Q2 2023 Coda Octopus Group Inc Earnings Call
Participants
Jackie Keshner; IR; Gateway Group
Annmarie Gayle; Chairman & CEO - Denmark; Coda Octopus Group, Inc.
Gayle Jardine; Interim CFO; Coda Octopus Group, Inc.
Brian Kinstlinger; Analyst; Alliance Global Partners
Walter Ramsley; Analyst; R-Squared
David Wright; Analyst; Henry Investment Trust
Presentation
Operator
Good morning, and welcome to Coda Octopus Group's second-quarter fiscal year 2023 earnings conference call. My name is Christine, and I'll be your operator for today. Before this call, Coda Octopus issued its financial results for the fiscal second quarter ended April 30, 2023, including a press release, a copy of which will be furnished in a report filed with the SEC and will be available in the Investor Relations section of the company's website.
Joining us on today's call from Coda Octopus are its Chair and CEO, Annmarie Gayle; and its acting CFO, Mrs. Gayle Jardine. (Operator Instructions)
Before we begin, Jackie Keshner from the Gateway Group will make a brief introductory statement. Miss Kesher, please proceed.
Jackie Keshner
Thank you. Good morning, everyone, and welcome to Coda Octopus's second-quarter fiscal year 2023 earnings conference call. Before management begins their formal remarks, we would like to remind everyone that some statements we're making today may be considered forward-looking statements under securities laws and involve a number of risks and uncertainties.
As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission.
We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law. We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including but not limited to risks and uncertainties identified in our Form 10-K and Form 10-Q for the second quarter.
You may get Coda Octopus's Securities and Exchange Commission's filings free by visiting the SEC website at www.sec.gov. I would also like to remind everyone that this call is being recorded and will be made available for replay via a link in the Investor Relations section of Coda Octopus's website.
Now I will turn the call over to the company's Chair and CEO, Annmarie Gayle. Annmarie?
Annmarie Gayle
Thanks, Jackie, and good morning, everyone. Thank you for joining us for our second-quarter 2023 earnings call. As a management, we have established over many years a good track record of running a profitable and sound business. We have also spent the last four years on the development of our new generation of underwater products and solution, including our Echoscope PIPE and our Diver Augmented Vision Display System, DAVD, which underpin our growth strategy. Management's core focus is now on organically growing the business. Our current business target is growing the marine technology business this year by 22.2% to reach $18 million and growing the services business by 6.7% to reach $8 million. We have a strong balance sheet and do not envisage the requirement for new capital to fund our growth.
Although at the end of this quarter, we are behind on our full-year 2023 business plan financial goals, we continue to be laser-focused on our growth strategy and executing against this. Some Echoscope rental and sales projects we are working on tap on predictably slowed mainly in Asia, and therefore, in the second quarter, we did not achieve our revenue target for Echoscope solution.
I'd now like to summarize our second-quarter highlights. Within our current business strategy, the two pillars of growth for our company are our Echoscope real-time 3D imaging sonar, the new generation of Echoscope PIPE; and our recently launched diver augmented vision display system, DAVD system, which is in adoption by the US Navy. I will therefore focus my remarks on these two pillars.
Turning firstly to the Echoscope, the underwater imaging sonar market is growing largely due to the new generation of underwater vehicles focused on bringing new capabilities to the subsea and underwater markets. One of the key requirements for the defense market for these new vehicles is real-time 3D spatial perception and scene awareness technology. It is therefore our strategy to work on increasing the number of defense underwater vehicle programs, which the Echoscope technology is embedded in.
If we are successful with our strategy, this would open up long tail and recurring revenues for the business onto these programs, which is similar to the business model of our engineering business. In the second quarter, Echoscope sales were down, and this is largely due to anticipated sales in Asia territory that did not come through in the second quarter as expected.
We, however, continue to focus on our overriding strategy to increase our market share of the imaging sonar market. In this quarter, we provided support to two of the defense programs that utilize our Echoscope. These programs are now entering their customer trial phase.
