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ACQUISITIONS | 9 Months Ended
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Jul. 31, 2025
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract] |
ACQUISITIONS | NOTE 9 – ACQUISITIONS On October 29, 2024, the Company acquired all the issued and outstanding shares of Precision Acoustics Limited (PAL) for $6,538,569 in cash. At the acquisition date, the Company had immediate access to PAL’s cash balance of $1,933,284, which resulted in a net cash outlay by the Company at the acquisition date of $4,605,285. The Company agreed to pay the sellers for all cash in excess of the agreed working capital amount of $595,869 in PAL’s bank account on the date of its acquisition. This resulted in the Company paying $1,337,415 for the excess cash balance. The Company acquired PAL to gain access to its expertise in acoustic and medical imaging technologies which we believe can be leveraged through development for use in the subsea market, the primary sector for our core business, the Marine Technology Business, and more broadly to expand the Group’s collective capabilities in order to qualify and compete for larger Defense-related contracts. In the Current Quarter, PAL contributed revenues of $1,458,536 and net income of $248,948 to our consolidated results. In the nine month period ended July 31, 2025, it contributed revenues of $4,069,866 and net income of $811,785 to our consolidated results. The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred at the beginning of the Company’s comparable quarterly reporting period. The unaudited supplemental pro-forma information concerning revenue and expenses for PAL (which have been translated from British Pound to USD using the exchange rate used by the Company for those reporting periods) is shown below: SCHEDULE OF PROFORMA INFORMATION
|  | Pro forma |  |  | Pro forma |  |  | Pro forma |  |  | Pro forma |
|  | Three Months |  |  | Three Months |  |  | Nine Months |  |  | Nine Months |
|  | Ended |  |  | Ended |  |  | Ended |  |  | Ended |
|  | July 31, |  |  | July 31, |  |  | July 31, |  |  | July 31, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Net Revenue |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Coda Octopus Group |  | $ | 5,606,259 |  |  | $ | 5,476,544 |  |  | $ | 15,222,103 |  |  | $ | 15,260,913 |
Precision Acoustics |  |  | 1,458,536 |  |  |  | 1,123,979 |  |  |  | 4,069,866 |  |  |  | 3,701,901 |
Combined Net Revenue |  | $ | 7,064,795 |  |  | $ | 6,600,523 |  |  | $ | 19,291,969 |  |  | $ | 18,962,814 |
Net Revenue |  | $ | 7,064,795 |  |  | $ | 6,600,523 |  |  | $ | 19,291,969 |  |  | $ | 18,962,814 |
Net Income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of acquired intangible assets, pro forma |  | $ | (123,656 | ) |  | $ | (116,890 | ) |  | $ | (357,688 | ) |  | $ | (348,917 | )
Coda Octopus Group |  |  | 1,034,037 |  |  |  | 1,274,658 |  |  |  | 2,292,937 |  |  |  | 3,319,784 |
Precision Acoustics |  |  | 372,604 |  |  |  | 290,460 |  |  |  | 1,169,473 |  |  |  | 299,540 |
Combined Net Income |  | $ | 1,282,985 |  |  | $ | 1,448,228 |  |  | $ | 3,104,722 |  |  | $ | 3,270,407 |
Net Income |  | $ | 1,282,985 |  |  | $ | 1,448,228 |  |  | $ | 3,104,722 |  |  | $ | 3,270,407 |
The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported proforma information. These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the Company’s results to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from the beginning of the Company’s fiscal year 2025 (November 1, 2024) up to the period ended July 31, 2025. In fiscal year 2024, the Company incurred $41,531 of acquisition related costs. These expenses are included in our general and administrative expense on the Consolidated Statements of Income and Comprehensive Income for the year ended October 31, 2024. The acquisition of PAL includes contingent consideration arrangements (“Earn Outs”) that requires additional consideration to be paid by the Company over a three year period to the sellers of PAL based on future revenue and pre-tax income of PAL. The potential Earn Out amounts as at October 31, 2024 are shown in the table below applying an exchange rate (from British Pound to USD) of $1.278973: SCHEDULE OF POTENTIAL EARNOUT PROVISION AMOUNTS
Earn Out |  | 2025 FY |  |  | 2026 FY |  |  | 2027 FY |
Revenue Target |  | $ | 5,334,584 |  |  | $ | 5,867,914 |  |  | $ | 6,454,962 |
Pre-Tax Profit Target |  | $ | 1,046,476 |  |  | $ | 1,295,597 |  |  | $ | 1,573,133 |
Earn Out Amount Payable based on Targets |  | $ | 208,472 |  |  | $ | 418,223 |  |  | $ | 652,275 |
The actual Earn Out obligations are specified in British Pound and therefore, if triggered, the amounts stated above may vary according to exchange rate fluctuations. Based on the projections the Company used, we determined that there would be no Earn Outs payable, and therefore until the period ended April 30, 2025 (our second fiscal quarter) no contingent liability for Earn Out payments had been recorded in the Company’s financial statements. An assessment shows that PAL is achieving financial results that exceeded our original expectations. As noted above, the contingent consideration has two components that both must be met to achieve the contingent consideration payout: a revenue and pre-tax income target. As of July 31, 2025, it appears probable that PAL will achieve the pre-tax income target. We also believe that PAL is close to achieving the revenue target for triggering the year one Earn Out payment. Since PAL revenues fluctuate from quarter to quarter, the Company intends to wait until the fourth quarter amounts are known to determine if the first-year Earn Outs payments will be achieved. Based on PAL’s results through the first three-quarters of fiscal year 2025, in the Current Quarter the Company has recorded an expense and liability for 75% of the total Earn Out or $158,872, and will record the remaining 25% in the fourth quarter of 2025 if it achieves the revenue target component. If the pre-conditions are not achieved (revenue and profit target), the accrual of $158,872 will be reversed in the Company’s fourth fiscal quarter. The Company has up to one-year from October 29, 2024, to make any measurement period adjustments to the fair value of the opening balance sheet. The goodwill is attributable to the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including an experienced workforce that will help accelerate product development and our go-to-market strategy, as well as expected future synergies generated by integrating PAL’s products with those in our existing platform. None of the goodwill is expected to be deductible for tax purposes. Prior to the acquisition, PAL was a non-key supplier to our Marine Technology Business, which purchased on average approximately $80,000 of acoustic materials from PAL. It expects to continue to purchase these materials, at a similar level from PAL in the future. The fair value of assets acquired includes non-competes and value of technology. The estimated future annual amortization expenses of finite-lived assets relating to the PAL acquisition for our fiscal year 2025 is $468,064 and in the three month and nine month periods ended July 31, 2025, amortization expenses for PAL were $123,656 and $357,688, respectively. CODA OCTOPUS GROUP, INC. Notes to the Unaudited Consolidated Financial Statements July 31, 2025 and October 31, 2024

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