Coda Octopus Group, Inc.
For the period ended Apr 30, 2026. Filed Jun 15, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 30, 2026 · Filed Jun 15, 2026
CODA$8.34+3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-01-31; filed 2026-03-17.
0001493152-26-010399
Item 2. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-04-30; filed 2026-06-15.
0001493152-26-028609
Item 2. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 85 previous paragraphs and 127 current paragraphs.
35 unchanged; 28 reworded; 60 added; 22 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 12 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (60)
Current report
These conditions may adversely affect customer demand for our products and services and reduce the predictability of customer spending patterns, which in turn may impact on our ability to forecast overall demand. We expect some or all of these factors to continue to influence our operations during fiscal year 2026.
Current report
Business Disruption caused by the ongoing Iranian Conflict and the closure of the Strait of Hormuz
Current report
We operate in global markets, and our results are affected by macroeconomic conditions and geopolitical developments that influence customer demand, supply chain reliability, and overall business activity. In the Current Quarter, $5,231,403 or 75.8% of our consolidated net revenues were generated outside the Americas.
Current report
In the Current Quarter, geopolitical instability has had a direct impact on our business. The ongoing conflict involving Iran and the resulting instability in the Middle East have adversely affected customer activity in regions that are significant to our Marine Technology Business. A substantial portion of our customer base for this segment is located in the Middle East and Asia. The conflict, combined with the effective closure of the Strait of Hormuz—through which a significant portion of global maritime shipping transits—has disrupted commercial activity and reduced demand for our products and services.
Current report
Revenues from Asia and the Middle East for the Group in the Previous Quarter was $2,770,898 compared to $2,046,989 in the Current Quarter, representing a decrease of 26.1%. The uncertainty caused by the conflict and the regional standoff has contributed to lower order intake, delays in contract awards, and the postponement of customer projects. These conditions have also resulted in higher raw material costs, increased operational overhead, and extended lead times for core components, which have slowed progress on customer programs. These disruptions may impair our ability to meet customer demand, maintain production schedules, or operate efficiently.
Current report
We expect some or all of these macroeconomic and geopolitical factors to continue to influence our operations during fiscal year 2026.
Current report
We sell our products and services globally, and a significant portion of our revenue is generated from international markets. Changes in U.S. trade policy that restrict the free flow of goods and services may reduce global demand for our offerings and contribute to uncertainty in the markets in which we operate. Recent shifts in U.S. trade policy have increased volatility in global trade conditions. Our revenue mix includes both product sales and rentals, with rental activity closely linked to offshore project development. Following changes in U.S. Administration policy regarding funding for offshore renewable energy programs, we have experienced reduced demand for rental equipment and related services from certain European customers who had been down-selected to develop offshore renewable projects in the United States. In addition, some of the products we sell into the U.S. market are manufactured in the United Kingdom. As a result, changes in trade policy, tariffs, customs requirements, or cross-border regulatory frameworks may affect our cost structure, supply chain efficiency, and the competitiveness of our products in the U.S. market. These factors collectively contribute to uncertainty in customer purchasing behavior and may adversely affect our ability to forecast demand and operate efficiently. Under the newly introduced tariff structure, we are subject to a 10% tariff on items imported into the United States from the United Kingdom, where most of our products are manufactured. In the Current Quarter approximately 20.2% of our Marine Technology Business revenues was generated from sales made in the USA and therefore exposed to tariffs.
Current report
A brief summary of the impact of exchange rate fluctuations is shown immediately below:
Current report
Gross profit margin increased from 67.7% in the Previous Quarter to 77.0% in the Current Quarter primarily due to the mix of sales and the decrease in sales in the Middle East and Asia (resulting in a decrease in commission costs in the Current Quarter). In the Current Quarter we saw increased utilization of our rental assets resulting in an increase in rental revenue by 351.1% to $761,338 compared to $168,791 in the Previous Quarter. In addition, hardware sales from the strategic region of Asia fell by 35.3%, resulting in commission costs decreasing by 68.7% to $114,060 compared to $364,381 in the Previous Quarter.
Current report
In the Current Quarter, total operating expenses in the Marine Technology Business decreased by 25.3% to $1,241,359 compared to $1,662,743 in the Previous Quarter. The decrease was primarily driven by favorable foreign currency exchange rate movements resulting from the fluctuation of the U.S. dollar against the British Pound and Danish Kroner, the functional currencies of our foreign subsidiaries. These movements resulted in a foreign currency–related benefit of $88,949 in the Current Quarter, compared to an exchange rate variance expense of $221,198 in the Previous Quarter.
Current report
Pre-tax income was $1,216,553 in the Current Quarter compared to $1,055,255 in the Previous Quarter, reflecting a decrease in operating expenses.
Current report
In the Current Quarter, PAL generated $1,525,824 or 22.1% of our consolidated net revenues compared to $1,299,069 or 18.5% of our consolidated net revenues in the Previous Quarter, representing an increase of 17.5%. Gross profit margin was 53.7% in the Current Quarter compared to 65.4% in the Previous Quarter reflecting the mix of sales. Commission costs decreased by 62.0% and were $9,886 in the Current Quarter compared to $26,003 in the Previous Quarter. Total operating expenses were $539,711 compared to $704,189 in the Previous Quarter. Pre-tax income was $310,405 in the Current Quarter compared to $173,871 in the Previous Quarter, reflecting an increase in revenue in conjunction with a decrease in total operating expenses.
