to pay any cash dividends in the foreseeable future.
The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant. As of October 31, 2024, we had no authorized share repurchase programs.
The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, operating results, capital requirements and other factors that the board of directors considers significant. As of October 31, 2025, we had no authorized share repurchase programs.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

99 edited+76 added−81 removed25 unchanged
Biggest changeProducts Services Overhead Total Year Ended October 31, 2024 Net Revenues $ 12,806,603 $ 7,509,558 $ - $ 20,316,161 Cost of Revenues 2,824,541 3,318,515 - 6,143,056 Gross Profit 9,982,062 4,191,043 - 14,173,105 Research & Development 2,019,112 223,317 - 2,242,429 Selling, General & Administrative 3,814,860 2,248,493 2,283,192 8,346,545 Total Operating Expenses 5,833,972 2,471,810 2,283,192 10,588,974 Income (Loss) from Operations 4,148,090 1,719,233 (2,283,192 ) 3,584,131 Other Income Other Income 53,960 34,422 - 88,382 Interest Income 657,817 198,239 82,719 938,775 Total Other Income 711,777 232,661 82,719 1,027,157 Income (Loss) before Income Taxes 4,859,867 1,951,894 (2,200,473 ) 4,611,288 Income Tax Expense Current Tax Expense 316,955 169,374 227,341 713,670 Deferred Tax Expense (Benefit) (5,655 ) 19,169 238,108 251,622 Total Income Tax Expense 311,300 188,543 465,449 965,292 Net Income (Loss) $ 4,548,567 $ 1,763,351 $ (2,665,922 ) $ 3,645,996 Supplemental Disclosures *Total Assets $ 40,922,453 $ 13,404,567 $ 3,217,524 $ 57,544,544 *Total Liabilities $ 3,072,876 $ 842,450 $ 500,695 $ 4,416,021 Revenues from Intercompany Sales - eliminated from sales above $ 3,367,839 $ 238,143 $ 1,266,000 $ 4,871,982 Depreciation and Amortization $ 632,882 $ 88,166 $ 49,487 $ 770,535 Purchases of Long-lived Assets $ 345,191 $ 23,786 $ 89,103 $ 458,079 * The Total Assets and Total Liabilities included in the Supplemental Disclosures include PAL 35 Products Services Overhead Total Year Ended October 31, 2023 Net Revenues $ 12,119,066 $ 7,233,022 $ - $ 19,352,088 Cost of Revenues 2,819,796 3,501,237 - 6,321,033 Gross Profit 9,299,270 3,731,785 - 13,031,055 Research & Development 2,043,890 52,577 - 2,096,467 Selling, General & Administrative 3,109,566 2,463,087 2,622,383 8,195,036 Total Operating Expenses 5,153,456 2,515,664 2,622,383 10,291,503 Income (Loss) from Operations 4,145,814 1,216,121 (2,622,383 ) 2,739,552 Other Income Other Income 39,146 - - 39,146 Interest Income 544,892 97,638 - 642,530 Total Other Income 584,038 97,638 - 681,676 Income (Loss) before Income Taxes 4,729,852 1,313,759 (2,622,383 ) 3,421,228 Income Tax Expense (Benefit) Current Tax Expense (Benefit) 272,126 78,876 ( 102,347 ) 248,655 Deferred Tax Expense (Benefit) 115,954 ( 54,382 ) ( 13,148 ) 48,424 Total Income Tax Expense (Benefit) 388,080 24,494 ( 115,495 ) 297,079 Net Income (Loss) $ 4,341,772 $ 1,289,265 $ (2,506,888 ) $ 3,124,149 Supplemental Disclosures Total Assets $ 36,969,673 $ 13,604,262 $ 1,267,581 $ 51,841,516 Total Liabilities $ 2,263,761 $ 732,582 $ 416,407 $ 3,412,750 Revenues from Intercompany Sales - eliminated from sales above $ 4,602,741 $ 584,622 $ 1,200,000 $ 6,387,363 Depreciation and Amortization $ 523,339 $ 100,689 $ 43,502 $ 667,530 Purchases of Long-lived Assets $ 1,996,544 $ 25,404 $ 108,392 $ 2,130,340 The Company’s reportable business segments sell their goods and services in four geographic locations: ● Americas ● Europe ● Australia/Asia ● Middle East/Africa 36 Liquidity and Capital Resources As of October 31, 2024, the Company had an accumulated deficit of $7,406,491, working capital of $39,084,999 and stockholders’ equity of $53,128,523.
Biggest changeThe following tables summarize certain balance sheets and statement of operations information by reportable segment for the financial years ending October 31, 2025, and October 31, 2024, respectively, except that for 2024 FY there is no comparative Income Statement data for PAL for the reasons stated previously: Marine Technology Business (“Products”) Acoustic Sensors and Materials Business (“PAL”) Defense Engineering Services Business (“Services”) Corporate Total Year Ended October 31, 2025 Net Revenues $ 13,221,339 $ 5,409,954 $ 7,931,833 $ - $ 26,563,126 Cost of Revenues 3,375,922 2,237,430 3,287,406 - 8,900,758 Gross Profit 9,845,417 3,172,524 4,644,427 - 17,662,368 Research & Development 1,858,139 414,370 175,253 - 2,447,762 Selling, General & Administrative 4,091,421 1,920,985 2,466,341 2,199,831 10,678,578 Total Operating Expenses 5,949,560 2,335,355 2,641,594 2,199,831 13,126,340 Income (Loss) from Operations 3,895,857 837,169 2,002,833 (2,199,831 ) 4,536,028 Other Income Other Income 73,331 194,761 - - 268,092 Interest Income 505,465 5,661 107,106 89,865 708,097 Total Other Income 578,796 200,422 107,106 89,865 976,189 Income (Loss) before Income Taxes 4,474,653 1,037,591 2,109,939 (2,109,966 ) 5,512,217 Income Tax Expense Current Tax Expense 201,167 43,118 183,338 722,192 1,149,815 Deferred Tax Expense (Benefit) 188,755 91,045 13,252 (60,580 ) 232,472 Total Income Tax Expense 389,922 134,163 196,590 661,612 1,382,287 Net Income (Loss) $ 4,084,731 $ 903,428 $ 1,913,349 $ (2,771,578 ) $ 4,129,930 Supplemental Disclosures Total Assets $ 38,279,403 $ 7,100,814 $ 14,766,853 $ 4,346,492 $ 64,493,562 Total Liabilities $ 2,969,095 $ 1,376,533 $ 1,198,902 $ 833,618 $ 6,378,148 Revenues from Intercompany Sales - eliminated from sales above $ 6,144,638 $ 51,896 $ 374,311 $ 2,600,000 $ 9,170,845 Depreciation and Amortization $ 563,530 $ 710,565 $ 65,480 $ 51,935 $ 1,391,510 Purchases of Long-lived Assets $ 531,792 $ 248,560 $ 53,980 $ 336,386 $ 1,170,718 38 Marine Technology Business (“Products”) Defense Engineering Services Business (“Services”) Corporate Total Year Ended October 31, 2024 Net Revenues $ 12,806,603 $ 7,509,558 $ - $ 20,316,161 Cost of Revenues 2,824,541 3,318,515 - 6,143,056 Gross Profit 9,982,062 4,191,043 - 14,173,105 Research & Development 2,019,112 223,317 - 2,242,429 Selling, General & Administrative 3,814,860 2,248,493 2,283,192 8,346,545 Total Operating Expenses 5,833,972 2,471,810 2,283,192 10,588,974 Income (Loss) from Operations 4,148,090 1,719,233 (2,283,192 ) 3,584,131 Other Income Other Income 53,960 34,422 - 88,382 Interest Income 657,817 198,239 82,719 938,775 Total Other Income 711,777 232,661 82,719 1,027,157 Income (Loss) before Income Taxes 4,859,867 1,951,894 (2,200,473 ) 4,611,288 Income Tax (Benefit) Expense Current Tax Expense 316,955 169,374 227,341 713,670 Deferred Tax (Benefit) Expense (5,655 ) 19,169 238,108 251,622 Total Income Tax Expense 311,300 188,543 465,449 965,292 Net Income (Loss) $ 4,548,567 $ 1,763,351 $ (2,665,922 ) $ 3,645,996 *Supplemental Disclosures Total Assets $ 40,922,453 $ 13,404,567 $ 3,217,524 $ 57,544,544 Total Liabilities $ 3,072,876 $ 842,450 $ 500,695 $ 4,416,021 Revenues from Intercompany Sales - eliminated from sales above $ 3,367,839 $ 238,143 $ 1,266,000 $ 4,871,982 Depreciation and Amortization $ 632,882 $ 88,166 $ 49,487 $ 770,535 Purchases of Long-lived Assets $ 345,191 $ 23,786 $ 89,103 $ 458,080 * In the 2024 FY Supplemental Disclosures Information, the Marine Technology Business Disclosure under “Total Assets” includes $4,529,648 of assets pertaining to PAL and under “Total Liabilities” includes $1,455,145 of liabilities pertaining to PAL.
These business units have established synergies in terms of customers and specialized engineering skills sets (hardware, firmware, and software) encompassing capturing, computing, processing and displaying data in harsh environments. Factors Affecting our Business. Our business is affected by a number of factors including those set out below: A.
These business units have established synergies in terms of customers and specialized engineering skills sets (hardware, firmware, and software) encompassing capturing, computing, processing and displaying data in harsh environments. Factors Affecting our Business Our business is affected by a number of factors including those set out below: 25 A.
It has been operating as a supplier of solutions comprising both hardware and software products for over 30 years to this market and it owns key proprietary technology including its Echoscope ® and DAVD technology, that are used in both the underwater defense and commercial markets.
It has been operating in this market as a supplier of solutions comprising both hardware and software products for over 30 years and it owns key proprietary technology including its Echoscope ® and DAVD technology, that are used in both the underwater defense and commercial markets.
Concentration of Business Opportunities Where the Sales Cycle is Long and Unpredictable The Services Business revenues are highly concentrated and are largely generated from subcontracts with a small number of Prime Defense Contractors. The sales cycle is generally protracted, which may affect our revenues.
Concentration of Business Opportunities Where the Sales Cycle is Long and Unpredictable The Defense Engineering Services Business revenues are highly concentrated and are largely generated from subcontracts with a small number of Prime Defense Contractors. The sales cycle is generally protracted, which may affect our revenues.
Goodwill is not amortized and is evaluated for impairment annually or more often if circumstances indicate impairment may exist. Customer relationships, value of technology, non-compete agreements, patents and licenses are amortized on a straight-line basis over periods of 2 to 15 years. The Company amortizes its intangible assets using the straight-line method over their estimated period of benefit.
Goodwill is not amortized and is evaluated for impairment annually or more often if circumstances indicate impairment may exist. Customer relationships, value of technology, non-compete agreements, patents and licenses are amortized on a straight-line basis over periods of 4 to 15 years. The Company amortizes its intangible assets using the straight-line method over their estimated period of benefit.
“Note 11 Income Taxes” to the Consolidated Financial Statements discusses the amounts of deferred tax assets and liabilities and also presents the impact of significant differences between financial reporting income and taxable income. 28 For income tax purposes, the Company uses the percentage of completion method of recognizing revenues on long-term contracts which is consistent with the Company’s financial reporting under U.S.
“Note 11 Income Taxes” to the Consolidated Financial Statements discusses the amounts of deferred tax assets and liabilities and also presents the impact of significant differences between financial reporting income and taxable income. 29 For income tax purposes, the Company uses the percentage of completion method of recognizing revenues on long-term contracts which is consistent with the Company’s financial reporting under U.S.
However, with the ongoing geopolitical climate, we do not expect to see increased sales in China. We also believe that where technologies are made unavailable to China, China will endeavor to find alternative source of supply or innovate in the areas where restrictions are placed by Western governments and will be more harmful to companies.
However, with the ongoing geopolitical climate, we do not expect to see increased sales in China. We also believe that where technologies are made unavailable to China, China will endeavor to find alternative source of supply or innovate in the areas where restrictions are placed by Western governments and will be more harmful to companies and competition in general.
Our effective tax rate is subject to significant variation due to several factors including variability in our pre-tax income and taxable income and/or loss and the mix of jurisdictions to which such income or losses relate, the applicability of special tax regimes, changes in tax regulations, changes in our stock price, changes in our deferred tax assets and liabilities, their valuation, foreign currency gains (losses).
Our effective tax rate is subject to significant variation due to several factors including variability in our pre-tax income and the mix of jurisdictions to which such income or losses relate, the applicability of special tax regimes, changes in tax regulations, changes in our stock price, changes in our deferred tax assets and liabilities, their valuation, foreign currency gains (losses).
