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 ACQUISITIONS We have contingent obligations pertaining to a three-year earn out period relating to our acquisition of PAL that provides for certain payments to be made subject to meeting the defined revenue and pre-income targets (Earn Outs). These Earn Out Periods are referred to hereinafter as Year 1, Year 2 and Year 3. Year 1 Earn Out period expired in October 2025. Year 1 Earn Out targets were achieved by PAL. Accordingly, we recorded $ 213,343 as Earn Out expenses in our audited consolidated financial statements for 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 our consolidated audited financial statements with the SEC on Form 10-K on January 29, 2026. The potential remaining Earn Out amounts for Year 2 and Year 3, as of April 30, 2026, are shown in the table below applying an exchange rate (from British Pound to USD) of $ 1.278973 : SCHEDULE OF POTENTIAL EARNOUT PROVISION AMOUNTS Earn Out 2026 FY 2027 FY Revenue Target $ 5,867,914 $ 6,454,962 Pre-Tax Profit Target $ 1,295,597 $ 1,573,133 Earn Out Payable if Target is achieved $ 418,223 $ 652,275 No provision has been made for the Year 2 Earn Out Liability in our financial statements as at April 30, 2026, as the determination of the likelihood of this being earned will be made when more financial information is available. We will expense any future Earn Out payments if it becomes probable that the qualifying condit …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

Note 4 FAIR VALUE OF FINANCIAL INSTRUMENTS The Companys financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses. The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair values because of the short-term nature of these instruments. …

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 April 30, 2026 October 31, 2025 Finite-lived Average intangible Life Gross Accumulated Gross Accumulated assets (Years) Asset Amortization Net Asset Amortization Net Customer Relationships 10 $ - $ - $ - $ 919,503 $ (919,503 ) $ - Non Compete Agreements 4 224,637 (84,239 ) 140,398 423,548 (255,744 ) 167,804 Value of Technology 7 2,947,155 (631,533 ) 2,315,622 2,947,155 (426,070 ) 2,521,085 Patents 10 883,750 (380,209 ) 503,541 845,906 (355,207 ) 490,699 Total intangible assets $ 4,055,542 $ (1,095,981 ) $ 2,959,561 $ 5,136,112 $ (1,956,524 ) $ 3,179,588 Amortization of intangible assets for the three months ended April 30, 2026 and 2025 was $ 134,697 and $ 116,575 , respectively, and for the six months ended April 30, 2026 and 2025 was $ 271,309 and $ 244,334 , respectively. CODA OCTOPUS GROUP, INC. Notes to the Unaudited Consolidated Financial Statements April 30, 2026 and October 31, 2025 Note 12 GOODWILL AND IDENTIFIED INTANGIBLE ASSETS (Continued) Goodwill consisted of the following as of: SCHEDULE OF GOODWILL April 30, 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 …

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 . Our provision for, or benefit from, income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items, if any, that are recognized in the relevant period. We update our estimate of the annual effective tax rate each quarter based on the most current information available. Any change in the estimated annual effective tax rate is recorded as a cumulative adjustment in the period in which the change is identified. Our quarterly income tax provision, as well as our quarterly estimate of the annual effective tax rate, may vary significantly from period to period. This variability is driven by several factors, including the inherent difficulty in forecasting pre-tax income or loss and the jurisdictions in which such results are expected to occur; the impact of intercompany transactions; the applicability of special tax regimes; changes in our operating structure; fluctuations in our stock price; foreign currency gains and losses; and changes in tax laws, regulations, or administrative practices. Our effective tax rate may be more or less volatile depending on the level of pre-tax income or loss in a given period. 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 …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Note 6 OPERATING LEASES We are contractually bound by a non-cancellable operating lease relating to our operating segment, PAL. Lease costs recognized in our consolidated financial statements are summarized as follows: SCHEDULE OF OPERATING LEASE COSTS April 30, October 31, 2026 2025 Lease Liability $ 384,596 $ 394,932 Future minimum lease payments $ 494,831 518,953 Remaining life of the lease in years (Expires March 31, 2033) 6.92 7.42 Discount Rate 6.75 % 6.75 % Estimated future minimum lease payments and imputed interest as of April 30, 2026, are as follows: SCHEDULE OF MATURITIES OF LEASE LIABILITIES Years Total 2026 (remaining 6 months) $ 32,644 2027 66,431 2028 68,424 2029 70,477 2030 72,591 Thereafter 184,264 Total Future minimum lease payments 494,831 Imputed Interest (110,235 ) Total $ 384,596 Lease Liability $ 384,596 …

LesseeOperatingLeasesTextBlock · excerpt; the full note is in the filing

NOTE 16 DISAGGREGATION OF NET REVENUE Information about the Companys operations in different geographic areas for the three months and six months ended April 30, 2026 and 2025, is shown below. Net revenues were 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 April 30, 2026 Marine Technology Business (Products) Acoustic Sensors and Materials Business (PAL) Defense Engineering Services Business (Services) Total Disaggregation of Total Net Revenues Primary Geographical Markets Americas $ 573,083 $ 311,322 $ 788,204 $ 1,672,609 Europe 475,734 958,288 1,750,392 3,184,414 Australia/Asia 1,423,313 213,917 - 1,637,230 Middle East/Africa 367,462 42,297 - 409,759 Total Revenues $ 2,839,592 $ 1,525,824 $ 2,538,596 $ 6,904,012 Major Goods/Service Lines Equipment Sales $ 1,763,606 $ 1,350,500 $ 37,169 $ 3,151,275 Equipment Rentals 761,338 - - 761,338 Software Sales 134,954 - - 134,954 Engineering Parts - - 2,099,301 2,099,301 Services 179,694 175,324 402,126 757,144 Total Revenues $ 2,839,592 $ 1,525,824 $ 2,538,596 $ 6,904,012 Goods transferred at a point in time $ 1,898,560 $ 1,350,500 $ 37,169 $ 3,286,229 Services transferred over time 941,032 175,324 2,501,427 3,617,783 Total Revenues $ 2,839,592 $ 1,525 …

RevenueFromContractWithCustomerTextBlock · excerpt; the full note is in the filing

Note 15 SEGMENT ANALYSIS We operate three reportable segments, Marine Technology Business, Acoustic Sensors and Materials Business, and the Defense Engineering Services Business (together the Business Segments). These Business Segments are managed separately based upon fundamental differences in their operations, market segments and resource allocation. 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. Our Chief Operating Decision Maker (CODM) is our Chief Executive Officer. The CODM evaluates the operating results and performance of all Business Segments using GAAP reporting for revenue, expenses, and net income by segment. This financial information is used to assess operating trends, perform analytical comparisons, benchmark performance between periods and across geographic regions, make investment decisions, and monitor budget-to- actual performance on a monthly, quarterly and annual basis. The net revenues shown in this Note 15 in the tables below comprise sales that have been made externally. Inter-company sales between our reportable segments are eliminated from our consolidated income statement. For segment reporting purposes, we have, however, included in the Supplemental Disclosures below information on inter-company sales in the reporting period. Inter-company sales are not incl …

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 seasonal, world events 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. Principles of Consolidation The unaudited consolidated financial statem …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

Note 14 2017 AND 2021 STOCK INCENTIVE PLANS 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 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 subject to Stockholders approval and was 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 2017 Plan. On July 12, 2021, a second plan was adopted by the Board of Directors (2021 Plan). 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 allocated 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. During the three months ended April 30, 2026, no new stock awards were granted, and no stock options were exercised. A total of 6,880 restricted stock awards that mat …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing