Good morning, and welcome to the Coda Octopus Group's Third Quarter Fiscal 2025 Earnings Conference Call. My name is Melissa, and I will be your operator today. Before this call, Coda Octopus issued its financial results for the third quarter ended July 31, 2025, including a press release a copy of which will be furnished in a report filed with the SEC and will be available in the Investor Relations section of the company's website. Joining us on today's call from Coda Octopus are its Chair and CEO, Annmarie Gayle; its interim CFO, Gayle Jardine; it's President of Technology and Director, Blair Cunningham. Following their remarks, we will open the call for questions. Before we begin, Geoff Turner from, Investor Relations team will make a brief introductory statement. Geoff, please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Coda Octopus Third Quarter Fiscal 2025 Earnings Conference Call. Before management begins their formal remarks, we would like to remind everyone that some statements we are making today may be considered forward-looking statements under securities law and involve a number of risks and uncertainties. As a result, we caution you that there are a number of factors, many of which are beyond our control, which could cause actual results and events to differ materially from those described in the forward-looking statements. For more detailed risks, uncertainties and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and public filings made with the Securities and Exchange Commission. We disclaim any obligation or undertaking to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made, except as may be required by law. We refer you to our filings with the Securities and Exchange Commission for detailed disclosures and descriptions of our business as well as uncertainties and other variable circumstances, including, but not limited to, risks and uncertainties identified in our Form 10-K for the year ended October 31, 2024, and Forms 10-Q for the first, second and third quarters of our fiscal 2025 year. You may get Coda Octopus Securities and Exchange Commission filings free by visiting the SEC website at www.sec.gov. I would like to remind everyone that this call is being recorded and will be made available for replay via a link in the Investor Relations section of the Coda Octopus website. Finally, as a reminder, this is our third quarter fiscal 2025 reporting and all comparisons, unless explicitly stated otherwise, are with our third quarter fiscal 2024. Now I will turn the call over to the company's Chair and CEO, Annmarie Gayle. Annmarie?

Thanks, Geoff, and good morning, everyone. Thank you for joining us for our third quarter fiscal year 2025 Earnings Call. Despite the challenging global policy environment, our revenue in the third quarter 2025 increased by 29% and I believe that we have delivered a solid set of results. For those who are new to the Coda Octopus story, our business is made up of 3 discrete business operations, the Marine Technology Business, the Marine Engineering Businesses and our recently added Acoustics Sensors and Materials business unit. Within our group, our core business is the Marine Technology business. This business generates most of our revenue. And in the third quarter, it generated 56.4% of our net revenue. It is around this business that we're building our growth strategy. The Marine Technology business operates in the subsea market and is home to key disruptive underwater technologies. These technologies are bringing the smartphone revolution on the water by providing a comprehensive real-time information platform which allows our customers to make real-time decisions and also significantly reducing the cost of these operations while increasing safety. The specific addressable markets that we operate in are the imaging sonar market and diving market. It is these market segments that our growth strategy is built around. Turning to our imaging sonar the Echoscope. The Echoscope is a real-time 3-dimensional volumetric imaging sonar that can generate real-time dimensional images underwater in zero visibility water conditions. This is widely used in the commercial offshore marine market for a range of underwater applications. A significant part of our annual revenue is derived from the commercial offshore marine market. To achieve the growth that shareholders want to see from our company, we have to increase our market share for underwater imaging sensors in the defense space. There are many ongoing defense…

Thank you, Annmarie, and good morning, everyone. Today, I will focus on progress that we have made around our core technologies, Echoscope and DAVD. The Echoscope, our flagship technology, the Echoscope continues to represent the largest opportunity for scalable growth, particularly within the defense and security market. This sector is undergoing a transformational shift driven by the increasing deployment of next-generation underwater vehicles and platforms, including manned, unmanned, surface, subsurface and fully autonomous robotic systems. The latest generation of underwater vehicles, including drones, is trending towards smaller form factors, creating newer opportunities in the subsea market. To meet this demand, we've spent the last 2 years developing a new series of compact real-time 3D imaging sonars, supported by a significant investment in our next-generation custom technology chipset. This breakthrough IP investment has enabled us to miniaturize our advanced imaging technology for key defense and commercial applications. The first products in this line are now on the market, and I commend our R&D team for their exceptional work in making this possible. Designed to meet the evolving needs of underwater vehicles and platforms in the defense sector, we are excited to report that we have now launched our ultra compact real-time 3D imaging sonars, the Echoscope PIPE NANO GEN Series. These next-generation sonars enable small platforms to enhance situational awareness and consolidate multiple sensors into a single power efficient unit, delivering both 3D spatial awareness and forward-looking obstacle avoidance. Beyond subsea vehicles, the NANO GEN SERIES is also ideal for diver wearable systems, diving platforms and a wide range of underwater robotics. We've already concluded several successful trials in the quarter with our NANO GEN Series sonars, with key defense customers who are excited about the technology and have started to look at this integration into programs. Looking ahead, I will…

Thank you, Blair. Let me now turn the call over to our interim CFO, Gayle Jardine, to take you through our financials for the third quarter 2025 before I provide my closing remarks. Gayle?