Many Chinese entities have been included on the US Bureau of Industry and Security blacklist where there is a presumption of denial of grant of export licenses. The UK Government is generally in lock step with the US Government’s position and has refused to grant export licenses for several of the Company’s applications for end users in China.
Many Chinese entities have been included on the US Bureau of Industry and Security blacklist where there is a presumption of denial of grant of export licenses. The UK Government is generally in lock step with the US Government’s position and has refused to grant export licenses for several end users in China.
Furthermore, as a small business, we are hindered in our ability to compete for certain specialized electronic engineering skills or technology skills, as our remuneration package is not as competitive as those offered by bigger companies which are competing for the same skills. G.
Furthermore, as a small business, we are hindered in our ability to compete for certain specialized electronic engineering skills or technology skills, as our remuneration package is not as competitive as those offered by bigger companies which are competing for the same skills. H.
See “Note 2 Summary of Accounting Policies” (Foreign Currency Translation) of our audited Consolidated Financial Statements as of October 31, 2024, for more information on the applicable rates used for our Balance Sheet transactions and Statements of Income and Comprehensive Income.
See “Note 2 Summary of Accounting Policies” (Foreign Currency Translation) of our audited Consolidated Financial Statements as of October 31, 2025, for more information on the applicable rates used for our Balance Sheet transactions and Statements of Income and Comprehensive Income.
We evaluate our estimates based on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates relate to revenue recognition, the assessment of recoverability of goodwill and intangible assets, recognition and measurement of deferred income tax assets and liabilities, the assessment of unrecognized tax benefits, and others.
We evaluate our estimates based on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates relate to revenue recognition, the assessment of recoverability of goodwill and intangible assets and the recognition and measurement of deferred income tax assets and liabilities.
This category is affected by fluctuations in foreign currency exchange transactions both relating to our profit and loss expenses and our assets and liabilities on our balance sheet and are largely paper losses or gains, as may be applicable, in the reporting period.
This category is affected by fluctuations in foreign currency exchange transactions both relating to our income and expenses and our assets and liabilities on our balance sheet and are largely paper losses or gains, as may be applicable, in the reporting period.
In addition, a significant part of our assets and liabilities is held in British Pounds, Danish Kroner and Euros by these foreign subsidiaries.
In addition, a significant part of our assets and liabilities are held in British Pounds, Danish Kroner and Euros by these foreign subsidiaries.
An example of new technology entering the subsea market is lidar technology. However, unlike our sonar technology, Lidar technology cannot be employed in zero visibility conditions and cannot generate a volume pulse or image moving objects required for real time inspection and monitoring underwater. H.
An example of new technology entering the subsea market is lidar and photogrammetry technologies. However, unlike our sonar technology, Lidar and Photogrammetry technology cannot be employed in zero visibility conditions and cannot generate a volume pulse or image moving objects required for real time inspection and monitoring underwater. I.
Due to the protracted nature of the government procurement process and cycle for Defense spending under federal and/or state budgets, the sales cycle can be long, unpredictable and subject to variation by the different Administrations, thus affecting timing of orders, revenues and our overall growth plans. I.
Due to the protracted nature of the government procurement process and cycle for Defense spending under federal and/or state budgets, the sales cycle can be long, unpredictable and subject to variation by the different Administrations, thus affecting timing of orders, revenues and our overall growth plans. J. U. S.
Comparison of fiscal year ended October 31, 2024, to fiscal year ended October 31, 2023 The information provided below pertains to the Company’s consolidated financial results of operations.
Comparison of fiscal year ended October 31, 2025, to fiscal year ended October 31, 2024 The information provided below pertains to the Company’s consolidated financial results of operations.
A significant part of the Company’s operations is based in the UK and Denmark, and therefore a major part of the Company’s assets and liabilities recorded in its consolidated balance sheet and profit and loss expenses are translated from the functional currencies of these subsidiaries into USD for reporting purposes, thus accounting for the changes.
A significant part of the Company’s operations is based in the UK and Denmark, and therefore a major part of the Company’s assets and liabilities recorded in its consolidated balance sheet and income and expenses account are translated from the functional currencies of these subsidiaries into USD for reporting purposes, thus accounting for the changes.
This section of Form 10-K discusses fiscal 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
This section of Form 10-K discusses fiscal 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
Our customers include offshore service providers to major oil and gas companies, renewable energy companies, underwater construction companies, law enforcement agencies, ports, mining companies, defense bodies, prime defense contractors, navies, research institutes and universities and diving companies.
Its customers include offshore service providers to major oil and gas companies, renewable energy companies, underwater construction companies, law enforcement agencies, ports, mining companies, underwater vehicle manufacturers, defense bodies, prime defense contractors, navies, research institutes and universities and diving companies.
In the 2024 FY, for the purpose of reporting revenue and expenses, the value of the British Pound and Danish Kroner when compared to the 2023 FY increased against the USD by 3.4% and 1.1%, respectively.
In the 2025 FY, for the purpose of reporting revenue and expenses, the value of the British Pound and Danish Kroner when compared to the 2024 FY increased against the USD by 2.3% and 2.1%, respectively.
PAL had no material income statement activity in the two days from the acquisition date October 29, 2024 through to October 31, 2024, the date of the Company’s fiscal year end.
PAL was acquired on October 29, 2024 and had no material income statement activity in the two days from the acquisition date October 29, 2024 through to October 31, 2024, the date of the Company’s fiscal year end.
For the purpose of reporting assets and liabilities, the British Pound and the Danish Kroner both increased by 6.0% and 2.8%, respectively against the USD when compared to the 2023 FY. We also hold cash and cash equivalents in foreign currencies such as British Pound, Euros, Danish Kroner. When the U.S.
For the purpose of reporting assets and liabilities, the British Pound and the Danish Kroner both increased by 2.4% and 6.5%, respectively, against the USD when compared to the 2024 FY. We also hold cash and cash equivalents in foreign currencies such as the British Pound, Euros and the Danish Kroner. When the U.S.
The technology space is inherently uncertain due to the fast pace of innovations and therefore we can give no assurance that we can maintain our leading position in these areas or that innovations in other areas may not surpass our solutions that we currently supply to the subsea market.
The technology space is inherently uncertain due to the fast pace of innovations including in the area of AI and the capabilities this may bring, and therefore we can give no assurance that we can maintain our leading position in these areas or that innovations in other areas may not surpass our solutions that we currently supply to the subsea market.