Current report
In the Current Quarter, the Defense Engineering Services Business generated $2,538,596 or 36.8% of our consolidated net revenues compared to $1,840,300 or 26.2% in the Previous Quarter, representing an increase of 37.9%. This increase is attributable to the UK arm of our Defense Engineering Services Business. Gross profit margin increased from 55.5% in the Previous Quarter to 62.0% in the Current Quarter, reflecting the mix of engineering projects. Commission costs increased to $55,128 in the Current Quarter compared to $0 in the Previous Quarter. Total operating expenses increased by 10.3% and were $628,148 compared to $569,435 in the Previous Quarter, as a result of an increase in R&D expenditure in the Current Quarter. Pre-tax income increased in the Current Quarter to $977,387 compared to $477,722 in the Previous Quarter, largely reflecting the increase in revenue, gross profit margins and interest income.
Current report
Net Revenues: Total consolidated net revenues for the Current Quarter decreased by 1.6% when compared to the Previous Quarter and were $6,904,012 and $7,017,459, respectively. The decrease in consolidated net revenue reflects a 26.8% reduction in revenue from the Marine Technology Business, our core business segment. This business segment primarily works in the marine offshore sector. Due to the ongoing conflict with Iran and the effective closure of the Strait of Hormuz, a large part of its customer base located in the Middle East and Asia have been affected and revenues from those regions decreased by 18.6%. Revenues in both the Defense Engineering Business and PAL increased in the Current Quarter.
Current report
Gross Profit Margins*:* Margin percentage was stronger in the Current Quarter at 66.3% (gross profit of $4,578,049) compared to 64.1% (gross profit of $4,497,281) in the Previous Quarter. In the Current Quarter, gross profit margins in our Marine Technology Business were stronger primarily due to a reduction in hardware sales (decreased by 46.9% to $1,763,606 compared to $3,319,322 in the Previous Quarter); a reduction in sales derived from Asia, resulting in a decrease in commission costs by 68.7% to $114,060 compared to $364,381 coupled with an increase in rental revenue by 351.1%. In the Current Quarter, 61.0% of the total revenues of the Marine Technology Business attracted commission compared to 85.9% of total revenue in the Previous Quarter attracting commission. Gross Profit Margins in the Defense Engineering Business also increased from 55.5% to 62.0%, reflecting the mix of projects in the period presented. Total consolidated commission costs in the Current Quarter were $179,074 compared to $390,384 in the Previous Quarter, representing a decrease of 54.1%, which is primarily attributable to the Marine Technology Business.
Current report
Our gross profit margins may vary from period to period due to several factors, including changes in our revenue mix across business segments, product categories, and geographic regions. Key drivers include:
Current report
In the Current Quarter, gross profit margins for the Marine Technology Business were 77.0% compared to 67.7% in the Previous Quarter; for PAL this was 53.7% compared to 65.4%; and for the Defense Engineering Services Business this was 62.0% compared to 55.5%.
Current report
During the Current Quarter, research and development (“R&D”) expenses in our Marine Technology Business decreased by 19.3% to $456,067 compared to $565,385 in the Previous Quarter. The decrease primarily reflects a reduction in headcount within the R&D function.
Current report
R&D expenditures in this business are incurred to support ongoing investment in the development and enhancement of our products and solutions. A significant portion of these costs consists of wages and salaries for engineering and technical personnel. Continued investment in R&D remains essential to our strategy, as innovation is critical to maintaining the competitiveness and technological relevance of our offerings.
Current report
During the Current Quarter, R&D expenses at PAL increased by 16.1% to $110,567 compared to $95,266 in the Previous Quarter. R&D expenditures in this business are incurred to support ongoing investment in the development of acoustic sensors, acoustic materials, and related solutions. A significant portion of these costs consists of wages and salaries for engineering and technical personnel.
Current report
During the Current Quarter, R&D expenses in the Defense Engineering Services Business increased by 178.3% to $81,670 compared to $29,344 in the Previous Quarter. R&D expenditures in this segment are primarily focused on advancing the Thermite® Octal range of mission-computer products, with the strategic objectives of expanding and diversifying revenue opportunities and improving gross profit margins. The table below sets out the R&D expenditure for each segment for the periods presented: -
Current report
Selling, General and Administrative Expenses (SG&A): SG&A expenses for the Current Quarter decreased by 21.4% to $2,136,769 compared to $2,719,602 in the Previous Quarter. The primary driver of this decrease was favorable foreign currency exchange rate movements. Exchange rate variance adjustments resulted in a benefit of $87,693 in the Current Quarter, compared to an exchange rate variance expense of $312,285 in the Previous Quarter. Non-cash charges represented 9.1% of total SG&A, or $194,259, in the Current Quarter, compared to 24.7%, or $670,542, in the Previous Quarter. These non-cash charges include depreciation, amortization, stock-based compensation, allowance for credit losses, and foreign currency exchange rate variance adjustments.
Current report
Stock-based compensation decreased and was a benefit of $13,704 in the Current Quarter compared to an expense of $66,239 in the Previous Quarter.
Current report
Wages and Salaries – This category decreased in the Current Quarter primarily due to reduced headcount, reflecting ongoing inflationary pressures in the engineering labor market and resulting workforce instability, particularly within the Defense Engineering Services Business. This business experienced elevated staff turnover during the period, contributing to a 17.9% reduction in wages and salaries. We expect wages and salaries to increase materially on a full-year basis in fiscal year 2026 compared to fiscal year 2025. We are currently operating with a reduced headcount and are actively recruiting to fill several vacant positions, including additions to our management team. Some of these hires may also result in incremental costs associated with our succession planning initiatives.
