Financial Analysis

NOTE 7 ACQUISITION OF PRECISION ACOUSTICS LIMITED On October 29, 2024, the Company acquired all the issued and outstanding shares of PAL for $ 6,538,569 in cash. At the acquisition date, the Company had immediate access to PALs cash balance of $ 1,933,284 , which resulted in a net cash outlay at the acquisition date of $ 4,605,285 . The Company agreed to pay the sellers for all cash in PALs bank account on the date of its acquisition, which was in excess of the agreed working capital amount of $ 595,869 and, as part of the transaction, the Company paid the sellers $ 1,337,415 for the excess cash balance. The Company acquired PAL to gain access to its expertise in acoustic and medical imaging technologies which we believe can be leveraged through development for use in the subsea market, the primary sector for the Marine Technology Business and more broadly to expand the Groups collective capabilities in order to qualify to compete for larger Defense-related contracts. Prior to the acquisition, PAL was a non-key supplier to our Marine Technology Business, which purchased on average approximately $ 80,000 of acoustic materials from PAL. It expects to continue to purchase these materials, at a similar dollar level, from PAL in the future. In addition to the cash paid at closing, the share purchase agreement provides for certain earnout payments over a three-year period, and which are conditional upon PAL meeting the defined targets (revenue and pre-tax profit) in each of the ear …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 14 - EMPLOYEE BENEFIT PLANS The Companys U.S. subsidiaries maintain a 401(k)-retirement plan. The plan allows the Company to make matching contributions of 4 % of employee compensation, subject to IRS contribution limits. U.S. employees who have at least six months of service with the Company are eligible. In addition, the Companys UK subsidiaries operate statutory pension schemes which provide for the payment of certain contributions by the Company and the Employee. These schemes in the UK operate on a defined contribution money purchase basis and the contributions are charged to operations as they arise. Finally, the Company is obligated to provide pension funding according to the laws in which it operates including in both Denmark, Australia and India. The Company has an arrangement that fulfils this requirement. Costs related to the Companys contribution to these employee benefit plans for the years ended October 31, 2025 and 2024 were $ 253,950 and $ 130,650 , respectively CODA OCTOPUS GROUP, INC. Notes to the Consolidated Financial Statements October 31, 2025 and 2024 …

CompensationAndEmployeeBenefitPlansTextBlock · excerpt; the full note is in the filing

NOTE 5 FAIR VALUE The Company carries its financial instruments at fair value. Fair value is defined as an exchange price that would be received for an asset or paid to transfer a liability, (an exit price), in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. At October 31, 2025, and 2024, respectively, the Companys financial assets and liabilities were in cash and cash equivalents. The cash equivalents are highly liquid investments with maturities of three months or less. Our recently acquired subsidiary, PAL, whose financial assets and liabilities were in cash and cash equivalents, follows the Companys existing practice of keeping these assets in highly liquid investments with maturities of three- months or less. The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: Level 1 Quoted prices in active markets for identical assets. Level 2 Observable market-based inputs or unobservable inputs that are corroborated by market data. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow method …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

NOTE 8 GOODWILL AND IDENTIFIED INTANGIBLE ASSETS Intangibles consisted of the following as of: SCHEDULE OF INTANGIBLE ASSETS October 31, 2025 October 31, 2024 Average Finite-lived Life Gross Accumulated Gross Accumulated intangible assets (Years) Asset Amortization Net Asset Amortization Net Customer Relationships 10 $ 919,503 $ (919,503 ) $ 0 $ 919,503 $ (919,503 ) $ 0 Non-Compete Agreements 4 423,548 (255,744 ) 167,804 423,548 (198,911 ) 224,637 Value of Technology 7 2,947,155 (426,070 ) 2,521,085 2,947,155 - 2,947,155 Patents 10 - 15 845,906 (355,207 ) 490,699 820,555 (305,313 ) 515,242 Total intangible assets $ 5,136,112 $ (1,956,524 ) $ 3,179,588 $ 5,110,761 $ (1,423,727 ) $ 3,687,034 Estimated future annual amortization expenses of finite-lived assets as of October 31, 2025, is as follows: SCHEDULE OF ESTIMATED FUTURE AMORTIZATION EXPENSES Years Ending October 31, Amount 2026 $ 523,996 2027 521,218 2028 521,218 2029 465,059 2030 465,059 Thereafter 683,038 Totals $ 3,179,588 Amortization of intangible assets for the years ended October 31, 2025, and 2024 was $ 530,218 and $ 60,476 respectively, driven by the acquisition of PAL. Goodwill consisted of the following as of: SCHEDULE OF GOODWILL October 31, October 31, 2025 2024 Coda Octopus Engineering, Inc. (US Based) $ 2,038,669 $ 2,038,669 Coda Octopus Products Limited (UK Based) 62,315 62,315 Coda Octopus Martech Limited (UK Based) 1,281,124 1,281,124 Precision Acoustics Limited (UK Based) 257,226 257,226 Total Goodwill …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 11 - INCOME TAXES The Company provides for income taxes and the related accounts under the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates and will be updated if the enacted tax rate changes before the expected reversal dates. Valuation allowances are established when management determines it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The provision (benefit) for income taxes comprises: SCHEDULE OF PROVISION (BENEFIT) FOR INCOME TAXES October 31, October 31, 2025 2024 Current federal expense $ 594,187 $ 174,094 Current state income tax expense 128,005 53,147 Foreign tax expense 427,623 486,429 Total current tax expense 1,149,815 713,670 Deferred federal (benefit) expense (47,205 ) 249,693 Deferred state (benefit) expense (13,375 ) (11,585 ) Deferred foreign tax expense 293,052 13,514 Deferred tax expense 232,472 251,622 Total Income Tax Expense $ 1,382,287 $ 965,292 CODA OCTOPUS GROUP, INC. Notes to the Consolidated Financial Statements October 31, 2025 and 2024 The expense for income taxes differed from the U.S. statutory rate due to the following: SCHEDULE OF RECONCILIATION OF INCOME TAX BENEFIT October 31, October 31, 2025 2024 Statutory tax rate 21.0 % 21.0 % R&D Relief (8.6 )% (8.8 )% Foreign Tax expense 10.4 % 7.5 % State Income Tax 2.3 % (1.2 )% Total 25.1 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 16 - DISAGGREGATION OF REVENUE SCHEDULE OF DISAGGREGATE OF REVENUE FROM CONTRACTS FOR SALE WITH CUSTOMERS BY GEOGRAPHIC LOCATION For the Year Ended October 31, 2025 Marine Technology Business (Products) Acoustic Sensors and Materials Business (PAL) Defense Engineering Services Business (Services) Grand Total Disaggregation of Total Net Sales Primary Geographical Markets Americas $ 4,228,821 $ 1,021,809 $ 3,685,905 $ 8,936,535 Europe 1,651,453 2,307,790 4,245,928 8,205,171 Australia/Asia 5,897,362 1,967,015 - 7,864,377 Middle East/Africa 1,443,703 113,340 - 1,557,043 Total Revenues $ 13,221,339 $ 5,409,954 $ 7,931,833 $ 26,563,126 Major Goods/Service Lines Equipment Sales $ 9,407,469 $ 4,537,692 $ 463,420 $ 14,408,581 Equipment Rentals 1,476,713 6,214 - 1,482,927 Software Sales 752,312 59,600 - 811,912 Engineering Parts - - 6,356,615 6,356,615 Services 1,584,845 806,448 1,111,798 3,503,091 Total Revenues $ 13,221,339 $ 5,409,954 $ 7,931,833 $ 26,563,126 Goods transferred at a point in time $ 10,159,781 $ 4,597,292 $ 478,517 $ 15,235,590 Services transferred over time 3,061,558 812,662 7,453,316 $ 11,327,536 Total Revenues $ 13,221,339 $ 5,409,954 $ 7,931,833 $ 26,563,126 CODA OCTOPUS GROUP, INC. Notes to the Consolidated Financial Statements October 31, 2025 and 2024 For the Year Ended October 31, 2024 Marine Technology Business (Products) Defense Engineering Services Business (Services) Grand Total Disaggregation of Total Net Sales Primary Geographical Markets Americas $ …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

