Coda Octopus Group, Inc.

Previous wording

We sell our goods and services internationally, with $4,150,361 or 59.1% of our consolidated net revenue in the Current Quarter derived from outside of the United States. Macroeconomic factors, including changes in inflation and interest rates, as well as global economic and geopolitical developments including unpredictable shifts in global tariffs, world events, significant changes in trade policies and funding policies, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. These factors may adversely affect customer demand for our products and services and our ability to forecast spending patterns and therefore overall demand for our goods and services. We expect some or all of these factors to continue to impact our operations in fiscal year 2025.

Current wording

We sell our goods and services internationally, with $4,484,660 or 63.5% of our consolidated net revenue in the Current Quarter derived from outside of the United States. Macroeconomic factors, including changes in inflation and interest rates, as well as global economic and geopolitical developments including unpredictable shifts in global tariffs, world events, significant changes in trade policies and funding policies, have direct and indirect impacts on our results of operations that are difficult to isolate and quantify. These factors may adversely affect customer demand for our products and services and our ability to forecast spending patterns and therefore overall demand for our goods and services. We expect some or all of these factors to continue to impact our operations in fiscal year 2025.

Previous wording

The new U.S. Administration is rapidly changing key policies in the area of trade, defense and foreign policy which has resulted in general uncertainty around the world. Our core business has a leading solution in the offshore renewable market. Following the change in U.S policy many offshore renewable permits for U.S. developments have been suspended and many leading developers such as Shell, Orsted, BP and Total Energy have either reduced or halted their US offshore renewable programs. We believe that these factors have resulted in weak demand from European developers and offshore suppliers for our rental solutions which caused a decrease in rental revenue and associated services from the geographic region of Europe (the Marine Technology’s main rental hub) in the Current Quarter. Nevertheless, we believe that new U.S. policy on prioritizing domestic energy production of Oil & Gas also favors our products and solutions, and we believe that in the foreseeable future this will offset reduction of revenue from U.S. offshore renewables. Furthermore, a key part of our growth strategy as a Group relies on Defense spending and the U.S. new foreign policy on Defense has also seen Europe including the United Kingdom committing to significant increases defense spending, with Germany expecting to spend about €400 billion ($428 billion) on defense over the coming years in addition to creating a special fund of €500 billion ($535 billion) for infrastructure spending over the next 10 years. European Union member states have also agreed to allow the member states to exceed the debt ceilings that are in place to allow the countries to borrow for defense investments. We therefore believe that despite the short-term disruption caused by uncertainty around the new U.S. Administration’s critical policies, many of these changes are likely to be favorable for our Business. In the Current Quarter we saw increased customer engagements on Defense projects along with more pace in the procurement process.

Current wording

The new U.S. Administration is rapidly changing key policies in the area of trade, defense and foreign policy which have resulted in general uncertainty around the world. Our core business has a leading solution in the offshore renewable market. Following the change in the US renewables policy many offshore renewable permits for U.S. developments have been suspended and many leading developers such as Shell, Orsted, BP and Total Energy have either reduced or halted their US offshore renewable programs. We believe that these factors have resulted in weak demand from European developers and offshore suppliers for our rental solutions which caused a decrease in rental revenue and associated services from the geographic region of Europe (the Marine Technology’s main rental hub) in the Current Quarter. Nevertheless, we believe that new U.S. policy on prioritizing domestic energy production of Oil & Gas also favors our products and solutions, and we believe that in the foreseeable future this may offset the reduction of revenue from U.S. offshore renewables. Furthermore, a key part of our growth strategy as a Group relies on Defense spending and the U.S. new foreign policy on Defense has also seen Europe including the United Kingdom committing to significant increases defense spending, with Germany expecting to spend about €400 billion ($428 billion) on defense over the coming years in addition to creating a special fund of €500 billion ($535 billion) for infrastructure spending over the next 10 years. European Union member states have also agreed to allow the member states to exceed the debt ceilings that are in place to allow the countries to borrow for defense investments. We therefore believe that despite the short-term disruption caused by uncertainty around the new U.S. Administration’s critical policies, many of these changes are likely to be favorable for our Business.

Previous wording

Our Marine Technology Business constitutes our core business and is critical for our growth strategy. It is an established technology solution provider of over 30 years to the offshore subsea market. It owns key proprietary technology (comprising both hardware and software) including its real time 3D volumetric imaging sonar and its cutting-edge augmented reality diving solution DAVD (Diver Augmented Vision Display) system. These solutions are used in both the underwater Defense and Commercial markets. It recently launched its new underwater digital communications system which advances the offering in the market from analog voice communications to digital voice communications underwater (Voice-Hub-4). All innovation, design, development, manufacturing and support are performed within the Company.

Current wording

Our Marine Technology Business constitutes our core business and is critical for our growth strategy. It is an established technology solution provider of over 30 years to the offshore subsea market. It owns key proprietary technology (comprising both hardware and software) including its real time 3D volumetric imaging sonar (Echoscope®) and its cutting-edge augmented reality diving solution DAVD (Diver Augmented Vision Display) system. These solutions are used in both the underwater Defense and Commercial markets. It recently launched its new underwater digital communications system which advances the offering in the market from analog voice communications to digital voice communications underwater (Voice-Hub-4). All innovation, design, development, manufacturing and support are performed within the Company.

Previous wording

Our novel diving technology is distributed under the name “CodaOctopus®DAVD” to the global defense and commercial diving markets. The DAVD technology is an advanced Augmented Reality display technology designed to enhance divers’ safety, performance and situational awareness, especially in low-visibility and technically challenging environments. It seamlessly integrates real-time data, on-demand information and Echoscope 3D sonar imagery, projecting these onto the diver’s field of vision through the DAVD Augmented Reality Head-Up display.

