Coda Octopus Group, Inc.: Form 10-K for the period ended Oct 31, 2025

Overview

Coda Octopus Group, Inc. (“Coda” “the Company” or “we”), through its wholly owned subsidiaries, operates three distinct segments:

• the Marine Technology Business (also referred to in this Form 10-K as “Products Business”, or “Products Segment” or “Core Business”);
• Acoustic Sensors and Materials Business (also referred to in this Form 10-K as “PAL”);
• the Defense Engineering Services Business (also referred to in this Form 10-K as “Engineering Business”, or “Engineering Segment” or “Services Business”).

Marine Technology Business

Our Marine Technology Business provides technology solutions to the underwater market and constitutes our core business. We are allocating most of our resources to this segment. It owns key proprietary and unique technology comprising its real time volumetric imaging sonar technology (Echoscope® technology) and diving technology (“DAVD” (Diver Augmented Vision Display)), both of which are intended for the underwater market, and which are used in the commercial offshore and defense sectors. It also sells other proprietary subsea products such as its geophysical hardware and software solutions, inertial navigation systems and digital audio communications system for underwater applications. All innovations, design, development and manufacturing of our products are performed within the Company. As part of our patent strategy, we endeavor to actively protect our innovations by seeking, where appropriate, patent protection.

Our imaging sonar series which is marketed under the name Echoscope®, Echoscope PIPE® and Echoscope PIPE NANO Gen Series® are used primarily in the underwater construction, offshore renewables, and offshore oil and gas, complex underwater mapping, salvage operations, dredging, bridge inspection, navigation of underwater hazard, port and harbor security, ship hull scanning, mining, commercial and defense diving, robotics, autonomous underwater vehicle market, marine sciences sectors and more broadly applications for real time 3D monitoring, inspection and visualization underwater. Uniquely, the Echoscope® technology is a single sensor for multiple underwater applications that can be used to image in 3D, moving objects in zero visibility water conditions. Competing technologies such as the multibeam is intended for mapping the seabed. However, they are not designed for imaging moving objects.

Our diving technology marketed under the name “CodaOctopus® DAVD” targets the global defense and commercial diving markets. We have two variants of the DAVD, (the tethered and untethered variants). The tethered variant is used with a connection to a surface vessel, and the untethered variant is not connected to a surface mothership for air supply. The target market for the untethered variant is the military and special forces operations divers.

The DAVD solution has the potential to radically change how diving operations are performed globally because it delivers real time information simultaneously to the divers underwater and their surface-based dive supervisors. The DAVD Head- Up Display (“HUD”) is used as a data portal for the diver while underwater. Various types of information are displayed to the diver in the HUD in real time, thereby increasing the capability of the interaction between the diver and the dive supervisor and therefore the overall effectiveness of the dive operations. When paired with our Echoscope® technology it forms a comprehensive solution for diving in zero-visibility water conditions, which is one of the biggest challenges for diving operations.

The DAVD untethered solution (“DUS”) is designed for the Defense and Military market where diving is performed without connection to a surface vessel. These divers typically performs special forces operations, mine detection and clearance or reconnaissance and surveillance. Similar to the tethered variant, the DAVD HUD is used for displaying a range of mission-related information to the diver.

DAVD’s concept of using a pair of glasses, which is capable of augmented reality display, inside the face mask, helmet or other diving suits is protected by a patent. The Company has an exclusive license to exploit this utility patent.

The Marine Technology Business operates through the Company’s wholly owned subsidiaries Coda Octopus Products, Inc., (Orlando), Coda Octopus Products Ltd (UK), Coda Octopus Products A/S (Denmark).

Acoustics Sensors and Materials Business

The Company acquired Precision Acoustics Limited (PAL) on October 29, 2024. PAL is a supplier of acoustic sensors materials, and consultancy services in the field of acoustics. PAL serves a broad base of markets such as the medical, subsea, defense, universities and research and development institutes. PAL also performs calibration services for medical devices and is accredited to ISO/IEC 17025 standard. PAL is one of only two organizations in the United Kingdom with this certification, alongside the National Physical Laboratory (NPL). Globally, only a handful of facilities hold ISO/IEC 17025 accreditation for these measurements. Ultrasonic free-field sensitivity calibration is critical for markets that require precision ultrasonic measurement, strict safety compliance, and full metrological traceability. These include regulated and high-risk applications, such as diagnostic and therapeutic medical ultrasound and defense and underwater acoustics, where free-field calibration is essential to ensure accurate beam sensitivity and minimal interference. PAL’s operations are based in the United Kingdom.

Defense Engineering Services Business (Services Segment)

Our Defense Engineering Services Businesses are suppliers of embedded solutions and sub-assemblies which they design, manufacture and sell as a component of mission critical integrated defense systems. The Defense Engineering Services Business established its business in 1977 and has been supporting a number of significant defense programs for over 40 years, including Raytheon’s Close in Weapon Support (CIWS) and Northrop Grumman’s Mine Hunting Systems Program (AQS-24). The Defense Engineering Services business model entails engineering components for integration into broader defense programs, such as the CIWS program. Typically, they are contracted to develop and supply prototypes units which are validated for broader integration into these Defense programs and thereafter, subject to meeting the acceptance criteria, these lead to contracts for manufacture, repair and upgrade for the life of the program, which can span decades. We enjoy sole source status for the parts that we design and supply into these programs. This business model ensures recurring and long tail revenues. Coda Octopus Engineering, Inc. and Coda Octopus Martech Ltd, qualify as small businesses. This opens opportunities under state requirements to collaborate with Prime Defense Contractors on these programs. A significant part of the revenue generated by the Defense Engineering Services Business is highly concentrated and is usually derived from a small number of prime defense contractors such as Raytheon, Northrop, Atlas Electronics or Thales Underwater. In any one financial year, between 20% to 30% of our consolidated revenues may be derived from these customers either alone or collectively.

The Defense Engineering Services Businesses operate through our wholly owned subsidiaries, Coda Octopus Engineering, Inc (“COEI”), which is based in Salt Lake City, Utah and which we acquired in 2007, and Coda Octopus Martech Limited (“Martech”), which is based in Portland, United Kingdom which we acquired in 2006.

Cross-Group Synergies

Our Marine Technology business, PAL, and the Defense Engineering Services Business operate as a fully integrated capability, combining shared customer relationships, complementary technologies, and deep specialist engineering expertise. Together, they deliver end-to-end solutions in underwater acoustics and measurement, supported by the design and manufacture of robust, ruggedized systems engineered for deployment in demanding and hostile environments. These capabilities span the entire technology value chain, from acquisition and processing through to computation, analysis, and visualization.

The Group increasingly operates on a collaborative basis, with each business drawing on the strengths of the others to deliver complex customer programs and coordinated responses to broader-scope tenders. Our Defense Engineering Services Business plays a central role in the Group’s growth strategy, providing the engineering depth and systems expertise required to accelerate innovation and enhance the delivery of technology solutions across the Marine Technology portfolio.

This integrated operating model enhances the Group’s control over intellectual property and reinforces its competitive position. PAL’s recognized expertise in ultrasonic and acoustic measurement underpins the Group’s core technologies and continues to shape the development and evolution of integrated, value-led solutions based on proprietary technology.

Key Pillars for our Growth Plans

Our volumetric real time 3D imaging sonar technology (the Echoscope® technology) and our DAVD are our most promising products for the Company’s near-term growth.

The Echoscope® is widely used in the commercial offshore marine market for a wide range of activities from real time 3D monitoring, salvage and recovery, placements and landings, mining, etc. The biggest market opportunity for scalable growth around the Echoscope is in the defense sector which is undergoing structural and transformational changes through the deployment of new classes of underwater vehicles, including manned, unmanned surface, and fully autonomous platforms. These platforms vary in size, from large vehicles exceeding 85 feet in length and weighing over 85 tons, to compact, one-person-deployable systems. A common requirement across all platforms is the need for reliable underwater vision. This capability is essential for safe and accurate navigation, situational awareness, environmental understanding, data collection, and mission execution. The Echoscope directly addresses these needs by providing high-resolution, real-time 3D imaging in complex underwater environments. The defense sector deploys these underwater vehicles for a range of mission-critical applications, most notably Mine Countermeasures, Anti-Submarine Warfare, Surveillance and Reconnaissance, and Infrastructure Protection (such as undersea cables). The Echoscope is currently being evaluated for integration into active future defense programs.

All next-generation defense vehicle programs share a common objective of integrating advanced technologies and enhanced capabilities. Central to this evolution is the development of smarter vehicles equipped with tools like the Echoscope® which deliver real-time, three-dimensional data (live XYZ data) for informed real time decision-making. Its versatility across a wide range of defense mission applications supports the consolidation of sensor suite requirements on these platforms. A key advantage lies in addressing SWaP (Size, Weight, and Power) constraints. With the potential to reduce the number of active sensors on these platforms the Echoscope offers the opportunity to lower power consumption and overall vehicle weight and directly contributing to extended mission durations. This capability represents a unique and valuable benefit which the Echoscope brings to the defense underwater vehicles programs.

The launch by the Company of its Echoscope PIPE NANO Gen Series® in fiscal year 2025, our ultra-compact real time 3D imaging sonar marks a critical step in enabling next-generation subsea AI enabled autonomy. As the subsea industry transitions from vessel-intensive, human -in-the-loop workflows, NANO Gen Series provides the real time 3D perception required to unlock scalable, software driven autonomy across a growing range of platforms. It functions as a core perception sensor for AI-enabled platforms, supporting navigation, obstacle avoidance, target recognition and guidance and adaptive mission execution with reliance on bandwidth limited communications or post-processing capability. The introduction of our NANO Gen Series which is a shade bigger than a smartphone, is a significant leap forward as it positions the Company to address a broad swathe of the underwater vehicle market, where these vehicles are increasingly becoming smaller. With the introduction of our NANO Gen sonar series in fiscal year 2025 we saw real progress in the Defense underwater vehicle market and have had several key and successful trials with the new NANO sonar as it is aligned with the strongest growth drivers in the subsea market for autonomy, Edge AI, reduced operational costs and scalable deployment. By enabling higher levels of autonomy and mission efficiency in a single, compact sensor, NANO Gen Series strengthens the Echoscope’s role as a critical sensor to the next generation of intelligent subsea platforms.

We also believe that the DAVD system, which is a relatively new technology and presents significant capabilities to the diving market, is poised to radically change the way diving operations are performed globally by providing a fully integrated suite of sensor data shared in real time by the diver and the dive supervisor on the surface. Current diving is done largely by voice command missions from the topside using disparate suite of systems for video data, communications, and positioning.

The DAVD tethered variant is now a commercial offering and is in the early stages of adoption with the US Navy in over 14 commands. We continue to work to achieve adoption in the global market.

The DAVD untethered solution (DUS) presents the biggest market opportunity for DAVD technology. In the USA alone there are over 14,000 divers that could utilize this solution including U.S. Special Operations Forces (SOF), EOD (Explosive Ordnance Disposal), US Army, Marine Corps, US Coast Guard, first responders and law enforcement.

In the Fiscal Year 2024, the DAVD untethered solution was the subject of a joint funded U.S and Foreign Navy program, the DUS Hardening Program, under which the DAVD technology was adapted and hardened for SOF applications. During the fiscal year 2024 we made significant progress by delivering major project deliverables such as a new generation head up display (DAVD HUD), which is in a much smaller form factor and higher resolution. Following the successful completion of the DUS Hardening Program, we made further progress during the fiscal year 2025 when we received the first production order for the untethered variant and delivered 16 DAVD Untethered Systems for the U.S Navy MK16 Rebreather system. These are the culmination of extensive field testing and direct feedback from operational divers. The production unit is now undergoing final approval for Authorization for Navy Use (ANU). This is an essential approval process which permits the system to be used in live operation. We also delivered all program deliverables under the DUS Hardening Program to a foreign navy sponsor including training on the DUS, which now enables this navy to move to the next stage of their evaluation by introducing this technology to their internal users. In the 2025 FY we also received our first small batch order for DAVD system from a very influential European-based foreign navy, and we are contracted to provide training in our second quarter of fiscal 2026 to this navy.

