UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 2020 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-38154 CODA OCTOPUS GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 34-200-8348 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Id ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2020 OR [ ] 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 ...

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) This section presents the unaudited consolidated financial statements and management's discussion and analysis for the reporting period [Item 1: Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) This section presents unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets and stockholders' equity increased as of January 31, 2020, driven by higher cash, inventory, and property Consolidated Balance Sheets ($) | Metric | Jan 31, 2020 (Unaudited) ($) | Oct 31, 2019 ($) | | :----------------------- | :----------------------- | :----------- | | Total Current Assets | $25,918,475 | $24,279,857 | | Total Assets | $36,483,470 | $34,511,244 | | Total Current Liabilities| $3,838,604 | $3,167,450 | | Total Liabilities | $4,424,173 | $3,883,471 | | Total Stockholders' Equity| $32,059,297 | $30,627,773 | - Cash increased by **$806,276** from $11,721,683 as of October 31, 2019, to **$12,527,959** as of January 31, 2020[7](index=7&type=chunk) - Inventory increased by **$911,098** from $5,350,514 as of October 31, 2019, to **$6,261,612** as of January 31, 2020[7](index=7&type=chunk) [Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Net revenues, gross profit, and net income increased for the three months ended January 31, 2020, despite a rise in R&D and operating expenses Consolidated Statements of Income and Comprehensive Income | Metric | Three Months Ended Jan 31, 2020 ($) | Three Months Ended Jan 31, 2019 ($) | Change (%) | | :-------------------------------- | :------------------------------ | :------------------------------ | :--------- | | Net Revenues | $6,680,979 | $5,758,508 | 16.0% | | Gross Profit | $4,274,440 | $3,533,072 | 21.0% | | Total Operating Expenses | $2,819,943 | $2,190,601 | 28.7% | | Income From Operations | $1,454,497 | $1,342,471 | 8.3% | | Net Income | $1,346,773 | $1,239,013 | 8.7% | | Basic Net Income Per Share | $0.13 | $0.12 | 8.3% | | Comprehensive Income | $1,431,524 | $1,536,868 | -6.9% | - Research & Development expenses increased by **62.5%** from $571,326 in 2019 to **$928,265** in 2020[12](index=12&type=chunk) - Selling, General & Administrative expenses increased by **16.8%** from $1,619,275 in 2019 to **$1,891,678** in 2020[12](index=12&type=chunk) [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity increased to $32,059,297 as of January 31, 2020, primarily due to net income and foreign currency translation Consolidated Statements of Stockholders' Equity ($) | Metric | Oct 31, 2019 (Audited) ($) | Jan 31, 2020 (Unaudited) ($) | | :-------------------------------- | :--------------------- | :----------------------- | | Common Stock Amount | $10,723 | $10,723 | | Additional Paid-in Capital | $59,521,665 | $59,521,665 | | Accumulated Other Comprehensive Loss| $(2,135,408) | $(2,050,657) | | Accumulated Deficit | $(26,769,207) | $(25,422,434) | | Total Stockholders' Equity | $30,627,773 | $32,059,297 | - Net Income for the three months ended January 31, 2020, was **$1,346,773**[16](index=16&type=chunk) - Foreign currency translation adjustment contributed **$84,751** to comprehensive income[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased significantly, while cash used in investing and financing activities also saw reductions Consolidated Statements of Cash Flows ($) | Cash Flow Activity | Three Months Ended Jan 31, 2020 ($) | Three Months Ended Jan 31, 2019 ($) | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net Cash Provided by Operating Activities | $1,484,140 | $2,418,625 | | Net Cash Used in Investing Activities | $(643,159) | $(919,135) | | Net Cash Used in Financing Activities | $(119,456) | $(508,578) | | Net Increase in Cash | $806,276 | $1,288,767 | | Cash at the End of the Period | $12,527,959 | $8,801,189 | - The decrease in net cash from operating activities was partly due to an increase in inventory and a decrease in accounts payable and other current liabilities[20](index=20&type=chunk) - Purchases of property and equipment decreased from **$919,135** in 2019 to **$606,345** in 2020[20](index=20&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) These notes