Current wording

Our novel diving technology is distributed under the name “CodaOctopus®DAVD” to the global defense and commercial diving markets. The DAVD technology is an advanced Augmented Reality display technology designed to enhance divers’ safety, performance and situational awareness, especially in low-visibility and technically challenging environments. It seamlessly integrates several different streams of real-time data, on-demand information (such as drawings, pictures, videos) and Echoscope 3D sonar imagery, projecting these onto the diver’s field of vision through the DAVD Augmented Reality Head-Up display (HUD).

Previous wording

On October 29, 2024, we acquired PAL which is a recognized leader in the ultrasound and acoustic measurement field. PAL supplies acoustic sensors and materials to a broad range of markets including the medical, aerospace, subsea and automotive industries. It also provides measurement and calibration services for the sensors that they supply.

Current wording

On October 29, 2024, we acquired PAL which is a recognized leader in the ultrasound and acoustic measurement field. PAL supplies acoustic sensors and materials to a broad range of markets including the medical, aerospace, subsea and automotive industries. It also provides measurement and calibration services for the sensors that they supply. PAL recently received accreditation to the 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.

Previous wording

The Marine Engineering Business has operations in the USA and UK. Its central business model is 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 this 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. Clients include prime defense contractors such as Raytheon, Northrop Grumman, Thales Underwater and BAE Systems. The scope of services provided by the Marine Engineering Business encompasses concept, design, prototype and manufacturing.

Current wording

The Marine Engineering Business has operations in the USA and UK. Its central business model is 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 this 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. Clients include prime defense contractors such as Raytheon, Northrop Grumman, Thales Underwater and BAE Systems. The scope of services provided by the Marine Engineering Business encompasses concept, design, prototype, manufacturing and support.

Previous wording

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

Current wording

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.

Previous wording

The DAVD untethered solution (DUS) presents the biggest market opportunity for this solution. In the USA alone there are over 14,000 divers that could utilize this solution including US Special Forces, EOD, US Army, Marine Corps, US Coast Guard, first responders and law enforcement. The DAVD untethered solution has been the subject of a funded hardening program under which the technology was adapted for this market (such as Special Forces, Seals, etc.), and in 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. In our first quarter 2025, we received the first order for sixteen DAVD DUS systems which will be used for field trials across different communities of users such as the EOD (Explosive Ordinance Disposal) community in the U.S. We also are actively working with two foreign navies who are in an advanced stage of readiness to start adopting the technology (in small batches), and which will be used to introduce the technology to their divers.

Current wording

The DAVD untethered solution (DUS) presents the biggest market opportunity for the 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, US Army, Marine Corps, US Coast Guard, first responders and law enforcement. The DAVD untethered solution has been the subject of a joint funded U.S and Foreign Navy hardening program under which the DAVD technology was adapted for SOF applications, and in 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. In our first quarter 2025, we received the first order for sixteen DAVD DUS systems which will be used for field trials across different communities of users such as the EOD (Explosive Ordinance Disposal) community in the U.S. We successfully delivered these systems in our third quarter and continue to support the customer’s evaluation program. We also are actively working with two foreign navies who are in an advanced stage of readiness to start adopting the technology (in small batches), and which will be used to introduce the technology to their divers.

Previous wording

Inflation measured as the Consumer Price Index has affected the global economy since calendar year 2022, and which was caused by supply chain issues resulting from the coronavirus pandemic and which has since been further compounded by the war in Ukraine which has affected the price of commodities such as oil. Inflation has since remained volatile in the countries in which we operate and continues to be a threat to the global economy. For the 12-month period preceding April 2025, this was:

Current wording

Inflation measured as the Consumer Price Index has affected the global economy since calendar year 2022, and which was caused by supply chain issues resulting from the coronavirus pandemic and which has since been further compounded by the war in Ukraine which has affected the price of commodities such as oil. Inflation has since remained volatile in the countries in which we operate and continue to be a threat to the global economy. For the 12-month period preceding July 2025, this was:

Previous wording

We sell our goods and services globally and a large percentage of our revenue emanates from international sales. Any change in U.S. policy that restricts the free flow of goods and services is likely to dampen demand for our goods and services globally. The recent change in trade policy by the U.S. vis-à-vis the rest of the world has created significant uncertainties. Our revenue mix is a combination of outright sales and rentals. Rentals are driven by offshore projects. However, since the change in the U.S Administration policy on the funding of offshore renewables programs, we have seen reduced demand for our rental and associated solutions from our European customers who were the front runners for developing many offshore renewables projects in the USA. 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 Current Quarter approximately 36.7% of our Marine Technology Business revenue was generated from sales made in the U.S.

Current wording

We sell our goods and services globally and a large percentage of our revenue emanates from international sales. Any change in U.S. policy that restricts the free flow of goods and services is likely to dampen demand for our goods and services globally. The recent change in trade policy by the U.S. vis-à-vis the rest of the world has created significant uncertainties. Our revenue mix is a combination of outright sales and rentals. Rentals are driven by offshore projects. However, 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. 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 Current Quarter approximately 42.6% of our Marine Technology Business revenue was generated from sales made in the U.S.

Previous wording

The Company has operations in the UK, USA, Denmark, Australia and India. The results of operations, our intercompany balances associated with our international operations, products and service offerings are exposed to foreign exchange rate fluctuations. Due to these fluctuations, operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances (such as assets and liabilities). We also hold cash equivalents in foreign currencies such as British Pounds, Euros and Danish Kroner. When the U.S. Dollar strengthens compared to these currencies, cash equivalents when translated, may be materially less than expected and vice versa. In the Current Quarter the USD weakened against the British Pound and Danish Kroner, which resulted in direct cost of sale and also total operating expenses of our foreign subsidiaries when translated into USD for reporting purposes being higher. The impact of currency fluctuations is discussed more fully below under “Inflation and Foreign Currency”. See also Note 5 (Foreign Currency Translation) to the Unaudited Consolidated Financial Statements and the section of this report which concerns “Inflation and Foreign Currency”.