The concept of utilizing a pair of transparent glasses in the HUD underwater for this purpose, is protected by patent. All component parts of the DAVD system are proprietary to the Company and include software (4G USE® DAVD Edition), Diver Processing Pack – telemetry system (DPP), topside Supervisor Console Controller and real time 3D Sonar. The Company benefits from the exclusive license from the U.S. Department of the Navy at Naval Surface Warfare Center Panama City Division to utilize the utility patent covering the concept of using the pair of transparent glasses as a data hub underwater. The DAVD tethered variant is classified as an “Authorization for Navy Use” item and also benefits from CE marking certifying that the DAVD system meets the essential health, safety and environmental requirements of the UK and European Union. The untethered variant is currently going through validation process.

Our corporate structure is as follows:

Corporate History

The Company began as Coda Technologies Limited. This company now operates under the name Coda Octopus Products Limited, a United Kingdom corporation formed in 1994 as a start-up company with its origins as a research group at Heriot-Watt University, Edinburgh, Scotland. Initially, its operations consisted primarily of developing software for subsea mapping and visualization using sidescan sonar (a technology widely used in commercial offshore geophysical survey and naval mine-hunting to detect objects on, and textures of, the surface of the seabed).

In June 2002, we acquired Octopus Marine Systems Ltd, a UK corporation, and changed our name to Coda Octopus Limited. At the time of its acquisition, Octopus Marine Systems was producing geophysical products broadly similar to those of Coda, but targeted at the less sophisticated, easy-to-use, “workhorse” market.

In December 2002, Coda Octopus Ltd acquired OmniTech AS, a Norwegian corporation, which became a wholly owned subsidiary of the Company, and which subsequently changed its name to Coda Octopus R&D A/S. At the time of acquisition, this company had been engaged for over ten years in developing a revolutionary imaging sonar technology capable of producing real time three-dimensional (“3D”) underwater images for use in subsea activities. Coda Octopus Products Limited (Edinburgh based) then developed our visualization software (Underwater Survey Explorer) to control and display the images from the real time 3D sonar device. This technology is now marketed by us under the brand name “Echoscope®”, Echoscope PIPE® and Echoscope PIPE NANO Gen Series®. All activities of this now-defunct Norwegian subsidiary, Coda Octopus R&D A/S, have been transferred to Coda Octopus Products Limited (Edinburgh).

On July 13, 2004, the Company effected a reverse merger pursuant to the terms of a share exchange agreement between The Panda Project, Inc. (“Panda”), a Florida corporation, and a now defunct entity affiliated with Coda Octopus Ltd. (“Coda Parent”). Panda acquired the shares of Coda Octopus Limited, a UK corporation and a wholly owned subsidiary of Coda Parent, in consideration for the issuance of a total of 1,432,143 shares of common stock to Coda Parent and other shareholders of Coda Octopus Limited. The shares issued represented approximately 90.9% of the issued and outstanding shares of Panda. The share exchange was accounted for as a reverse acquisition of Panda by Coda. Subsequently, Panda was reincorporated in Delaware and changed its name to Coda Octopus Group, Inc.

In June 2006, the Company acquired Coda Octopus Martech Limited (“Martech”), which is part of our Defense Engineering Services Business. This is an English corporation.

In April 2007, the Company acquired Coda Octopus Engineering, Inc. (“COEI”), formerly known as Colmek Inc., which is part of our Defense Engineering Services Business. This is a Utah corporation.

In December 2013 Coda Octopus Products Limited established Coda Octopus Products Pty Ltd (Australia) to grow our presence in Australia and New Zealand. These activities were interrupted by the Coronavirus Pandemic in 2020 and since then we have not had personnel on the ground and therefore these operations have been slow to regain momentum.

On October 29, 2024, we acquired into the Group, Precision Acoustics Limited - “PAL” - a company established under the laws of England. This company was acquired to gain access to its expertise and expand our capabilities and offering to the market. It was also acquired to leverage its existing technologies and expertise, which are used in other market sectors, into one of our main markets, the subsea market.

Coda Octopus Group, Inc., is organized under the laws of the State of Delaware as a holding company that conducts its business through its subsidiaries, several of which are organized under the laws of foreign jurisdictions, including England, Scotland, Denmark, Australia and India. This may have an adverse impact on the ability of U.S. investors to enforce a judgment obtained in U.S. courts against these entities, or to effect service of process on the officers and directors managing the foreign subsidiaries. These companies’ operations must comply with the laws of the countries under which they are incorporated, and these laws are likely to be different from the equivalent laws of the United States.

Corporate Information

Our principal executive offices are located at 3300 S. Hiawassee Rd, Orlando, FL 32835. Our telephone number is +1 (407) 735-2406. We maintain a corporate website at www.codaoctopusgroup.com (http://www.codaoctopusgroup.com). The reference to the Company’s website address does not constitute incorporation by reference of the information on the Company’s website into this Form 10-K.

Marine Technology Business (“Products Segment”)

Our Marine Technology Business develops proprietary solutions for both the commercial and defense subsea market. The range of solutions which it offers to the market are complementary and include:

These products and/or solutions are sold, rented or leased into various marine sectors such as:

• Marine geophysical survey
• Offshore Renewables (“Wind Energy”)
• Underwater construction, inspection and monitoring
• Diving Companies
• Commercial and Defense Diving
• Salvage and decommissioning
• Oil and Gas (O&G”)
• Robotics
• Autonomous underwater vehicles
• Commercial fisheries
• Environmental, mammal and habitat monitoring
• Underwater Defense Applications
• Underwater vehicles
• Port and Harbor Security, law enforcement and first responders
• Research and education

1. Geophysical Range of Products

The Geophysical range of products is marketed under the brands DA4G®, GeoSurvey® and Survey Engine®. We started our business in 1994 designing and developing the GeoSurvey® software and hardware package for acquisition and processing of sidescan sonar and sub-bottom profiler data. For over two decades, our GeoSurvey has been an industry leading software package in the market for data acquisition and interpretation and provides feature rich solutions and productivity enhancing tools for the most exacting survey requirements. Designed specifically for sidescan and sub-bottom data acquisition, GeoSurvey® has been purchased by numerous leading survey companies throughout the world and has been the workhorse for processing data for Oil & Gas companies for many years. DA4G is a hardware acquisition system and both GeoSurvey® and Survey Engine® are complementary software packages which are used for processing the data post-acquisition.

2. Inertial Positioning and Attitude Measurement Systems (“Motion Products”)

We have been selling our GNSS Aided Inertial Measurement Systems for over 20 years. Our current generation of F280 Series® was released to the market in 2021 and is used to provide data on accurate positioning, heading, pitch, roll and yaw at sea. The F280 Series® is an advancement of our F180® series and is highly complementary to our real time Echoscope® sonar series and they are packaged together to provide a more comprehensive solution. The products within the F280 Series ® range can be sold with or without our Echoscope®.

3. Real Time Volumetric Imaging Sonars (ranging from 3D/4D, 5D and 6D)

We design, develop and supply what we believe is the world’s most advanced series of real time volumetric imaging sonar (Echoscope®, Echoscope PIPE® and recently added Echoscope PIPE® NANO Gen Series). This is the culmination of over 25 years of research and development. Our sonar innovations are multi-tiered and extend to hardware, firmware and software, all of which co-exist and are co-dependent on each other. In other words, hardware, firmware and software operate as sub-systems to each other. We believe that the highly complex nature of this new technology will make it extremely difficult to reverse engineer our sonar products.

Prior to 2018, we were selling our third generation of Echoscope imaging sonar (3G Sonar Series which were of limited application due to size, weight, power and price (SWAPs)). In January 2018, we launched our 4G Sonar Series which were largely form factor revisions, and removed the SWAPs issues. Building on our 4G developments, we continued our innovation and in 2021 released our latest generation of sonar, Echoscope PIPE® to the market which advanced the capabilities of the technology and antecedent sonar products significantly. We continued investing in our Echoscope Technology and in 2025 based on our breakthrough technology chip set, we were able to introduce our new Echoscope PIPE NANO Gen Series® which is significantly reduced in form factor (a shade bigger than smartphones) and further opens the opportunities for our technology in the small underwater vehicles space, drones and robotics and platforms designed for autonomy and AI driven requirements.

We believe that the Echoscope PIPE® technology is superior to the other imaging sonars in the market as it generates real time 3D, 4D, 5D and 6D images of the underwater environment irrespective of low or zero visibility conditions and, unlike conventional sonars, can image a volume of data (as opposed to a slice of data). The capability of our volumetric imaging sonars covers a broad breadth of activities underwater particularly for any form of real time monitoring in 3D, underwater construction, salvaging, placements, decommissioning, obstacle avoidance, complex underwater mapping and real time 3D navigation in zero visibility conditions. Uniquely also, using a single sensor (our Echoscope PIPE®) range we can provide different data outputs to the various parts of the survey team, thus reducing the number of different sensors required on these underwater projects, and ultimately reducing the costs associated with these operations.

About the Company’s 5D and 6D PIPE Sonars Innovations

The acronym PIPE stands for Parallel Intelligent Processing Engine.

5D and 6D imaging sonars are new to the subsea market and constitute an innovation by the Company.

5D Sonars (Echoscope PIPE®)

The Company’s 5D Sonars is capable of processing and utilizing much more of the data that is acquired and processed by our latest PIPE volumetric imaging sonars. Prior to this, due to limitation of processing technologies, there was an upper limit to the amount of data our antecedent sonars could acquire and process. This meant that in the previous generation of sonars (3G and 4G series) when a signal was emitted, they returned a single range and intensity value per beam. In our 5D Sonars we return multiple range and intensity values per beam (Full Time Series data). This new capability provides more information about the underwater environment.

6D Sonars (Echoscope PIPE®)

The Company’s 6D Sonars process and utilize much more of the data acquired by the sonar. 6D Sonars generate multiple real time 3D full time series images. The latest PIPE technology generates multiple 3D images simultaneously in real time using different sonar/acoustic parameters (such as different beamforming methods, frequency, range, field of view, pulse length and other acoustic filters or shading). This allows for different data sets to be provided to different parts of the survey team in real time (thus consolidating the sensors and the associated costs and effectiveness of the solution). We are not aware of any sonar that offers either 5D or 6D Capability.

Echoscope PIPE NANO Gen Series®

The Company’s NANO Gen Series sonars were introduced during third fiscal quarter of 2025. The NANO Gen Series is pivotal for the Company as it addresses the small underwater vehicles, drones, autonomous and robotics platforms which is a growing part of the underwater vehicles market – where these are getting increasingly smaller. The biggest market opportunity for our scalable growth around the Echoscope is in the defense sector which is undergoing a major transformation through the deployment of new classes of underwater vehicles, including manned, unmanned surface, and fully autonomous platforms which are becoming increasingly small. The introduction of NANO is important as it positions the Company to address a broader swathe of the imaging sonar market. We believe our NANO Gen Series is aligned with the strongest growth drivers in the subsea market by enabling higher levels of autonomy and mission efficiency with a single ultra compact sensor supporting multiple high-value use cases including subsea navigation, inspection, 3D modeling, 3D perception, seabed imaging and change detection and therefore allowing operators to consolidate hardware, reduce integration complexity and lower the total system cost. This multi-mission flexibility positions NANO Gen Series as a platform-agnostic technology for AUVs, ROVs, hybrid vehicles, resident subsea systems and future autonomous fleets.

Echoscope® Software

The Echoscope® technology is used in conjunction with our internally developed software (USE, Construction Monitoring System (CMS), 4G USE®, 4G USE® DAVD Edition and 4G USE® DAVD Flex Edition). The software is a critical component of the capabilities and features of our sonar series.

Our software development capability is an important part of our strategy to maintain our lead in designing, manufacturing, and selling state-of-the-art real-time volumetric imaging sonars and our DAVD System. It also allows us to be responsive to our customers’ requirements for new features and capabilities around our solutions.

We have now launched our fourth-generation multi-sensor software platform which is marketed under the name “4G USE®”, which is a multi-sensor platform allowing users to bring in and utilize a variety of sensor data including sonar, positioning, camera, lidar, video processing and other sources of point cloud data and seamlessly merging above and below the water data captured from the sonar and camera. It is also the platform for our DAVD software, and this module is marketed under the brands 4G USE® DAVD Edition and 4G USE® DAVD Flex Edition and our new 4G USE® Obstacle Detection/Avoidance software.

