UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________ to ______________

Commission File Number 001-38154

CODA OCTOPUS GROUP, INC.

(Exact name of registrant as specified in its charter)

Delaware

34-2008348

(State or other jurisdiction of

Incorporation or organization)

(I.R.S. Employer

Identification Number)

3300 S Hiawassee Rd, Suite 104-105, Orlando, Florida		32835
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:		(863) 937 8985

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		CODA		Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act (Check one): ☐

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☐

Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of issuer’s common stock, $0.001 par value as of March 15, 2022 is 10,857,195.

INDEX

	Page
PART I - Financial Information

Item 1: Financial Statements	3

Consolidated Balance Sheets as of January 31, 2022 (Unaudited) and October 31, 2021	3

Consolidated Statements of Income and Comprehensive Income for the Three Months Ended January 31, 2022 and 2021 (Unaudited)	5

Consolidated Statements of Stockholders’ Equity for the Three Months Ended January 31, 2022 and 2021 (Unaudited)	6

Consolidated Statements of Cash Flows for the Three Months Ended January 31, 2022 and 2021 (Unaudited)	7

Notes to Unaudited Consolidated Financial Statements	8

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3: Quantitative and Qualitative Disclosures about Market Risks	28

Item 4: Controls and Procedures	28

PART II - Other Information	29

Item 1: Legal Proceedings	29

Item 1A: Risk Factors	29

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3: Default Upon Senior Securities	29

Item 4: Mine Safety Disclosures	29

Item 5: Other Information	29

Item 6: Exhibits	29

Signatures	30

PART I. FINANCIAL INFORMATION

CODA OCTOPUS GROUP, INC.

Consolidated Balance Sheets

January 31, 2022 and October 31, 2021

	2022		2021
	Unaudited
ASSETS

CURRENT ASSETS
Cash	$	20,711,228	$	17,747,656
Accounts Receivable, net		1,535,682		4,207,996
Inventory		11,159,798		10,691,177
Unbilled Receivables		401,661		1,080,384
Prepaid Expenses		313,945		1,202,327
Other Current Assets		651,724		627,619

Total Current Assets		34,774,038		35,557,159

FIXED ASSETS
Property and Equipment, net		6,743,670		6,037,101

OTHER ASSETS
Goodwill and Other Intangibles, net		3,794,880		3,794,383
Deferred Tax Asset		86,643		76,776

Total Other Assets		3,881,523		3,871,159

Total Assets	$	45,399,231	$	45,465,419

The accompanying notes are an integral part of these unaudited consolidated financial statements

CODA OCTOPUS GROUP, INC.

Consolidated Balance Sheets (Continued)

January 31, 2022 and October 31, 2021

	2022			2021
	Unaudited
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts Payable	$	319,605		$	1,454,611
Accrued Expenses and Other Current Liabilities		805,573			740,449
Note Payable		-			63,559
Deferred Revenue		1,288,231			1,999,841

Total Current Liabilities		2,413,409			4,258,460

LONG TERM LIABILITIES

Deferred Revenue, less current portion		153,176			157,886

Total Long Term Liabilities		153,176			157,886

Total Liabilities		2,566,585			4,416,346

STOCKHOLDERS’ EQUITY

Common Stock, $.001 par value; 150,000,000 shares authorized, 10,857,195 shares issued and outstanding as of January 31, 2022 and October 31, 2021, respectively		10,858			10,858
Additional Paid-in Capital		61,508,306			61,183,131
Accumulated Other Comprehensive Loss		(1,425,909	)		(1,667,059	)
Accumulated Deficit		(17,260,609	)		(18,477,857	)

Total Stockholders’ Equity		42,832,646			41,049,073

Total Liabilities and Stockholders’ Equity	$	45,399,231		$	45,465,419

The accompanying notes are an integral part of these unaudited consolidated financial statements

CODA OCTOPUS GROUP, INC.

Consolidated Statements of Income and Comprehensive Income

For the Periods Indicated

(Unaudited)

	2022			2021
	Three Months Ended January 31,
	2022			2021

Net Revenues	$	5,838,208		$	5,050,459
Cost of Revenues		1,678,274			1,735,537

Gross Profit		4,159,934			3,314,922

OPERATING EXPENSES
Research & Development		672,890			583,139
Selling, General & Administrative		2,111,112			1,813,366

Total Operating Expenses		2,784,002			2,396,505

INCOME FROM OPERATIONS		1,375,932			918,417

OTHER INCOME (EXPENSE)
Other Income		79,994			92,025
Interest Expense		(11,278	)		(14,514	)

Total Other Income		68,716			77,511

INCOME BEFORE INCOME TAX EXPENSE		1,444,648			995,928

INCOME TAX (EXPENSE) BENEFIT
Current Tax (Expense) Benefit		(285,609	)		24,725
Deferred Tax Benefit		58,209			108,191

Total Income Tax (Expense) Benefit		(227,400	)		132,916

NET INCOME	$	1,217,248		$	1,128,844

NET INCOME PER SHARE:
Basic	$	0.11		$	0.10
Diluted	$	0.11		$	0.10

WEIGHTED AVERAGE SHARES:
Basic		10,857,195			10,751,881
Diluted		11,396,861			11,308,881

NET INCOME	$	1,217,248		$	1,128,844

Foreign Currency Translation Adjustment		241,150			925,613

Total Other Comprehensive Income	$	241,150		$	925,613

COMPREHENSIVE INCOME	$	1,458,398		$	2,054,457

The accompanying notes are an integral part of these unaudited consolidated financial statements

CODA OCTOPUS GROUP, INC.

Consolidated Statements of Changes in Stockholders’ Equity

For the Three Months Ended January 31, 2022 and 2021

(Unaudited)

Accumulated

Additional

Other

Common Stock

Paid-in

SEC Form 10-Q filed by Coda Octopus Group Inc.