Thank you, Annmarie, and good morning, everyone. I will now take you through our third quarter fiscal 2025 financial results. For reference, all income statement comparisons are with third quarter fiscal 2024, and all figures are in U.S. dollars. Starting with revenue. In the third quarter of 2025, we recorded total revenue of $7.1 million compared to $5.5 million in the third quarter of 2024, an increase of 29.0%. Our core business, the Marine Technology business generated revenue of $4.0 million compared to $3.0 million, representing a 30.7% increase over the third quarter of last year. Our Acoustic Sensors and Materials business, which was added to our group in October 2024, recorded revenue of $1.5 million. Our Marine Engineering business or Services business generated revenue of $1.6 million compared to $2.4 million, representing a 33.2% decrease over the third quarter of 2024. In summary, our net revenue increased by 29%, and the newly added business, Precision Acoustics added 20.6% to our consolidated revenue in the third quarter of 2025. Moving on to gross profit and margin. In the third quarter of 2025, we generated gross profit of $4.8 million compared to $4.0 million in the third quarter of 2024. Consolidated gross margin was 68.3% versus 73.9% in the third quarter of last year. In our Marine Technology business, gross margin decreased to 77.0% in the third quarter of 2025 compared to 82.9% in 2024, reflecting the mix of sales with more units of hardware sales compared to rental sales. The Acoustic Sensors and Materials business realized gross margin of 54.8%, a little lower than the previous 2 quarters, reflecting increased commission costs and mix of sales. Our marine engineering business gross margin decreased to 58.9% in the third quarter of 2025 versus 62.6% in the third quarter of 2024, again,…

Thank you, Gayle. I'm very pleased with the increase in revenue in the third quarter 2025 and our overall financial results. I'm also pleased with the progress we're making against our key milestones for growing our business. Some of these include the delivery of the 16 DAVD systems for the U.S. Special Forces evaluation. The delivery of the final DAVD deliverables to the foreign navy sponsor under the funded DUS Hardening Program. We believe the Hardening Program has been a success, and we are starting to see the positive results of this. The launch of our NANO GEN Series sonars which together with our existing sonar range puts us in a position to address the sizable portion of the imaging sonar market. The receipt of our first order from a foreign navy for the DAVD untethered system, this order, which is for 2 systems is from a very influential European navy. We are very pleased with this as we believe this will be the precursor to broader adoption by this influential European Navy. We continue to work to create stable, long-term shareholder value and execute against our strategy to grow the business which is our single biggest priority as a group. In terms of cash deployment, we will continue to prosecute our M&A strategy in fiscal year 2025 and are continuing to build our M&A pipeline. Through our strategy, we aim to pivot the revenue model of the Marine Technology business to a multiyear multiple sales model as we've started to see with DAVD product line. To conclude, we would like to thank our shareholders for their continued support. We're now happy to answer any questions. Operator?

[Operator Instructions] Our first question comes from the line of Brian Kinstlinger with Alliance Global Partners.

This is Kevin for Brian. With the launch of the Echoscope PIPE NANO GEN Series and its trials during the quarter, what type of feedback have you guys received so far?

Blair, would you like to take that, please?

Certainly, Annmarie. Thank you very much, and thank you again for the question. I think the most striking feedback from all of the customers that have seen the system is the remarkable reduction in form factor, size and weight, which is critical as we can outline for the new vehicles that are coming into the market. So really, that's been transformational. Many of these customers are familiar with the Echoscope performance so that we were delivering the same again, but in a much, much, much smaller form factor. So I think everyone is very excited to look for new opportunities of where they can now integrate the Echoscope into their platforms where perhaps size or weight perhaps that prevented them from doing so in previous development organizations.

And just to like to add to that, the DSEND program, which Blair cited earlier that's a very, very good example of the sonar actually being in a diving suit with our previous generation of sonars that wasn't possible because of the form factors. So really being able to reduce the sonar to the size of almost a smartphone really opens the aperture for our business and the potential for opportunities to expand opportunities base. So we're very, very excited about this because our previous generation of sonars is a bit bigger, would be locked out of applications like the DSEND. So opening the aperture and getting more -- reducing the form factor of sonar and therefore, having the opportunity to broaden the scope of what we can do on smaller vehicles is a seismic move forward for our business.

