10-K/A: Coda Octopus Amends 10-K for Signed Audit Report

Coda Octopus Group, Inc. filed an amended annual report (10-K/A) for fiscal year 2025 solely to include a properly signed audit report, with no other changes to its previously filed financial statements.

Summary

• The filing is an amendment (10-K/A) to the Annual Report on Form 10-K for the fiscal year ended October 31, 2025, originally filed on January 29, 2026.
• The sole purpose of this amendment is to include the properly signed audit report of Frazier & Deeter, LLC, which was inadvertently omitted from the original filing.
• No other changes, modifications, or updates have been made to the disclosures contained in the original Form 10-K.
• For the fiscal year ended October 31, 2025, Net Revenues were $26,563,126, an increase from $20,316,161 in 2024.
• Net Income for FY2025 was $4,129,930, up from $3,645,996 in FY2024.
• Basic Earnings Per Share (EPS) increased to $0.37 in FY2025 from $0.33 in FY2024.
• Cash and Cash Equivalents grew to $28,682,615 as of October 31, 2025, compared to $22,479,072 in the prior year.
• The company acquired Precision Acoustics Limited (PAL) on October 29, 2024, for $6,538,569 in cash, with a net cash outlay of $4,605,285.
• An earnout provision of $213,343 was expensed in FY2025 for PAL, as its operating results exceeded initial forecasts and met Year 1 targets.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this filing as positive due to strong financial performance across key metrics for FY2025 and the successful integration of the PAL acquisition, despite being an administrative amendment to correct an oversight.

Positives

• Net Revenues increased significantly by 30.7% to $26,563,126 in FY2025 from $20,316,161 in FY2024.
• Gross Profit rose by 24.6% to $17,662,368 in FY2025 from $14,173,105 in FY2024.
• Income from Operations increased by 26.6% to $4,536,028 in FY2025 from $3,584,131 in FY2024.
• Net Income grew by 13.3% to $4,129,930 in FY2025 from $3,645,996 in FY2024.
• Basic EPS increased to $0.37 in FY2025 from $0.33 in FY2024, and Diluted EPS increased to $0.37 from $0.32.
• Net cash provided by operating activities saw a substantial increase to $7,211,168 in FY2025 from $2,451,675 in FY2024.
• The acquisition of Precision Acoustics Limited (PAL) in October 2024 has performed well, exceeding initial forecasts and triggering a $213,343 earnout payment in FY2025.
• The company has not utilized its $4,000,000 revolving line of credit facility with HSBC NA, indicating strong liquidity and financial health.
• No goodwill impairments have been recognized to date, suggesting stable asset valuations.

Negatives

• The filing is an amendment (10-K/A) solely to correct an administrative oversight (omitted audit report signature), indicating a procedural error in the initial filing.
• Total Liabilities increased to $6,378,148 in FY2025 from $4,416,021 in FY2024.
• The company recorded aggregate foreign exchange transaction losses of $208,015 in FY2025 and $287,939 in FY2024.
• Approximately $27.1 million of cash and cash equivalents as of October 31, 2025, may be in excess of federal deposit insurance limits, posing a concentration risk.
• A single customer accounted for 15.3% of net revenues in FY2024, highlighting customer concentration risk, although no customer exceeded 10% in FY2025.

Risks

• Concentration risk exists with cash and cash equivalents held at various financial institutions, with approximately $27.1 million in excess of federal deposit insurance limits as of October 31, 2025.
• Accounts receivables are subject to potential concentrations of credit risk due to a significant portion of sales being to a small number of companies, and market fluctuations or trade disputes may affect collectability.
• Inventory valuation requires significant management judgment regarding disposition and recoverable values, which are inherently uncertain and could lead to material write-downs.
• Supplier commitments for electronic and mechanical device components are based on forecasted customer demand, and reductions in these commitments may incur additional costs.
• Forecasting demand for new products and services is difficult, potentially leading to issues with inventory requirements, lead times, and prepayments that may be at risk.
• The company carries significant inventory levels of specialized components (e.g., PCBAs) with no after-market value outside of utilization with its products, increasing inventory risk.
• Calculating stock-based compensation expense involves highly subjective assumptions (expected term, volatility, forfeiture rate), and changes in these assumptions could materially affect future expenses.
• The tax consequences of certain transactions may be subject to uncertainty, requiring significant judgment in assessing and estimating tax consequences.
• The company expects its income tax provision to increase in 2027 primarily due to a decrease in foreign income deduction under the 2025 Tax Act's global intangible low-taxed income (GILTI) provisions.
• UK Net Operating Loss (NOL) carryforwards are restricted and can only be utilized by the entity in which the loss occurred, limiting their broader tax abatement benefit for the UK tax group.
• The $4,000,000 revolving line of credit facility with HSBC NA expires in April 2026 and is subject to renewal at the sole discretion of HSBC NA.