Turning to DAVD, the tethered DAVD system has now moved from the Navy's R&D phase to bear field adoption phase. And in the second quarter, we sold $1 million DAVD systems, which will be distributed to new command within the Navy.
Within our 2023 financial year fiscal projections, we have $2 million revenue targeted for DAVD. Thus, in the second quarter, we have achieved 50% of our targeted revenues for this product. And with the opportunities we are currently pursuing, we believe we will meet our 2023 fiscal year target for the DAVD.
We continue to pivot from an R&D focus to sales and marketing and brand building. The second quarter saw us having top-quality engagements. Some of these were closed-door invitation-only events with our target markets, and we continue to raise awareness about our technology.
We participated in several events for the promotion of our products and services, including two key events, which were by invitation. Special Operations Forces Week 2023, which was hosted in partnership with United States Special Operations Command and Military Diver Training Continuum in Panama City, which had in excess of 250 military divers participating, a significant target market for the untethered version of DAVD.
We also showcased and presented the DAVD tethered solution at the Dutch diving regulatory body SWOD, Special Weapons Ordinance Device Exchange event in Papendrecht, Netherlands, which had a large turnout of diving companies, fire department, and the Defense Labor Inspectorate in attendance. We had successful demonstration of DAVD to the Dutch Navy in a vessel rescue penetration training facility in the Netherlands.
We also had successful completion of DAVD trials with a major European offshore provider who is actively discussing options for adoption. We also had successful engagement and demonstration of DAVD to new market opportunities for the deep saturation diving sector and multiple nations' Special Forces untethered diving solutions.
We successfully supported two different defense underwater vehicle programs of US prime defense contractors with their Echoscope PIPE integration in preparation for their ongoing [fee] trials with their end user customer. In the quarter, we also saw strong inquiries for rental of the DAVD solution for projects that had tainted by low visibility water condition. In the second quarter, therefore, we had solid momentum and progress around our key pillars of growth, those the DAVD and Echosope PIPE.
Looking forward, we are also discussing potential adoption by a Japanese construction company, sales of evaluation system for the DAVD untethered solution, and working with US project sponsor for the full adoption of the DAVD untethered system in 2024.
Turning to the DAVD adoption curve. DAVD is an important part of our growth strategy, and we think it is important to update the market on the likely adoption curve for this recently launched technology. The customer adoption curve for nearly all such opportunities is the same. Stage one, initial demonstration and trials to establish interest; and stage two, customers specific trials, which are designed around their workflow, typically on live operational mission; and stage three; decision on adoption and investment plan. This process can take up to two years to culminate in a decision.
To summarize where we are with some of these initiatives around the DAVD, therefore, turning firstly to DAVD tethered variant. DAVD tethered variant is an approved Navy use item and is now in the field and adopted by the US Navy. The Navy has started purchasing field assistance as distinct from R&D systems.
In this second quarter, we sold $1 million DAVD tethered systems. We're now actively marketing this variant in both the commercial and defense sectors, including extending our model to lease and rental option.
Turning to DAVD untethered variant, the DAVD untethered variant is now delivered and under evaluation with project sponsors. And we expect some initial evaluation systems to be purchased for broader field assessments in the third quarter. This variant was the centerpiece of the Special Operation Forces and Military Diver Training Continuum events we attended in the quarter. Coda Octopus will continue to support the field evaluation by providing training and other technical support that may be required by the project sponsor. Interest has grown in the DAVD in new diving communities, and we are working with teams in the saturation diving community for both the US Navy and commercial European dive contractors.
Turning now to ongoing trials and adoption discussions. We have four second stage of foreign defense agency trials scheduled in our third and fourth quarters, one European offshore service provider in third stage, and discussing investments plans, one European offshore service provider in second stage, and we have already done DAVD customization work on the technology for this service provider.
