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 April 30, 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:		(407) 735 2406

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 June 14, 2022 is 10,858,302.

INDEX

	Page
PART I - Financial Information	3

Item 1: Financial Statements	3

Consolidated Balance Sheets as of April 30, 2022 (Unaudited) and October 31, 2021	4

Consolidated Statements of Income and Comprehensive Income for the Three and Six Months Ended April 30, 2022 and 2021 (Unaudited)	6

Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended April 30, 2022 and 2021 (Unaudited)	7

Consolidated Statements of Cash Flows for the Six Months Ended April 30, 2022 and 2021 (Unaudited)	8

Notes to Unaudited Consolidated Financial Statements	9

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3: Quantitative and Qualitative Disclosures about Market Risks	38

Item 4: Controls and Procedures	38

PART II - Other Information	39

Item 1: Legal Proceedings	39

Item 1A: Risk Factors	39

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	39

Item 3: Default Upon Senior Securities	39

Item 4: Mine Safety Disclosures	39

Item 5: Other Information	39

Item 6: Exhibits	39

Signatures	40

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Unaudited Consolidated Financial Statements

For the Three Months Ended April 30, 2022 and 2021

Contents

Consolidated Balance Sheets as of April 30, 2022 (Unaudited) and October 31, 2021	4

Consolidated Statements of Income and Comprehensive Income for the Three and Six Months ended April 30, 2022 (Unaudited) and 2021 (Unaudited)	6

Consolidated Statements of Changes in Stockholders’ Equity for the Three and Six Months ended April 30, 2022 (Unaudited) and 2021 (Unaudited)	7

Consolidated Statements of Cash Flows for the Six Months ended April 30, 2022 (Unaudited) and 2021 (Unaudited)	8

Notes to Unaudited Consolidated Financial Statements	9

CODA OCTOPUS GROUP, INC.

Consolidated Balance Sheets

April 30, 2022 and October 31, 2021

		2022		2021
	2022		2021
	Unaudited
ASSETS
CURRENT ASSETS

Cash	$	20,658,119	$	17,747,656
Accounts Receivable, net		1,981,074		4,207,996
Inventory		10,598,371		10,691,177
Unbilled Receivables		353,302		1,080,384
Prepaid Expenses		348,927		1,202,327
Other Current Assets		578,456		627,619

Total Current Assets		34,518,249		35,557,159

FIXED ASSETS
Property and Equipment, net		6,388,822		6,037,101

OTHER ASSETS
Goodwill and Other Intangibles, net		3,823,506		3,794,383
Deferred Tax Asset		132,067		76,776

Total Other Assets		3,955,573		3,871,159

Total Assets	$	44,862,644	$	45,465,419

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

CODA OCTOPUS GROUP, INC.

Consolidated Balance Sheets (Continued)

April 30, 2022 and October 31, 2021

	2022			2021
	Unaudited
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES

Accounts Payable	$	1,225,126		$	1,454,611
Accrued Expenses and Other Current Liabilities		916,523			740,449
Note Payable		-			63,559
Deferred Revenue		1,040,332			1,999,841

Total Current Liabilities		3,181,981			4,258,460

LONG TERM LIABILITIES

Deferred Revenue, less current portion		137,897			157,886

Total Long Term Liabilities		137,897			157,886

Total Liabilities		3,319,878			4,416,346

STOCKHOLDERS’ EQUITY

Common Stock, $.001 par value; 150,000,000 shares authorized, 10,858,302 issued and outstanding as of April 30, 2022 and 10,857,195 shares issued and outstanding as of October 31, 2021		10,859			10,858
Additional Paid-in Capital		61,873,873			61,183,131
Accumulated Other Comprehensive Loss		(3,692,660	)		(1,667,059	)
Accumulated Deficit		(16,649,306	)		(18,477,857	)

Total Stockholders’ Equity		41,542,766			41,049,073

Total Liabilities and Stockholders’ Equity	$	44,862,644		$	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

(Unaudited)

		2022			2021			2022			2021
	Three Months Ended April 30,						Six Months Ended April 30,
	2022			2021			2022			2021

Net Revenues	$	4,984,838		$	5,373,076		$	10,823,046		$	10,423,535
Cost of Revenues		1,953,132			1,623,472			3,631,406			3,359,009

Gross Profit		3,031,706			3,749,604			7,191,640			7,064,526

OPERATING EXPENSES
Research & Development		517,378			645,281			1,190,268			1,228,420
Selling, General & Administrative		2,033,116			1,788,534			4,155,106			3,610,225

Total Operating Expenses		2,550,494			2,433,815			5,345,374			4,838,645

INCOME FROM OPERATIONS		481,212			1,315,789			1,846,266			2,225,881

OTHER INCOME (EXPENSE)
Other Income		14,497			69,445			94,491			71,499
Funding from Paycheck Protection Program		-			558,901			-			648,872
Interest Expense		(2,502	)		(5,108	)		(2,902	)		(11,297	)

Total Other Income		11,995			623,238			91,589			709,074

INCOME BEFORE INCOME TAX EXPENSE		493,207			1,939,027			1,937,855			2,934,955

INCOME TAX BENEFIT (EXPENSE)
Current Tax Benefit (Expense)		109,150			309,962			(176,459	)		334,688
Deferred Tax Benefit (Expense)		8,946			(41,056	)		67,155			67,134

Total Income Tax Benefit (Expense)		118,096			268,906			(109,304	)		401,822


NET INCOME	$	611,303		$	2,207,933		$	1,828,551		$	3,336,777

NET INCOME PER SHARE:
Basic	$	0.06		$	0.20		$	0.17		$	0.31
Diluted	$	0.05		$	0.20		$	0.16		$	0.30

WEIGHTED AVERAGE SHARES:
Basic		10,857,673			10,772,315

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