Current wording

The Company has operations in the UK, USA, Denmark, Australia and India. The results of operations, our intercompany balances associated with our international operations, products and service offerings are exposed to foreign exchange rate fluctuations. Due to these fluctuations, operating results may differ materially from expectations, and we may record significant gains or losses on the remeasurement of intercompany balances (such as assets and liabilities). We also hold cash and cash equivalents in foreign currencies such as British Pounds, Euros and Danish Kroner. When the U.S. Dollar strengthens compared to these currencies, cash equivalents when translated, may be materially less than expected and vice versa. In the Current Quarter the USD weakened against the British Pound and Danish Kroner, which resulted in direct cost of sale and also total operating expenses of our foreign subsidiaries when translated into USD for reporting purposes being higher. The impact of currency fluctuations is discussed more fully below under “Inflation and Foreign Currency”. See also Note 5 (Foreign Currency Translation) to the Unaudited Consolidated Financial Statements and the section of this report which concerns “Inflation and Foreign Currency”.

Previous wording

These factors may adversely impact on our availability of free cash flow, working capital and business prospects. As of April 30, 2025, we had cash and cash equivalents of $24,462,301, and cash provided by our operations of $2,103,980. Based on our outstanding obligations and our cash and cash equivalents, as well as our revolving line of credit with HSBC NA, we believe we have sufficient working capital to meet our anticipated cash needs for the next twelve months. However, any projections of future cash flows are subject to substantial uncertainty.

Current wording

These factors may adversely impact on our availability of free cash flow, working capital and business prospects. As of July 31, 2025, we had cash and cash equivalents of $26,196,439, and cash provided by our operations of $4,307,865. Based on our outstanding obligations and our cash and cash equivalents, as well as our revolving line of credit with HSBC NA, we believe we have sufficient working capital to meet our anticipated cash needs for the next twelve months. However, any projections of future cash flows are subject to substantial uncertainty.

Previous wording

Our consolidated results of operations include the results of the Company’s foreign subsidiaries. Our foreign subsidiaries’ results are translated from their respective functional currencies into United States Dollar (USD) for reporting purposes. Currency fluctuations can therefore impact (positively or negatively) on our consolidated results including revenue, profitability and the value of our assets and liabilities included on the consolidated balance sheet. During the Current Quarter, the USD weakened against the British Pound and the Danish Kroner, resulting in translated foreign revenues being higher by $81,131 than when using the Previous Quarter exchange rate. In addition, the associated costs of our foreign subsidiaries including cost of sales and operating expenses when translated from their respective functional currencies into USD for reporting purposes were higher due to the weakening of the USD (for a discussion of the effect of foreign exchange rates see Item 2 “Inflation and Foreign Currency”). Consolidated net revenue in the Current Quarter increased by 31.8% and was $7,017,459 compared to $5,323,178 in the Previous Quarter. During the Current Quarter total operating expenses increased by 42.8% and income from operations decreased by 19.5%. Commission costs were 195.2% higher in the Current Quarter and were $390,384 compared to $132,222 in the Previous Quarter due to more units of hardware sales emanating from Asia which unusually incurred a higher commission cost due to quantities purchased (see Notes 15 and 16 to the unaudited Consolidated Financial Statements for more information on Segment reporting and Disaggregation of Revenue by segment and geography). Pre-tax income in the Current Quarter was $1,265,610 compared to $1,641,215 in the Previous Quarter, representing a decrease of 22.9%, largely caused by lower gross profit margins and higher total operating expenses which primarily is a result of the weakening of the USD against the British Pound and Danish Kroner. A more detailed analysis of our results of operations is set out below.

Current wording

Our consolidated results of operations include the results of the Company’s foreign subsidiaries. Our foreign subsidiaries’ results are translated from their respective functional currencies into United States Dollar (USD) for reporting purposes. Currency fluctuations can therefore impact (positively or negatively) on our consolidated results including revenue, profitability and the value of our assets and liabilities included in the consolidated balance sheet. During the Current Quarter, the USD weakened against the British Pound and the Danish Kroner, resulting in translated foreign revenues being higher by $264,175 than when using the Previous Quarter exchange rate. In addition, the associated costs of our foreign subsidiaries including cost of sales and operating expenses when translated from their respective functional currencies into USD for reporting purposes were higher due to the weakening of the USD, (for a discussion of the effect of foreign exchange rates see Item 2 “Inflation and Foreign Currency”). Consolidated net revenue in the Current Quarter increased by 29.0% and was $7,064,795 compared to $5,476,544 in the Previous Quarter. During the Current Quarter total operating expenses increased by 29.6% and income from operations decreased by 0.8%. Commission costs were 46.5% higher in the Current Quarter or $146,921 compared to $100,290 in the Previous Quarter due to an increase in sales deriving from Asia (see Notes 15 and 16 to the unaudited Consolidated Financial Statements for more information on Segment reporting and Disaggregation of Revenue by segment and geography). Pre-tax income in the Current Quarter was $1,543,749 compared to $1,631,246 in the Previous Quarter, representing a decrease of 5.4%, largely caused by an increase in our SG&A costs which includes a provision for the Current Nine Month Period of $158,872 for contingent liability related to the PAL’s year one Earn Outs, representing 75% of the first year Earn Out contingent liability. A more detailed analysis of our results of operations is set out below.

Previous wording

In the Current Quarter 59.1% of our consolidated net revenue was attributable to our foreign subsidiaries. When translating this amount from the native functional currencies of British Pound and Danish Kroner in the Current Quarter this was $4,150,361 compared to $4,069,230 when using the exchange rate applied in the Previous Quarter. This is an increase to net revenue of $81,131 compared to the same quarter last year.

Current wording

In the Current Quarter 66.1% 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 Quarter this was $4,670,202 compared to $4,406,027 when using the exchange rate applied in the Previous Quarter and therefore an increase in net revenue of $264,175.