Current report
General corporate administrative expenses in the Current Quarter were $375,855 or 5.4% of net revenues and $473,230 or 6.7% of net revenues in the Previous Quarter, respectively, which largely reflects a decrease in overheads costs attributable to reduction in our stock-based compensation expense which in the Current Quarter was a benefit of $13,704 compared to an expense in the Previous Quarter of $66,239.
Current report
Operating Income: In the Current Quarter operating income increased by 64.8% and was $1,792,976 as compared to $1,087,684 in the Previous Quarter. The increase in operating income reflects the decrease in total operating expenses by 18.3% and which were $2,785,073 compared to $3,409,597 in the Previous Quarter. A significant factor in the decrease in our total operating expense in the Current Quarter is favorable foreign currency exchange rate variance adjustments which resulted in a benefit of $87,693 in the Current Quarter, compared to an exchange rate variance expense of $312,285 in the Previous Quarter.
Current report
Other Income: In the Current Quarter, we had “Total Other Income, net” of $340,676 compared to $177,926, representing an increase of 91.5% from the Previous Quarter. The significant components within this category in the Current Quarter are interest earned on our certified deposit account which was $171,915 compared to $145,594 in the Previous Quarter; and gain on the sale of assets (our vessel and a vehicle) of $133,674. See Note 7 (Composition of Certain Financial Statement Captions for more detailed analysis of this). We anticipate that the interest earned in these certified deposit accounts will be material in the future if interest rates remain at similar levels.
Current report
Comprehensive Income*.*Comprehensive income for the Current Quarter was $1,256,263, compared to $2,709,201 in the Previous Quarter. Comprehensive income is affected by fluctuations in foreign currency exchange rates, which influence both the translation of foreign-currency-denominated revenues and expenses and the remeasurement of monetary assets and liabilities. These impacts generally represent non-cash gains or losses recognized during the reporting period. A significant portion of the Company’s operations is based in the United Kingdom and Denmark; accordingly, a substantial share of our transactions is conducted in British Pounds and Danish Kroner and translated into U.S. dollars for reporting purposes. Note 7 (“Property and equipment by geographic areas”) provides additional information on the geographic distribution of our assets. In the Current Quarter, the U.S. dollar strengthened against the British Pound, Danish Kroner, and Euro, resulting in a $441,547 loss from foreign currency translation adjustments, compared to a $1,800,439 gain in the Previous Quarter. Table 1 in the MD&A section titled “Inflation & Foreign Currency” illustrates the impact of these currency movements on our Income Statement and Balance Sheet for the Current Quarter compared with the Previous Quarter.
Current report
Results of Operations for the Current Six Month Period compared to the Previous Six Month Period
Current report
Net Revenues: Total consolidated net revenues for the Current Six Month Period compared to the Previous Six Month Period increased by 11.3% and were $13,614,124 and $12,227,174, respectively. The primary factors for the increase are attributable to an increase in revenue from the Defense Engineering Services Business by 24.5% or $4,309,946 compared to $3,461,945 in the Previous Six Month Period and which reflects an increase in revenue derived from the UK arm of the Defense Engineering Services Business. PAL also increased revenue in the Current Six Month Period by 19.1% to $3,109,583 compared to $2,611,330 in the Previous Six Month Period, and which reflects an increase in the number of “Acoustic Test Environments” that have been sold in the period presented. The Marine Technology Business revenue in the Current Six Month Period compared to the Previous Six Month Period, was $6,194,595 and $6,153,899, respectively, representing an increase of 0.7%. A key market for Marine Technology Business is the offshore marine market sector in the Middle East and Asia. During the second quarter of the current fiscal year this segment was affected by the ongoing conflict in Iran and the effective closure of the Strait of Hormuz resulting in a steep decrease in order intake and sales emanating from the Middle East and Asia. Furthermore, due to delay in receiving awards from Defense Programs relating to DAVD, revenue from the Americas in the Current Six Month Period in the Marine Technology Business was down by 52.3% or $929,677 as compared to $1,778,337 in the Previous Six Month Period.
Current report
Gross Profit Margins*:* Consolidated Margin percentage was higher in the Current Six Month Period at 65.7% (gross profit of $8,945,083) compared to 64.8% (gross profit of $7,925,751). The main factors which have resulted in the higher consolidated margins in the Current Six Month Period are primarily attributed to the decrease in hardware sales by 20.2% and which were $4,035,486 compared to $5,054,063 in the Previous Six Month Period. As a consequence of the foregoing, commission costs incurred by the Marine Technology Business decreased by 36.1% or $207,326, in conjunction with an increase in the utilization rate of our rental assets resulting in an increase in rental revenue by 283.6% to $1,508,295 in the Current Six Month Period compared to $393,234 in the Previous Six Month Period. Total consolidated commission costs for the Six Month Period were $480,512 compared to $635,893 in the Previous Six Month Period. The ongoing conflict involving Iran and the resulting instability in the Middle East have adversely affected customer activity in regions that are significant to our Marine Technology Business. A substantial portion of our customer base for this segment is located in the Middle East and Asia. The conflict, combined with the effective closure of the Strait of Hormuz—through which a significant portion of global maritime shipping transits—has disrupted commercial activity and reduced demand for our products and services in our second quarter which has impacted revenue in the Current Six Month Period.