NOTE 15 - SEGMENT ANALYSIS Our segment reporting is in accordance with the new standard ASU 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. We operate three 3 reportable segments, Marine Technology Business, Acoustic Sensors and Materials Business and Defense Engineering Services Business which are managed separately based upon fundamental differences in their operations. Segment operating income is total segment revenue reduced by cost of revenues and operating expenses, Research and Development (R&D), and Selling, General & Administrative (SG&A) identifiable with the reporting business segment. Corporate includes general corporate administrative expenses. 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 of 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 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- …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 2 - SUMMARY OF ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES Basis of Presentation The accompanying consolidated financial statements of the Company and its wholly owned subsidiaries have been prepared in accordance with generally accepted accounting principles (GAAP) in the United States (U.S.) and the applicable rules and regulations of the Securities and Exchange Commission (the SEC). The Companys fiscal year ends on October 31. The Company employs a calendar month-end reporting period for its quarterly reporting. Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The accounting estimates and assumptions that require managements most significant, challenging, and subjective judgment include estimates related to the percentage of completion method used to account for contracts including costs and earnings in excess of billings, billings in excess of costs and estimated earnings, the valuation of the deferred tax asset, the valuation of the assets purchased and liabilities assumed in our acquisition of PAL, and the valuation of goodwill. Actual results realized by the Company may differ from managements estimates. Reclassifications Certain amounts included in the accompanying Consolidated Balance Sheets, Consolidated Statements of Income and Comprehensive Income, and Consolidated St …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

NOTE 10 CAPITAL STOCK Common Stock 2017 and 2021 Stock Incentive Plan (together SIPs) On December 6, 2017, the Board of Directors adopted the 2017 Stock Incentive Plan (the 2017 Plan). The purpose of the 2017 Plan is to advance the interests of the Company and its stockholders by enabling the Company and its subsidiaries to attract and retain qualified individuals through opportunities for equity participation in the Company, and to reward those individuals who contribute to the Companys achievement of its economic objectives. The 2017 Plan was adopted by the Board of Directors and approved by Stockholders at the Companys Annual General Meeting held on July 24, 2018, and provides for a maximum of 913,612 to be issued under this Plan. On July 12, 2021, a second plan was adopted by the Board of Directors (2021 Plan) and approved by Stockholders at the Companys Annual General Meeting held on September 14, 2021. The 2021 Plan is identical to the 2017 Plan in all material respects except that the maximum number of shares allocated for issuance is 1,000,000 . The shares available for issuance under the SIPs may, at the election of the Compensation Committee, be either treasury shares or shares authorized but unissued, and, if treasury shares are used, all references in the SIPs to the issuance of shares will, for corporate law purposes, be deemed to mean the transfer of shares from treasury. As of October 31, 2025, there were 406,808 shares available for future issuance under the 2 …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing

Note 9 CONTINGENT CONSIDERATION PRECISION ACOUSTICS LIMITED (PAL) In connection with the acquisition of Precision Acoustics Limited (PAL), the Company may be required to make contingent consideration payments based on PAL achieving specified revenue and pre-tax profit targets during a three-year earn-out period. The earn-out period consists of three annual measurement periods referred to as Year 1, Year 2 and Year 3. The Year 1 earn-out period ended in October 2025. PAL achieved the Year 1 earn-out targets. As a result, the Company recognized contingent consideration expense of $ 213,343 in its consolidated financial statements for the year ended October 31, 2025. In accordance with the terms of the acquisition agreement, this amount was paid to the sellers following the filing of the Companys Annual Report on Form 10-K on January 29, 2026 as amended on Form 10-K/A. During the quarter ended July 31, 2026, management completed its assessment of PALs operating performance and forecasted results for the Year 2 earn-out period. Based on PALs year-to-date operating performance and forecast for the remainder of the measurement period, management concluded that achievement of the applicable revenue and pre-tax profit targets for the Year 2 earn-out period is probable and that the related contingent consideration obligation is reasonably estimable. Accordingly, the Company recognized a contingent consideration expense and corresponding contingent consideration liability of $ 438,588 …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Note 4 FAIR VALUE OF FINANCIAL INSTRUMENTS The Companys financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities. Due to the short-term nature of these instruments, the carrying amounts reported in the accompanying consolidated balance sheets approximate their fair values. …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Note 12 GOODWILL AND IDENTIFIED INTANGIBLE ASSETS Intangibles consisted of the following as of: SCHEDULE OF INTANGIBLE ASSETS July 31, 2026 October 31, 2025 Finite-lived intangible assets Average Life (Years) Gross Asset Accumulated Amortization Net Gross Asset Accumulated Amortization Net Customer Relationships 10 $ - $ - $ - $ 919,503 $ (919,503 ) $ - Non-Compete Agreements 4 224,637 (98,278 ) 126,359 423,548 (255,744 ) 167,804 Value of Technology 7 2,947,155 (736,789 ) 2,210,366 2,947,155 (426,070 ) 2,521,085 Patents 10 901,729 (392,728 ) 509,001 845,906 (355,207 ) 490,699 Total intangible assets $ 4,073,521 $ (1,227,795 ) $ 2,845,726 $ 5,136,112 $ (1,956,524 ) $ 3,179,588 Amortization of intangible assets for the three months ended July 31, 2026 and 2025 was $ 135,372 and $ 136,259 , respectively, and for the nine months ended July 31, 2026 and 2025 was $ 406,681 and $ 394,566 , respectively. CODA OCTOPUS GROUP, INC. Notes to the Unaudited Consolidated Financial Statements July 31, 2026 and October 31, 2025 Note 12 GOODWILL AND IDENTIFIED INTANGIBLE ASSETS (Continued) Goodwill consisted of the following as of: SCHEDULE OF GOODWILL July 31, October 31, 2026 2025 *Coda Octopus Engineering, Inc. * $ 2,038,669 $ 2,038,669 Coda Octopus Products Ltd. 62,315 62,315 Coda Octopus Martech Ltd. 1,281,124 1,281,124 Precision Acoustics Ltd. 257,226 257,226 Goodwill $ 3,639,334 $ 3,639,334 * This business unit changed its name from Coda Octopus Colmek, Inc. with effect from March 17, 2 …

GoodwillAndIntangibleAssetsDisclosureTextBlock · excerpt; the full note is in the filing

Note 17 INCOME TAXES The Company accounts for income taxes in accordance with ASC 740, Income Taxes . The provision for income taxes for interim periods is determined using an estimate of the Companys annual effective tax rate, adjusted for discrete items recognized in the applicable reporting period. The estimated annual effective tax rate is updated quarterly based on the most current information available. Changes in the estimated annual effective tax rate are recognized in the period in which the change is identified. The Companys quarterly income tax provision and estimated annual effective tax rate may vary significantly from period to period due to several factors, including the level and mix of earnings among taxing jurisdictions, the timing and impact of intercompany transactions, the applicability of special tax regimes, changes in the Companys operating structure, fluctuations in foreign currency exchange rates, stock-based compensation, and changes in tax laws, regulations, and administrative practices. The One Big Beautiful Bill Act of 2025 (the 2025 Tax Act) was enacted on July 4, 2025. The 2025 Tax Act includes several changes to U.S. corporate income tax rules, including the reinstatement of 100% accelerated depreciation for qualified property, retroactive to January 20, 2025, and the immediate expensing of domestic research and development costs, retroactive to January 1, 2025. For fiscal year 2026, the Company does not expect these provisions to have a mater …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Note 6 OPERATING LEASES The Company leases its PAL operating facility under a non-cancellable operating lease agreement that expires on March 31, 2033. The lease is accounted for in accordance with ASC 842, Leases . Information related to the Companys operating lease is summarized below: SCHEDULE OF OPERATING LEASE COSTS July 31, October 31, 2026 2025 Lease Liability $ 385,381 $ 394,932 Future minimum lease payments $ 477,528 518,953 Remaining life of the lease in years (Expires 31 March 2033) 6.67 7.42 Discount Rate 6.75 % 6.75 % Estimated future minimum lease payments and imputed interest related to the operating lease liability as of July 31, 2026 are as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Years Total 2026 (remaining 3 months) $ 16,289 2027 66,295 2028 68,284 2029 70,332 2030 72,442 Thereafter 183,886 Total Future minimum lease payments 477,528 Imputed Interest (92,147 ) Total $ 385,381 Lease Liability $ 385,381 …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