Previous wording

In the Current Quarter 66.8% of our consolidated Operating Expenses and Cost of Revenue was attributable to our foreign subsidiaries and this was $3,961,236 (“Foreign Subsidiary Costs”) of our total costs of $5,929,775. When translating the Foreign Subsidiary Costs from the native functional currencies of British Pound and Danish Kroner to USD in the Current Quarter this was $101,145 higher when using the exchange rate of the Previous Quarter.

Current wording

In the Current Quarter 71.8% of our consolidated Operating Expenses and Cost of Revenue was attributable to the Company’s foreign subsidiaries and this was $4,082,816 (“Foreign Subsidiary Costs”) of our total costs of $5,684,816. When translating the Foreign Subsidiary Costs from the native functional currencies of British Pound and Danish Kroner to USD in the Current Quarter this was $224,023 higher when using the exchange rate of the Previous Quarter.

Previous wording

We sell our products internationally (63.3% of sales by our Products Business in the Current Quarter are attributed to sales outside of the USA). In the Current Quarter, the Products Business generated $3,878,090 or 55.3% of our consolidated net revenues compared to $3,524,714 or 66.2% in the Previous Quarter, representing an increase of $353,376 or 10.0%. The increase in sales is due to a combination of factors including increase in hardware sales derived from the strategic region of Asia by 105.4% to $2,200,282 in the Current Quarter compared to $1,071,295 in the Previous Quarter, along an increase in sales derived from the U.S. by 122.1% to $1,423,701 compared to $640,093 in the Previous Quarter and which included $1,235,300 of DAVD tethered systems sales. Gross profit margin decreased from 80.2% in the Previous Quarter to 67.7% in the Current Quarter, which reflects several factors. These include a higher percentage of units of hardware sales compared to rentals and associated services revenue; and commission costs increasing by 177.7% to $364,381 in the Current Quarter compared to $131,209 in the Previous Quarter as a result of an increase in sales derived from Asia. The decrease in the gross profit margin on sales to Asia is related to a volume sale which incurred a higher commission cost than is customary. Typically, agents do not purchase at the volume which triggers the higher commission percentage on the sale. We therefore do not expect that margins will be lower in the future unless “volume sales” are involved. Also, sales from Europe (our rental hub) decreased significantly and were $254,107 in the Current Quarter compared to $1,464,322 which we believe is a result of the change in policy by the U.S. Administration on offshore renewables which has resulted in many developers cancelling projects. In the Current Quarter total operating expenses increased by 30.1% in the Products Business and were $1,662,743 compared to $1,277,881 in the Previous Quarter, largely due to exchange rate translation variance as a result of the USD weakening against the British Pound and Danish Kroner, the functional currencies of our foreign subsidiaries, and which resulted in a $221,198 expense relating to foreign currency transactions compared to a gain on these transactions in the Previous Quarter of $84,599. Pre-tax income was $1,055,255 in the Current Quarter compared to $1,736,910 in the Previous Quarter, reflecting a decrease in gross profit and an increase in operating expenses.

Current wording

We sell our products internationally (57.4% of sales by our Products Business in the Current Quarter are attributed to sales outside of the USA). In the Current Quarter, the Products Business generated $3,984,475 or 56.4% of our net revenues compared to $3,048,544 or 55.7% in the Previous Quarter, representing an increase of $935,931 or 30.7%. The increase in sales is due to a combination of factors including increase in hardware sales, mainly derived from the Americas and Middle East & Africa, by 103.6% to $2,746,255 in the Current Quarter compared to $1,349,010 in the Previous Quarter. Sales derived from the U.S. increased by 148.6% to $1,696,334 compared to $682,477 in the Previous Quarter, driven mainly by an increase in DAVD related sales of $1,235,300. Gross profit margin decreased from 82.9% in the Previous Quarter to 77.0% in the Current Quarter, which reflects several factors including the mix of sales. The Products Business mix of sales in the Current Quarter includes a higher percentage of units of hardware sales (which yields a lower gross profit margin) and a lower percentage of rentals (which yields a higher gross profit margin). Also, sales from Europe (our rental hub) decreased significantly and were $157,227 in the Current Quarter compared to $662,700 in Previous Quarter which we believe is a result of the change in the funding policy by the U.S. Administration for offshore renewables which has resulted in many European developers (such as Orsted and BP) cancelling offshore renewable development projects. In the Current Quarter total operating expenses increased by 14.6% in the Products Business and were $1,770,863 compared to $1,545,374 in the Previous Quarter. This is due to a combination of factors including recording in the Current Quarter an exceptional item of $158,872 for PAL related Earn Outs, exchange rate translation expenses as a result of the USD weakening against the British Pound and Danish Kroner, the functional currencies of our foreign subsidiaries, and which resulted in a $238,551 foreign currency related expense compared $163,440 in the Previous Quarter. Pre-tax income was $1,426,739 in the Current Quarter compared to $1,154,300 in the Previous Quarter, reflecting an increase in revenue and gross profit.

Previous wording

In the Current Quarter, PAL generated $1,299,069 or 18.5% of our consolidated net revenue. Gross profit margin was 65.4%; commission costs incurred on sales generated in the Current Quarter were $26,003; total operating expenses were $704,109. PAL’s transactions are in its native currency of British Pound. During the Current Quarter foreign currency transactions resulted in charge of $174,700 when translated into USD and therefore increasing expenses in the Current Quarter. Pre-tax income was $173,871.

Current wording

In the Current Quarter, PAL generated $1,458,536 or 20.6% of our consolidated net revenue. Gross profit margin was 54.8%; commission costs incurred on sales generated in the Current Quarter were $50,833; total operating expenses were $550,090. PAL’s transactions are in its native currency of British Pound. Pre-tax income was $252,108.