Great. And then congrats on all the progress on the DAVD -- the untethered DAVD program. During the March conference call, you commented the company is targeting $4.5 million in DAVD related revenue. Can you talk about what transpired since then that target in the press release today is $3.5 million to $4 million?

Well, we're still -- I mean we think we're going to hit $4 million in DAVD revenues so for this fiscal year, which we think it's really, really significant given that last year, we did $1.2 million. So still seeing really significant move forward with the DAVD product line, and I feel very, very happy with this year potentially hitting $4 million in revenue being $1.2 million last year at the same time. So really happy about that.

[Operator Instructions] Our next question comes from the line of Richard Deutsch with Private Investor.

Yes. And congratulations to your R&D team over the past few years. I followed the progress, and it's vast. In fact, that's one of the hard parts of understanding your company is how many opportunities you have with the technology that you've produced. So I have a few questions, but I'll start off with one. In terms of your exposure to China or countries that we're not looking to do business with, what should we be thinking about in terms of sales opportunities or lost opportunities? And also the supply chain in terms of getting critical components, parts and supplies. That's my first question.

Well, thank you very much, Richard, for that question. In terms of supply chain, we're really not exposed to China at all. So most of our products components are originating mainly from Europe so we don't really have any exposure in terms of supply chain in China, not significant at all. In terms of selling to China, really, that was an issue from more than 5 years now that because for the U.K. government, for example, has made it really difficult to get export licenses to China. So for a long time, that market is rather tame for this business due to the barriers to import products into China. So although we have a strong presence in Asia, China is not our biggest target market, although there are lots of opportunities in China, it's not the biggest target market for our business.

Okay. And one more here on your technology. I've been impressed at how superior it appears to be over many years and the developments you keep making just keep pushing that envelope forward. But I've been surprised we've had quarter after quarter of sales that have not really expanded very much. So I want to know, is Echoscope still your main short-term revenue driver in terms of overall revenues? And why has it taken so long? And what are the impediments or the opportunities short term in the market considering your technological advances. I don't understand why the sales have been not going up faster.

Okay. So just to remind you, in this quarter, the Marine Technology business sales went up by 30.7%, I believe, and hardware sale component also went up significantly. And I think, yes, by 103.6% and within that mix, it's mainly Echoscope and DAVD. So that's the first thing to see that we do believe that we're making good progress. In the quarter, the disappointing part of our quarter is really about rentals where rentals have decreased largely because of the shift in funding opportunities for offshore renewables. And while we believe that in the longer run, that will be offset by more projects for oil and gas, it still takes time to spin up a development. So overall, I think that we're making good progress. But really, as I've emphasized over and over for the business to grow, we do, I mean, a sizable part of our revenue comes from the commercial offshore marine market. The model for that market is different because then often a sale is a single sale or rental, really, the opportunity for sizable or scalable growth lies in the defense space. And that's a process. It's not an event. I believe we're making all the right progress to get the technology into programs where the technology is being looked at for integration into these broader programs. And last quarter, I did report on some significant findings for some of the defense programs that have evaluated the Echoscope technology and concluded the Echoscope is superior in terms of its performance and capabilities. So I do believe we're making progress in really, where it matters is the defense market because there, first of all, there's budget, and then there's opportunity for multiple sales, recurring sales. And that's what we're targeting. And we're starting to see some of that from the DAVD product line where we're seeing year in, year out budget now being appropriated for that line of products with pull-through Echoscope sales. So overall, I feel the pace is a bit slow, but that is not unusual for programs that they take a longer time in evaluating the technology and once it's really then adopted, that's when we start seeing the sales that we would like to see. And a critical juncture we've reached in this quarter also is the successful conclusion of the hardening program for the DAVD where I think that program is 2 years ago, it started where the whole purpose of that was to deliver prototypes for evaluation by operational divers in the special forces and really getting feedback and refining the technology, we have now delivered what we believe is the refined product for this key market. So I do believe that we're making really good progress against the key milestones that are important for the growth of the business.

And just one final question. Your M&A program is interesting, but I wonder why -- we'd like to hear what your thoughts are on the stock buyback program as your company is extremely attractive itself as an M&A target. I'd like to hear what thoughts are about reducing the shares through a stock buyback program.

Sorry, I'm not sure what the question is.

The question is, what status and thoughts do you have about a stock buyback program for Coda shares?

Well, that's something for our Board to think about. And I'll raise that with our Board, but really that's really a board decision on stock buybacks. So right now, I feel very much in terms of our M&A program, we're building a pipeline of opportunities for the business and looking for value-accretive technologies that may be highly complementary to the dated product line. That's our thinking on our M&A strategy for the time being.

Really stunningly great work that you guys are doing. Looking forward to continuing to follow you.

There are no other questions at this time. I'll turn the floor back to Ms. Gayle for any final comments.

Okay. Thank you, operator. Thank you for attending today's call.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.