Note 16 DISAGGREGATION OF NET REVENUES Information about the Companys operations in different geographic areas for the three months and nine months ended July 31, 2026 and 2025, is shown below. Net revenues are attributed to geographic areas based on the location of the customer. SCHEDULE OF DISAGGREGATE OF REVENUE FROM CONTRACTS FOR SALE WITH CUSTOMERS BY GEOGRAPHIC LOCATION Marine Technology Business (Products) Acoustic Sensors and Materials Business (PAL) Defense Engineering Services Business (Services) Total For the Three Months Ended July 31, 2026 Marine Technology Business (Products) Acoustics Sensors and Materials Business (PAL) Defense Engineering Services Business (Services) Total Disaggregation of Total Net Revenues Primary Geographical Markets Americas $ 1,597,751 $ 695,814 $ 1,158,580 $ 3,452,145 Europe 547,970 430,751 1,570,497 2,549,218 Australia/Asia 959,127 425,320 - 1,384,447 Middle East/Africa 272,624 59,035 - 331,659 Total Revenues $ 3,377,472 $ 1,610,920 $ 2,729,077 $ 7,717,469 Major Goods/Service Lines Equipment Sales $ 2,257,201 $ 1,456,891 $ 42,409 $ 3,756,501 Equipment Rentals 703,927 - - 703,927 Software Sales 94,971 - - 94,971 Engineering Parts - - 2,575,094 2,575,094 Services 321,373 154,029 111,574 586,976 Total Revenues $ 3,377,472 $ 1,610,920 $ 2,729,077 $ 7,717,469 Goods transferred at a point in time $ 2,352,172 $ 1,456,891 $ 42,409 $ 3,851,472 Services transferred over time 1,025,300 154,029 2,686,668 3,865,997 Total Revenues $ 3,377,472 $ 1,6 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Note 15 SEGMENT ANALYSIS The Company operates through three reportable segments: the Marine Technology Business, Acoustics Sensors and Materials Business, and Defense Engineering Services Business (collectively, the Business Segments). The Business Segments are managed separately due to differences in their products and services, customer bases, markets served, operational characteristics, and resource requirements. Segment operating income is determined as segment revenue less cost of revenues and directly attributable operating expenses, including research and development (R&D) and selling, general and administrative (SG&A) expenses. Corporate expenses consist primarily of general corporate administrative costs and are not allocated to the reportable segments. The Companys Chief Executive Officer serves as the Chief Operating Decision Maker (CODM). The CODM evaluates the performance of the Business Segments using segment revenues, operating expenses and operating income prepared in accordance with U.S. GAAP. Segment operating income is the primary measure of segment profit or loss used by the CODM to assess segment performance, allocate resources, evaluate operating trends, assess investment opportunities, and monitor actual results against budgets and forecasts. The revenues presented in this Note 15 represent sales to external customers. Intercompany transactions between reportable segments are eliminated in consolidation and are therefore excluded from consolidat …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Note 1 ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all material adjustments consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the periods presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2026 due to seasonality, macroeconomic conditions, geopolitical events, customer procurement cycles and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been omitted in accordance with the rules and regulations of the U.S. Securities Exchange Commission (SEC). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes presented in the Companys Annual Report on Form 10-K for the year ended October 31, 2025 as filed with the Securities and Exchange Commission on January 29, 2026 and amended on Form 10-K/A as filed with the Securities and Exchange Commission on February 26, 2026. Princi …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

Note 14 2017 AND 2021 STOCK INCENTIVE PLANS (SIPs) On December 6, 2017, the Board of Directors adopted the 2017 Stock Incentive Plan (the 2017 Plan), which was subsequently approved by shareholders at the Annual General Meeting held on July 24, 2018. The purpose of the 2017 Plan is to promote the long-term interests of the Company and its shareholders by attracting, retaining and motivating directors, officers, employees and other eligible service providers through equity-based incentives. The 2017 Plan authorizes the issuance of up to 913,612 shares of common stock. On July 12, 2021, the Board of Directors adopted the 2021 Stock Incentive Plan (the 2021 Plan). The 2021 Plan is substantially identical to the 2017 Plan in all material respects, except that it authorizes the issuance of up to 1,000,000 shares of common stock. The 2017 Plan and the 2021 Plan are referred to collectively as the Stock Incentive Plans or SIPs. Shares issued under the SIPs may consist of either authorized but unissued shares or treasury shares, as determined by the Compensation Committee. To the extent treasury shares are utilized, references in the SIPs to the issuance of shares shall be deemed, for corporate law purposes, to refer to the transfer of shares from treasury. During the three months ended July 31, 2026, the Company granted 12,802 restricted stock awards and no stock options were exercised. During the period, 3,500 previously vested restricted stock awards that had remained unsettled we …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing