Coda Octopus Group Inc (CODA)

[gerard711]

latest news ......July 13, 2006 - 12:30 PM EDT

Coda Octopus Acquires Martech Systems
Leader in Port Security Technology Acquires World Class Design and Engineering Firm to Build Next Generation Underwater Systems; Expects to Report Consolidated Results on or About September 15


Coda Octopus Group, Inc (PINKSHEETS: CDOC), a world leader in port security technology, headquartered here, today said it acquired privately held Martech Systems for $1.615 million cash, of which $1.246 million was paid at closing, with the balance to be paid over the next twelve months. An earn-out package in the form of restricted common stock, if and when paid, could increase the value of the transaction to as much as $3 million.

According to Coda, Martech has been continuously profitable and expects revenues for the fiscal year ending October 31, 2006 of approximately $3 million, up from approximately $2.2 million in FY 2005.

Based in Weymouth UK, Martech was founded in 1988 to provide a design and manufacturing service for the military and defense sectors. An ISO9001 accredited company with secure facilities, Martech has steadily grown its capabilities in such fields as image processing, sonar, electronics, software development and mechanical systems, while diversifying its assignments and its client base to include some of the finest cutting-edge technology companies and organizations in the world, including Thales, Harwell, EADS, Bayer Diagnostics, Ultra Electronics and the UK Atomic Energy Authority.

Coda Octopus said that in line with its announced plans to become a reporting company, it will report on or about September 15 consolidated results for the combined companies, and audited results for Coda Octopus Group for the fiscal years ending October 31, 2005 and October 31, 2004. Coda also expects to become a reporting company and to file a Form 10 registration statement with the SEC shortly thereafter. According to the Company, on a proforma basis, the company said that had the acquisition occurred on October 31, 2004, the combined companies would have had revenues of approximately $6.8 million for the year ending October 31, 2005 and would be projected to have revenues of approximately $13 million for the current fiscal year ending October 31, 2006. Coda Octopus currently has approximately 24.3 million shares issued and outstanding.

Design Capability To Be Greatly Enhanced

According to Jason Reid, President and CEO of Coda Octopus Group, "The primary reason we acquired Martech is to greatly enhance our design capability, and to transform this aspect of our business from a major cash flow drain into a genuine profit center."

Since 2002, Coda Octopus has spent approximately $3 million to develop and bring to market the world's first real time 3D sonar, Reid said. He stated further, "As the market for port security technology evolves from high technology components into increasingly significant and robust systems, Martech will help us to maintain our first mover status, bring new products to market rapidly, while rationalizing and significantly reducing execution costs."

In addition, Reid said, "Giving our engineers an opportunity to work on challenging projects from outside of Coda Octopus and maintaining an informal, small-company atmosphere, we think will enable us to continue to attract and retain the very best."

Reid added further, "We also believe a modest investment in marketing and sales by Coda management will result in important incremental growth in sales, cash flow and profits."

Rick Pegrum, Managing Director of Martech Systems, commented, "All of us at Martech are excited to become a part of this important effort to provide genuine technology solutions to the challenges we face in underwater security, most particularly for the security of our ports, and to join a public company that we think has a top notch management team, and outstanding upside potential."

For further information on Martech, please visit its website http://www.martechsystems.co.uk

About Coda Octopus

Founded in 1994 as Coda Technologies, Coda Octopus is recognized internationally as a leading developer of underwater technologies for imaging, mapping, defense and survey applications. Based in New York, with R&D, manufacturing, and sales facilities in the UK, Norway, and Florida, its key products include Octopus precision motion sensors, Coda and Octopus marine software and systems, Octopus thermal printers and the unique Coda Echoscope -- the first real-time 3D subsea sonar -- with particular applications in the port security and construction markets. The company believes the January 2006 release of this patented product, which revolutionizes subsea visualization, establishes Coda Octopus as the technology leader in underwater port security.

For further information, please visit http://www.CodaOctopus.com or contact Coda Octopus at [e-mail], or visit http://www.martechsystems.co.uk