Diver Augmented Vision Display (DAVD) System – Diving Technology

Funded by the Office of Naval Research (“ONR”) through its Future Naval Capabilities (FNC) program, and in close collaboration with NAVSEA 00C3 and Naval Surface Warfare Center, Panama City Division (“NSWC PCD”) we have developed a cutting-edge Augmented Reality (AR) technology (DAVD), purpose-built product to enhance diver safety, performance and situational awareness in low-visibility and technically demanding underwater environments.

DAVD is a complete end-to-end diver management solution incorporating as a key element a high-resolution, fully transparent glass head-up display (“DAVD HUD”), integrated directly inside the diving helmet (for hard hat surface air supply diving) or full-facemask (for tethered and untethered defense, commercial and recreational diving applications) or diving suits.

Problem In Context

The concept of using a pair of transparent glasses in the HUD to render real time information for underwater applications is protected by patent and Coda Octopus has an exclusive license from United States Department of the Navy at NSWC PCD to exploit this patent for all underwater diving activities.

The US Government, as represented by Secretary of the Navy (Arlington, VA), describes the challenge for divers in an abstract from their patent application as follows:

“By their very nature, underwater dive missions are difficult and inherently dangerous. Furthermore, the complexity of underwater missions can make it difficult or impossible for a diver to retain all pre-mission briefing information. For these reasons, it is critical for underwater divers to have access to environmental data and mission data while in the water. However, in low visibility water environments, divers can rarely see handheld displays or gauges. Accordingly, divers are generally supplied with audio-communicated information from a topside location. The topside-supplied information can include descriptions of sonar images, blueprints, maps, pictures, etc. Unfortunately, it can be very difficult and confusing for a diver to interpret a topside personnel’s audio description of the topside personnel’s visual interpretation. Combining this with unreliable audio communication can lead to mission failures or disasters.”

It further describes the objective of the Invention as:

“Accordingly, it is an object of the present invention to provide an underwater diver with real-time visual information available to topside personnel.

Another object of the present invention is to provide real-time visual information to an underwater diver for viewing in water environments irrespective of water visibility levels.

Other objects and advantages of the present invention will become more obvious hereinafter in the specification and drawings.”

How does DAVD Change this?

The DAVD system addresses all the challenges described above including removing the interpretation of the underwater scene to the topside by providing the diver with real time data and first-person interpretation. The DAVD technology benefits not only the diver and direct supervisor on the surface, but also engineers, end-clients, rescue workers and support personnel who all have a vested interest in a successful and safe diving mission. DAVD provides the location of the diver, the dive support vessel, work site assets and any hazards that are known or discovered in real-time. Real-time compass and depth are also displayed to the diver to reduce disorientation. Visibility for the diver and team is significantly enhanced with both real-time camera and 3D sonar data (providing underwater night-vision) and also high-resolution maps and models of the entire work site and surroundings. Communication is transformed from low quality audio speech to high quality digital audio and video, text messaging, visual alerts and automated navigation guidance. The safety of the diver and team is paramount. DAVD ensures the Diver and Supervisor are visually synchronized and can safely coordinate movement, tasks and instructions with full health monitoring and logging of the entire mission. Using the current method of diving, data and information sharing end when the diver leaves the surface.

The DAVD solution is currently in early-stage adoption with the US Navy and enjoys the benefit of the classification Authorization for Navy Use (ANU) item for the Tethered variant. DAVD also is certified for CE markings which covers compliance with the European Union and the United Kingdom health environmental and health and safety requirements.

We continue to evolve the DAVD technology. We delivered the new generation of DAVD HUD at the end of fiscal year 2024 and following the completion of the DUS Hardening Program, which funded the adaptation of the DAVD technology for the special forces sector, we delivered 16 DUS new generation systems which are now the subject of evaluation for broader adoption by this community of users.

During fiscal 2025 we received contracts for several funded programs for the incorporation of the DAVD technology into diving apparatus including diving masks and diving suits including DSEND (Deep Sea Expeditionary with No Compression System). DAVD is being leveraged as a critical life support and visualization component, enhancing diver safety and mission effectiveness by delivering real time life support data via the DAVD HUD and 3D situational awareness through Echoscope technology. These initiatives exemplify the growing recognition of DAVD and Echoscope technologies as mission-critical tools in the evolving landscape of advanced military diving and underwater operations.

Marine Technology Business Accreditations

Coda Octopus Products Limited has the requisite accreditations for its business including being Lloyds Register accredited to ISO 9001:2015 and Cyber Essentials Plus certification.

Acoustic and Materials Business (Precision Acoustics Limited (“PAL”))

PAL is a recognized leader in the ultrasound and acoustic measurement field. Specializing in acoustic hydrophone design and innovative acoustic materials, they provide a comprehensive range of products and solutions, with a primary focus on medical imaging and Non-Destructive Testing (NDT). NDT is used to validate the viability of structures such as aircraft, ship hulls, wellheads and other subsea structures. Their expertise extends to working closely with national and global standard-setting bodies (such as the National Physical Laboratory of the UK), contributing to the establishment of the primary measurement standards in the industry. PAL also performs calibration services for medical devices and is accredited to ISO/IEC 17025 standard. PAL is one of only two organizations in the United Kingdom with this certification, alongside the National Physical Laboratory (NPL). Globally, only a handful of facilities hold ISO/IEC 17025 accreditation for these measurements. Ultrasonic free-field sensitivity calibration is critical for markets that require precision ultrasonic measurement, strict safety compliance, and full metrological traceability. These include regulated and high-risk applications, such as diagnostic and therapeutic medical ultrasound and defense and underwater acoustics, where free-field calibration is essential to ensure accurate beam sensitivity and minimal interference.

PAL has the requisite accreditations for its business including being Lloyds Register accredited to ISO 9001:2015 and Cyber Essentials Plus certification and ISO/IEC 17025 covering ultrasonic hydrophone calibration capabilities—specifically in Ultrasonic Free-Field Sensitivity.

Defense Engineering Services Businesses (“Services Segment”)

Our Defense Engineering Services Businesses comprise Coda Octopus Engineering, Inc. (“COEI”) which is based in Salt Lake City and Coda Octopus Martech Limited which is based in Portland, UK.

They largely operate as sub-contractors to prime defense contractors, and their engineering solutions typically constitute sub-components designed for integration into larger defense programs of record where high levels of reliability and quality are essential pre-requisites for securing and maintaining these agreements with their customers. Typically, they prototype subassemblies for their customers and after going through various acceptance tests, including first article inspection approvals, they are then awarded the manufacturing contracts. Many of these manufacturing contracts have a repeat orders profile which typically follows the life cycle of the defense program that is using the subassembly component within the broader program.

These arrangements often give the Defense Engineering Services Businesses long term preferred/sole supplier status for the sub-components they supply into these programs and provide them with opportunity to participate in any requirements for technology refresh or obsolescence management for the components supplied. They generally use these long-standing relationships to win more contracts with these customers.

In order to grow, the Defense Engineering Business relies on increasing the number of new programs it attracts annually. In addition, we are increasingly combining our engineering capabilities with our product offerings. This enables us to offer systems which are complete with installation and support to maximize the utilization of our collective expertise to advance our technologies.

Coda Octopus Martech Limited (“Martech”)

Martech, which is UK-based, operates in the specialized niche of bespoke design and manufacturing services mainly to the United Kingdom defense and subsea industries. Its services are provided on a custom subcontract basis where high quality and high integrity devices are required in small quantities. Their skill set includes both hardware and software design.

Martech enjoys pre-approvals to allow it to be short-listed for certain types of government contracts. Much of the more significant business secured by Martech is through the formal government or government contractor tendering process. Martech has the requisite accreditations for its business including being Lloyds Register accredited to ISO 9001:2015 and Cyber Essentials Plus certification.

Coda Octopus Engineering, Inc. (“COEI”)

COEI, which is US-based, is a supplier of embedded solutions and sub-assemblies which they design and manufacture and sell into mission critical integrated defense systems such as the Close-In-Weapons System (CIWS). This business was established 1977 and has been supporting several significant US defense programs for over 45 years, including Raytheon’s CIWS and Northrop Grumman’s Mine Hunting Systems Program (AQS-24). This business was at the heart of technology for search and recovery of the Titanic in 1985 with its long-range telemetry system for underwater instrumentation. COEI’s business model entails designing sub-assemblies which are components of broader defense programs. COEI is the sole source for the hardware and software components that they supply to these programs. This business model ensures recurring and long tail revenues since we continue to supply parts, typically for the life of the program, which can span decades. Their work scope typically extends to both hardware and software design.

COEI has the requisite accreditations for its business, including being Lloyds Register accredited to ISO 9001:2015 and NIST (National Institute of Science and Technology) 800-171 certification.

Sales and Marketing

The Marine Technology Business markets its products through its internal sales team, website, industry events such as trade shows, webinars, live demonstrations of the technology, industry relationships and a network of non-exclusive agents in foreign countries such as Japan, China, Korea and South Africa.

PAL markets its products through its internal sales team, its website and a network of non-exclusive agents in Japan, China, India and Korea.

COEI markets its products through its internal sales team, website, industry events and a network of non-exclusive agents in the US and Canada.

Martech markets its products through its internal sales team, website and industry events.

Competition

Marine Technology Business

In our Marine Technology Business, we are exposed to the following competitive challenges:

Real Time 3D/4D/5D and 6D Volumetric Sonar (Echoscope® Technology)

A significant portion of our revenue is generated from our Echoscope® technology.

Within the domain of real-time 3D imaging, we are aware of only a single recent entrant to the market: WaterLinked AS. The specific capabilities and intended applications of their sonar system remain uncertain; however, publicly available datasheets indicate that it is designed solely as an acoustic camera with a notably limited imaging range and crucially limited resolution. Consequently, the product appears to offer limited performance and remains at a nascent stage of technological development.

Entry into this market depends upon specialized marine electronics, acoustic, know-how, and software development skills. The learning curve, which has resulted in the advancement of our real time 3D sonar device, is the culmination of two decades of research and development in this field.

Companies such as Kongsberg Gruppen, R2Sonic, LLC, Tritech International Ltd., United Kingdom, BlueView Technologies Inc., USA (now a part of Teledyne Technologies Incorporated), and Norbit Group AS Norway and Kraken Robotics are examples of companies offering imaging sonar solutions (such as multibeam sonars, SAS sonars and/or 2D scanning sonars), but none of these sonar offerings are directly comparable or competitors to our real time volumetric 3D/4D/5D and 6D sonar solutions as their scanning sonar, single beam or multibeam sonars are not real time 3D imaging sonars and therefore cannot image moving targets underwater.

Specifically, we believe that they do not have the same capabilities as our Echoscope® technology in terms of real time inspection and monitoring by generating 3D, 4D, 5D and 6D images of moving objects underwater including in environments in low or zero visibility conditions. Notwithstanding it should be noted that Teledyne has acquired a significant number of substantial subsea companies (examples are Reson and BlueView). Teledyne has much greater resources, liquidity and market reach than our Company and has many operating verticals. We therefore can give no assurance that companies such as these will not enter this market. Furthermore, companies such as Kongsberg Gruppen and Teledyne can expend significantly more in any one fiscal year on R&D and Business Development, key pillars for increasing market share of underwater imaging sonars, than the Company. Notwithstanding, we believe that our recent development and introduction of 5D/6D - Echoscope PIPE® sonar capability in conjunction with our software (4G USE® a multi-sensor platform) further distinguishes our volumetric sonars and significantly extends our lead in real time 3D/4D/5D and 6D Imaging of moving objects underwater over competitors in the subsea imaging market. Furthermore, we believe that the addition of Precision Acoustic’s expertise in this area will help the Company in maintaining its lead in this area. We are not aware of any other imaging sonars in the market capable of generating real time 5D and 6D imagery underwater, which are Coda Octopus inventions. The innovations around Echoscope PIPE® are the subject of numerous patent applications. We have been awarded US 10,718,865 and US 10,816,652 patents which concerns a method of compressing beamformed data and method of compressing sonar data, respectively. These two patents are important “method patents” since we are handling significantly more data than in our previous generation of sonars.

We seek to compete on the basis of producing high quality products employing cutting edge technology that is easy to use by the operators without specialized skills in sonar technology. We intend to continue our research and development activities to continually improve our products, seek new applications for our existing products, develop new innovative products and grow the market for our products and expertise.

Diver Augmented Vision Display System (“DAVD”)

A material portion of our revenue is generated from our DAVD technology.

There are various diving systems in the market that provide a combination of different aspects of our DAVD system but no systems that directly compete in the form of embedded fully transparent glasses mounted internally within the diver helmet or mask for visual display of a range of data and augmented reality information which can be directly consumed by the diver underwater. This concept is protected by US Patent 10,877,282.

The DAVD system provides a unique diver centric system with localized and external sensors to provide increased safety, scene awareness and vital communication in the form of Digital Audio, Ultra-Low-Light Video, Text and technical instruction and access to a complete media hub for effective communication between diver and supervisor. The DAVD system provides the following capabilities:

• Fully Transparent High-Definition HUD mounted internally within supported Dive Helmets and Dive Masks, including Kirby Morgan KM37, KM37SS, KM97 and SL17 Helmets, as well as the Interspiro Divator MK II, OTS Guardian and Dräger Panorama Nova Dive, Diveways and DSENDs.
• Fully integrated 1st person perspective digital low-light camera with advanced video processing and real-time edge enhancement for Diver and Dive Supervisor
• Fully integrated noise-cancelling Digital Audio at source, replacing legacy communications
• Integrated Diver Head Tracking for accurate 3D scene visualization with full support for subsea positioning systems for accurate Diver positioning
• Telemetry Information on demand including Dive Timers, Depth and Compass Heading, Live position Lat/Long (when connected to external diving positioning system), Waypoint Range and Bearing as well as external Dive Computer data
• Instant Digital Voice and Text Communication between Dive Supervisor and Diver, including auto and pre-defined messaging
• Transmit unlimited on-demand media to Diver including Images, Instructional Videos, Technical Drawings and other assets to assist in live operations
• Creation and transfer of unlimited step-by-step mission instructions with text, video and image support for common diver tasks and operations
• Full Mixed-Reality 3D Display for Diver using live Sonar, pre-surveyed Sonar data and 3D models
• Divers HUD Display fully adjustable between 2D Mode, and 3D Mode with 1st person and 3rd person perspective

There are several diver related products and sensors that can be worn by the diver such as telemetry systems, navigational aids, dive computers, video and sonar systems and probes and sensors such as magnetic and thickness. Each of these systems typically have an independent display, typically on the device or wrist worn.

Video systems generally provide no direct benefit to the diver and are intended for top-side visualization. The DAVD provides video data directly to the diver.

More recent advances in technology have introduced head mounted display (HMD) as either replacement or as additional display close to the divers’ eyes. These are typically presented in the form of a monocular display mounted externally to the divers’ mask in which the diver must look at this display through a single eye. These are not intended for long term use and are more for occasional glance at data for reference. Dual HMDs are also provided in certain products to replace what the diver can see through the mask with a computer display.

The drawback of such HMD is that the diver loses all sense of the natural surrounding and the real environment is placed using the computer display. Examples of monocular and dual lens HMD include Shearwater Nerd 2, Tritech DMD (Diver Mounted Display) and Blueprint Subsea Artemis HMD.

Furthermore, a significant challenge for diving is the operating environment where zero visibility conditions typically prevail. Combining our DAVD with our Echoscope® removes this barrier for diving operations.

Acoustic Sensors and Materials Business

PAL sells several products, some of which are customized for the customer’s specific application. It is exposed to the following competitive challenges:

Needle and Membrane Hydrophones and Fibre-Optic Hydrophones Market.

For its needle and membrane hydrophone ranges, which are a highly specialized range of products, competition is limited. The principal competitors offering both needle and membrane hydrophones are Onda Corporation, Sunnyvale, CA, USA and Gampt, Merseberg, Germany. For its fibre-optic hydrophones range of products, its main competitors are Onda Corporation, Sunnyvale, CA, USA, RP Acoustics, Stuttgart, Germany and Muller Instruments, Oberursel, Germany.

Single element Transducers Market

PAL supplies single element transducers. There are many suppliers of ultrasonic transducers including Olympus, USA, Imasonic, Besancon, France; Vermon, France; Sonatest, UK; Waygate Technologies, USA as well as numerous smaller organizations in China. However, these competitors offer commercial-off-the-shelf (COTs) products whereas PAL offers custom design single element transducers based on its customers’ specifications and therefore competition is limited for this specialist customization capability.

Automated Measurement Systems Market

PAL supplies Automated Measurement Systems. Its main competitors in this area are Onda Corporation, Sunnyvale, CA, USA; Acertara Acoustic Laboratories, Longmont, CO, USA and Gampt, Merseberg, Germany. These companies offer acoustic measurement systems which are comparable with the PA UMS system. However, PAL faces less competition for its Automated Measurement Systems since its focus is on customization to their customers’ specifications.

Passive Acoustic materials Market

PAL supplies passive acoustic materials. Competition is limited as it has a license from the UK National Physical Laboratory to distribute a wide range of ultrasonic absorbers and encapsulants incorporating NPL’s intellectual property.

Measurements and Calibration Market

As a provider of measurements and calibration services in the UK, PAL’s main competitor is National Physical Laboratory (NPL), UK who is the only provider of ISO17025 accredited hydrophone calibration services, in addition to the ultrasonic power calibration service. They also provide ultrasonic and underwater acoustic field characterization services. However, there is a long-established collaboration between PAL and NPL, and both organizations act as supplier and customer of each other. Elsewhere, numerous notified bodies or national measurement institutions (TuV, Germany; SGS, France; GUM Poland; PTB, Germany) offer some specific measurement services.

Defense Engineering Services Businesses

COEI and Martech compete with larger contractors, such as the primes, in the defense industry. Typical among these are Ultra Electronics, Atlas, BAE Systems, Thales Underwater, Raytheon and Northrop Grumman, all of whom are also partners on various projects. The strongest competitors are often the prime contractors themselves as they predominantly have the option to execute the work package internally as opposed to subcontracting with us.

Intellectual Property

We operate in an industry in which innovation, investment in new ideas and protection of our intellectual property rights are critical for our continued success. When we can, we protect our innovations and inventions through a variety of means, including, but not limited to, applying for patent, copyright, and trademark protection domestically and internationally, and protecting our trade secrets. We incentivize our employees to innovate through our Patent Reward Scheme.

Patents

Our patented inventions along with our strategy to enhance these inventions are at the heart of the Company’s strategy for growth and development. We expend a material part of our resources in building our Patent Portfolio. We also incentivize our staff to contribute to our Patent Portfolio by having in place a competitive Patent Reward Scheme.

Our patent portfolio consists of the following:

Trademarks

We own the registered trademarks listed below and they are used in conjunction with the products that we market and sell:

Coda®, Octopus®, CodaOctopus®, CodaOctopus & Design®, Octopus & Design®, F180®, F280®, F280 Series®, Echoscope®, Echoscope 4G®, Echoscope 5D®, 5D Echoscope®, Echoscope 6D®, 6D Echoscope®, Echoscope PIPE®, Ping-Pong Echoscope Sonar®, Ping-Pong Echoscope®, Ping-Pong Sonar®, Echoscope Sequencer® 4G Underwater Survey Explorer®, 4G USE®, Echoscope Sequencer®, Survey Engine®, Dimension®, DAseries®, Echoscope PIPE NANO Gen Series®, Echoscope PIPE 6G NANO®, GeoSurvey® CodaOctopus® Air, CodaOctopus® Vantage®; CodaOctopus® UIS; CodaOctopus® USE, Sentiris®, Thermite®; PA and PA Precision Acoustics.

In addition, we have registered several internet domain names including www.codaoctopus.com (http://www.codaoctopus.com); www.codaoctopusgroup.com (http://www.codaoctopusgroup.com); www.codaoctopusengineering.com (http://www.codaoctopusengineering.com); www.colmek.com (http://www.colmek.com) and www.martechsystems.co.uk (http://www.martechsystems.co.uk); www.codaoctopusmartech.com (http://www.codaoctopusmartech.com); and www.acoustics.co.uk (http://www.acoustics.co.uk).

Research and Development (“R&D”)

Research and Development is foundational to our business strategy to ensure our growth strategy and maintain our competitiveness. The main costs that are incurred in this area are wages and salaries, researching, prototyping, and validation and testing. The acquisition of PAL into the Group on October 29, 2024, may result in an increase in R&D expenditure as we seek to take advantage of PAL’s expertise with a view to bringing more products and solutions to the market.

Our products are complex and therefore we can give no assurance that even with spending a significant part of our resources on R&D, we will be successful in our development goals or realize significant monetization of these developments or new technologies may not surpass our R&D innovation by the time these are realized as products or capabilities. Furthermore, even following the launch of any product we may not succeed. Moreover, we may incur significant research and development expenditures without realizing viable products.

Government Regulation

We sell our products and services internationally and therefore we are subject to numerous laws concerning general business regulations in the various jurisdictions in which we operate. Governmental actions (such as trade protection measures, including export duties and quotas and custom duties and tariffs) may have a material impact on our business and directly affect our revenue and business prospects. We are also subject to compliance with the U.S. Foreign Corrupt Practices Act and other applicable U.S. and foreign laws prohibiting corrupt payments to government officials and other third parties. We are subject to laws and policies of the U.S. and other jurisdictions affecting trade, foreign investment, loans, and taxes.

Furthermore, many of our products are subject to export control regimes including in the United States, United Kingdom, Denmark, and Australia. Where our products are subject to such export control requirements, they may only be exported to our customers if there is a valid export license granted by the relevant government body. Moreover, these regulations may change from time to time in these jurisdictions, including the United States, depending on the existing relationship with the country to which the goods are exported. Increasingly the area of export control of technologies is used as a political tool and therefore inherently fluid and uncertain – making business decisions even more complex. Our international activities are significant to our revenues and profits (see Note 16 “Disaggregation of Revenue”). We are therefore dependent on obtaining, on a timely basis, export licenses to many foreign jurisdictions including China. Furthermore, we may expend significant financial and other resources, including investment capital in a country to increase sales. However, changes in government trade policy including policy on exporting technology may affect our ability to sell our technology and therefore impact on our growth prospects.

In addition, as a supplier to US Government Bodies such as the Department of Defense (“DoD”), we may be subject to numerous laws and regulations relating to the award, administration, Defense Federal Acquisition Regulations (“DFARs”) and performance of US Government contracts, including the False Claims Act. Non-compliance found by any one agency could result in fines, penalties, debarment, or suspension from receiving additional contracts with all US Government agencies. Given our dependence on US Government business, suspension or debarment could have a material adverse effect on our business and results of operations. In addition, the costs of complying with some of the regulations including DFARS may be prohibitive.

We are dependent on Government funding for a significant part of our revenue generation. To secure certain types of Defense contracts, we need as a pre-requisite to meet DFAR on security (including regulations on the type of IT system which must be in place, receiving, handling and storing certain classes of materials). In many instances we do not hold these credentials, and we may therefore not qualify to compete for such contracts.

We are also required to maintain certain accreditations including ISO 900 accreditation, Cyber Essentials, Cyber Essential Plus.

Employees

As of the date hereof, we employ approximately 100 employees worldwide, of which 10 hold management positions. A large majority of our employees have a background in science, technology, software and hardware engineering, with a substantial part being educated to a degree level. A number of our employees hold PhD’s in the area of their specialization. None of our employees are employed under a collective agreement and we have not experienced any organized labor difficulties in the past.

Available Information

Our internet address is www.codaoctopusgroup.com (http://www.codaoctopusgroup.com), where we make available, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities Exchange Commission (“SEC”). Our SEC reports can be accessed through the investor relations section of our website. With the exception of our annual and periodic reports (Form 10-K and Form 10-Q), the information found on the Company’s website is not intended to be incorporated by reference into this or any other report we file with or furnish to the SEC and are expressly excluded from any such form or reporting.

Risk Management

The Company has designed and implemented processes to identify, address and mitigate risks from cybersecurity threats. Our current processes, which are subject to change as best practices evolve, include:

(I) maintenance of cyber security certifications (such as Cyber Essential Plus). The Cyber essential scheme is a certification scheme designed to show that an organization has a minimum level of protection in cyber security through annual assessments to maintain the certification. This certification is issued by third party service providers who annually review the Company’s security controls around its Information Technology Infrastructure (“ITI”) and business practices to determine the Company’s vulnerability to cyber security threats. We also implement all recommendations which may come out of the certification assessments process.

(II) As part of our day-to-day management of our business, we perform ongoing monitoring of ITI for access violations to our IT systems, weaknesses, changes or other threats.

(III) We actively monitor the bulletins that may be issued by National Cyber Security Bodies, which are a good source of information on current trends and methods relating to cyber-attacks. We review this information and adapt our business practices as may be prudent and feasible.

(IV) We have established an internal cross-group committee (Cyber Security Management Committee (“CSMC”) designating the area of cyber security risk management as “business critical”. The CSMC, under the guidance of the Board of Directors, is responsible for the risk management strategy and governance of this critical business area. Under the CSMC, a formal monthly reporting on cyber security related matters has been implemented and this is provided to the Management of the Company for ongoing review. The monthly reporting covers: (i) the outcome of random testing designed to identify threats, access violations and risks; (ii) compliance with the Company’s ITI access protocol; (iii) confirmation that in the reporting period that there were no cyber security incidents; (iv) the assessment and identification of any gaps in the Company’s cyber security risk management protocol; and (v) confirmation that we continue to be compliant with our cyber security certifications and no action or omission has caused this certification to be invalid.

(V) We run monthly cybersecurity awareness training with our employees, and this is documented in our internal periodic reporting.

Governance

Our Board of Directors holds oversight over the Company’s cyber security risk management strategy and protocols. The Company’s internal CSMC works closely with the Board’s expert appointee. All ITI changes, proposed through the CSMC, are routed through approval processes, and testing before implementation.

Our business strategy, results of operations, and financial condition have not been materially affected by risks from cybersecurity threats, but we cannot provide assurance that they will not be materially affected in the future by such risks or any future material incidents.

Orlando, Florida

Our corporate offices are co-located with our subsidiary Coda Octopus Products, Inc. in Orlando. We own these business premises comprising 3,000 square feet, that include office space, a training center and light manufacturing facilities.

Edinburgh, Scotland, UK

Coda Octopus Products Limited (Edinburgh based) operates from two premises together comprising 21,313 square feet of internal space and includes office space, R&D Facilities, a Training Facility, Manufacturing and Warehousing. These premises are owned by Coda Octopus Products Limited.

Copenhagen, Denmark

Coda Octopus Products A/S, a Danish Subsidiary was established as a mitigation strategy in relation to the UK leaving the European Union which has limited trade relations with EU member states. It leases business premises comprising 1,450 square feet for its operations. The lease is subject to 6 months’ notice of termination.

Annual rent is currently DKK 165,763 plus Value Added Tax (being an equivalent of $24,286 per annum) with an annual increase of 3%.

Salt Lake City, Utah, USA

Coda Octopus Engineering, Inc operates from its premises which comprises 16,000 square feet and includes manufacturing, R&D Facilities, and office space. These premises are owned by Coda Octopus Engineering, Inc.

Portland, Dorset, UK

Martech uses premises owned by Coda Octopus Products Limited. These premises are located in the Marine Center in Portland, Dorset, United Kingdom, and comprise 9,890 square feet. The building comprises both office space and manufacturing and testing facilities. The rent paid to Coda Octopus Products Limited is currently $63,568 per annum.

Higher Bockhampton, Dorset, United Kingdom

PAL leases business premises comprising 6,501 square feet used for both office space, manufacturing and testing facilities. The lease is for a fixed period (with no provision for early termination) and expires on March 31, 2033. The annual rent for these premises is currently $61,500 per annum.

All non-US Dollar denominated rents are stated according to prevailing exchange rates as of the date of each respective lease agreement.

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

Forward-Looking Statements

This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995. All statements other than statements of historical fact made herein are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurance can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations. Actual results and outcomes could differ materially for a variety of reasons, including, among others, fluctuations in foreign exchange rates, changes in global economic conditions, tariff and trade policies, reduction in government spending in the Defense sector and customer demand and spending, inflation, interest rates, and world events, risks of inventory management, variability in demand, economic and geopolitical conditions and additional or unforeseen circumstances, developments, or events may give rise to or amplify many of these risks.

This section of Form 10-K discusses fiscal 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in “Management Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)” in our Form 10-K, filed with the SEC on January 29, 2025, which is available free of charge on the SEC’s website at www.sec.gov (http://www.sec.gov) and our Investor Relations website at www.codaoctopusgroup.com (http://www.codaoctopusgroup.com).

General Overview

We operate three distinct business segments: the Marine Technology business, Acoustic Sensors and Material Business and the Defense Engineering Services Business. PAL was acquired on October 29, 2024 and had no material income statement activity in the two days from the acquisition date October 29, 2024 through to October 31, 2024, the date of the Company’s fiscal year end. Therefore, the Company’s audited Consolidated Statements of Income and Comprehensive Income for fiscal year 2024 and reported in its Form 10-K for the year ended October 31, 2024 does not include PAL. Accordingly, no income statement data is available for PAL in the 2024 FY and is therefore excluded from our MD&A discussion below.

Marine Technology Business

Our Marine Technology Business has operations in the USA, UK and Denmark – see the organization chart set out in the Section Item 1 (Business). This business is an established technology solution provider to the underwater imaging, surveying and diving market. It has been operating in this market as a supplier of solutions comprising both hardware and software products for over 30 years and it owns key proprietary technology including its Echoscope® and DAVD technology, that are used in both the underwater defense and commercial markets. All design, development and manufacturing of our technology and solutions are performed within the Company. We sell our products and solutions globally and have a combination of direct sales and indirect sales (via our agents’ network). In Asia and Africa, we largely sell via agents while in the USA, Europe and the Middle East we sell directly. We also rent our products and solutions, particularly to tier-one offshore service providers who prefer accounting for offshore equipment as an operating expense rather than capital expense.

Although the Marine Technology Business generates most of its revenue from its range of real time 3D sonars and DAVD, it supplies several other products to the marine offshore market such as its F280 Series®, DA4G-USB, GeoSurvey software, Survey Engine® software and Voice_HUB_4, (a recently developed digital audio communications system which advances the current analog-based communication technology to a digital based communication technology). Its customers include offshore service providers to major oil and gas companies, renewable energy companies, underwater construction companies, law enforcement agencies, ports, mining companies, underwater vehicle manufacturers, defense bodies, prime defense contractors, navies, research institutes and universities and diving companies. It also provides customization of technology services, particularly in the defense market and around our DAVD solutions where this is tailored for particular markets and applications.

Newly acquired Acoustics Sensors and Materials Business

PAL, which is UK based, was acquired by the Group on October 29, 2024. This Company is a recognized leader in the ultrasound and acoustic measurement field. Specializing in acoustic hydrophone design and innovative acoustic materials, they provide a comprehensive range of products and solutions, with a primary focus on medical imaging and Non-Destructive Testing (NDT). NDT is used to validate the viability of structures such as aircraft, ship hulls, wellheads and other subsea structures. Their expertise extends to working closely with national and global standard-setting bodies (such as the National Physical Laboratory of the UK), contributing to the establishment of the primary measurement standards in the industry. PAL also performs calibration services for medical devices and is accredited to ISO/IEC 17025 standard. PAL is one of only two organizations in the United Kingdom with this certification, alongside the National Physical Laboratory (NPL). Globally, only a handful of facilities hold ISO/IEC 17025 accreditation for these measurements.

Defense Engineering Services Business

The Defense Engineering Services Business has operations in the USA and UK. It is a trusted long-term DoD supplier. Its central business model consists of working with Prime Defense Contractors to design and manufacture sub-assemblies for utilization into larger Defense mission critical integrated systems (“MCIS”). An example of such MCIS is the US Close-In-Weapons Support (CIWS) Program for the Phalanx radar-guided cannon used on combat ships. These proprietary sub-assemblies, once approved within the MCIS program, afford the Services Business the status of preferred supplier. Such status permits it to supply these sub-assemblies and upgrades in the event of obsolescence or advancement of technology for the life of the MCIS program. Customers include prime Defense contractors such as Raytheon, Northrop Grumman, Thales Underwater and BAE Systems. The typical scope of services provided by this business extends to concept, design, prototype, manufacture, and post-sale support including maintenance and obsolescence management.

We have long-standing relationships with Prime Defense Contractors, and we use these credentials to secure more business. We support some significant Defense programs of record by supplying and maintaining proprietary parts (or parts for which we are preferred suppliers) through obsolescence management programs. These services provide recurring stream of revenues for our Services segment.

These business units have established synergies in terms of customers and specialized engineering skills sets (hardware, firmware, and software) encompassing capturing, computing, processing and displaying data in harsh environments.

Factors Affecting our Business

Our business is affected by a number of factors including those set out below:

A. Change in Global Trade Policy including Tariffs We sell our goods and services globally and a large percentage of our revenue emanates from international sales. The recent change in trade policy has created significant uncertainties and certain monetary trade barriers for goods being imported into the US. Furthermore, some of our products sold in the U.S. market are manufactured in the UK. Therefore, we are subject to a 10% tariff on items which are imported into the U.S. from the UK. In the 2025 FY approximately 32% of our Marine Technology Business revenue was generated from sales made in the U.S. on which we have been subject to tariffs. Furthermore, approximately 18.9% of PAL’s sales are made to the US and are also subject to tariffs.

B. Change in Funding Policy for Offshore Renewables Our Core Business revenue mix is a combination of outright sales and rentals. Rentals are an important part of our revenue generating activities and are driven by offshore development projects such as installation of infrastructure cables or remediation of subsea assets. Typically, we are contracted by the major offshore service providers to provide our Echoscope technology and support services (such as offshore engineers) to provide training and support. However, since the change in the U.S. Administration’s policy on the funding for offshore renewables programs, we have seen reduced demand (and underutilization of our rental assets) from our European customers who had been down-selected for development of many of the offshore renewable Programs in the USA.

C. Foreign Exchange Risks

We are subject to foreign exchange risks. The Company’s operations are split between the United States, United Kingdom and Denmark. A significant proportion of our consolidated net revenues are generated outside of the United States by our foreign subsidiaries in the United Kingdom (“UK”) and Denmark. For context, in the 2025 FY our foreign subsidiaries generated $17,596,977, representing 66.2% of our consolidated revenue. In addition, a significant part of our assets and liabilities are held in British Pounds, Danish Kroner and Euros by these foreign subsidiaries. Foreign Currency translations of our assets and liabilities are translated at the prevailing exchange rate at the balance sheet date, and revenue and expenses are translated using the average exchange rates in effect during the 12-month reporting period. Significant currency fluctuations (particularly the British Pound and/or the Danish Kroner, Euros, against the US Dollar) may (positively or negatively) affect our financial results including our income statement transactions and the value of our assets and therefore we are subject to foreign currency fluctuation risks. In the 2025 FY, for the purpose of reporting revenue and expenses, the value of the British Pound and Danish Kroner when compared to the 2024 FY increased against the USD by 2.3% and 2.1%, respectively. For the purpose of reporting assets and liabilities, the British Pound and the Danish Kroner both increased by 2.4% and 6.5%, respectively, against the USD when compared to the 2024 FY. We also hold cash and cash equivalents in foreign currencies such as the British Pound, Euros and the Danish Kroner. When the U.S. Dollar strengthens compared to these currencies, cash and cash equivalents balances when translated, may be materially less than expected and vice versa. The impact of currency fluctuations is discussed more fully below under Item 2 - “Inflation and Foreign Currency”. See also Note 2 (Summary of Accounting Policies) – “Foreign Currency Translation” to the audited consolidated financial statements.

Furthermore, we sell our goods and services globally. The exchange rate of the foreign currency used by our customers for the purchase of our goods and services against our functional currencies (British Pounds purchase, Danish Kroner or USD purchase) may make the purchasing of our products unattractive from a pricing point of view. For example, a significant strategic market for our Echoscope® technology is Japan. The Japanese Yen has been under significant pressure and as a result we have seen reduced demand for our technology in Japan in the 2025 FY.

D. Macroeconomic Factors

Macroeconomic factors, including changes in inflation and interest rates, global economic and geopolitical developments, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. These could affect customer demand for our products and services, our ability to predict growth needs, expenses, and the benefits we gain from new technologies. We expect some or all of them to continue to impact our operations in the 2026 FY.

E. Geopolitical Landscape

(i) Relationship with the Second Largest Economy in the World: China

We sell our products globally and increasingly to Asia. Asia is the fastest growing economies for our technology and solutions. The change in the political stance of both the U.S. and UK Governments towards trade with China, directly affects the sale of our products to customers based in China. Our real time 3D sonars which are depth rated above 300 meters along with our inertial navigation and attitude measurement sensors (F280® series) are subject to export control for certain countries, including China and therefore requires an export license. Many Chinese entities have been included on the US Bureau of Industry and Security blacklist where there is a presumption of denial of grant of export licenses.

The UK Government is generally in lock step with the US Government’s position and has refused to grant export licenses for several end users in China. The curtailment of access to this market due to refusal to issue export licenses is likely to significantly impact our revenues from Asia.

The removal of China as a trading partner (the second largest economy in the world) is likely to have a significant negative impact on our revenues and growth strategy. China has one of the largest planned and funded investment programs for offshore renewables, the market for which most of our technology is used for in China. After significant business development in China, we had started to see persistent and credible growth for our products in this market. However, with the ongoing geopolitical climate, we do not expect to see increased sales in China. We also believe that where technologies are made unavailable to China, China will endeavor to find alternative source of supply or innovate in the areas where restrictions are placed by Western governments and will be more harmful to companies and competition in general.

(ii) Global instability caused by ongoing conflicts

In general, conflicts create global instability in many ways including disrupting the supply chain and shipping routes. Such conflicts may reduce demand for our products and also increase inflation.

F. Significant Increase in the Price of Raw Materials caused by increased global demand for Artificial Intelligence (AI) processing

Our Business is affected by increased costs of raw materials such as chips and processors, due to the increasing demand from AI businesses. These increases may make the costs of our products uncompetitive and affect demand and margins.

G. Shortage of Key Skills/Resourcing Levels and significant increase in cost of operations due to inflation

We are experiencing skill shortages in areas that are critical for our business operations. The inflationary conditions coupled with the shortage of skilled workers in the countries in which we operate make it difficult for us to compete for these skills. Furthermore, the competitive marketplace for labor also results in high turnover in the workforce which impacts our business in several areas.

Furthermore, as a small business, we are hindered in our ability to compete for certain specialized electronic engineering skills or technology skills, as our remuneration package is not as competitive as those offered by bigger companies which are competing for the same skills.

H. Technological Advancement

A significant part of our growth strategy is built on our flagship real time volumetric imaging sonar technology, the Echoscope® and our DAVD solution. The technology space is inherently uncertain due to the fast pace of innovations including in the area of AI and the capabilities this may bring, and therefore we can give no assurance that we can maintain our leading position in these areas or that innovations in other areas may not surpass our solutions that we currently supply to the subsea market. An example of new technology entering the subsea market is lidar and photogrammetry technologies. However, unlike our sonar technology, Lidar and Photogrammetry technology cannot be employed in zero visibility conditions and cannot generate a volume pulse or image moving objects required for real time inspection and monitoring underwater.

I. Concentration of Business Opportunities Where the Sales Cycle is Long and Unpredictable

The Defense Engineering Services Business revenues are highly concentrated and are largely generated from subcontracts with a small number of Prime Defense Contractors. The sales cycle is generally protracted, which may affect our revenues. It is also dependent on the US federal government appropriating budget for Defense projects and where the federal government is unable to find consensus in the US Congress, this affects the timely award of sub-contracts from Prime Defense Contractors to our Services Business, which is reliant on these awards. Furthermore, the Marine Technology Business’ key opportunities which are critical to its growth strategy are in the Defense market and therefore this business segment is also reliant on funding from Defense Programs. Due to the protracted nature of the government procurement process and cycle for Defense spending under federal and/or state budgets, the sales cycle can be long, unpredictable and subject to variation by the different Administrations, thus affecting timing of orders, revenues and our overall growth plans.

J. U. S. Government Shutdown and funding of Programs through the use of Continuing Resolutions (CR).

The U.S Government shutdown has impacted on our business and most Defense programs that we work on remain unfunded or have limited funding available to them. This has impacted order intake in our fourth quarter, and we expect this uncertainty to continue until a budget is adopted and appropriation of funding to these programs made. Furthermore, many US defense programs are being funded through the use of CR. This continues to affect many opportunities which the Company is pursuing as while the existing sustenance programs continue to be funded, new programs awards have slowed significantly.

K. The Loss of Key Senior Management or the Failure to Hire and Retain Highly Skilled Personnel

We depend on our senior management and other key personnel, including our CEO and President of Technology. We do not have “key person” life insurance policies. We also rely on other highly skilled personnel within our innovation team, some of whom are of retirement age and who have vast and concentrated experience of our innovations and technologies. Competition for qualified personnel in the industries in which we operate is intense. For example, we experience significant competition in the technology industry for software engineers, analogue hardware engineers, computer scientists and other technical staff. In addition, the nature of our work prevents the adoption of remote working policies, which is very attractive for employees in general.

Critical Accounting Policies and Estimates

The Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements have been prepared in conformity with GAAP in the United States which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. We evaluate our estimates based on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates relate to revenue recognition, the assessment of recoverability of goodwill and intangible assets and the recognition and measurement of deferred income tax assets and liabilities. Actual results could differ from those estimates and may have material effects on our operating results and financial position.

We believe the following accounting estimates are most critical to understanding our consolidated financial statements. See “Note 2 - Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements for a full description of our accounting policies.

Revenue Recognition

Revenues are earned under formal contracts with our customers.

We have three operational segments that generate revenue.

Our Marine Technology Business revenues are derived from both sales and rental of underwater technologies.

PAL revenues are derived from sale of acoustic sensors and materials, in addition to the provision of calibration services.

Our Engineering Business revenues are derived from the supply of engineering services.

Our contracts do not include the possibility for additional contingent consideration and therefore when making a determination of the contract price we do not have to consider potential variable additional consideration. Our product sales do not include a right of return from the customer.

Regarding our Marine Technology Business and PAL, all our products are sold on a stand-alone basis and those market prices are evidence of the value of the products. To the extent that we also provide services (e.g., installation, training, etc.), those services are either included as part of the product or are subject to written contracts based on the stand-alone value of those services.

Revenue from sales of engineering services there are contracts in place that specify the fixed hourly rate and other reimbursable costs to be billed and recognized based on material and direct labor hours incurred. Revenues from fixed-price contracts are recognized on the percentage-of-completion method, measured by the percentage of costs incurred (materials and direct labor hours) to date to estimated total costs to be incurred (materials and direct labor hours) for each contract. This method is used as we consider expenditures for direct materials and labor hours to be the best available measure of progress on these contracts.

For further discussion of our revenue recognition accounting policies, refer to “Note 4 Revenue Recognition” in our Consolidated Financial Statements.

Income Taxes

The Company accounts for income taxes in accordance with Accounting Standards Codification Topic 740, Income Taxes (ASC 740). Under ASC 740, deferred income tax assets and liabilities are recorded for the income tax effects of differences between the bases of assets and liabilities for financial reporting purposes and their bases for income tax reporting. The Company’s differences arise principally from the use of various accelerated and modified accelerated cost recovery system lives for income tax purposes versus straight line depreciation used for book purposes and from the utilization of net operating loss carry-forwards.

Deferred tax assets and liabilities are the amounts by which the Company’s future income taxes are expected to be impacted by these differences as they reverse. Deferred tax assets are based on differences that are expected to decrease future income taxes as they reverse. Correspondingly, deferred tax liabilities are based on differences that are expected to increase future income taxes as they reverse. “Note 11 Income Taxes” to the Consolidated Financial Statements discusses the amounts of deferred tax assets and liabilities and also presents the impact of significant differences between financial reporting income and taxable income.

For income tax purposes, the Company uses the percentage of completion method of recognizing revenues on long-term contracts which is consistent with the Company’s financial reporting under U.S. GAAP.

Goodwill and Intangible Assets

Goodwill and intangible assets consist principally of the excess of cost over the fair value of net assets acquired (i.e., goodwill), customer relationships, value of technology, non-compete agreements and licenses. Goodwill was allocated to our reporting units based on the original purchase price allocation. Goodwill is not amortized and is evaluated for impairment annually or more often if circumstances indicate impairment may exist. Customer relationships, value of technology, non-compete agreements, patents and licenses are amortized on a straight-line basis over periods of 4 to 15 years. The Company amortizes its intangible assets using the straight-line method over their estimated period of benefit. We evaluate annually the recoverability of goodwill and intangible assets and carefully consider events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists.

Step 1 of the goodwill impairment test used to identify potential impairment compares the fair value of the reporting unit with its’ carrying amount, including goodwill. If the fair value, which is based on future discounted cash flows, exceeds the carrying amount, goodwill is not considered impaired. The Company has adopted Accounting Standards Codification 2017 – 04, Simplifying the Test for Goodwill Impairment, which permits the Company to impair the difference between the carrying amount in excess of the fair value of the reporting unit as the reduction in goodwill.

At the end of each financial year, we evaluate goodwill on a separate reporting unit basis to assess recoverability, and impairments, if any, are recognized in earnings. An impairment loss would be recognized in an amount equal to the excess of the carrying amount of the reporting unit compared to the fair value of the reporting unit. To date, the Company has not had any goodwill impairments.

Results of Operations

In this Form 10-K, the following meanings are ascribed to the terminologies set out immediately below:

Our audited Consolidated Statements of Income and Comprehensive Income (“Income Statement”) for the 2024 FY do not include PAL which was acquired into the Group on October 29, 2024 (two days prior to the Company’s fiscal year end on October 31, 2024) and therefore when we compare our 2025 FY to 2024 FY, there is no comparative income statement data for PAL in our 2024 FY Income Statement.

In the Current FY our overall consolidated financial results were up when compared to the Previous FY. Our consolidated results of operations include the results of the Company’s foreign subsidiaries which are translated from their respective functional currencies into United States Dollar (USD) for reporting purposes. Currency fluctuations can therefore (positively or negatively) impact on our consolidated results including revenue, profitability and the value of our assets and liabilities included on the consolidated balance sheets. For a discussion of the effect of foreign exchange rates on sales growth, see “Effect of Foreign Exchange Rates” below.

In the Current FY our consolidated net revenue was $26,563,126 compared to $20,316,161 in the Previous FY, representing an increase of 30.7%. A significant part of the increase in our consolidated net revenue in the 2025 FY is due to the addition of PAL to the Group which contributed 20.4% or $5,409,954 to our consolidated net revenue. Without PAL, our consolidated net revenue would have increased by 4.1% to $21,153,172. Gross Profit Margin decreased by 3.3% points, reflecting changes in the mix of sales in the reporting period in conjunction with an increase in commission costs incurred in the period which was $896,046 in the Current FY compared to $740,507 in the Previous FY, representing an increase of 21.0%. Total operating expenses increased by 24.0% in the Current FY and were $13,126,340 compared to $10,588,974 in the Previous FY, largely due to the inclusion of PAL which added 17.8% or $2,335,355 to our total operating expenses. Income from operations increased by 26.6% and was $4,536,028 in the Current FY compared to $3,584,131 in the Previous FY. Net income before taxes in the Current FY increased by 19.5% and was $5,512,217 compared to $4,611,288 in the Previous FY.

Effect of Foreign Exchange Rates

As mentioned above, exchange rate fluctuations may affect our overall financial results.

Revenue Impact – Percentage of Revenue and Costs from our Foreign Subsidiaries:

In the Current FY 66.6% of our consolidated net revenue was attributable to the Company’s foreign subsidiaries. When translating this amount from the native functional currencies of British Pound and Danish Kroner in the Current FY this $17,684,353 compared to $17,290,179 when using the exchange rate applied in the Previous FY and therefore an increase in net revenue of $394,174.

Cost of Revenue and Operating Costs Impact from our Foreign Subsidiaries

In the Current FY 66.6% of our consolidated Operating Expenses and Cost of Revenue was attributable to the Company’s foreign subsidiaries and this was $14,674,223 (“Foreign Subsidiary Costs”) of our total costs of $22,027,098. When translating the Foreign Subsidiary Costs from the native functional currencies of British Pound and Danish Kroner to USD in the Current FY this was $331,622 higher than when using the exchange rate of the Previous FY.

Segment Summary

Marine Technology Business

In the 2025 FY, the Marine Technology Business generated $13,221,339 or 49.8% of our consolidated net revenues compared to $12,806,603 or 63.0% in the 2024 FY, representing an increase of 3.2%. Gross Profit Margin was lower at 74.5% in the 2025 FY compared to 77.9% in the 2024 FY, representing a decrease of 3.4 % points, reflecting the mix of sales. A notable factor in the Current FY is a significant decrease in rentals and associated services revenue which we attribute to the reduction in funding for offshore renewables by the US Administration. This has resulted in reduced demand for our rental solutions for the offshore renewable sector. In 2025 FY total operating expenses increased in the Marine Technology Business by 2.0% and were $5,949,560, compared to $5,833,972 in the 2024 FY. Income from operations in the Marine Technology Business was $3,895,857.

Although revenue in the Marine Technology Business increased by 3.2% in the 2025 FY, this segment was impacted by reduced rental revenue from the offshore renewables market due to the change in offshore renewable funding policy by the U.S. Administration. In addition, the shutdown of the U.S. Government also impacted order intake in the fourth quarter of our 2025 FY. Gross Profit Margins were slightly weaker due to the mix of sales in the Current FY where we had an increase in equipment sales by 30.5% and a reduction in rental revenue by 36.6%, which yield a higher gross profit margin than outright sales. Commission costs were broadly in line with the Previous Financial year and were $720,289 in the 2025 FY as compared to $719,491 in the 2024 FY, representing a 0.1% change.

Acoustics Sensors and Materials Business (PAL)

PAL was acquired into the Group on October 29, 2024, and therefore we have no comparative 2024 FY Income Statement data. In the 2025 FY, PAL contributed 20.4% or $5,409,954 to our consolidated net revenue. Gross Profit Margin was 58.6%. Total operating expenses for PAL were $2,335,355 and Income from operations was $837,169.

Defense Engineering Services Business

In the 2025 FY, the Defense Engineering Services Business generated $7,931,833 or 29.9% of our consolidated net revenue compared to $7,509,558 or 37.0% in the 2024 FY, representing an increase of 5.6%. Gross Profit Margin was higher at 58.6% in the 2025 FY compared to 55.8% in the 2024 FY, representing an increase of 2.8% points. This increase reflects the mix of engineering services provided during the reporting period (more units of manufacturing compared to design work). Total operating expenses increased in the Defense Engineering Services Business by 6.9% and were $2,641,594 in the 2025 FY compared to $2,471,810 in 2024 FY. This is largely related to an increase in wages and salaries. Although we have a lower staff headcount, wages have remained inflationary due to shortage of skills. This, in general, has resulted in higher volatility in the workforce, resulting in higher payroll costs. Income from operations in the 2025 FY was $2,002,833 compared to $1,719,233 in the 2024 FY, representing a 16.5% increase

This segment is comprised of the UK Operations (Martech) and the US Operations (COEI) and is reliant on funding being available under Defense Programs. During the 2025 FY, the US Operations were affected by the US Government Shutdown which resulted in lower order take in the last quarter of 2025 FY.

We continue to work on the diversification of the Defense Engineering Services Business revenue, which is highly concentrated and reliant on Defense funding being available, by investing in our Thermite® Octal range of mission computers.

Comparison of fiscal year ended October 31, 2025, to fiscal year ended October 31, 2024

The information provided below pertains to the Company’s consolidated financial results of operations. For information on the performance of each Segment including the disaggregation of revenues and geographical split, see “Note 15 – Segment Analysis” and “Note 16 – Disaggregation of Revenue” of our audited Consolidated Financial Statements as of October 31, 2025, and 2024.

Revenue:

Our consolidated net revenue increased by 30.7% in the 2025 FY when compared to the 2024 FY. Revenue increased in the Marine Technology Business by 3.2% and was $13,221,339 and the Defense Engineering Services Business revenue increased by 5.6% and was $7,931,833. PAL contributed 20.4% or $5,409,954 to our consolidated net revenue. Without the inclusion of PAL, our consolidated net revenue in 2025 FY would have increased by 4.1% to $21,153,172.

Gross Margin:

Gross profit margins reported in our financial results may vary according to several factors. These include:

• The percentage of consolidated net sales attributed to the Marine Technology Business versus the Defense Engineering Services Business and PAL. The Marine Technology Business gross profit margin may vary with the mix of products, the percentage of rental revenue and associated services; and geography from which our sales in the reporting period are derived (most sales from Asia incur commission costs which impact margins). The gross profit margin yielded by the Marine Technology Business is generally higher than that of the Defense Engineering Services Business and PAL.
• The percentage of consolidated net sales attributed to the Defense Engineering Services Business. The Defense Engineering Services Business yields a lower gross profit margin on generated sales which are largely based on DOD sub-contracts which are time and materials based.
• The percentage of consolidated net sales attributed to PAL. PAL supplies acoustic sensors and materials and its gross margin for these are typically between 55 – 62%. This may vary with the mix of products and also the percentage of reported sales that are performed through sales agents on which commission costs are incurred.
• The geography from which the sales are derived. Sales from Asia typically incur commission costs.
• Level of commission on products which may vary according to volume. All our business units work with sales/distribution agents. Most of the Marine Technology Business and PAL’s sales in Asia are completed via agents or distributors. See Note 3 “Cost of Goods Sold” of our audited Consolidated Financial Statements of October 31, 2025, and 2024, for more discussion on this.
• The composition of our sales. Hardware sales margins are lower than software sales margins. Rentals yield a higher margin and therefore the more units of rentals in our mix of sales, the higher our margins.
• The percentage of sales that are attributed to custom engineering around our technology versus field support services provided by our technical support engineers.
• Level of Rental Assets in the Marine Technology Business’ Rental Pool depreciation expenses may vary accordingly.
• The mix of engineering projects performed by our Defense Engineering Services. Gross profit margins may vary depending on whether we perform prototyping designs versus manufacturing.

In the 2025 FY gross profit margins for the Marine Technology Business were 74.5% compared to 77.9% in FY 2024. For PAL these were 58.6% and for the Defense Engineering Services Business, these were 58.6% in the 2025 FY compared to 55.8% in the 2024 FY.

The Marine Technology Business incurred commission costs in the 2025 FY of $720,289 compared to $719,491 in the 2024 FY, representing a marginal increase of 0.1%. For PAL these were $124,764 and the Defense Engineering Services Business $50,993 compared to $21,016 in 2024 FY.

Since there are more variable factors affecting Gross Profit Margins in the Marine Technology Business, our core business, a table showing a summary disaggregation of sales generated by the Marine Technology Business in the 2025 FY compared to the 2024 FY is set out below:

The increase in Equipment sales is largely attributable to an increase in DAVD and DAVD-related sales and increase in sales emanating from the strategic region of Asia where sales increased by 7.7% to $5,897,362 compared to $5,475,401. Rental revenue decreased and reflects the impact of the change in funding policy related to offshore renewables programs. Since the change in the U.S. Administration’s policy on the funding for offshore renewables programs, we have seen reduced demand for our rental and associated solutions from our European customers who were down-selected for developing many offshore renewables projects in the USA. For more detailed information on the composition and disaggregation of our revenues, please refer to “Note 16 Disaggregation of Revenue” of our audited Consolidated Financial Statements of October 31, 2025, and 2024.

Research and Development (R&D):

R&D in the 2025 FY increased by 9.2% and was $2,447,762 compared to $2,242,429 in the 2024 FY. The main reason for the increase in R&D expenditure is the inclusion of PAL which had R&D expenditures of $414,370. Without PAL R&D expenditures would have decreased by 9.3% or would have been $2,033,392, reflecting a reduction in payroll costs in this area – driven by the skills shortage discussed earlier.

• Marine Technology Business

During the 2025 FY our Marine Technology Business R&D expenditure decreased by 8.0% and was $1,858,139 as compared to $2,019,112 in the 2024 FY. R&D expenditure is incurred by this business in connection with investments it makes in developing its products and solutions and a significant component of these expenditures comprises wages and salaries. This expenditure is an essential part of our business, as we need to continue to innovate our solutions on an ongoing basis. The decrease in R&D expenditure in the 2025 FY reflects reduced headcount and less R&D projects ongoing in the reporting period. In 2024 FY R&D expenditure of this business included technology custom chip development costs for our NANO Gen Series which we finalized and launched in our fourth quarter of 2025 FY.

• Acoustics and Materials Business (PAL)

This is a newly acquired business unit and therefore there is no comparative financial data for the 2024 FY. During the 2025 FY, PAL incurred R&D expenditure of $414,370. R&D expenditure is incurred by this business in connection with investments it makes in developing its acoustic sensors, solutions and materials. A significant component of these expenditures comprises wages and salaries.

• Defense Engineering Services Business

During the 2025 FY, the Defense Engineering Services Business R&D expenditure decreased by 21.5% and was $175,253 compared to $223,317 in the 2024 FY. The Defense Engineering Services Business incurs research and development expenses mainly on advancing its Thermite® Octal range of mission computer products with the strategic goals of increasing and diversifying its revenues and improving gross profit margins.

Changes in this category by Segment are set out immediately below:

Selling, General and Administrative Expenses (SG&A):

In 2025 FY, SG&A expenditure increased by 27.9% when compared to the 2024 FY.

Notable factors in the change in our SG&A expenses for the 2025 FY are:

• The inclusion of PAL into the Group has resulted in an increase in SG&A in the 2025 FY by 18.0% or $1,920,985. Without the inclusion of PAL our SG&A expenses would be 4.9% higher or $8,757,593.
• The realization of the conditions precedent for year one “earn out” payments under the Acquisition Agreement relating to PAL and for which we have incurred a liability of $213,343.
• The increase in non-cash charges as a component of SG&A which in the 2025 FY were 15.9% or $1,697,959 of our total SG&A expenses compared to 12.4% or $1,032,463 of our total SG&A expenses in the 2024 FY, representing an increase of non-cash charges of 64.5%. SG&A includes both cash charges and non-cash charges. The non-cash charges comprise Depreciation, Amortization, Stock-based compensation, Exchange Rate Variance charges and Credit Losses Allowance. In the Current Fiscal Year, the most significant factors which account for the increase in non-cash charges component were (i) stock based compensation expenses increased by 63.3% and were $224,786 compared to $137,676 in the 2024 FY (ii) Overhead Depreciation expenses increased by 51.2% to $645,484 in the 2025 FY compared to $426,966 in the 2024 FY, largely due to the inclusion of PAL; (iii) Credit Losses Allowance decreased to $89,456 compared to $119,405 in the 2024 FY; and (iv) Amortization expenses increased by 776.7% and were $530,218 compared to $60,476 in the 2024 FY, as a result of the acquisition of PAL.

Further discussions on SG&A are set out immediately below.

Key Areas of SG&A Expenses across the Group for the year ended October 31, 2025, compared to the year ended October 31, 2024

In the 2025 FY compared to the 2024 FY:

Wages and Salaries increased by 18.5%. This category of expenses increased primarily due to the inclusion of PAL into the Group, which added $522,380 or 12.1% of our total Wages & Salaries in the 2025 FY. Without PAL, this category would have increased by 4.1% or to $3,778,107, reflecting wages inflation as we are operating on a lower head count than in the Previous FY.

Legal and Professional Fees increased by 13.1%. The main reason for the increase is the inclusion of PAL.

Rent expenditure increased by 143.7% due to the lease we acquired as part of the acquisition of PAL. We own most of our business premises. This category of expenditure is not material for our business and relates to our Copenhagen office space and the existing PAL lease.

Commitment and Contingent Liability – The Company has made provision of $213,343 (or £163,000 British Pound – the currency of the earn out obligation) since PAL has met the pre-conditions for the payment of the year one earn out, relating to revenue and pre-tax income targets as stipulated in the Acquisition Agreement.

Marketing and associated travel costs: Marketing and associated travel expenses increased by 15.4%. We incur marketing expenses in connection with the promotion of our goods and services. These expenses include the wages and salaries of our Digitalization Team, which is responsible for content digital creation and video production relating to our products and solutions. They also include costs associated with participation in industry trade shows, marketing events and travel for marketing activities. Marketing costs attributable to PAL in the Current Fiscal Year were negligible.

Corporate expenses as a percentage of revenue for the year ended October 31, 2025, compared to the year ended October 31, 2024

General corporate administrative expenses in the 2025 FY were $2,199,831 or approximately 8.3% of net revenue and $2,283,192 or 11.2% of net revenue in the 2024 FY, respectively, reflecting an increase in net revenue by 30.7% in the 2024 FY. For more information on general corporate administrative expenses, please see Note 15 (Segment Analysis) of our audited Consolidated Financial Statements of October 31, 2025, and 2024.

Operating Income:

In 2025 FY, Operating Income increased by 26.6%. This is largely due to the increase in our consolidated net revenue and gross profit.

Other Income:

In the 2025 FY, we had “Other Income” of $976,189 compared to $1,027,157, representing a decrease of 5.0% from the 2024 FY. In the 2025 FY, $708,097 of this amount represents interest income earned on our certified deposit accounts. In the 2024 FY we had interest income of $938,775. The decrease in interest income reflects the change in interest rates that are applied to these amounts. These accounts are fixed for up to 3-month rolling periods and constitute “cash equivalents” in our current audited Consolidated Financial Statements for the year ended October 31, 2025. See “Note 6 - Composition of Certain Financial Statement Captions” (Other Income) to the audited Consolidated Financial Statements for the year ended October 31, 2025, where this is discussed further.

Income before Income Tax Expense for the year ended October 31, 2025, compared to the year ended October 31, 2024

In the 2025 FY, we had income before income taxes of $5,512,217 as compared to $4,611,288 in the 2024 FY, representing an increase of 19.5%. Net income before income taxes increased largely due to an increase in our consolidated net revenues and gross profit.

Net Income for the year ended October 31, 2025, compared to the year ended October 31, 2024

In the 2025 FY we had Net Income of $4,129,930 compared to $3,645,996 in the 2024 FY, representing an increase of 13.3%. This is a reflection of the increase in our pre-tax income for the reasons discussed earlier. In the 2025 FY our tax expenses increased, and we recorded a Current Tax Expense of $1,149,815 compared to $713,670 in the 2024 FY and a Deferred Tax Expense of $232,472 compared to $251,622 in the 2024 FY. Our effective tax rate is subject to significant variation due to several factors including variability in our pre-tax income and the mix of jurisdictions to which such income or losses relate, the applicability of special tax regimes, changes in tax regulations, changes in our stock price, changes in our deferred tax assets and liabilities, their valuation, foreign currency gains (losses). The mix of jurisdictions and related income or losses also affects our tax liability for Global Intangible Low-Taxed Income (GILTI) and increase in foreign subsidiaries pre-tax income is likely to increase our GILTI tax liability. Furthermore, our tax liability is also affected by the availability of net operating loss carryforward losses and R&D tax credits in the UK subsidiaries. The Company’s UK subsidiaries benefit from carryforward losses (NOLs) and research and development (R&D) tax credits. These have been applied to offset a portion of the 2025 FY tax liability for the Company’s UK subsidiaries resulting in a current provision of $265,434 for Current Tax Expense and $293,052 for Deferred tax expense compared to $267,759 for Current Tax Expense and $2,511 for Deferred tax expense in the 2024 FY. Our Danish subsidiary does not benefit from any carryforwards or other tax relief in its tax jurisdiction and therefore for 2025 FY we have recorded a Current Tax Expense of $162,189, a decrease from FY 2024 FY where we recorded a Current Tax Expense of $218,670 and a Deferred Tax Expense of $11,003.

Comprehensive Income for the year ended October 31, 2025, compared to the year ended October 31, 2024

In 2025 FY Comprehensive income was $4,762,104 compared to $4,577,714 for the 2024 FY, representing an increase of 4.0%. This category is affected by fluctuations in foreign currency exchange transactions both relating to our income and expenses and our assets and liabilities on our balance sheet and are largely paper losses or gains, as may be applicable, in the reporting period. In 2025 FY we recorded a lower gain of $632,174 on foreign currency translation adjustment transactions compared to a higher gain on these transactions of $931,718 in the 2024 FY. A significant part of the Company’s operations is based in the UK and Denmark, and therefore a major part of the Company’s assets and liabilities recorded in its consolidated balance sheet and income and expenses account are translated from the functional currencies of these subsidiaries into USD for reporting purposes, thus accounting for the changes. See Table under the section of the MD&A which concerns “Foreign Currency & Inflation”, and which shows the impact of the currency adjustments on our Income Statement and Balance Sheet in 2025 FY compared to 2024 FY.

Segment Analysis

We operate three reportable segments, “Marine Technology Business”, “Acoustic Sensors and Materials Business” and the “Defense Engineering Services Business”. These segments are managed separately based upon fundamental differences in their operations, market segments and allocation of resources. Segment operating income is total segment revenue reduced by cost of revenues and operating expenses, R&D and SG&A identifiable with the reporting business segment. Corporate expenses include general corporate administrative costs.

The Acoustic Sensors and Materials Business (“PAL”) was acquired on October 29, 2024 and had no material income statement activity for the remaining two days up to October 31, 2024. Therefore, there is no comparative financial data for PAL for 2024 FY. However, the fair value of assets acquired, and liabilities assumed for PAL have been included in our audited Consolidated Balance Sheet for the 2024 FY and in respect of the Segment Disclosure for 2024 FY PAL was included in the Supplemental Disclosures relating to the Marine Technology Business. The Segment Disclosure information for the 2025 FY includes full Income Statement information for PAL.

Our Chief Operating Decision Maker (CODM) evaluates the operating results and performance of all three of our segments using GAAP reporting for revenue, expenses and net income by segment. This financial metric is used to view operating trends, perform analytical comparisons and benchmark performance between periods and among geographic regions, take decisions on business investments and to monitor budget to actual performance on a monthly, quarterly and annual basis.

Inter-company sales are eliminated from our income statement. However, for information purposes only we have disclosed below inter-company sales for the reporting period.

The following tables summarize certain balance sheets and statement of operations information by reportable segment for the financial years ending October 31, 2025, and October 31, 2024, respectively, except that for 2024 FY there is no comparative Income Statement data for PAL for the reasons stated previously:

38

* In the 2024 FY Supplemental Disclosures Information, the Marine Technology Business Disclosure under “Total Assets” includes $4,529,648 of assets pertaining to PAL and under “Total Liabilities” includes $1,455,145 of liabilities pertaining to PAL. There was no Revenue from Intercompany Sales, Depreciation and Amortization or Purchases of Long-lived Assets pertaining to PAL.

The Company’s reportable business segments sell their goods and services in four geographic locations:

• Americas
• Europe
• Australia/Asia
• Middle East/Africa

39

Liquidity and Capital Resources

As of October 31, 2025, the Company had an accumulated deficit of $3,276,561 working capital of $44,365,153 and stockholders’ equity of $58,115,414. For the year then ended, the Company generated cash flow from operations of $7,211,168.

Assuming that the current global macroeconomic environment remains stable, we believe that our current level of cash and cash generation will be sufficient to meet our short and medium-term liquidity needs. As of October 31, 2025, we had cash and cash equivalents on hand of $28,682,615 and both billed and unbilled receivables of $6,721,585. Our current cash balance represents approximately 32 months of Selling, General and Administrative Expenses. The Company continues to critically evaluate the level of expenses that it incurs and reduces its expenses as may be appropriate within its business priorities.

We also have access to a revolving line of credit of $4 million from HSBC NA. All amounts under the Revolving Line of Credit are payable at the end of each financial year. The facility is subject to annual renewal by HSBC in its sole discretion on April 30th of each year. As of January 29, 2026, there are no amounts outstanding under this facility.

Operating Activities

Net cash generated from operating activities for the year ended October 31, 2025, was $7,211,168. We recorded net income for the period of $4,129,930. Other items in uses and sources of funds from operations included non-cash charges related to depreciation of fixed assets, amortization of intangible assets, deferred tax asset, gain on sale of asset, allowance for credit loss and stock-based compensation, which collectively amounted to $2,151,567. Changes in operating assets decreased net cash from operating activities by $491,815 and changes in current liabilities decreased net cash from operating activities by $1,421,486.

Investing Activities

Net cash used in investing activities, for the year ended October 31, 2025, was $1,196,069. These investing activities include costs associated with the implementation costs to date of our new ERP system, new plant and equipment, and the acquisition of a new survey vessel (COCO II) for our research and development testing, production testing and customer training.

Financing Activities

Net cash used in financing activities for the year ended October 31, 2025, was $0.

Foreign Currency and Inflation

The Company’s consolidated results are a combination of its U.S. operations and foreign subsidiaries. The foreign subsidiaries maintain their accounts in the native currencies of their operations, and which are:

The Company’s consolidated financial results therefore include the translation of its foreign subsidiaries functional currencies into USD. See “Note 2 Summary of Accounting Policies” (Foreign Currency Translation) of our audited Consolidated Financial Statements as of October 31, 2025, for more information on the applicable rates used for our Balance Sheet transactions and Statements of Income and Comprehensive Income.

Fluctuations in currency exchange rates can directly (positively and negatively) impact on the Company’s sales, profitability and financial position when the transactions of the foreign subsidiaries are translated from their functional currencies into USD for financial reporting. In addition, the Company is also subject to currency fluctuation risk with respect to certain foreign currency denominated receivables and payables incurred in the ordinary course of its business operations (cross-border transactions such as inventory purchasing). In general, the Company’s subsidiaries perform financial transactions in their native currencies. As necessary and on an exceptional basis, a subsidiary may perform financial transactions in foreign currencies (such as purchasing inventory from a foreign supplier, for example, in foreign currency). Furthermore, the Company holds significant cash balances in foreign currencies, such as the British Pound, the Euro and the Danish Kroner. The Company cannot predict the extent to which currency fluctuations may affect its business and financial position, and there is a risk that such fluctuations may have an adverse impact on the Company’s sales, profits and financial position. The Company does not hedge its exposure to currency fluctuation risks.

The impact of currency fluctuations (using the Constant Rate) in the 2025 FY compared to 2024 FY is set out in the table below. Constant Rate is defined as:

These are the values we have used in the calculations below which show the impact of these currency fluctuations on our operations in the 2025 FY when applying the Constant Rate:

The effect of exchange rate movements between the 2024 FY and the 2025 FY increased net assets by $713,113.

The table above does not show separately the effect of exchange rate impact for Australian Dollars or Indian Rupees since these operations are non-trading dormant entities, and therefore the impact of foreign exchange movements is not material.

*Total Effect summary column data is the difference between the Actual Results in the reporting period and the results when the Constant Rate is applied.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Inflation

Inflation affects our Business in several ways including:

• Cost of Operations (including wages, salaries, utilities) and therefore our overheads.
• Bill of Material (BOM) Costs of our Products and Input Materials for Engineering Services.
• Our revenue. An inflationary environment is likely to reduce demand for our goods and services.
• Impacts on our ability to compete for key skills required for our Business

High inflation affects our business in a number of areas including costs of operations, including wages and salaries which have increased in relation to the number of staff in the Current FY (which has reduced) compared to the number of staff in the Previous FY. In addition, our general costs of operations have increased along with raw material costs for our products and solutions.

Inflation is also an inherently destabilizing factor for both retaining staff and recruiting staff and therefore impacts on our business plans and the effectiveness of our assembled workforce.

Furthermore, our revenue continues to be affected in strategic markets and geographies due to inflationary pressures which have made the pricing for our solutions unattractive for those markets such as Japan which is a strategically important market for our technology.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13(a)- 15(e) under the Exchange Act), as of the end of the period covered by this Report. Based on the evaluation of our disclosure controls and procedures as of October 31, 2025, our Chief Executive Officer and Interim Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of this date.

Attached as exhibits to this Form 10-K are certifications of the Company’s Chief Executive Officer and Interim Chief Financial Officer, which are required in accordance with Rules 13a-15(e) and 15d-15(e) of the Exchange Act.

This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in the certifications and it should be read in conjunction with the certifications, for a more complete understanding of the topics presented.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed by, or under the supervision of, a public company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with US generally accepted accounting principles (“US GAAP”) including those policies and procedures that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US GAAP, and that receipts and expenditures are being made only in accordance with authorizations of management and directors of the company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Management is responsible for establishing and maintaining adequate internal control over financial reporting. Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, has assessed the effectiveness of our internal control over financial reporting as of October 31, 2025. In making this assessment, our management used the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013 Framework). Based on its assessment, our management believes that, as of October 31, 2025, our internal control over financial reporting was effective based on those criteria.

This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Under SEC rules, the management’s report was not subject to attestation by the Company’s independent registered public accounting firm.

Changes in Internal Control over Financial Reporting

During the year ended October 31, 2025, there were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) and 15d–15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.