Current report
Our gross profit margins may vary from period to period due to several factors, including changes in our revenue mix across business segments, product categories, and geographic regions. Key drivers include:
Current report
In the Current Six Month Period, gross profit margins for the Marine Technology Business were 76.1% compared to 69.7% in the Previous Six Month Period; and for PAL this was 60.4% compared to 63.6%; and for the Defense Engineering Business this was 54.6% compared to 57.1%.
Current report
Defense Engineering and Services Business (Services Business)
Current report
Gross profit margin for the Defense Engineering Services Business was lower at 54.6% in the Current Six Month Period compared to 57.1% in the Previous Six Month Period. This is largely due to the mix of projects undertaken in the period presented coupled with the increase in commission costs incurred in the Current Six Month Period where this was $66,980 compared to $12,765, representing an increase of 424.7%.
Current report
Acoustics and Materials Business (PAL)
Current report
Gross profit margin for PAL was 60.4% in the Current Six-Month Period compared to 63.6% in the Previous Six-Month Period. The decrease primarily reflects a higher proportion ofAcoustic Test Environments sold in the Current Six-Month Period. Commission costs for PAL decreased by 4.6%, totaling $46,782 in the Current Six-Month Period compared to $49,052 in the Previous Six-Month Period.
Current report
Marine Technology Business (Products)
Current report
In the Current Six Month Period gross profit margins for the Marine Technology Business were 76.1% compared to 69.7% in the Previous Six Month Period. This reflects less hardware sales to Asia due to the ongoing conflict with Iran and the effective closure of the Strait of Hormuz. This has resulted in lower hardware sales; lower sales being facilitated through our agents network and therefore commission costs incurred during the presented period (this was $366,750 in the Current Six Month Period compared to $574,076 in the Previous Six Month Period). Gross margin also improved as a result of a higher utilization rate on rental assets where rental revenue increased by 283.6% and was $1,508,295 in the Current Six Month Period compared to $393,234 in the Previous Six Month Period.
Current report
Since there are more variable factors affecting gross profit margins in the Marine Technology Business, a table categorizing net revenues generated by this segment in the Current Six Month Period compared to the Previous Six Month Period is set out below:
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Removed paragraphs (22)
Previous report
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 services 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 8.2% of our Marine Technology Business revenue was generated from sales made in the U.S.
Previous report
As mentioned above, exchange rate fluctuations were a key factor in our results of operation in the Current Quarter.
Previous report
Gross profit margin increased from 73.1% in the Previous Quarter to 75.3% in the Current Quarter, which reflects several factors including the mix of sales, in particular, rental revenue increased by 232.8% and was $746,957 compared to $224,443. Commission costs increased by 20.5% and were $252,690 compared to $209,695 in the Previous Quarter. In the Current Quarter total operating expenses increased by 52.2% in the Products Business and were $1,478,510 compared to $971,676 in the Previous Quarter. This is largely due to 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 $213,094 foreign currency related expense compared to a benefit of $206,706 in the Previous Quarter. Pre-tax income was $1,177,968 in the Current Quarter compared to $853,124 in the Previous Quarter, reflecting an increase in revenue and gross profit.
Previous report
In the Current Quarter, PAL generated $1,583,759 or 23.6% of our consolidated net revenue compared to $1,312,261 or 25.2% of our consolidated revenue in the Previous Quarter, representing an increase of 20.7%. Gross profit margin was 66.8% in the Current Quarter compared to 61.7% in the Previous Quarter; commission costs increased by 60.1% and were $36,896 in the Current Quarter compared to $23,049 in the Previous Quarter; total operating expenses were $603,117 compared to $329,218 in the Previous Quarter. Pre-tax income was $456,714 in the Current Quarter compared to $556,049 in the Previous Quarter, reflecting an increase in general and administrative costs including wages & salaries, office costs and exchange rate adjustment expenses.
Previous report
In the Current Quarter, the Defense Engineering Services Business generated $1,771,350 or 26.4% of our consolidated net revenues compared to $1,621,645 or 31.1% in the Previous Quarter, representing an increase of 9.2%. Our U.S. based Defense Engineering Services Business has experienced delays in receiving orders from its prime defense contractors’ customers due to the limited funding available under Defense Programs which are being funded by Continuing Resolutions (as opposed to under a Federal Budget). Gross profit margin decreased from 58.9% in the Previous Quarter to 44.1% in the Current Quarter, reflecting the mix of engineering projects. Commission costs decreased by 7.2% and were $11,852 in the Current Quarter compared to $12,765 in the Previous Quarter; total operating expenses decreased by 2.0% and were $670,729 compared to $684,246 in the Previous Quarter. Pre-tax income decreased in the Current Quarter to $133,905 compared to $297,795 in the Previous Quarter, largely reflecting the decrease in gross profit margins due to the mix of sales in the Current Quarter.
Previous report
Results of Operations
Previous report
Net Revenue: Consolidated net revenues for the Current Quarter increased by 28.8% when compared to the Previous Quarter and were $6,710,112 and $5,209,715, respectively. Revenue increased in each business segment within the Group.
Previous report
Gross Profit Margins: Margin percentage was weaker in the Current Quarter at 65.1% (gross profit of $4,367,034) compared to 65.8% (gross profit of $3,428,470) in the Previous Quarter largely due to two factors: the decrease in gross margin in the Defense Engineering Services Business due to the mix of sales; and an increase in our consolidated commission costs (reflecting the geography of sales) which were $301,438 compared to $245,509 in the Previous Quarter, representing a 22.8% increase. In the Current Quarter, gross profit margins in our Marine Technology Business were stronger due to the increase in rental revenue which was mainly derived from our European rental hub.