Previous wording

In the Current Quarter, the Marine Engineering Business generated $1,840,300 or 26.2% of our consolidated net revenues compared to $1,798,464 or 33.8% in the Previous Quarter, representing an increase in sales of 2.3%. Gross profit margin increased from 50.7% in the Previous Quarter to 55.5% in the Current Quarter, reflecting the mix of engineering projects. In the Current Quarter total operating expenses decreased by 12.9% in the Marine Engineering Business and were $569,435 compared to $653,871 in the Previous Quarter. Pre-tax income in the Current Quarter was $477,722 compared to $321,360 in the Previous Quarter.

Current wording

In the Current Quarter, the Marine Engineering Business generated $1,621,784 or 23.0% of our consolidated net revenues compared to $2,428,000 or 44.3% in the Previous Quarter, representing a decrease in sales of 33.2%. Our U.S. based Marine Engineering Business has experienced delays in receiving orders from its prime defense contractors’ customers resulting from delays in the appropriation of the defense budgets. Gross profit margin decreased from 62.6% in the Previous Quarter to 58.9% in the Current Quarter, reflecting the mix of engineering projects. In the Current Quarter total operating expenses increased by 32.3% in the Marine Engineering Business and were $708,563 compared to $535,421 in the Previous Quarter. Pre-tax income in the Current Quarter was $277,335 compared to $1,030,488 in the Previous Quarter.

Previous wording

Net Revenue: Total consolidated net revenues for the Current Quarter increased by 31.8% when compared to the Previous Quarter and were $7,017,459 and $5,323,178, respectively. Net Revenue increased in all of the operating segments. PAL contributed 18.5% to our consolidated net revenue. Without the inclusion of PAL our consolidated net revenue would have increased by 7.4% when compared to the Previous Quarter ($5,718,390 in the Current Quarter compared to $5,323,178 in the Previous Quarter). In the Current Quarter our Core Business (Marine Technology Business) net revenue increased by 10.0% largely due to an increase in sales derived from the strategic region of Asia and the U. S. for DAVD and related items.

Current wording

Net Revenue: Total consolidated net revenues for the Current Quarter increased by 29.0% when compared to the Previous Quarter and were $7,064,795 and $5,476,544, respectively. Revenue increased in the Marine Technology Business, while it decreased in the Marine Engineering Business. PAL contributed 20.6% to our consolidated net revenue. Without the inclusion of PAL our consolidated net revenue would have increased by 2.4% to $5,606,259 in the Current Quarter, compared to $5,476,544 in the Previous Quarter. This is as a result of an increase in the Products Business revenue by 30.7% offset by a significant decrease in the Marine Engineering Business revenue caused by delays in receiving awards from its prime defense contractor customers due to delays in appropriation of the line items under the Federal Budget.

Previous wording

Gross Profit Margins*:* Margin percentage was weaker in the Current Quarter at 64.1% (gross profit of $4,497,281) compared to 70.2% (gross profit of $3,738,434) in the Previous Quarter. In the Current Quarter, gross profit margins in our Marine Technology Business were weaker due to the geography of a significant percentage of sales derived from Asia and which resulted in commission costs increasing in the Current Quarter by 177.7% to $364,381 compared to $131,209 in the Previous Quarter. This is unusual and is primarily due to the incurring a higher commission rate relating to quantities sold on a single order. Total consolidated commission costs in the Current Quarter were $390,384 compared to $132,222 in the Previous Quarter, representing an increase of 195.2%. Another contributory factor relates to the mix of sales in the Marine Technology Business. We had significant hardware sales in conjunction with lower rental and associated service sales in the Current Quarter.

Current wording

Gross Profit Margins*:* Margin percentage was weaker in the Current Quarter at 68.3% (gross profit of $4,823,756) compared to 73.9% (gross profit of $4,048,538) in the Previous Quarter largely due to the mix of sales. In the Current Quarter, gross profit margins in our Marine Technology Business were weaker due to the composition of sales in the Current Quarter, which had more units of hardware sales with a concentration of DAVD hardware, and less units of rental sales. Our net commission costs in the Current Quarter were $146,921 compared to $100,290 in the Previous Quarter, representing an increase of 46.5%.

Previous wording

In the Current Quarter, gross profit margins for the Marine Technology Business were 67.7% compared to 80.2% in the Previous Quarter and for the Marine Engineering Business these were 55.5% in the Current Quarter compared to 50.7% in the Previous Quarter and for PAL it was 65.4%. Our consolidated commission costs incurred in the Current Quarter increased by 195.2% and were $390,384 compared to $132,222 in the Previous Quarter. This is largely due to a significant percentage of our consolidated net sales in the Current Quarter emanating from the strategic region of Asia with an associated higher commission cost due to quantities purchased, combined with a significantly higher number units of hardware sales compared to rentals and associated services. Since there are more variable factors affecting gross profit margins in the Marine Technology Business, a table showing a summary of break-out of sales generated by this business in the Current Quarter compared to the Previous Quarter is set out below:

Current wording

In the Current Quarter, gross profit margins for the Marine Technology Business were 77.0% compared to 82.9% in the Previous Quarter and for the Marine Engineering Business these were 58.9% in the Current Quarter compared to 62.6% in the Previous Quarter and for PAL it was 54.8%.

Previous wording

Research and Development (R&D): R&D expenditures in the Current Quarter increased by 27.2% and were $689,995 compared to $542,481 in the Previous Quarter. The increase is largely attributed to the inclusion of PAL into the Group combined with the impact of foreign currency translation from British Pound to USD for reporting purpose (and where a significant portion of our R&D expenses are incurred).

Current wording

Research and Development (R&D): R&D expenditure in the Current Quarter increased by 15.3% and was $572,468 compared to $496,359 in the Previous Quarter. The increase is largely attributed to the inclusion of PAL into the Group combined with the impact of foreign currency translation from British Pound to USD for reporting purpose (and where a significant portion of our R&D expenses are incurred).

Previous wording

During the Current Quarter our Products Business R&D expenditure increased by 16.6% and was $565,385 as compared to $485,061 in the Previous Quarter. 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 increase is related to exchange rate variance as all of the costs related to this category have been translated from British Pound to USD and during the Current Quarter the USD weakened against the British Pound, the functional currency in which these costs are incurred.

Current wording

During the Current Quarter our Products Business R&D expenditure decreased by 6.9% and was $428,007 as compared to $459,879 in the Previous Quarter. 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 increase is related to exchange rate variance as all of the costs related to this category have been translated from British Pound to USD and during the Current Quarter the USD weakened against the British Pound, the functional currency in which these costs are incurred.

Previous wording

This is a newly acquired business unit and therefore there is no financial comparative data for the Previous Quarter. During the Current Quarter, PAL incurred R&D expenditure of $95,266. 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 and we anticipate that R&D costs associated with this business unit will be approximately $450,000 on an annualized basis.

Current wording

This is a newly acquired business unit and therefore there is no financial comparative data for the Previous Quarter. During the Current Quarter, PAL incurred R&D expenditure of $98,502. 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 and we anticipate that R&D costs associated with this business unit will be approximately $450,000 on an annualized basis.

Previous wording

During the Current Quarter, the Marine Engineering Business R&D expenditure decreased by 48.9% and was $29,344 compared to $57,420 in the Previous Quarter. The Marine Engineering 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.

Current wording

During the Current Quarter, the Marine Engineering Business R&D expenditure increased by 26.0% and was $45,959 compared to $36,480 in the Previous Quarter. The Marine Engineering 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.

Previous wording

Wages and Salaries – this category of expenses increased primarily due to the inclusion of PAL into the Group. Wages and salaries related to PAL in the Current Quarter are $112,987. Without PAL, this category of expenses would have been more in line with our Previous Quarter ($937,631 in the Current Quarter compared to $932,509 in the Previous Quarter). We anticipate that on a full year basis in the fiscal year 2025 this category will increase materially over the fiscal year 2024 as we are currently operating on a reduced headcount and are seeking to recruit for several vacant positions along with expanding our management team, some of which may include additional costs relating to our succession planning strategy.

Current wording

Wages and Salaries – this category of expenses increased primarily due to the inclusion of PAL into the Group. Wages and salaries related to PAL in the Current Quarter are $141,748. Without PAL, this category of expenses would have increased by 8.9%, reflecting inflation as we are operating on a lower head count than in the Previous Quarter. We anticipate that during the current fiscal year this category will increase materially over our previous fiscal year as we are currently operating on a reduced headcount and are seeking to recruit for several vacant positions and to expand our management team.

Previous wording

Legal and Professional fees decreased by 10.6% in the Current Quarter reflecting the timing of the performance of certain services such as tax consultants’ fees. In the Current Quarter this category includes professional fees attributable to PAL of $77,038.

Current wording

Legal and Professional fees increased by 9.5% in the Current Quarter reflecting the timing of the performance of certain services such as tax consultants’ fees. In the Current Quarter this category includes professional fees attributable to PAL of $27,732.

Previous wording

Rent and operating lease expenses – 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 new lease which we assumed as part of the acquisition of PAL. The increase in lease costs in the Current Quarter is attributable to PAL. We anticipate that lease costs will remain at approximately this level in fiscal year 2025.

Current wording

Rent and operating lease expenses – 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 lease which we assumed as part of the acquisition of PAL.

Previous wording

Marketing and associated travel costs: 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 creation and video production relating to our products and solutions and fees associated with the retention of a U.S. based Focus Group, which we retained to assist with our marketing strategy and efforts. They also include costs associated with participation in industry trade shows, marketing events such as demonstrations of our technology and travel for marketing activities. Marketing costs attributable to PAL in the Current Quarter were negligible.

Current wording

Marketing and associated travel costs: 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 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 Quarter were negligible.

Previous wording

General corporate administrative expenses in the Current Quarter were $473,230 or 6.7% of net revenue and $456,299 or 8.6% of net revenue in the Previous Quarter, respectively, representing an increase in our consolidated net revenue by 31.8%. For more information on general corporate administrative expenses, please see Note 15 (Segment Analysis).

Current wording

General corporate administrative expenses in the Current Quarter were $414,261 or 5.9% of net revenue and $576,969 or 10.5% of net revenue in the Previous Quarter, respectively, representing an increase in our consolidated net revenue by 29.0%. For more information on general corporate administrative expenses, please see Note 15 (Segment Analysis).

Previous wording

Other Income: In the Current Quarter, we had “Other Income” of $177,926 compared to $290,832, representing a decrease of 38.8% from the Previous Quarter. A significant component of “Other Income” is interest earned on our certified deposits of $145,594. In February 2023, the Company established certified deposit accounts with its existing bankers. These accounts are for a fixed term of up to 3-month rolling periods and constitute “cash equivalents” in our current unaudited Consolidated Financial Statements for the period ended April 30, 2025 (see Note 7 (Composition of Certain Financial Statement Captions for more detailed analysis of this). We anticipate that the interest earned on these certified deposit accounts will be material in the future if interest rates remain the same or continue to rise.

Current wording

Other Income: In the Current Quarter, we had “Other Income” of $163,770 compared to $240,472, representing a decrease of 31.9% from the Previous Quarter. A significant component of “Other Income” is interest of $154,848 earned on our certified deposits. In February 2023, the Company established certified deposit accounts with its existing bankers. These accounts are for a fixed term of up to 3-month rolling periods and constitute “cash equivalents” in our current unaudited Consolidated Financial Statements for the period ended July 31, 2025 (see Note 7 (Composition of Certain Financial Statement Captions for a more detailed analysis). We anticipate that the interest earned on these certified deposit accounts will be material in the future if interest rates remain broadly the same.