We are actively discussing adoption options with one major Japanese offshore construction company, who is in -- is an established user of our Echoscope and who owns up to 15 Echoscopes within their operation. Due to their established use of our Echoscope technology, we believe the adoption process is likely to be much quicker, and we have provided commercial terms on the adoption to this customer. Turning to expansion of the business model for DAVD technology allowing market access. We also believe from recent business development efforts that we could fast track adoption through rental and lease of the DAVD technology. This will also broaden the accessibility of the technology in the marketplace. We continue to believe that the likely inflection point for the DAVD, therefore, is in financial year 2024, where we hope to have acquisition budget lines established with other customers outside of the US Navy and where the US military command has started purchasing DAVD untethered system, our biggest opportunity for the product following completion of their evaluation period.
To conclude, therefore, we remain comfortable targeting approximately $25 million in revenue for our technology business on a standalone basis in financial year 2024. In financial year 2022, this business, that is the marine technology business had revenue of approximately $15 million. And this year, we're targeting $18 million for this business on a standalone basis, and at the same time, maintaining our profitability.
Turning now to new products and other progress. A number of key technologies were developed as part of the DAVD system, including the digital audio communication module and the subsea edge enhanced video modules. The first of these has already been requested as a standalone product by the US Navy, and we have a purchase order to deliver the first small batch in our third quarter.
We are also in discussions with several vehicle manufacturers for the integration of our subsea Edge Enhanced Video Modules. These technologies allow us to expand our product portfolio through discrete packaging of already developed technology to further add and diversify our market reach and revenue.
This product is also exciting for the company as the purchase process is significantly shorter due to the price point of these modules. We also believe that there is a real need to advance underwater communication systems by moving from analog communications to digital communications, which is what this new digital audio communications module is designed for. The addressable market for this, we believe, is significant, if our product meets the addressable market's brief.
Now turning to our marine engineering business, we continue to reiterate that this segment is important for our group as it has strong pedigree in defense engineering with stellar relationships with prime defense contractors spanning decades. These are important relationships for improved strategy. There is a strong crossover of engineering skills, which is vital for us to maintain our competitive lead in real-time 3D imaging sonar and our diving technology.
This business, that is the marine engineering business, supplies subassemblies into broader mission critical programs on the subcontract with prime defense contractors. This gives them the opportunity to have repeat orders for these subassemblies for the life of the program.
Within this business segment, we are navigating headwinds from supply chain issues across various defense programs. The supply chain difficulties apply not only to our own sourcing of components, but also crucially to our customers' own supply chain issues in parts of the program unrelated to us. This is resulting in the broader program design requirements being slower to lock in due to the general unavailability of components. This has led to many instances of multiple iterations of the design proposal being submitted for the same work package, which in turn has resulted in lower order intake in our first and second quarters.
However, we have two new programs, which are now moving from their prototype phase into production phase, where we expect to receive purchase orders for the manufacturing of these subassemblies. We have successfully completed the environmental assessment test for one of these programs recently, and we expect to receive the manufacturing order for these in the financial year. We have also started to deliver the first of a small batch of 30-minute Thermite computers to a NATO country. This will cumulatively positively impact this business. And it's an important first step in restoring the services business to its $10 million revenue profile over the next two years.
Let me now turn the call over to our Acting CFO, Gayle Jardine, to walk you through our financials before I provide my closing remarks. Gayle?
Gayle Jardine
Thank you, Annmarie, and good morning, everyone. Let me take you through our fiscal second -quarter financial results. Let's begin with revenue. In the second quarter of 2023, we recorded total revenue of $5.3 million compared to $5 million in the second quarter last year, an increase of 6.4%.
In marine technology business, generated revenue of $3.6 million compared to $3.5 million last year second quarter, a 2.6% increase. We're excited about the mix of sales, and as previously mentioned by MRV, in the second quarter, we sold $1 million of DAVD units, which is 50% of our DAVD revenue target for this financial year.
Looking now at gross profit and margin. In the second quarter of 2023, we generated gross profit of $3.6 million compared to $3 million in the second quarter of fiscal 2022. Gross margin in the second quarter of 2023 was 68.3% versus 60.8% in the same year-ago period.
