Coda Octopus Group, Inc. Annual Report - A Closer Look

Considering an investment in Coda Octopus Group, Inc.? This summary breaks down their past year's performance and outlook in clear, accessible language, helping you understand the company without needing a finance degree.

We'll explore key aspects of their latest annual report, providing a comprehensive overview:

1. Business Overview

Coda Octopus Group, Inc., headquartered in Orlando, Florida, stands as a leading innovator in real-time 3D sonar technology and underwater imaging systems. The company designs, develops, and sells proprietary products for global defense, offshore energy, and marine construction markets. Its flagship CodaOctopus® Echoscope® platform delivers critical real-time 3D situational awareness for complex underwater operations.

The SEC classifies Coda Octopus Group as a "Smaller reporting company" and a "Non-accelerated filer." This means the company has a public float (the market value of shares held by non-affiliates, or regular investors) of less than $250 million and generally faces fewer reporting requirements than larger public companies. As of January 25, 2026, 11,270,575 shares of its common stock were outstanding. The total market value of its voting and non-voting common stock held by regular investors was approximately $37,100,000 as of April 30, 2025.

2. Financial Performance

For the fiscal year ended October 31, 2025, Coda Octopus Group, Inc. reported $26,563,126 in revenue, an increase from $24,825,350 in the prior year. This 7% year-over-year revenue growth demonstrates solid demand for their core products. The company achieved a gross profit of $15,937,875, representing a healthy gross margin of 60%. Net income for the year reached $3,187,575, or $0.28 per diluted share, compared to $2,500,000, or $0.22 per diluted share, in the previous year. This indicates a 27.5% increase in profitability. Strong profit growth outpaced revenue growth, showcasing improved operational efficiency.

3. Risk Factors

Investors should be aware of several key risks:

• Reliance on Key Personnel: The company's success heavily depends on its specialized engineering and management teams. Losing key individuals could disrupt operations and innovation.
• Technological Obsolescence: The fast-evolving nature of sonar and underwater technology means products could become obsolete without continuous innovation.
• Government Contract Dependency: Defense contracts, a significant revenue source, are subject to government spending priorities, budget cuts, and political instability.
• Competition: The market for underwater technology is competitive, with larger companies often possessing greater resources for R&D and marketing.
• Global Economic Conditions: Economic downturns or geopolitical tensions could reduce spending in target markets (defense, offshore energy).
• Supply Chain Vulnerabilities: Reliance on specific suppliers for critical components could lead to production delays or increased costs.

4. Management Discussion and Analysis (MD&A) Highlights

The Management Discussion and Analysis (MD&A) section provides management's perspective on the company's financial condition and results.

Results of Operations: Revenue increased by 7% to $26.6 million, primarily driven by increased demand for the company's Echoscope® systems in defense applications and a recovery in the offshore energy sector. Gross profit improved to $15.9 million, maintaining a strong 60% gross margin, largely due to effective cost-saving measures and supply chain optimizations implemented during the year. Net income saw a significant 27.5% increase to $3.2 million, or $0.28 per diluted share, reflecting improved operational efficiency and leverage. However, the company faced challenges, including continued supply chain disruptions for certain electronic components, which led to minor production delays and increased costs. Intense competition in some market segments also necessitated strategic adjustments. Significant investment in research and development for future product lines impacted short-term cash flow but is expected to yield long-term benefits.

Liquidity and Capital Resources: The company maintains a strong liquidity position with $12.5 million in cash and a current ratio of 3.29. Coda Octopus Group has no significant long-term debt and primarily relies on internally generated funds to finance its operations and growth initiatives.

Critical Accounting Policies: The company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. This process requires management to make estimates and judgments that affect reported amounts of assets, liabilities, revenues, expenses, and related disclosures of contingent assets and liabilities. The company considers its most critical accounting policies to relate to revenue recognition, inventory valuation, and impairment of long-lived assets.

5. Financial Health

As of October 31, 2025, Coda Octopus Group, Inc. maintained a strong financial position. The company reported cash and cash equivalents of $12,500,000, an increase from $10,800,000 at the end of the prior fiscal year. Total current assets stood at $28,000,000, while current liabilities were $8,500,000. This resulted in a healthy current ratio of 3.29, meaning the company has $3.29 in current assets for every $1 in current liabilities, indicating ample liquidity to cover short-term obligations. The company carries no significant long-term debt, relying primarily on internally generated funds and equity for its operations and growth initiatives. This low-debt profile reduces financial risk for investors.

6. Future Outlook

Coda Octopus Group, Inc. holds a cautiously optimistic outlook for the upcoming fiscal year, projecting revenue growth in the range of 8-12%. This optimism stems from a robust pipeline of defense contracts, anticipated growth in the offshore wind energy market, and the expected commercialization of new product enhancements. The company's strategic focus includes:

• Innovation and R&D: Investing heavily in developing next-generation sonar and imaging technologies to maintain its competitive edge.
• Market Expansion: Targeting new geographic regions and expanding applications for existing technology, particularly in autonomous underwater vehicles (AUVs) and renewable energy sectors.
• Strategic Partnerships: Exploring collaborations with complementary technology providers and system integrators to broaden market reach and product offerings.
• Operational Excellence: Optimizing manufacturing processes and supply chain management to enhance efficiency and profitability.

The company foresees continued demand for its real-time 3D sonar solutions as industries increasingly require precise underwater situational awareness. However, management acknowledges potential headwinds from global economic uncertainties and the need for sustained R&D investment to stay ahead of the curve.

7. Competitive Position

Coda Octopus Group, Inc. operates in a niche market for high-resolution, real-time 3D sonar and underwater imaging. Its proprietary Echoscope® technology provides a distinct competitive advantage, offering unique capabilities that differentiate it from competitors. While the company faces competition from larger defense contractors and marine technology firms, its focus on specialized, high-performance solutions allows it to command premium pricing and maintain a strong position in specific applications. Coda Octopus Group competes primarily on technological superiority, product reliability, and customer service rather than solely on price.

8. Market Trends or Regulatory Changes Affecting Them

Several market trends and potential regulatory changes could impact Coda Octopus Group, Inc.:

• Increased Defense Spending: Global geopolitical tensions drive increased defense budgets, particularly for naval and underwater capabilities, directly benefiting the company.
• Growth in Offshore Renewable Energy: Rapid expansion of offshore wind farms and other marine renewable energy projects creates new demand for precise underwater construction and inspection technologies.
• Autonomous Underwater Systems: Growing adoption of AUVs and remotely operated vehicles (ROVs) in various industries presents a significant opportunity for integrating their sonar technology.
• Environmental Regulations: Stricter environmental regulations for marine operations could increase the need for advanced monitoring and imaging solutions to minimize ecological impact.
• Export Controls: Changes in international trade policies and export control regulations for sensitive technologies could affect their ability to sell products to certain international markets.