provide essential details on accounting policies, revenue recognition, financial instrument fair values, and segment performance [NOTE 1 – BASIS OF PRESENTATION](index=9&type=section&id=NOTE%201%20%E2%80%93%20BASIS%20OF%20PRESENTATION) Unaudited interim consolidated financial statements are prepared under SEC rules, consistent with US GAAP, and include foreign operations translated using local functional currencies - The Company's functional currencies include **US Dollars, British Pound Sterling, Australian Dollars, and Danish Kroner**[22](index=22&type=chunk) - Foreign currency translation gains and losses are recorded as a change in **other comprehensive income**[22](index=22&type=chunk) [NOTE 2 – REVENUE RECOGNITION](index=10&type=section&id=NOTE%202%20%E2%80%93%20REVENUE%20RECOGNITION) The Company adopted Topic 606, recognizing revenue through a five-step process for product sales, rentals, subscriptions, and services - Revenue recognition follows a **five-step process** under FASB Topic 606[26](index=26&type=chunk) - Revenue from product sales is recognized on a stand-alone basis, while rental and subscription revenue is recognized daily over the period[28](index=28&type=chunk)[29](index=29&type=chunk) - Deferred commissions were **$42,816** in Q1 2020, amortized over the contract performance period[40](index=40&type=chunk) [NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS](index=12&type=section&id=NOTE%203%20%E2%80%93%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) The Company's short-term financial instruments, including cash, receivables, and payables, have carrying values approximating their estimated fair values - Short-term financial instruments include cash, receivables, accounts payable, accrued expenses, and a revolving line of credit[44](index=44&type=chunk) - Carrying values of these instruments are adjusted for foreign currency exchange rates and approximate their fair values[44](index=44&type=chunk) [NOTE 4 – FOREIGN CURRENCY TRANSLATION](index=13&type=section&id=NOTE%204%20%E2%80%93%20FOREIGN%20CURRENCY%20TRANSLATION) Foreign subsidiary financial statements are translated into US dollars using local functional currencies, with translation gains/losses in other comprehensive income - Assets and liabilities of foreign operations are translated at balance sheet date exchange rates[47](index=47&type=chunk) - Revenues and expenses are translated at weighted average exchange rates during the reporting period[47](index=47&type=chunk) - Translation gains and losses are recorded in **accumulated other comprehensive income (loss)**[47](index=47&type=chunk) [NOTE 5 – INVENTORY](index=13&type=section&id=NOTE%205%20%E2%80%93%20INVENTORY) Inventory is valued at the lower of cost or net realizable value, showing an increase in all components as of January 31, 2020 Inventory ($) | Inventory Component | Jan 31, 2020 ($) | Oct 31, 2019 ($) | | :------------------ | :----------- | :----------- | | Raw materials and parts | $4,965,915 | $4,379,260 | | Work in progress | $714,269 | $517,354 | | Finished goods | $581,428 | $453,900 | | Total Inventory | $6,261,612 | $5,350,514 | [NOTE 6 – FIXED ASSETS](index=14&type=section&id=NOTE%206%20%E2%80%93%20FIXED%20ASSETS) Net property and equipment increased due to higher buildings and rental assets, partially offset by accumulated depreciation Fixed Asset Components ($) | Fixed Asset Component | Jan 31, 2020 ($) | Oct 31, 2019 ($) | | :-------------------- | :----------- | :----------- | | Buildings | $5,167,156 | $4,654,029 | | Rental assets | $1,976,512 | $1,634,684 | | Total Fixed Assets | $9,986,377 | $9,435,124 | | Accumulated depreciation | $(3,611,388) | $(3,448,312) | | Property and Equipment, Net | $6,374,989 | $5,986,812 | [NOTE 7 – OTHER CURRENT ASSETS](index=14&type=section&id=NOTE%207%20%E2%80%93%20OTHER%20CURRENT%20ASSETS) Other current assets decreased mainly due to a reduction in tax receivables, partially offset by an increase in deposits Other Current Asset Components ($) | Other Current Asset Component | Jan 31, 2020 ($) | Oct 31, 2019 ($) | | :---------------------------- | :----------- | :----------- | | Deposits | $104,952 | $42,932 | | Tax receivables | $135,839 | $255,254 | | Total Other Current Assets | $240,791 | $298,186 | [NOTE 8 – ESTIMATES](index=15&type=section&id=NOTE%208%20%E2%80%93%20ESTIMATES) Financial statement preparation requires significant management estimates for revenues, receivables, fixed assets, inventory, deferred tax assets, and goodwill - Significant