In our marine technology business or product business, gross margin fell slightly to 75.3% in the second quarter of 2023 compared to 76.6% in the prior year second quarter, reflected changes in the mix of sales. In the second quarter this year, we had more units of hardware in the mix of sales with less units of rentals and services. And marine engineering business gross margin was 53.9% versus 23.9% in the prior year second quarter. In the prior-year period, there was a high concentration of revenues from a particular low-margin project.
Now moving to our operating expenses. Total operating expenses for the second quarter of 2023 increased 8.5% to $2.8 million compared to $2.6 million in the second quarter of 2022, driven by a 10.3% increase in selling, general, and administrative expenses due to the increase in professional fees for services such as tax and audit.
Our selling, general, and administrative costs in the second quarter of 2023 totaled $2.2 million, increasing from $2 million in the prior year second quarter. As a percentage of revenue, our selling, general, and administrative costs for the second quarter 2023 increased to 42.3% of total revenue compared to 40.8% in the second quarter of fiscal 2022.
Looking forward on our cost structure, given the significant progress we've made in R&D in the last four years, we remain focused on aligning a significant portion of our resources and strategy from research and development to global business development, brand building, and investor relations. We believe we have developed world-class products and solutions that provide market-leading positions for Coda and that we can make meaningful progress in our markets through the investments to create shareholder value.
I'd like to focus on our operating income, which in the second quarter of 2023 was $855,000 compared to $481,000 in the second quarter of 2022. Operating margin was 16.1% compared to 9.7% in the second quarter last year.
Net income before taxes in the second quarter of 2023 was $1 million compared to $493,000 in the second quarter of 2022. Net income after taxes in our second quarter 2023 was $1 million or $0.09 per diluted share compared to $611,000 or $0.05 per diluted share in the same quarter last year. Finally, looking at our balance sheet, as of April 30, 2023, we had $23.5 million in cash and cash equivalents on hand and no debt. This represents a $1.1 million cash decreased in the quarter due to the timing of our federal tax and state tax payments for the prior year, as well as prepayments for tax in this year, which totaled $1.27 million. This tax payment is also reflected in a $1 million reduction in our current liabilities. For the year to date, we have had a cash build of $0.5 million.
That completes my financial summary. Now I will turn the call back over to Annmarie for closing remarks. Annmarie?
Annmarie Gayle
Thank you, Gayle. As stated previously, although in the second quarter, we are behind in our business plan. We are focused on executing our existing plan and growth strategy. We have significant momentum around our growth pillars. And again, our focus is converting these into tangible near-term opportunities for the business.
Management will continue its efforts to explore the rental and lease model for the DAVD with the objective of galvanizing market adoption. We also have a near-term growth catalyst from the digital audio communications module. If we're successful with this module, it will provide the company with diversification of revenue, which counterbalances the longer sales cycle of both the Echoscope and the DAVD and potentially adds a good stream of additional revenues for the company.
We have a demonstrated track record of consistent profitability, and we have a solid unleveraged balance sheet with cash on hand and no debt, which gives us confidence in our outlook for Coda. Furthermore, with our solid balance sheet, we do not envisage needing growth capital for the growth targets we set out for the next two years. We're now happy to take your questions. Operator.
Question and Answer Session
Operator
(Operator Instructions) Brian Kinstlinger, Alliance Global Partners.
Brian Kinstlinger
Great. Thanks so much and thank you for all the very detailed information on your marketing and the exciting things going on. I wanted to start with your financial targets for fiscal '23, especially the $18 million for marine products. This would mark a substantial increase in demand for the second half of the year, especially with only a modest contribution, if I heard you right, which is about $1 million more for the DAVD. So first, have you seen an improvement in the Asian market? And then, whether you have or have not -- what does give you the confidence that in the second half of the year, you're going to see much stronger results compared to the first half.
Annmarie Gayle
Brian, hi, it's Annmarie. Thank you very much for that question. Yes, we're really off plan, as I said, and really by this time, we really should have done around $9 million, and -- but largely what we've seen, really good level of inquiries, good level of proposal writing, and good quality of opportunities that we are pursuing.