Previous report
Gross profit margins reported in our financial results may vary according to several factors. These include:
Previous report
In the Current Quarter, gross profit margins for the Marine Technology Business were 75.3% compared to 73.1% in the Previous Quarter; and 66.8% compared to 61.7% for PAL; and 44.1% compared to 58.9% for the Defense Engineering Business.
Previous report
During the Current Quarter our Products Business R&D expenditure decreased by 2.2% and was $396,876 as compared to $405,812 in the Previous Quarter, reflecting reduction in head count. 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.
Previous report
Selling, General and Administrative Expenses (SG&A): SG&A expenses for the Current Quarter increased by 23.7% to $2,750,862 from $2,223,322 in the Previous Quarter. There are several factors which have resulted in higher SG&A costs in the Current Quarter, including:
Previous report
Wages and Salaries – this category of expenses decreased primarily due to the reduction in headcount. 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 including expansion of our management team.
Previous report
Operating Income: In the Current Quarter operating income increased by 52.6% and was $1,010,070 as compared to $662,002 in the Previous Quarter, reflecting an increase in consolidated net revenue and gross profit.
Previous report
Other Income: In the Current Quarter, we had “Other Income” of $176,703 compared to $272,838, representing a decrease of 35.2% from the Previous Quarter. A significant component of “Other Income” is interest of $172,270 earned on our certified deposits. In February 2023, the Company established certified deposit accounts (“CDA”) 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 January 31, 2026 (see Note 7 - Composition of Certain Financial Statement Captions for a more detailed analysis. We anticipate that due to the decrease in interest rates, the amount of interest that we will earn under the CDA will be less than previous years, although still material.
Previous report
Comprehensive Income. In the Current Quarter comprehensive income was $2,042,939 compared to a comprehensive loss of $115,611 in 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 $1,112,216 on foreign currency translation adjustment transactions compared to a loss of $1,028,586 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 (See Note 7 “property and equipment (by geographic areas) provide an indication of the split of our property and 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 report
The Company’s consolidated financial results therefore include the translation of its subsidiaries functional currencies into U.S Dollar. See “Note 5 - Foreign Currency Translation” of our unaudited consolidated financial statements, for more information on the applicable rates used for our Balance Sheet transactions and Statement of Income and Comprehensive Income.
Previous report
The Company’s consolidated results are a combination of its U.S. and foreign operations and these companies maintain their accounts in the functional currencies of their jurisdictions which are noted above. Fluctuations in currency exchange rates can directly impact on the Company’s sales, profitability and financial position when the transactions of the foreign subsidiaries are translated from their functional currencies into USD for financial reporting. In addition, the Company is also subject to currency fluctuation risk with respect to certain foreign currency denominated receivables and payables incurred in the ordinary course of its business operations (cross-border transactions such as inventory purchasing). In general, the Company’s subsidiaries perform financial transactions in their native currencies. Occasionally, a subsidiary may perform financial transactions in currencies other than its native or functional currency (purchasing inventory from a foreign supplier, for example, in foreign currency). Furthermore, the Company holds significant cash balances in foreign currencies, such as British Pound, Euro and Danish Kroner. The Company cannot predict the extent to which currency fluctuations may affect its business and financial position, and there is a risk that such fluctuations may have an adverse impact on the Company’s sales, profits, cash and cash equivalent balances and its overall financial position.
Previous report
Information regarding the effect of foreign exchange rates versus the U.S. Dollar on our net sales, operating expenses, and operating income and balance sheet items is provided to show the period ended the three months operating results had the foreign exchange rates remained the same as those in effect in the correlated previous periods. The effect on our net sales, operating expenses and operating income along with our balance sheet items from changes in our foreign exchange rates versus the U.S. Dollar is as follows:
Previous report
Information is not specified for INR as there is a limited scope of operations in this jurisdiction and therefore contributions are immaterial. However, the information for INR is included in the totals.
Previous report
Three Months ended January 31, 2026
Previous report
This table shows that the effect of exchange rates changes (the Current Quarter’s exchange rate compared to the Previous Quarter’s exchange rate) increased our net income from operations by $142,451 and increased net assets by $1,207,959, when compared to our net assets as at October 31, 2025.
Reworded paragraphs (28)
Previous wording
We sell our goods and services internationally, with $5,848,531 or 87.2% 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 2026.
Current wording
We sell our products and services internationally, with $5,231,403 or 75.8% of our consolidated net revenues for the Current Quarter, generated outside the United States. Our results of operations are affected by macroeconomic conditions, including changes in inflation and interest rates, as well as global economic and geopolitical developments. These developments include disruptions in trade caused by embargoes or blockades of major shipping routes, shifts in global tariff structures, significant changes in trade and funding policies, and other world events. Such factors can have both direct and indirect impacts on our business that are difficult to isolate or quantify.
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 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”.
Current wording
The Company has operations in the UK, USA and Denmark and the financial transactions of these companies are conducted primarily in local currencies. 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
We are uncertain as to the extent of the impact the factors disclosed above and in our Form 10-K as amended on our Form 10-K/A covering fiscal year ended October 31, 2025, are likely to have on our future financial results.
Current wording
We are uncertain as to the extent of the impact the factors disclosed above and those in our Form 10-K as amended on our Form 10-K/A covering fiscal year ended October 31, 2025, are likely to have on our future financial results.
Previous wording
These factors may adversely impact on our availability of free cash flow, working capital and business prospects. As of January 31, 2026, we had cash and cash equivalents of $30,446,339 and cash provided by our operations of $1,476,907. 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 April 30, 2026, we had cash and cash equivalents of $30,624,337 and cash provided by our operations of $2,047,284. 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
The Management’s discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These financial statements have been prepared in conformity with GAAP in the United States which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. We evaluate our estimates based on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates relate to revenue recognition, the assessment of recoverability of goodwill and intangible assets and the recognition and measurement of deferred income tax assets and liabilities. Actual results could differ from those estimates and may have material effects on our operating results and financial position.
Current wording
The Management’s discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statements. These unaudited consolidated financial statements have been prepared in conformity with GAAP in the United States which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. We evaluate our estimates based on our historical experience and various other assumptions that are believed to be reasonable under the circumstances. These estimates relate to revenue recognition, the assessment of recoverability of goodwill and intangible assets and the recognition and measurement of deferred income tax assets and liabilities. Actual results could differ from those estimates and may have material effects on our operating results and financial position.
Previous wording
Our Marine Technology Business revenues are derived from both sales and rental of underwater solutions for imaging, mapping, survey applications and diving. PAL’s revenues are derived from sales of acoustic sensors and materials and for our Defense Engineering Services Business from engineering services performed for third party customers who are primarily Defense Contractors. Our contracts do not include the possibility for additional contingent consideration so that our determination of the contract price does not involve having to consider potential additional variable consideration. Our product sales do not include a right of return by the customer.
Current wording
Our Marine Technology Business revenues are derived from both sales and rental of underwater solutions for imaging, mapping, survey applications and diving. PAL’s revenues are derived from sales of acoustic sensors, materials and calibration services, and for our Defense Engineering Services Business for engineering services performed for third party customers who are primarily Defense Contractors. Our contracts do not include the possibility for additional contingent consideration so that our determination of the contract price does not involve having to consider potential additional variable consideration. Our product sales do not include a right of return by the customer.
Previous wording
We value our inventory based on our cost. We adjust the value of our inventory to the extent our management determines that our cost cannot be recovered due to obsolescence or other factors. In order to make these determinations, our management uses estimates of future demand and sales prices for each product to determine appropriate inventory reserves and to make corresponding reductions in inventory values to reflect the lower of cost or net realizable value. In the event of a higher incidence of inventory obsolescence, we could be required to increase our inventory reserve, which would increase our cost of sales and decrease our gross profit.
Current wording
We value our inventory based on our cost. We adjust the value of our inventory to the extent our management determines that our cost cannot be recovered due to obsolescence or other factors. In order to make these determinations, our management uses estimates of future demand and sales prices for each product to determine appropriate inventory reserves and to make corresponding reductions in inventory values to reflect the lower of cost or net realizable value. In the event of a higher incidence of inventory obsolescence, we could be required to increase our inventory reserve, which would increase our cost of revenues and decrease our gross profit.
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 in the consolidated balance sheet.
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 net revenues, profitability and the value of our assets and liabilities included in the consolidated balance sheet.
Previous wording
During the Current Quarter, the USD weakened against the British Pound and the Danish Kroner, resulting in translated foreign revenues being higher by $406,232 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”).
Current wording
During the Current Quarter, the USD weakened against the British Pound and the Danish Kroner, resulting in translated foreign revenues being higher by $193,532 than when using the Previous Quarter exchange rate. In addition, the associated costs of our foreign subsidiaries including cost of revenues 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”).
Previous wording
Consolidated net revenue in the Current Quarter increased by 28.8% and was $6,710,112 compared to $5,209,715 in the Previous Quarter. During the Current Quarter total operating expenses increased by 21.3% and income from operations increased by 52.6%. Pre-tax income in the Current Quarter was $1,186,773 compared to $934,860 in the Previous Quarter, representing an increase of 26.9%. A more detailed analysis of our results of operations is set out below.
Current wording
Consolidated net revenues in the Current Quarter decreased by 1.6% and was $6,904,012 compared to $7,017,459 in the Previous Quarter. During the Current Quarter total operating expenses decreased by 18.3% and income from operations increased by 64.8%. Pre-tax income in the Current Quarter was $2,133,652 compared to $1,265,610 in the Previous Quarter, representing an increase of 68.6%. A more detailed analysis of our results of operations is set out below.
Previous wording
In the Current Quarter 85.6% of our consolidated net revenue was attributable to the Company’s foreign subsidiaries. When translating this amount from the native functional currencies of British Pound and Danish Kroner in the Current Quarter this was $5,746,397 compared to $5,340,165 when using the exchange rate applied in the Previous Quarter and therefore an increase in net revenue of $406,232.
Current wording
In the Current Quarter 73.2% 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 to USD in the Current Quarter this was $5,051,341 compared to $4,857,809 when using the exchange rate applied in the Previous Quarter and therefore an increase in net revenue of $193,532.
Previous wording
Cost of Revenue and Operating Costs Impact from our Foreign Subsidiaries
Current wording
Cost of Revenues and Operating Costs Impact from our Foreign Subsidiaries
Previous wording
In the Current Quarter 67.8% of our consolidated Operating Expenses and Cost of Revenue was attributable to the Company’s foreign subsidiaries and this was $3,867,441 (“Foreign Subsidiary Costs”) of our total costs of $5,700,042. 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 $263,781 higher when using the exchange rate of the Previous Quarter.