estimates include valuation of accounts receivable, fixed assets, inventory, deferred tax assets, and goodwill[54](index=54&type=chunk) - Estimates also cover costs and estimated earnings in excess of billings, and billings in excess of costs and estimated earnings[54](index=54&type=chunk) [NOTE 9 – CONTRACTS IN PROGRESS](index=15&type=section&id=NOTE%209%20%E2%80%93%20CONTRACTS%20IN%20PROGRESS) Unbilled receivables and total deferred revenue increased, with deferred revenue amortized over contractual periods Contracts in Progress ($) | Metric | Jan 31, 2020 ($) | Oct 31, 2019 ($) | | :-------------------- | :----------- | :----------- | | Unbilled Receivables | $2,490,905 | $2,279,362 | | Total Deferred Revenue| $1,178,537 | $973,735 | - Deferred revenue for subscription packages, warranty, and TLS obligations was **$501,795** as of January 31, 2020[57](index=57&type=chunk) - Subscription package and warranty obligations are amortized over **12 months**, while TLS varies between **36 and 60 months**[57](index=57&type=chunk) [NOTE 10 – CONCENTRATIONS](index=16&type=section&id=NOTE%2010%20%E2%80%93%20CONCENTRATIONS) The Company experienced significant customer concentration, with two customers accounting for 41% of net revenues and 44% of accounts receivable - Two customers generated **$2,710,008**, or **41% of net revenues**, for the three months ended January 31, 2020[60](index=60&type=chunk) - Total accounts receivable from these two customers was **$1,817,725**, or **44% of accounts receivable**, at January 31, 2020[60](index=60&type=chunk) - Customer concentration is a consequence of the Services Segment's business model, working with a small number of Prime Defense Contractors[62](index=62&type=chunk) [NOTE 11 – NOTE PAYABLE](index=16&type=section&id=NOTE%2011%20%E2%80%93%20NOTE%20PAYABLE) The secured note payable to HSBC NA decreased, and a revolving line of credit had a zero outstanding balance Note Payable ($) | Metric | Jan 31, 2020 ($) | Oct 31, 2019 ($) | | :-------------------- | :----------- | :----------- | | Total Note Payable | $940,118 | $1,059,574 | | Current Portion | $(492,692) | $(487,140) | | Total Long Term Note Payable | $447,426 | $572,434 | - The secured note payable has an annual interest rate of **4.56%** and matures in **December 2021**[63](index=63&type=chunk) - A **$4,000,000** revolving line of credit with HSBC NA had an outstanding balance of **$0** as of January 31, 2020[63](index=63&type=chunk) [NOTE 12 – RECENT ACCOUNTING PRONOUNCEMENTS](index=17&type=section&id=NOTE%2012%20%E2%80%93%20RECENT%20ACCOUNTING%20PRONOUNCEMENTS) The adoption of ASU No. 2016-02, Leases, had no material impact on financial statements as the Company owns most of its facilities - ASU No. 2016-02, Leases, was adopted effective **November 1, 2019**[66](index=66&type=chunk) - The adoption did not materially impact financial statements because the Company owns most of its facilities[66](index=66&type=chunk) [NOTE 13 – EARNINGS PER COMMON SHARE](index=17&type=section&id=NOTE%2013%20%E2%80%93%20EARNINGS%20PER%20COMMON%20SHARE) Basic net income per share increased to $0.13 for the three months ended January 31, 2020, based on increased weighted average common shares outstanding Earnings Per Common Share | Metric | Three Months Ended Jan 31, 2020 | Three Months Ended Jan 31, 2019 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net Income ($) | $1,346,773 | $1,239,013 | | Basic weighted average common shares outstanding | 10,721,881 | 10,660,694 | | Basic EPS ($) | $0.13 | $0.12 | [NOTE 14 – SEGMENT ANALYSIS](index=18&type=section&id=NOTE%2014%20%E2%80%93%20SEGMENT%20ANALYSIS) The Company operates in Marine Technology (Products) and Marine Engineering (Services) segments, with disaggregated revenues showing strong performance in key regions Three Months Ended January 31, 2020 ($) | Metric | Marine Technology Business (Products) ($) | Marine Engineering Business (Services) ($) | Overhead ($) | Total ($) | | :-------------------------------- | :------------------------------------ | :------------------------------------- | :------- | :---------- | | Revenues from External Customers | $3,632,812 | $3,048,167 | $0 | $6,680,979 | | Gross Profit | $2,977,135 | $1,297,305 | $0 | $4,274,440 | | Income (Loss) from Operations | $1,552,408 | $454,571 | $(552,482)| $1,454,497 | | Net Income (Loss) before Income Taxes | $1,562,000 | $450,889 | $(565,182)| $1,447,707 | | Net Income (Loss) | $1,509,694 | $442,699 | $(605,620)| $1,346,773 | Total Net Sales by Geographic