However, what we've really seen is a slower pace of conversion from the Asian market, but nothing leads us to believe that the opportunities have gone away. We still think that's there're valid opportunities for 2023. So whilst I believe that we are definitely off plan and we've got a lot of work to do to achieve that $18 million, I really think from what I'm seeing for our business is that we still could be very close to the projections, the internal projections. Look, we have reforecasted because then we have no reason to do so. As we said, what we're seeing is slower pace of conversion, but nothing indicating that the opportunities that we are pursuing have gone away. They've just slowed, and that's not unusual. I mean, our sales cycle and quarterly sales are not necessarily linear, although within our projections, they are just for modeling purposes, linear. But really our focus is full-year revenues and believe on a full-year basis, we have no reason at this stage to reforecast that.
Brian Kinstlinger
Okay. And then as it relates to your two underwater vehicles in trials with the Echoscope PIPE. Is Coda's technology the only one selected for those trial phases and how long you expect a trial phase might last?
Annmarie Gayle
Well, we don't know what's on the defense vehicles that are being, what are the sensors are there. We only know that our sensor is part of that solution. And I think that the two programs that we worked on this quarter, I think that they are at their advanced stage and from information we have on, if this program or trials are successful, they're likely to do a small batch in the beginning of Q1 next year. But it's subject, of course, to their trials being successful, and they continue to execute at the pace that they are currently executing.
Brian Kinstlinger
Right. Now last quarter, you talked about having four of these underwater vehicles in the US and one outside the US. Maybe share any detail as we've commented on two or the other three? Have they gone away? Are they still in the pipeline? There is just no update on them. Just trying to understand how that pipeline may or may not have changed.
Annmarie Gayle
No, no. The pipeline is the same. One program is in Japan and four programs in the US. In fact, one program is a commercial opportunity. They have launched their new program, and I think that we are selling into that program. So I think they've done successful trials with their underwater vehicle. And I think that they are in the process of -- I think, this will be for them the rental mode. So I think that program is alive. Our technology is part of their solution, and the other programs are ongoing. But in this quarter, I think what I tried, or the business is trying to emphasize is that the programs that we supported are advancing and moving from just their development phase into customer trial space. And we're excited about that because it's a significant move forward under the program.
Brian Kinstlinger
Got it. Thank you. And then my last question for now is, in the past, you've communicated -- recent past you communicated your plan to invest more in sales and marketing. I see SG&A moved up a little bit, but not a material amount, at least in my opinion. Can you talk about where you are with that piece of the plan and what you have left if you have something to invest in sales and marketing?
Annmarie Gayle
Yeah. So we've been doing a lot of legwork in the territories that are important to us. So Europe is really, really important, Asia is really important, and the US market too.
Let's start with Asia. Really, what we are doing in Asia is expanding our network of agents, and really what the business needs to do is to put boots on the ground to support agents and support our customers there, so the investment we're making for marketing is supporting our agents in the field with support staff in-country. And that's the model that we think will be very effective for our customers there because what our customers want to know, especially for these programs that we're working on, especially for the DAVD, that there's Coda (technical difficulty) provide support in-country.
So we are in the process of moving support engineers into Japan to start with and China and South Korea. So that's the first leg. And of course, as I mentioned, expanding our agent network, which means that appointing more agents, and we have done that in the last -- since this year, we've appointed a number of new agents and provided training. In fact, in June, we have quite a big team going out to China to do not just demonstrations, but extensive training under our senior hydrographic severe, we'll be there for several weeks providing support and training to our agents.
So we think that the best way for the countries where we don't speak the language, the best way to support our customers like expanding our agent network and ensure that our agents are trained (technical difficulty) in-country support or the opportunities that are ongoing and also when a customer has a problem on the ground, that who the people are at hand to see this is what you need to do or the system needs to go back to base. But we feel that this is the best model for us, so that's that.
In the US, we continue to attend a lot of significant events. We are -- although our marketing costs were down, I think that on a full-year basis, it's just timing. We will see marketing being much higher than last year because then we've got quite a lot of activities planned for the back end of the year. And in the US, we're still looking to recruit focused business development staff and that's ongoing. And similarly in Europe, we are looking for people, but they've got to be the right people with the right background. But I'm pleased to see that we're expanding our agent network at the same time and providing quite a lot of support and training for ongoing opportunities.
Brian Kinstlinger
Great. I would ask about DAVD, but you provided so much detail. I don't really have any questions about it. So thanks for all your time.
Annmarie Gayle
Thank you very much, Brian. Thank you.
Operator
(Operator Instructions) Walter Ramsley, R-Squared.
Walter Ramsley
Hello, Annmarie. Thanks for all the information. I had a request, I guess. If you could elaborate a little further on the slow performance in Asia? You said the customers are dragging their feet a little bit. Is that because their own business is slowing down or what's provoking that?
Annmarie Gayle
While we don't have a lot of visibility as to the reason for the slow pace of conversion. What we are told that project is just move a little bit to the right, it's not gone away. So we don't have any reason to be concerned. We're in good line of communications with our agent network for the opportunities that we're pursuing. And what we are told is that they've just moved to the right, so I can't give you more color as to the reason. But what I can say is that we -- at this point, I am not alarmed because I believe it's just a question that the project is pushed out a little bit from the schedule Q2 to later on in the year.
Walter Ramsley
Okay. And as far as the Echoscopes in the military, I mean, my understanding is that the military around the world is really accelerating development of these underwater drones. Essentially, is that the case? Or are they not moving as quickly as you would like either?
Annmarie Gayle
Well, look, the programs that we are really targeting for getting our vehicles embedded in, there's a lot of front-end work because then if you think of, they could be manufactured to the end user requirement. That will take a couple of years. The work that Coda Octopus needs to do is to be part of that front-end.
It's a little bit like Tesla. If Tesla is to bring out a new model of vehicles, all the specification for that model is locked down. And when that vehicle is been produced and supplied to the market, it's the same specification for that model. That's what we are doing. So the program might take a couple of years. But really that is simply what happens when you've got new generation of anything. There's a prototype phase, then there's trial phase, then there is production phase. We are doing a lot of prototype of front-end work to ensure we are part of that solution.
And this is what gives us the confidence that in the future that we are going to capture more market share because we're certainly in a number of programs and it doesn't stop with the five programs that we talked about last year every year. This is our laser focus. What are the new programs that cooled off with technology can get into? And we are having lots of discussions.
In fact, one of the wins that we had in the US last year, and that now is now been launched to the market. And as I said, we have sold a handful of system last year, that same program has come back to us for a different program that we are now developing for a different -- it's sonar within our series of sonar. So we're getting good repeat opportunities from, first of all, doing that front end work. We are part of that solution. That solution works with them. They come back to Coda with our good and excellent track record, and then we get onto another program.
So I feel we're doing a lot of the right things. And really the impact of those right things, which are the front-end work that we're doing to be part of that story. We're going to start yielding the results, Walter, of next year and onwards. So that's really what we need to do, you know? And at the same time --
Walter Ramsley
That sounds correct. Okay. And then just one last question, these new military programs, in particular, when they do a bake-off on a new program, what's your success rate? Doing them all?
Annmarie Gayle
When we do a bake-off, what you mean? I'm not sure I understand what you mean.
Walter Ramsley
Well, they put out a request for bid or whatever it is to get an underwater vision system so there are no secret drown. And so you have put in your proposal and two other companies put in proposals and you have a competition and what's your success rate?
Annmarie Gayle
Well, I don't know because the way it works, it's like a handful of -- I mean, most of these companies that are doing or producing underwater vehicles, the defense market will be a prime defense contractors in the US, in Japan, in South Korea, and really they really have a requirement. Already that stays.