Current wording
In the Current Quarter 68.8% of our consolidated Operating Expenses and Cost of Revenues was attributable to the Company’s foreign subsidiaries and this was $3,516,419 (“Foreign Subsidiary Costs”) of our total costs of $5,111,036. 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 $117,428 higher when using the exchange rate of the Previous Quarter.
Previous wording
We sell our products internationally (91.8% 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 $3,355,003 or 50.0% of our consolidated net revenues compared to $2,275,809 or 43.7% in the Previous Quarter, representing an increase of $1,079,194 or 47.4%. The increase in sales is due to a combination of factors including increase in hardware sales, mainly derived from the strategic region of Asia where sales increased by 63.4% to $2,601,087 in the Current Quarter compared to $1,591,811 in the Previous Quarter. Sales derived from the U.S. decreased by 22.3% to $275,577 compared to $354,636 in the Previous Quarter, reflecting the reduced funding available under Defense Programs, due to the use of Continuing Resolutions to fund these programs.
Current wording
We sell our products internationally (79.8% of sales by our Products Business in the Current Quarter are derived from sales outside of the USA). In the Current Quarter, the Products Business generated $2,839,592 or 41.1% of our consolidated net revenues compared to $3,878,090 or 55.3% in the Previous Quarter, representing a decrease of $1,038,498 or 26.8%. The decrease in revenues is primarily due to the reduced demand for our goods and services caused by the ongoing conflict with Iran and the effective closure of the Strait of Hormuz. Many offshore projects, especially in the Middle East and Asia, have been affected resulting in delays in ongoing projects and in customers’ placing orders. In the Current Quarter this has resulted in a decrease in hardware sales, from the strategic region of Asia where sales decreased by 35.3% to $1,423,313 compared to $2,200,282 in the Previous Quarter. Sales derived from the U.S. decreased by 59.7% to $573,083 compared to $1,423,701 in the Previous Quarter, reflecting delays in receiving contract awards under some Defense programs which we are anticipating.
Previous wording
Since there are more variable factors affecting gross profit margins in the Marine Technology Business, a table showing a summary categorizing sales generated by this business in the Current Quarter compared to the Previous Quarter is set out below:
Current wording
Since there are more variable factors affecting gross profit margins in the Marine Technology Business, a table categorizing net revenues generated by this segment in the Current Quarter compared to the Previous Quarter is set out below:
Previous wording
Further information on the performance of each business segment, including revenues by type and geography, can be found in Notes 15 and 16 to the unaudited consolidated financial statements for the Current and Previous Quarters.
Current wording
Further information on the performance of each business segment, including revenues by type and geography, can be found in Notes 15 (Segment Analysis) and 16 (Disaggregation of Net Revenues) to the unaudited consolidated financial statements for the Current and Previous Quarters.
Previous wording
Research and Development (R&D): R&D expenditure in the Current Quarter increased by 11.6% and was $606,102 compared to $543,126 in the Previous Quarter. The increase is largely attributed to increase in this area of expenditure in both PAL and the Defense Engineering Business.
Current wording
Research and Development (R&D): R&D expenditures in the Current Quarter decreased by 6.0% and were $648,304 compared to $689,995 in the Previous Quarter. This is largely due to the decrease in this area of expenditure in the Marine Technology Business.
Previous wording
Legal and Professional fees decreased by 6.6% in the Current Quarter reflecting the timing of the performance of certain services.
Current wording
Legal and Professional - This category increased by 1.7% in the Current Quarter reflecting the timing of the performance of certain services such as audit and tax consultancy fees.
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 existing lease which we assumed as part of the acquisition of PAL.
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 PAL operating lease. The costs of our operating lease reflect Right of Use interest expense.
Previous wording
Net Income before income taxes: In the Current Quarter, we had pre-tax income of $1,186,773 compared to $934,860 in the Previous Quarter, representing an increase of 26.9%. Pre-tax income increased, largely due to an increase in our consolidated net revenue and gross profit for the reasons discussed above.
Current wording
Income before income taxes: In the Current Quarter, we had pre-tax income of $2,133,652 compared to $1,265,610 in the Previous Quarter, representing an increase of 68.6%. Pre-tax income increased, largely due to the increase in our “income from operations” and “Total Other Income, net” for the reasons discussed above
Previous wording
Net Income: In the Current Quarter we had Net Income of $930,723 compared to $912,975 in the Previous Quarter, representing an increase of 1.9%. In the Current Quarter we recorded Current Tax Expense of $263,216 compared to $48,874 in the Previous Quarter, reflecting increased provision for income tax. We also recorded a Deferred Tax Benefit of $7,166 in the Current Quarter compared to $26,989 in the Previous Quarter, which relates to the vesting 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). 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. The Company’s UK subsidiaries have some restricted carryforward losses and qualify for R&D Tax credits which are applied to defray a percentage of our income tax liability in the UK.
Current wording
Net Income: In the Current Quarter we had Net Income of $1,697,810 compared to $908,762 in the Previous Quarter, representing an increase of 86.8%. In the Previous Quarter we recorded Current Tax Expense of $374,701 compared to $432,203 in the Current Quarter reflecting provision for income tax. We also recorded a Deferred Tax Benefit of $17,853 in the Previous Quarter compared to a Deferred Tax Expense of $3,639 in the Current Quarter, which relates to the cancellation of a stock award. 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). 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. The Company’s UK subsidiaries have some restricted carry forward losses and annually qualify for R&D Tax credits which are applied to defray a percentage of our income tax liability in the UK.
Previous wording
During the Current Quarter, the Defense Engineering Services Business R&D expenditure increased by 114.1% and was $99,217 compared to $46,350 in the Previous Quarter. The Defense 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 Six Month Period, the Defense Engineering Services Business R&D expenditure increased by 139.0% and was $180,887 compared to $75,694 in the Previous Six Month Period. R&D expenditures in this segment are primarily focused on advancing the Thermite® Octal range of mission-computer products, with the strategic objectives of expanding and diversifying revenue opportunities and improving gross profit margins.
Previous wording
During the Current Quarter, PAL incurred R&D expenditure of $110,009 compared to $90,964 in the Previous Quarter, an increase of 20.9%. 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.
Current wording
During the Current Six Month Periods ending April 30, 2026 and 2025, PAL incurred R&D expenditure of $220,576 and $186,230, respectively, an increase of 18.4%. 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.
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. They also include costs associated with participation in industry trade shows, marketing events and travel for marketing activities.
Current wording
Marketing and associated travel costs - We incur marketing expenses in connection with the promotion of our products and services. These expenses include wages and salaries for our Digitalization Team, which is responsible for content creation and video production related to our technologies, as well as costs associated with participation in industry trade shows, technology demonstrations, and travel for marketing activities. Marketing expenses decreased in the Current Six Month Period by 22.5%, primarily reflecting the timing of marketing events and related expenditure. We expect marketing expenses for fiscal year 2026 to be generally consistent with the levels incurred in fiscal year 2025.
Previous wording
General corporate administrative expenses in the Current Quarter were $604,608 or 9.0% of net revenue and $781,308 or 15.0% of net revenue in the Previous Quarter, respectively, reflecting an increase in our consolidated net revenue. For more information on general corporate administrative expenses, please see Note 15 (Segment Analysis).
Current wording
General corporate administrative expenses in the Current Six Month Period were $980,463 or 7.2% of net revenues and $1,254,538 or 10.3% of net revenue in the Previous Six Month Period, respectively. The decrease in overhead costs is primarily attributable to the decrease in stock compensation expense which was $13,285 in the Current Six Month Period compared to $166,384 in the Previous Six Month Period. For more information on general corporate administrative expenses, please see Note 15 (Segment Analysis).
Previous wording
As of January 31, 2026, the Company had an accumulated deficit of $2,345,838, working capital of $46,467,406, cash of $30,446,369 and stockholders’ equity of $60,185,342. During the Current Quarter, the Company’s operating activities provided $1,476,907 in cash.
Current wording
As of April 30, 2026, the Company had an accumulated deficit of $648,028, working capital of $47,727,460, cash of $30,624,337 and stockholders’ equity of $61,414,232. For the six months ended April 30, 2026, the Company’s operating activities provided $2,047,284 cash.
Previous wording
The Company entered into a $4,000,000 revolving line of credit with HSBC NA on November 27, 2019, at prime. The outstanding balance on the line of credit was $0 as of January 31, 2026. This revolving credit line will expire on April 2026, unless renewed.
Current wording
The Company entered into a $4,000,000 revolving line of credit with HSBC NA on November 27, 2019, at prime. The outstanding balance on the line of credit was $0 as of April 30, 2026. This revolving credit line is reviewed annually and discretionarily renewed by HSBC NA.
Previous wording
The Company and its subsidiaries maintain their accounts in the native currencies of their operations, and which are:
Current wording
The Company and its subsidiaries maintain their accounting records in the functional currencies of their respective jurisdictions, as follows:
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Results of Operations for the Current Quarter compared to the Previous Quarter
Current report — wording carried from elsewhere
Marketing and associated travel costs - We incur marketing expenses in connection with the promotion of our products and services. These expenses include wages and salaries for our Digitalization Team, which is responsible for content creation and video production related to our technologies, as well as costs associated with participation in industry trade shows, technology demonstrations, and travel for marketing activities. Marketing expenses decreased in the Current Quarter, primarily reflecting the timing of marketing events and related expenditures. On a full-year basis, we expect marketing expenses for fiscal year 2026 to be generally consistent with the levels incurred in fiscal year 2025.
Current report — wording carried from elsewhere
Overhead related costs as a percentage of net revenue for Current Six Month Period, compared to the Previous Six Month Period
Current report — wording carried from elsewhere
Net Income: In the Current Six Month Period we had Net Income of $2,628,533 as compared to $1,821,737 in the Previous Six Month Period, representing an increase of 44.3%. In the Previous and Current Six Month Periods we recorded Current Tax Expense of $695,419 and $423,575, respectively, reflecting provision for income tax in the respective periods. We also recorded a Deferred Tax Benefit of $3,527 and $44,842 in the Previous and Current Six Month Periods ending April 30, 2026 and 2025, respectively, which relates to the cancellation 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 and 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 Six Month Period, the U.S. subsidiaries generated 20.7% of our consolidated net revenue. In US we have a combined federal, state and GILTI provision of $159,894. The Company’s UK subsidiaries have carryforward losses and R&D Tax credits which are applied to defray a percentage of our income tax liability. We have made provision of $486,145 for tax liability for the UK subsidiaries in our consolidated results for the Current Six Month Period and $49,380 for our Danish subsidiary where the corporation tax rate is 22%.