Previous wording

Income before income taxes: In the Current Quarter, we had pre-tax income of $1,265,610 compared to $1,641,215 in the Previous Quarter, representing a decrease of 22.9%. Pre-tax income decreased, despite the increase in our consolidated net revenue by 31.8%, due to the combination of factors discussed earlier.

Current wording

Income before income taxes: In the Current Quarter, we had pre-tax income of $1,543,749 compared to $1,631,246 in the Previous Quarter, representing a decrease of 5.4%. Pre-tax income decreased, primarily due to an increase in our Total Operating Expenses which increased for the reasons discussed above.

Previous wording

Net Income: In the Current Quarter we had Net Income of $908,762 compared to $1,415,238 in the Previous Quarter, representing a decrease of 35.8%. In the Previous Quarter we recorded Current Tax Expense of $191,073 compared to a Current Tax Expense of $374,701 in the Current Quarter reflecting provision for income tax. We also recorded a Deferred Tax Expense of $34,904 in the Previous Quarter compared to a Deferred Tax Benefit of $17,853 in the Current Quarter, which relates to the granting of stock awards. Our effective tax rate is subject to significant variation due to several factors including variability in our pre-tax income and/or loss 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). In the Current Quarter, the U.S. subsidiaries generated 35.1% of our consolidated net revenue and generated taxable income which resulted in a provision for income tax in the Current Quarter. The Company’s UK subsidiaries have carryforward losses and qualify for R&D Tax credits which are applied to defray a percentage of our income tax liability. In Current Quarter we have made provision of $167,083 for tax liability for the UK subsidiaries and $32,658 for our Danish subsidiary, where the corporation tax rate is 22%.

Current wording

Net Income: In the Current Quarter we had Net Income of $1,282,985 compared to $1,274,658 in the Previous Quarter, representing an increase of 0.7%. In the Previous Quarter we recorded Current Tax Expense of $325,625 compared to $268,786 in the Current Quarter reflecting provision for income tax. We also recorded a Deferred Tax Expense of $30,963 in the Previous Quarter compared to a Deferred Tax Benefit of $8,022 in the Current Quarter, which relates to the granting of stock awards. Our effective tax rate is subject to significant variation due to several factors including variability in our pre-tax income and/or loss 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 GILTI. The changes under the 2025 Tax Act as they relate to GILTI, including the computation method, will be effective for the Company in its 2027 financial statements. In the Current Quarter, the U.S. subsidiaries generated 33.9% of our consolidated net revenue and generated taxable income which resulted in a provision for income tax in the Current Quarter of $219,600. The Company’s UK subsidiaries have carryforward losses and qualify for R&D Tax credits which are applied to defray a percentage of our income tax liability in the UK. In Current Quarter we have made provision of $49,186 for tax liability for the Company’s foreign subsidiaries.

Previous wording

Comprehensive Income*.* In the Current Quarter comprehensive income was $2,709,201 compared to comprehensive income $977,555 for the Previous Quarter reflecting adjustments resulting from foreign currency translations. This category is affected by fluctuations in foreign currency exchange transactions both relating to our revenue and expenses and the valuation of our assets and liabilities on our balance sheet. In the Current Quarter, the USD weakened against the British Pound, Danish Kroner and Euro and we had a gain of $1,800,439 on foreign currency translation adjustment transactions compared to a loss of ($437,683) in the Previous Quarter. A significant part of the Company’s operations is based in the UK and Denmark, and therefore a major part of our assets and liabilities recorded in our unaudited consolidated balance sheet and financial transactions are translated from the functional currencies of these subsidiaries into USD for reporting purposes (Note 7 “property and equipment (by geographic areas) provide an indication of the split of our property). See the section below which concerns “Inflation & Foreign Currency” which shows the impact of the currency adjustments on our Income Statement and Balance Sheet in the Current Quarter compared to the Previous Quarter.

Current wording

Comprehensive Income*.* In the Current Quarter comprehensive income was $1,353,477 compared to $1,668,038 for the Previous Quarter reflecting adjustments resulting from foreign currency translations. In the Current Quarter, the USD weakened against the British Pound, Danish Kroner and Euro and we had a gain of $70,492 on foreign currency translation adjustment transactions compared to $393,380 in the Previous Quarter. A significant part of the Company’s operations is based in the UK and Denmark, and therefore a major part of our assets and liabilities recorded in our unaudited consolidated balance sheet and financial transactions are translated from the functional currencies of these subsidiaries into USD for reporting purposes (Note 7 “property and equipment (by geographic areas) provide an indication of the split of our property). See the section below which concerns “Inflation & Foreign Currency” which shows the impact of the currency adjustments on our Income Statement and Balance Sheet in the Current Quarter compared to the Previous Quarter.

Previous wording

Net Revenue: Total consolidated net revenues for the Current Six Month Period and the Previous Six Month Period were $12,227,174 and $9,784,369 respectively, representing an increase of 25.0%. In the Current Six Month Period, the Marine Technology Business net revenues were $6,153,899 compared to $7,067,480 representing a reduction of 12.9% when compared to the Previous Six Month Period. PAL net revenue in the Current Six Month Period was $2,611,330. The Marine Engineering Business revenues in the Current Six Month Period and the Previous Six Month Period were $3,461,945 and $2,716,889, representing an increase of 27.4%. The increase in our consolidated net revenue in the Current Six Month Period is attributable to an increase in net revenue of both the Marine Technology Business and the Marine Engineering Business in the Current Quarter along with the inclusion of net revenue from PAL which we recently acquired into the Company. Without PAL our net revenue in the Current Six Month Period would have been lower by 1.7% at $9,615,844 compared to $9,784,369 in the Previous Six Month Period.

Current wording

Net Revenue: Total consolidated net revenues for the Current Nine Month Period and the Previous Nine Month Period were $19,291,969 and $15,260,913 respectively, representing an increase of 26.4%. In the Current Nine Month Period, the Marine Technology Business net revenues were $10,138,374 compared to $10,116,024 representing a marginal increase of 0.2% when compared to the Previous Nine Month Period. PAL net revenues in the Current Nine Month Period were $4,069,866. The Marine Engineering Business revenues in the Current Nine Month Period and the Previous Nine Month Period were $5,083,729 and $5,144,889, respectively, representing a decrease of 1.2%. The increase in our consolidated net revenue in the Current Nine Month Period is attributable to the inclusion of PAL which we recently acquired into the Company. Without PAL our net revenue in the Current Nine Month Period would have been lower by 0.3% at $15,22,103 compared to $15,260,913 in the Previous Nine Month Period.

Previous wording

Gross Profit Margins*:* Consolidated Margin percentage was weaker in the Current Six Month Period at 64.8% (gross profit of $7,925,751) compared to 69.8% (gross profit of $6,825,170). The main factors which have resulted in the lower consolidated margins in the Current Six Month Period are attributable to our Core Business, (Marine Technology Business). Sales derived from Asia increased by 32.1% and were $3,792,093 compared to $2,870,835, which resulted in an increase in commission costs incurred on these sales. Moreover, the composition of this business’ sales included in the Current Six Month Period, a higher percentage of hardware sales and a lower percentage of rentals and associated services sales, which impacted margins. Sales made to Europe (our rental hub) by our Marine Technology Business decreased in the Current Six Month Period to $577,650 compared to $2,408,010 in the Previous Six Month Period. We secure most of our rental and associated services revenue from the European market. We believe that the change in the U.S. Administration Policy on offshore renewables development projects has affected our rental revenue as many European developers have cancelled or shelved many U.S offshore renewable programs including Shell, Orsted, BP and Total Energy. Total consolidated commission costs for the Six Month Period were $635,893 compared to $425,406 in the Previous Six Month Period, representing an increase of 49.5%.

Current wording

Gross Profit Margins*:* Consolidated margins percentage was weaker in the Current Nine Month Period at 66.1% (gross profit of $12,749,507) compared to 71.3% (gross profit of $10,873,708). The main factors which have resulted in the lower consolidated margins percentage in the Current Nine Month Period are attributable our Core Business (Marine Technology Business) and the introduction of PAL’s products into the mix of sales which has a different margin profile. Our Core Business sales derived from Asia increased by 11.5% and were $4,871,995 compared to $4,368,330, resulting in commission costs increasing by 28.0% from $523,671 in the Previous Nine Month Period to $670,164 in the Current Nine Month Period. Moreover, the composition of this business’ sales in the Current Nine Month Period included a higher percentage of hardware sales and a lower percentage of rentals and associated services sales, which impacted margins. Sales made to Europe (our rental hub) by our Marine Technology Business decreased in the Current Nine Month Period. We secure most of our rental and associated services revenue from the European market and in the Current Nine Month Period our rental revenue decreased by 63.0% when compared to the Previous Nine Month Period. We believe that the change in the U.S. Administration Policy on funding for offshore renewables development projects has affected our rental revenue as many European developers have cancelled or shelved many U.S offshore renewable programs including Shell, Orsted, BP and Total Energy. Net commission costs for the Nine Month Period were $782,814 compared to $525,696 in the Previous Nine Month Period, representing an increase of 48.9%.

Previous wording

Gross Profit Margins for the Marine Engineering Business were higher at 57.1% in the Current Six Month Period compared to 52.6% in the Previous Six Month Period. This is largely due to the types of engineering projects that are ongoing in the reporting period (contract manufacturing versus design and development work scopes), the former yielding a higher margin profile.

Current wording

Gross Profit Margins for the Marine Engineering Business were marginally higher at 57.7% in the Current Nine Month Period compared to 57.3% in the Previous Nine Month Period. This is largely due to the types of engineering projects ongoing in the reporting period (contract manufacturing versus design and development work scopes), the former yielding a higher margin profile.

Previous wording

This is a newly acquired business unit and therefore there is no comparative data for the Previous Six Month Period. For context, Gross Profit Margin for PAL in our first Quarter 2025 was 61.7% and for the Current Quarter 65.4% and for the Current Six Month Period 63.6%. In the Current Six Month Period PAL incurred commission costs of $49,052. PAL sells its acoustics sensors and materials globally and has several agents in Asia and therefore it incurs commission costs to these agents.

Current wording

This is a newly acquired business unit and therefore there is no comparative data for the Previous Nine Month Period. For context, Gross Profit Margin for PAL in our first Quarter 2025 was 61.7%, second Quarter 2025 was 65.4% and for the Current Quarter 54.8% (the decrease in the Current Quarter reflects higher commission costs) and for the Current Nine Month Period 60.4%. In the Current Nine Month Period PAL incurred commission costs of $99,885. PAL sells its acoustics sensors and materials globally and has several agents in Asia and therefore it incurs commission costs on sales concluded in Asia.

Previous wording

Since there are more variable factors affecting gross profit margins in the Marine Technology Business, a breakdown of sales for this business in the Current Six Month Period is set out below:

Current wording

Since there are more variable factors affecting gross profit margins in the Marine Technology Business, a breakdown of sales for this business in the Current Nine Month Period is set out below:

Previous wording

The increase in Equipment sales in the Current Six Month Period is a result of an increase in sales derived from the strategic region of Asia where sales increased from $2,870,835 to $3,792,093 and sales derived from the U.S for DAVD of $1,235,300.

Current wording

The increase in Equipment sales in the Current Nine Month Period is a result of an increase in sales derived from the strategic region of Asia where sales increased to $4,871,995 from $4,368,330 and sales derived from the U.S increased to $3,474,671 in the Current Nine Month Period compared to $1,660,492 in the Previous Nine Month Period and which mainly relates to DAVD technology sales.