And where we win is because they're looking for real-time 3D imaging sonar technology and one program knows often the code, the solution, and we are contracted, and also, where we were at the military continuum in Panama City, it was a huge swell around not just the DAVD system but the Coda Echoscope. So there's a lot of word of mouth that this is the only imaging sonar that will meet that brief for -- on imaging in real-time 3D in zero visibility water conditions.
In fact, yesterday, I saw a paper that was (inaudible) or the Coda Octopus technology around. And that paper was unequivocal that this is the most advanced sonar technology in the market and the most capable. And we just saw that yesterday. And you know, there is no -- it's not controversial that our technology is the most advanced and I think that the small number of prime defense contractors that are operating in the space, we're kind of well known.
So it's not usually a competition for the sensor that you're integrating in their vehicles, it usually starts with a dialogue that they're trying to do this within what the details they can provide. And then, we answer a series of questions. And then, we provide them with data sheet. And it goes on until they reach the point where they say, okay, we would like to buy a system for our fees -- first fees. So we feel very (technical difficulty) we have the good connections with the primes, and that's not just in the US, in Japan, in South Korea, we are, for example, on a number of programs in South Korea already, and that we've started supplying -- sonars into their new vessels. So it's a small community of uses for real-time 3D imaging, and unfortunately, I mean, unfortunately rather, Coda is the show in town.
Walter Ramsley
Yeah. Sounds great. Thanks for answering all those questions. Congratulations.
Annmarie Gayle
Thank you very much, Walter.
Operator
David Wright, Henry Investment Trust.
David Wright
Annmarie, good morning. Thanks for having the call.
Annmarie Gayle
Good morning.
David Wright
Can you tell us the status of the search for a permanent CFO and whether or not you have a particular geography in mind for that CFO would be stationed?
Annmarie Gayle
Thank you very much, David, for your question. Yes, that's ongoing. We've had a number of interviews. Well, the position is open, is in Edinburgh and in Orlando. And so we are having some good quality conversations at the moment. And where you think to make an appointment in the next more number of months. So that's where we are.
But we're getting some good quality conversations. And we are hoping, as I said before, to make an appointment in a small number of months. But of course, we want to emphasize, we want to be sure it's the right candidate for Coda Octopus.
David Wright
Okay. And just to go back into the script, I wanted to make sure I didn't misunderstand you when you were speaking right after describing the DAVD adoption curve and going through, you got to untethered and talked about what was going on with untethered. And then I thought I heard you refer to something called the saturation diving community. Did I understand the word saturation correctly?
Annmarie Gayle
Yes, you did, exactly. Those our new communities that are coming out of the SWOD that we -- the SWOD events we attended in Papendrecht in the Netherlands and also at the Ministry continuum in the US. We started conversations with different teams, including the deep diving saturation team. So these are new conversations that we started and for around the debit.
Walter Ramsley
Okay. If you have another minute, could you just briefly describe what is saturation diving?
Annmarie Gayle
Well, I probably -- it's just deeper diving where you guys in like a chamber and farming. So it just means right at the moment, we're doing more on-surface diving and we sometimes dive a little deeper at the [DAVD] belt, but the saturation diving it much deeper diving. And that's where you would have things like the diving suite. And that's really where the technology would be embedded in the diving suite.
Walter Ramsley
Okay. Well, thanks for the elaborate --
Annmarie Gayle
See, it's simply deeper diving.
Walter Ramsley
Right? I wasn't sure if it meant lots and lots of divers saturating an area.
Annmarie Gayle
No, no.
Walter Ramsley
So thanks for explaining.
Annmarie Gayle
Very good. Well, continued good luck going forward.
Walter Ramsley
Thank you very, very much. Thank you, David.
Operator
Thank you. We have reached the end of the question-and-answer session. Ms. Gayle, I would now like to turn the floor back over to you. Ms. Gayle, I would like to turn the floor back over to you.
Annmarie Gayle
Thank you for joining our call today and for your interest in our company. Have a great rest of your day. Operator?
Operator
Thank you for joining us. Thank you for joining us for today's Coda Octopus conference call. You may now disconnect your lines.
Annmarie Gayle
Thank you.