Significant currency fluctuations (particularly the British Pound and/or the Danish Kroner, Euros, against the US Dollar) may (positively or negatively) affect our financial results including our profit and loss account and the value of our assets and therefore we are subject to foreign currency fluctuation risks.
Significant currency fluctuations (particularly the British Pound and/or the Danish Kroner, Euros, against the US Dollar) may (positively or negatively) affect our financial results including our income statement transactions and the value of our assets and therefore we are subject to foreign currency fluctuation risks.
Our Danish subsidiary does not benefit from any carryforwards or other tax relief in its tax jurisdiction and therefore for the 2024 FY we have recorded a Current Tax Expense of $218,670 and a Deferred Tax Expense of $11,003.
Our Danish subsidiary does not benefit from any carryforwards or other tax relief in its tax jurisdiction and therefore for 2025 FY we have recorded a Current Tax Expense of $162,189, a decrease from FY 2024 FY where we recorded a Current Tax Expense of $218,670 and a Deferred Tax Expense of $11,003.
Exceptionally, a subsidiary may perform financial transactions in foreign currencies (such as purchasing inventory from a foreign supplier, for example, in foreign currency). Furthermore, the Company holds significant cash balances in foreign currencies, such as British Pound, Euro and Danish Kroner.
As necessary and on an exceptional basis, a subsidiary may perform financial transactions in foreign currencies (such as purchasing inventory from a foreign supplier, for example, in foreign currency). Furthermore, the Company holds significant cash balances in foreign currencies, such as the British Pound, the Euro and the Danish Kroner.
Foreign Currency translations as they pertain to our assets and liabilities are translated at the prevailing exchange rate at the balance sheet date and related revenue and expenses are translated using the average exchange rates in effect during the 12-month reporting period.
Foreign Currency translations of our assets and liabilities are translated at the prevailing exchange rate at the balance sheet date, and revenue and expenses are translated using the average exchange rates in effect during the 12-month reporting period.
(iii) Global instability caused by ongoing conflicts In general, conflicts create global instability in many ways including disrupting the supply chain and shipping routes. Such conflicts may reduce demand for our products and also increase inflation. 26 E.
(ii) Global instability caused by ongoing conflicts In general, conflicts create global instability in many ways including disrupting the supply chain and shipping routes. Such conflicts may reduce demand for our products and also increase inflation. 27 F.
Other items in uses and sources of funds from operations included non-cash charges related to depreciation of fixed assets, amortization of intangible assets, deferred tax asset, gain on sale of asset, allowance for credit loss and stock-based compensation, which collectively totaled $1,245,331.
Other items in uses and sources of funds from operations included non-cash charges related to depreciation of fixed assets, amortization of intangible assets, deferred tax asset, gain on sale of asset, allowance for credit loss and stock-based compensation, which collectively amounted to $2,151,567.
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements. Inflation Inflation affects our Business in several ways including: Cost of Operations (including wages, salaries, utilities) and therefore our overheads. Bill of Material (BOM) Costs of our Products and Input Materials for Engineering Services. Our revenue. An inflationary environment is likely to reduce demand for our goods and services.
Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements. Inflation Inflation affects our Business in several ways including: ● Cost of Operations (including wages, salaries, utilities) and therefore our overheads. ● Bill of Material (BOM) Costs of our Products and Input Materials for Engineering Services. ● Our revenue.
Impacts on our ability to compete for key skills required for our Business High inflation affects our business in a number of areas including costs of operations, including wages and salaries which have increased in relation to the number of staff in the Current FY (which has reduced) compared to the number of staff in the Previous FY.
An inflationary environment is likely to reduce demand for our goods and services. ● Impacts on our ability to compete for key skills required for our Business High inflation affects our business in a number of areas including costs of operations, including wages and salaries which have increased in relation to the number of staff in the Current FY (which has reduced) compared to the number of staff in the Previous FY.
Such status permits it to supply these sub-assemblies and upgrades in the event of obsolescence or advancement of technology for the life of the MCIS program. Customers include prime Defense contractors such as Raytheon, Northrop Grumman, Thales Underwater and BAE Systems.
These proprietary sub-assemblies, once approved within the MCIS program, afford the Services Business the status of preferred supplier. Such status permits it to supply these sub-assemblies and upgrades in the event of obsolescence or advancement of technology for the life of the MCIS program. Customers include prime Defense contractors such as Raytheon, Northrop Grumman, Thales Underwater and BAE Systems.
Technological Advancement A significant part of our growth strategy is predicated on our flagship real time volumetric imaging sonar technology, the Echoscope® and our Diver Augmented Vision Display (DAVD) solution.
Technological Advancement A significant part of our growth strategy is built on our flagship real time volumetric imaging sonar technology, the Echoscope® and our DAVD solution.
For information on the performance of each Segment including the disaggregation of revenues and geographical split, see “Note 15 Segment Analysis” and “Note 16 Disaggregation of Revenue” of our audited Consolidated Financial Statements as of October 31, 2024, and 2023. 30 Revenue: Year Ended October 31, 2024 Year Ended October 31, 2023 Percentage Change $ 20,316,161 $ 19,352,088 Increase of 5.0% Our consolidated revenues increased by 5.0% in the 2024 FY when compared to the 2023 FY.
For information on the performance of each Segment including the disaggregation of revenues and geographical split, see “Note 15 – Segment Analysis” and “Note 16 – Disaggregation of Revenue” of our audited Consolidated Financial Statements as of October 31, 2025, and 2024. 32 Revenue: Year Ended October 31, 2025 Year Ended October 31, 2024 Percentage Change $ 26,563,126 $ 20,316,161 Increase of 30.7% Our consolidated net revenue increased by 30.7% in the 2025 FY when compared to the 2024 FY.
The recent change in both the US and UK Governments’ political stance towards trade with China, directly affects the sale of our products to customers based in China.
The change in the political stance of both the U.S. and UK Governments towards trade with China, directly affects the sale of our products to customers based in China.
The foreign subsidiaries maintain their accounts in the native currencies of their operations, and which are: US Dollars For US Operations British Pound For United Kingdom Operations Danish Kroner For Danish Operations Australian Dollars For Australian Operations (operations are currently dormant) Indian Rupees For Indian Operations (operations are currently dormant) The Company’s consolidated financial results therefore include the translation of its foreign subsidiaries functional currencies into USD.
Operations British Pound For United Kingdom Operations Danish Kroner For Danish Operations Australian Dollars For Australian Operations (operations are currently effectively dormant) Indian Rupees For Indian Operations (operations are currently effectively dormant) The Company’s consolidated financial results therefore include the translation of its foreign subsidiaries functional currencies into USD.
Furthermore, our revenue continues to be affected in strategic markets and geographies due to inflationary pressures which have made the pricing for our solutions unattractive for those markets. 38 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.
Furthermore, our revenue continues to be affected in strategic markets and geographies due to inflationary pressures which have made the pricing for our solutions unattractive for those markets such as Japan which is a strategically important market for our technology. 41 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.
Furthermore, we sell our goods and services globally. The exchange rate of the foreign currency used by our customer for the purchase of our goods and services against our functional currency may make the purchasing of our products unattractive from a pricing point of view.
Furthermore, we sell our goods and services globally. The exchange rate of the foreign currency used by our customers for the purchase of our goods and services against our functional currencies (British Pounds purchase, Danish Kroner or USD purchase) may make the purchasing of our products unattractive from a pricing point of view.
Fiscal Year 2024 Consolidated Results of Operations In this Form 10-K, the following meanings are ascribed to the terminologies set out immediately below: FY Means Fiscal Year 2024 FY Means the Fiscal Year ended October 31, 2024 2023 FY Means the Fiscal Year ended October 31, 2023 Current FY Means the Fiscal Year ended October 31, 2024 Previous FY Means the Fiscal Year ended October 31, 2023 It should be noted that our audited Consolidated Statements of Income and Comprehensive Income (“Income Statement”) for the 2024 FY do not include PAL which was acquired into the Group on October 29, 2024 (two days prior to the Company’s fiscal year end on October 31).
Results of Operations In this Form 10-K, the following meanings are ascribed to the terminologies set out immediately below: FY Means Fiscal Year 2025 FY Means the Fiscal Year ended October 31, 2025 2024 FY Means the Fiscal Year ended October 31, 2024 Current FY Means the Fiscal Year ended October 31, 2025 Previous FY Means the Fiscal Year ended October 31, 2024 Our audited Consolidated Statements of Income and Comprehensive Income (“Income Statement”) for the 2024 FY do not include PAL which was acquired into the Group on October 29, 2024 (two days prior to the Company’s fiscal year end on October 31, 2024) and therefore when we compare our 2025 FY to 2024 FY, there is no comparative income statement data for PAL in our 2024 FY Income Statement.
This is a reflection of the increase in our pre-tax income for the reasons discussed earlier. In the 2024 FY our tax expenses increased, and we recorded a Current Tax Expense of $713,670 compared to $248,655 in the 2023 FY and a Deferred Tax Expense of $251,622 compared to $48,424 in the 2023 FY.
This is a reflection of the increase in our pre-tax income for the reasons discussed earlier. In the 2025 FY our tax expenses increased, and we recorded a Current Tax Expense of $1,149,815 compared to $713,670 in the 2024 FY and a Deferred Tax Expense of $232,472 compared to $251,622 in the 2024 FY.
The mix of jurisdictions and related income or losses also affects our tax liability for Global Intangible Low-Taxed Income. Furthermore, our tax liability is also affected by the availability of carryforwards losses and R&D tax credits in the UK subsidiaries.
The mix of jurisdictions and related income or losses also affects our tax liability for Global Intangible Low-Taxed Income (GILTI) and increase in foreign subsidiaries pre-tax income is likely to increase our GILTI tax liability. Furthermore, our tax liability is also affected by the availability of net operating loss carryforward losses and R&D tax credits in the UK subsidiaries.
Income before Income Tax Expense for the year ended October 31, 2024, compared to the year ended October 31, 2023 Year Ended October 31, 2024 Year Ended October 31, 2023 Percentage Change $ 4,611,288 $ 3,421,228 Increase of 34.8% In the 2024 FY, we had income before income taxes of $4,611,288 as compared to $3,421,228 in the 2023 FY, representing an increase of 34.8%.
Income before Income Tax Expense for the year ended October 31, 2025, compared to the year ended October 31, 2024 Year Ended October 31, 2025 Year Ended October 31, 2024 Percentage Change $ 5,512,217 $ 4,611,288 Increase of 19.5% In the 2025 FY, we had income before income taxes of $5,512,217 as compared to $4,611,288 in the 2024 FY, representing an increase of 19.5%.
The Gross Profit Margin yielded by the Marine Technology Business is generally higher than that of the Services Business. ● The percentage of our consolidated sales that is attributable to the Services Business.
The gross profit margin yielded by the Marine Technology Business is generally higher than that of the Defense Engineering Services Business and PAL. ● The percentage of consolidated net sales attributed to the Defense Engineering Services Business.
This is largely due to the increase in our consolidated revenue and gross profit. Other Income : Year Ended October 31, 2024 Year Ended October 31, 2023 Percentage Change $ 1,027,157 $ 681,676 Increase of 50.7 % In the 2024 FY, we had “Other Income” of $1,027,157 compared to $681,676, representing an increase of 50.7% from the 2023 FY.
This is largely due to the increase in our consolidated net revenue and gross profit. Other Income : Year Ended October 31, 2025 Year Ended October 31, 2024 Percentage Change $ 976,189 $ 1,027,157 Decrease of 5.0% In the 2025 FY, we had “Other Income” of $976,189 compared to $1,027,157, representing a decrease of 5.0% from the 2024 FY.
The table above does not show separately the effect of exchange rate impact for Indian Rupees since this operation is dormant and the impact is not material. *Total Effect summary column data is the difference between the Actual Results in the reporting period and the results when the Constant Rate is applied.
The table above does not show separately the effect of exchange rate impact for Australian Dollars or Indian Rupees since these operations are non-trading dormant entities, and therefore the impact of foreign exchange movements is not material. *Total Effect summary column data is the difference between the Actual Results in the reporting period and the results when the Constant Rate is applied.
Net Income for the year ended October 31, 2024, compared to the year ended October 31, 2023 Year Ended October 31, 2024 Year Ended October 31, 2023 Percentage Change $ 3,645,996 $ 3,124,149 Increase of 16.7% In the 2024 FY we had Net Income of $3,645,996 compared to $3,124,149 in the 2023 FY, representing an increase of 16.7%.
Net Income for the year ended October 31, 2025, compared to the year ended October 31, 2024 Year Ended October 31, 2025 Year Ended October 31, 2024 Percentage Change $ 4,129,930 $ 3,645,996 Increase of 13.3% In the 2025 FY we had Net Income of $4,129,930 compared to $3,645,996 in the 2024 FY, representing an increase of 13.3%.
In 2024 FY we recorded a lower gain of $931,718 on foreign currency translation adjustment transactions compared to a gain of $1,294,575 in the 2023 FY.
In 2025 FY we recorded a lower gain of $632,174 on foreign currency translation adjustment transactions compared to a higher gain on these transactions of $931,718 in the 2024 FY.
Our product sales do not include a right of return from the customer. Regarding our Marine Technology Business, all our products are sold on a stand-alone basis and those market prices are evidence of the value of the products.
Regarding our Marine Technology Business and PAL, all our products are sold on a stand-alone basis and those market prices are evidence of the value of the products.
Geopolitical Landscape (i) Relationship with the Second Largest Economy in the World: China We sell our products globally and increasingly to Asia. Asia is the fastest growing economies for our technology and solutions.
We expect some or all of them to continue to impact our operations in the 2026 FY. 26 E. Geopolitical Landscape (i) Relationship with the Second Largest Economy in the World: China We sell our products globally and increasingly to Asia. Asia is the fastest growing economies for our technology and solutions.
Gross Profit Margin was higher at 55.8% in the 2024 FY compared to 51.6% in the 2023 FY, representing an increase of 4.2% points. This increase reflects the mix of engineering services composed within our 2024 FY revenue make up (more units of manufacturing compared to design work).
Gross Profit Margin was higher at 58.6% in the 2025 FY compared to 55.8% in the 2024 FY, representing an increase of 2.8% points. This increase reflects the mix of engineering services provided during the reporting period (more units of manufacturing compared to design work).
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K, filed with the SEC on January 30, 2023, which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at www.codaoctopusgroup.com General Overview We operate two distinct business segments: the Products Segment and Services Segment.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)” in our Form 10-K, filed with the SEC on January 29, 2025, which is available free of charge on the SEC’s website at www.sec.gov and our Investor Relations website at www.codaoctopusgroup.com .
In addition, the Services Business incurs research and development expenses on advancing its Thermite ® Octal range of mission computer products with the strategic goals of increasing and diversifying its revenues and improving gross profit margins. In the 2024 FY this category of expenditure increased by 7.0%.
The Defense Engineering Services Business incurs research and development expenses mainly on advancing its Thermite ® Octal range of mission computer products with the strategic goals of increasing and diversifying its revenues and improving gross profit margins.
Further discussions on SG&A are set out immediately below. 32 Key Areas of SG&A Expenses across the Group for the year ended October 31, 2024, compared to the year ended October 31, 2023 Expenditure October 31, 2024 October 31, 2023 Percentage Change Wages and Salaries $ 3,627,748 $ 3,499,542 Increase of 3.7% Legal and Professional Fees (including accounting, audit, tax and investor relations) $ 1,658,648 $ 1,809,604 Decrease of 8.3% Rent for our various locations $ 29,330 $ 50,767 Decrease of 42.2% Marketing (excluding associated travel) $ 382,440 $ 216,403 Increase of 76.7% Travel associated with Marketing activities $ 70,120 $ 41,149 Increase of 70.4% In the 2024 FY compared to the 2023 FY: Wages and Salaries increased by 3.7%.
Further discussions on SG&A are set out immediately below. 35 Key Areas of SG&A Expenses across the Group for the year ended October 31, 2025, compared to the year ended October 31, 2024 Expenditure October 31, 2025 October 31, 2024 Percentage Change Wages and Salaries $ 4,300,487 $ 3,627,748 Increase of 18.5% Legal and Professional Fees (including accounting, audit, tax and investor relations) $ 1,876,124 $ 1,658,648 Increase of 13.1% Rent for our various locations $ 71,476 $ 29,330 Increase of 143.7% Contingent Liability $ 213,343 $ - N/A Marketing (excluding associated travel) $ 370,043 $ 382,440 Decrease of 3.2% Travel associated with Marketing activities $ 152,003 $ 70,120 Increase of 116.8% In the 2025 FY compared to the 2024 FY: Wages and Salaries increased by 18.5%.
Our consolidated results of operations include the results of the Company’s foreign subsidiaries. Our foreign subsidiaries’ results are translated from their respective functional currencies into United States Dollar (USD) for reporting purposes.
In the Current FY our overall consolidated financial results were up when compared to the Previous FY. Our consolidated results of operations include the results of the Company’s foreign subsidiaries which are translated from their respective functional currencies into United States Dollar (USD) for reporting purposes.
Comprehensive Income for the year ended October 31, 2024, compared to the year ended October 31, 2023 Year Ended October 31, 2024 Year Ended October 31, 2023 Percentage Change $ 4,577,714 $ 4,418,724 Increase of 3.6% In the 2024 FY Comprehensive income was $4,577,714 compared to $4,418,724 for the 2023 FY.
Comprehensive Income for the year ended October 31, 2025, compared to the year ended October 31, 2024 Year Ended October 31, 2025 Year Ended October 31, 2024 Percentage Change $ 4,762,104 $ 4,577,714 Increase of 4.0% In 2025 FY Comprehensive income was $4,762,104 compared to $4,577,714 for the 2024 FY, representing an increase of 4.0%.
The Company’s UK subsidiaries benefit from carryforward losses (NOLs) and research and development (R&D) tax credits. These have been applied to offset a portion of the 2024 FY UK tax liability resulting in a current provision for tax liability of the UK subsidiaries of $267,759 for Current Tax Expense and a Deferred expense of $2,511.
These have been applied to offset a portion of the 2025 FY tax liability for the Company’s UK subsidiaries resulting in a current provision of $265,434 for Current Tax Expense and $293,052 for Deferred tax expense compared to $267,759 for Current Tax Expense and $2,511 for Deferred tax expense in the 2024 FY.
Until a Federal Budget is adopted by the new Administration and the line-item appropriations are in place we expect this business unit to continue to be impacted. We continue to work on the diversification of the Services Business revenue, which is highly concentrated and reliant on Defense funding being available, by investing in our Thermite® Octal range of mission computers.
We continue to work on the diversification of the Defense Engineering Services Business revenue, which is highly concentrated and reliant on Defense funding being available, by investing in our Thermite® Octal range of mission computers.
Our current cash balance represents approximately 33 months of Selling, General and Administrative Expenses. The Company continues to critically evaluate the level of expenses that it incurs and reduces its expenses as may be appropriate within its business priorities. We also have access to a revolving line of credit of $4 million from HSBC NA.
The Company continues to critically evaluate the level of expenses that it incurs and reduces its expenses as may be appropriate within its business priorities. We also have access to a revolving line of credit of $4 million from HSBC NA. All amounts under the Revolving Line of Credit are payable at the end of each financial year.
Changes in this category by Segment are set out immediately below: Description Amount % change Products Business (Products Segment) 2024 FY $ 2,019,112 Decrease 1.2% Products Business (Products Segment) 2023 FY $ 2,043,890 Engineering Business (Services Segment) 2024 FY $ 223,317 Increase 324.7% Engineering Business (Services Segment) 2023 FY $ 52,577 Selling, General and Administrative Expenses (SG&A) : Year Ended October 31, 2024 Year Ended October 31, 2023 Percentage Change $ 8,346,545 $ 8,195,036 Increase of 1.8% In the 2024 FY SG&A expenditures increased by 1.8% when compared to the 2023 FY.
Changes in this category by Segment are set out immediately below: Description Amount % change Marine Technology Business (Products Segment) 2025 FY $ 1,858,139 Decrease 8.0 % Marine Technology Business (Products Segment) 2024 FY $ 2,019,112 Acoustics Sensors and Materials Business 2025 FY $ 414,370 infinite Acoustics Sensors and Materials Business 2024 FY - Defense Engineering Services Business (Services Segment) 2025 FY $ 175,253 Decrease 21.5 % Defense Engineering Services Business (Services Segment) 2024 FY $ 223,317 Selling, General and Administrative Expenses (SG&A) : Year Ended October 31, 2025 Year Ended October 31, 2024 Percentage Change $ 10,678,578 $ 8,346,545 Increase of 27.9% In 2025 FY, SG&A expenditure increased by 27.9% when compared to the 2024 FY.
See Table under the section of the MD&A which concerns “Foreign Currency & Inflation”, and which shows the impact of the currency adjustments on our Income Statement and Balance Sheet in 2024 FY compared to 2023 FY. 34 Segment Analysis We operate two reportable segments, “Products Business” and “Service Business” which are managed separately based upon fundamental differences in their operations.
See Table under the section of the MD&A which concerns “Foreign Currency & Inflation”, and which shows the impact of the currency adjustments on our Income Statement and Balance Sheet in 2025 FY compared to 2024 FY. 37 Segment Analysis We operate three reportable segments, “Marine Technology Business”, “Acoustic Sensors and Materials Business” and the “Defense Engineering Services Business”.
Changes in operating assets decreased net cash from operating activities by $2,183,361 and changes in current liabilities decreased net cash from operating activities by $256,291. Investing Activities Net cash used in investing activities, (net of cash acquired), for the year ended October 31, 2024, was $4,421,092.
Changes in operating assets decreased net cash from operating activities by $491,815 and changes in current liabilities decreased net cash from operating activities by $1,421,486. Investing Activities Net cash used in investing activities, for the year ended October 31, 2025, was $1,196,069.
These increases may make the costs of our products uncompetitive and affect demand and margins. F. Shortage of Key Skills/Resourcing Levels and significant increase in cost of operations due to inflation We are experiencing skill shortages in areas that are critical for our business operations.
Shortage of Key Skills/Resourcing Levels and significant increase in cost of operations due to inflation We are experiencing skill shortages in areas that are critical for our business operations. The inflationary conditions coupled with the shortage of skilled workers in the countries in which we operate make it difficult for us to compete for these skills.
For Revenue and Expenses (Income Statement Transactions) for the Current FY, the Constant Rate means: The “prevailing weighted average” exchange rate in the current 12-month period for the Current FY compared to the “prevailing weighted average” exchange rate in the 12-month period for the Previous Year.
Constant Rate is defined as: For Revenue and Expenses Transactions for the 2025 FY means The “prevailing weighted average” exchange rate in the current 12-month period for the Current FY compared to the “prevailing weighted average” exchange rate For Balance Sheet Transactions for the 2025 FY means The prevailing exchange rate as of October 31, 2025, when compared to the prevailing exchange rate as of October 31, 2024.
Income from operations in the 2024 FY was $1,719,233 compared to $1,216,121 in the 2023 FY. This segment is comprised of the UK Operations (Martech) and the US Operations (Colmek) and is reliant on funding being available under Defense Programs.
This, in general, has resulted in higher volatility in the workforce, resulting in higher payroll costs. Income from operations in the 2025 FY was $2,002,833 compared to $1,719,233 in the 2024 FY, representing a 16.5% increase This segment is comprised of the UK Operations (Martech) and the US Operations (COEI) and is reliant on funding being available under Defense Programs.
In the 2024 FY, the Marine Technology Business generated $12,806,603 or 63.0% of our consolidated revenues compared to $12,119,066 or 62.6% in the 2023 FY, representing an increase of 5.7%.
Segment Summary Marine Technology Business In the 2025 FY, the Marine Technology Business generated $13,221,339 or 49.8% of our consolidated net revenues compared to $12,806,603 or 63.0% in the 2024 FY, representing an increase of 3.2%.
A significant proportion of our consolidated revenues are generated outside of the United States by our foreign subsidiaries in the United Kingdom (“UK”) and Denmark and in the 2024 FY our foreign subsidiaries generated $12,936,755, representing 63.7% of our consolidated revenue.
The Company’s operations are split between the United States, United Kingdom and Denmark. A significant proportion of our consolidated net revenues are generated outside of the United States by our foreign subsidiaries in the United Kingdom (“UK”) and Denmark. For context, in the 2025 FY our foreign subsidiaries generated $17,596,977, representing 66.2% of our consolidated revenue.
See “Note 6 - Composition of Certain Financial Statement Captions” (Other Income) to the audited Consolidated Financial Statements for period ended October 31, 2024, where this is discussed further.
These accounts are fixed for up to 3-month rolling periods and constitute “cash equivalents” in our current audited Consolidated Financial Statements for the year ended October 31, 2025. See “Note 6 - Composition of Certain Financial Statement Captions” (Other Income) to the audited Consolidated Financial Statements for the year ended October 31, 2025, where this is discussed further.
Net income before income taxes increased largely due to an increase in our consolidated revenues and a 46.1% increase in interest income in the 2024 FY (see Other Income above).
Net income before income taxes increased largely due to an increase in our consolidated net revenues and gross profit.
We believe the following accounting estimates are most critical to understanding our consolidated financial statements. See “Note 2 - Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for a full description of our accounting policies. Revenue Recognition Revenues are earned under formal contracts with our customers.
Actual results could differ from those estimates and may have material effects on our operating results and financial position. We believe the following accounting estimates are most critical to understanding our consolidated financial statements. See “Note 2 - Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for a full description of our accounting policies.
As previously disclosed, PAL was acquired on October 29, 2024 and had no material income statement activity for the remaining two days of up to October 31, 2024. Therefore, our Income Statement does not include PAL.
The Acoustic Sensors and Materials Business (“PAL”) was acquired on October 29, 2024 and had no material income statement activity for the remaining two days up to October 31, 2024. Therefore, there is no comparative financial data for PAL for 2024 FY.
We also provide technology customization services, particularly in the defense market and around our DAVD solutions where this is tailored for particular markets and applications. Newly acquired business unit within the Products Segment We acquired PAL into the Group on October 29, 2024.
It also provides customization of technology services, particularly in the defense market and around our DAVD solutions where this is tailored for particular markets and applications. Newly acquired Acoustics Sensors and Materials Business PAL, which is UK based, was acquired by the Group on October 29, 2024. This Company is a recognized leader in the ultrasound and acoustic measurement field.
The Company does not hedge its currency exposure risks. 37 Applying the Constant Rate (as the term is defined immediately below), the impact of currency fluctuations in the 2024 FY compared with the 2023 FY, is shown below.
The Company does not hedge its exposure to currency fluctuation risks. 40 The impact of currency fluctuations (using the Constant Rate) in the 2025 FY compared to 2024 FY is set out in the table below.
In respect of our Marine Technology Business these are derived from both sales and rental of underwater technologies and in respect of our Engineering Business from the supply of engineering services. Our contracts do not include the possibility for additional contingent consideration so that our determination of the contract price does not involve having to consider potential variable additional consideration.
Our Engineering Business revenues are derived from the supply of engineering services. Our contracts do not include the possibility for additional contingent consideration and therefore when making a determination of the contract price we do not have to consider potential variable additional consideration. Our product sales do not include a right of return from the customer.
Gross Margin: Year Ended October 31, 2024 Year Ended October 31, 2023 Percentage Change 69.8% (Gross profit of $14,173,105) 67.3% (Gross profit of $13,031,055) Increase of 2.5% Our consolidated gross profit margins reported in our financial results may vary according to several factors, which include: ● The percentage of our consolidated sales that is attributable to the Marine Technology Business versus the Services Business.
Gross Margin: Year Ended October 31, 2025 Year Ended October 31, 2024 Percentage Change 66.5% (Gross profit of $17,662,368) 69.8% (Gross profit of $14,173,105) Decrease of 3.3% points Gross profit margins reported in our financial results may vary according to several factors.
For more detailed information on the composition and disaggregation of our revenues, please refer to “Note 16 Disaggregation of Revenue” of our audited Consolidated Financial Statements of October 31, 2024, and 2023. 31 Research and Development (R&D): Year Ended October 31, 2024 Year Ended October 31, 2023 Percentage Change $ 2,242,429 $ 2,096,467 Increase of 7.0% Research and Development costs are, in general, an inherent ongoing cost for the Marine Technology Business operations and are expended on maintaining its products in the market, advancing these or expanding its technology portfolio.
For more detailed information on the composition and disaggregation of our revenues, please refer to “Note 16 Disaggregation of Revenue” of our audited Consolidated Financial Statements of October 31, 2025, and 2024. 33 Research and Development (R&D): Year Ended October 31, 2025 Year Ended October 31, 2024 Percentage Change $ 2,447,762 $ 2,242,429 Increase of 9.2% R&D in the 2025 FY increased by 9.2% and was $2,447,762 compared to $2,242,429 in the 2024 FY.
This business is an established technology solution provider to the underwater imaging, surveying and diving market.
Marine Technology Business Our Marine Technology Business has operations in the USA, UK and Denmark – see the organization chart set out in the Section Item 1 (Business). This business is an established technology solution provider to the underwater imaging, surveying and diving market.
For the year then ended, the Company generated cash flow from operations of $2,451,675. We believe that our current level of cash and cash generation will be sufficient to meet our short and medium-term liquidity needs. As of October 31, 2024, we had cash and cash equivalents on hand of $22,479,072 and both billed and unbilled receivables of $5,151,290.
For the year then ended, the Company generated cash flow from operations of $7,211,168. Assuming that the current global macroeconomic environment remains stable, we believe that our current level of cash and cash generation will be sufficient to meet our short and medium-term liquidity needs.
However, the fair value of assets acquired and liabilities assumed for PAL have been included in our audited Consolidated Balance Sheet and in respect of the Segment information provided immediately below, PAL is included in the Supplemental Disclosure information in the table below but not in the Income Statement. The Company evaluates performance and resources based upon operating income.
However, the fair value of assets acquired, and liabilities assumed for PAL have been included in our audited Consolidated Balance Sheet for the 2024 FY and in respect of the Segment Disclosure for 2024 FY PAL was included in the Supplemental Disclosures relating to the Marine Technology Business.
Since there are more variable factors affecting Gross Profit Margins in the Marine Technology Business, a table showing a summary break-out of sales generated by the Marine Technology Business in the 2024 FY compared to the 2023 FY is set out below: 2024 FY Products 2023 FY Products Percentage Change Equipment Sales $ 7,210,169 $ 8,444,305 (14.6 )% Equipment Rentals 2,328,781 1,264,804 84.1 % Software Sales 878,516 851,976 3.1 % Services 2,389,137 1,557,981 53.3 % Total Net Sales $ 12,806,603 $ 12,119,066 5.7 % The main reason for the reduction in equipment sales in the 2024 FY is the contraction in demand from the key strategic market of Defense Programs in the U.S.
Since there are more variable factors affecting Gross Profit Margins in the Marine Technology Business, our core business, a table showing a summary disaggregation of sales generated by the Marine Technology Business in the 2025 FY compared to the 2024 FY is set out below: 2025 FY Products 2024 FY Products Percentage Change Equipment Sales $ 9,407,469 $ 7,210,169 30.5 % Equipment Rentals 1,476,713 2,328,781 (36.6) % Software Sales 752,312 878,516 (14.4) % Services 1,584,845 2,389,137 (33.7) % Total Net Sales $ 13,221,339 $ 12,806,603 3.2 % The increase in Equipment sales is largely attributable to an increase in DAVD and DAVD-related sales and increase in sales emanating from the strategic region of Asia where sales increased by 7.7% to $5,897,362 compared to $5,475,401.

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