Future Outlook

The company anticipates adopting several new accounting standards in future fiscal years, including those related to income tax disclosures (ASU 2023-09), expense disaggregation (ASU 2024-03), credit losses (ASU 2025-05), government grants (ASU 2025-10), and interim reporting improvements (ASU 2025-11). It expects its income tax provision to increase in 2027 due to the 2025 Tax Act's GILTI provisions. The revolving line of credit facility is subject to renewal in April 2026, and future earnout payments for the PAL acquisition are conditional on meeting defined targets.

Management Comments

• Annmarie Gayle, Chief Executive Officer, and Gayle Jardine, Interim Chief Financial Officer, certified that the report does not contain any untrue statement of a material fact or omit to state a material fact, and that the financial statements fairly present the financial condition, results of operations, and cash flows.
• Management is responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting, designed to ensure material information is known and to provide reasonable assurance regarding financial reporting reliability.
• Management makes significant estimates and assumptions in preparing consolidated financial statements, particularly concerning the percentage of completion method for contracts, valuation of deferred tax assets, and valuation of assets/liabilities in the PAL acquisition.
• Management monitors credit exposure through ongoing credit evaluations of customers' financial condition and limits credit when necessary, performing routine credit management activities.
• Management believes its income tax positions and deductions would be sustained upon audit and does not anticipate any adjustments to result in a material change to its financial position.

Industry Context

StockSavvy.ai notes that Coda Octopus Group operates in specialized, high-tech sectors including marine technology, acoustic sensors, and defense engineering services. The acquisition of Precision Acoustics Limited (PAL) strategically enhances the company's capabilities in acoustic and medical imaging, aiming to leverage this expertise for subsea market development and to qualify for larger Defense contracts. This move aligns with broader industry trends of consolidation and diversification within niche technology markets, particularly those with dual-use (commercial and defense) applications. The company's involvement with the Office of Naval Research and prime defense contractors underscores its position in critical defense supply chains, where long-term contracts and sole-supplier status provide stability.

Comparison to Industry Standards

• The filing does not provide specific comparisons to industry benchmarks, competitor performance, or global standards for its financial results or operational metrics. The focus is on internal performance and compliance with accounting standards.

Legal Proceedings

• The company may be involved in legal and administrative proceedings and claims from time to time, for which liabilities are recorded when a loss is known or considered probable and estimable.

Related Party Transactions

• During the 2025 fiscal year, the company granted 10,000 shares of common stock to a related party for consulting services, issued outside of the Stock Incentive Plans.

Stakeholder Impact

• Shareholders: Positive impact from strong financial performance (increased revenue, net income, EPS) and strategic acquisition, but no new material information in this amendment.
• Employees: Benefit from stock-based compensation plans and company contributions to 401(k) and statutory pension schemes.
• Customers: Continued access to advanced underwater technologies, acoustic sensors, and defense engineering services.
• Suppliers: Precision Acoustics Limited (PAL) is now an integrated part of the company, with continued internal purchases of acoustic materials.

Next Steps

• Adopt Accounting Standards Update (ASU) 2023-09, 'Improvements to Income Tax Disclosures,' effective November 1, 2026.
• Adopt ASU 2024-03, 'Disaggregation of Income Statement Expense,' effective November 1, 2026, with interim disclosures beginning January 31, 2027.
• Adopt ASU 2025-05, 'Measurement of Credit Losses for Accounts Receivable and Contract Assets,' effective for annual reporting periods after December 15, 2025.
• Adopt ASU 2025-10, 'Accounting for Government Grants Received by Business Entities,' effective for annual reporting periods beginning after December 15, 2028.
• Adopt ASU 2025-11, 'Interim Reporting (Topic 270): Narrow-Scope Improvements,' effective for interim reporting periods within annual reporting periods beginning after December 15, 2027.
• Adopt ASU 2025-12, 'Codification Improvements,' effective for annual reporting periods that begin after December 15, 2026.
• The $4,000,000 revolving line of credit facility with HSBC NA is subject to renewal in April 2026.
• Future earnout payments for Precision Acoustics Limited (PAL) are conditional upon PAL meeting defined revenue and pre-tax profit targets in subsequent earnout years.

Key Dates

Recommendation

The filing is an amendment to an annual report, primarily to include a signed audit report, and does not introduce new material financial or operational information that would alter an investment thesis. While the underlying financial results for FY2025 show strong growth in revenue, profit, and cash flow, this information would have been available in the original 10-K. The administrative nature of this amendment suggests no immediate catalyst for a change in investment position, thus a 'hold' recommendation is appropriate for seasoned investors.

Keywords

Marine Technology, Acoustic Sensors, Defense Engineering, SEC Filing, 10-K/A, Financial Results, Underwater Technology, Sonar, Acquisition, Precision Acoustics, FY2025, Earnings, Cash Flow, Corporate Governance