Area (Three Months Ended January 31, 2020) ($) | Geographic Area | Marine Technology Business ($) | Marine Engineering Business ($) | Grand Total ($) | | :-------------- | :------------------------- | :-------------------------- | :---------- | | Americas | $541,332 | $2,135,905 | $2,677,237 | | Europe | $619,017 | $912,262 | $1,531,279 | | Australia/Asia | $2,421,360 | $0 | $2,421,360 | | Middle East & Africa | $51,103 | $0 | $51,103 | | Total Net Sales | $3,632,812 | $3,048,167 | $6,680,979 | Total Net Sales by Product Line (Three Months Ended January 31, 2020) ($) | Product Line | Marine Technology Business ($) | Marine Engineering Business ($) | Grand Total ($) | | :----------- | :------------------------- | :-------------------------- | :---------- | | Equipment Sales | $2,722,919 | $0 | $2,722,919 | | Equipment Rentals | $323,645 | $0 | $323,645 | | Software Sales | $229,775 | $0 | $229,775 | | Engineering Parts | $0 | $2,553,229 | $2,553,229 | | Services | $356,473 | $494,938 | $851,411 | | Total Net Sales | $3,632,812 | $3,048,167 | $6,680,979 | [NOTE 15 – INCOME TAXES](index=25&type=section&id=NOTE%2015%20%E2%80%93%20INCOME%20TAXES) The effective tax rate decreased to 6.9% due to a reduction in the AMT tax refund, with U.S. federal net operating loss carryforwards totaling $2,831,621 - Effective tax rate decreased from **8.2%** in 2019 to **6.9%** in 2020[88](index=88&type=chunk) - The decrease in effective tax rate was due to a reduction in the AMT tax refund from **$75,004** in 2019 to **$37,502** in 2020[88](index=88&type=chunk) NOL Expiration Year ($) | NOL Expiration Year | Amount ($) | | :------------------ | :----------- | | 2029 | $2,707,158 | | 2028 | $124,463 | | Total | $2,831,621 | [NOTE 16 – RECLASSIFICATION OF PRIOR YEAR PRESENTATION](index=25&type=section&id=NOTE%2016%20%E2%80%93%20RECLASSIFICATION%20OF%20PRIOR%20YEAR%20PRESENTATION) Certain prior year amounts were reclassified for consistency, specifically a VAT receivable adjustment, with no effect on reported results of operations - Prior year amounts were reclassified for consistency, including VAT receivable[89](index=89&type=chunk) - These reclassifications had no effect on the reported results of operations[89](index=89&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, critical accounting policies, and significant factors affecting the business, including Brexit and the Coronavirus outbreak [General Overview](index=26&type=section&id=General%20Overview) Coda Octopus Group, Inc. operates two distinct businesses: Marine Technology (Products) and Marine Engineering (Services), focusing on underwater technologies and proprietary defense parts - Products Segment focuses on real-time 3D imaging, mapping, defense, and survey applications for subsea commercial and defense markets[93](index=93&type=chunk) - Services Segment designs and manufactures proprietary parts for larger defense mission-critical integrated systems (MCIS), such as the Close-In-Weapons Support (CIWS) Program for the Phalanx[94](index=94&type=chunk) - The Services Segment holds 'preferred supplier' status for its proprietary parts, ensuring supply and upgrades for the life of programs[94](index=94&type=chunk) [Factors Affecting our Business](index=27&type=section&id=Factors%20Affecting%20our%20Business) The Company's business is significantly affected by Brexit, posing risks of increased costs and supply chain disruptions, and the Coronavirus outbreak, leading to project postponements and reduced sales - Brexit could lead to WTO trade rules, increasing import/export costs, custom duties, and compliance costs for UK operations[98](index=98&type=chunk) - The Company established a Danish subsidiary, Coda Octopus Products A/S, to mitigate Brexit impact and maintain EU market access[100](index=100&type=chunk) - The Coronavirus outbreak has caused indefinite postponements of projects due to travel restrictions and disruptions in the supply of product components, particularly impacting sales in China and other Asian countries[103](index=103&type=chunk) [Critical Accounting Policies](index=28&type=section&id=Critical%20Accounting%20Policies) The Company's critical accounting policies involve significant management estimates for revenue recognition, deferred costs, income taxes, and intangible assets - Revenue recognition for products is based on stand-alone sales, while services are recognized when provided or based on percentage-of-completion for fixed-price contracts[108](index=108&type=chunk)[109](index=109&type=chunk) - Deferred costs on service projects are recognized in accordance with revenue recognition policies and are reviewed quarterly for recoverability[111](index=111&type=chunk) - Goodwill is not amortized but evaluated for impairment annually, while other intangible assets are amortized on a straight-line basis over **2 to 15 years**[116](index=116&type=chunk)[117](index=117&type=chunk) [Consolidated Results of Operations](index=30&type=section&id=Consolidated%20Results%20of%20Operations) Consolidated financial results improved with increased revenues and net income before taxes, driven by the Products Segment, despite significant R&D investments in the Services Segment - Consolidated net income before taxes increased by **7.2%**, and revenues increased by **16%** in the Current Quarter[119](index=119&type=chunk) - Products Segment revenues increased by **28.4%**, and net income before taxes rose by **70.4%** to **$1,562,000**[120](index=120&type=chunk) - Services Segment's net income before taxes decreased by **42.9%** to **$450,889**, primarily due to a **534%** increase in R&D expenditures for the new Thermite® mission computer division[121](index=121&type=chunk) [Results of Operations for the Current Quarter compared to the Previous Quarter](index=31&type=section&id=Results%20of%20Operations%20for%20the%20Current%20Quarter%20compared%20to%20the%20Previous%20Quarter) Total consolidated revenues increased by 16%, with improved gross profit margins, while operating expenses rose due to R&D and SG&A investments Results of Operations Comparison | Metric | Current Quarter (Jan 31, 2020) ($) | Previous Quarter (Jan 31, 2019) ($) | Change (%) | | :-------------------------------- | :----------------------------- | :------------------------------ | :--------- | | Net Revenues | $6,680,979 | $5,758,508 | 16.0% | | Gross Profit Margin | 64.0% | 61.4% | +2.6 ppts | | R&D Expenditures | $928,265 | $571,326 | 62.5% | | SG&A Expenses | $1,891,678 | $1,619,275 | 16.8% | | Income from Operations | $1,454,497 | $1,342,471 | 8.3% | | Net Income | $1,346,773 | $1,239,013 | 8.7% | - R&D increase was driven by investment in the Thermite® mission computer division (**$206,438**) and CRADA HUD prototype development (**$165,098**)[125](index=125&type=chunk)[127](index=127&type=chunk) - SG&A increase was mainly due to higher wages and salaries in the UK and increased legal/professional fees, partially offset by decreased rent due to property ownership[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The Company maintained a strong liquidity position with substantial working capital and stockholders' equity, generating cash from operating activities and reducing debt Liquidity and Capital Resources ($) | Metric | As of Jan 31, 2020 ($) | | :-------------------- | :----------------- | | Accumulated Deficit | $(25,422,434) | | Working Capital | $22,079,871 | | Stockholders' Equity | $32,059,297 | | Cash from Operating Activities (Current Quarter) | $1,484,140 | - The outstanding balance on the secured note payable to HSBC NA was **$940,118** as of January 31, 2020, down from $1,410,216 in the Previous Quarter[136](index=136&type=chunk)[144](index=144&type=chunk) - A **$4,000,000** revolving line of credit with HSBC NA had an outstanding balance of **$0** as of January 31, 2020[142](index=142&type=chunk) [Inflation and Foreign Currency](index=34&type=section&id=Inflation%20and%20Foreign%20Currency) The Company's financial results are exposed to foreign currency fluctuations across multiple functional currencies, with actual currency movements positively impacting net income and net assets - The Company's functional currencies include **US Dollars, British Pound, Danish Kroner, and Australian Dollars**[146](index=146&type=chunk) - Currency fluctuations can affect sales, profitability, and financial position, and the Company does not currently hedge its currency exposure[147](index=147&type=chunk) Total Effect of Currency Fluctuations (Jan 31, 2020) ($) | Metric | Total Effect of Currency Fluctuations (Jan 31, 2020) | | :-------------------- | :------------------------------------------------- | | Net profit (losses) | $103,029 (increase) | | Net assets | $293,079 (increase) | [Off-Balance Sheet Arrangements](index=34&type=section&id=Off-Balance%20Sheet%20Arrangements) The Company does not have any off-balance sheet arrangements - The Company has no off-balance sheet arrangements[150](index=150&type=chunk) [Item 3: Quantitative and Qualitative Disclosures about Market Risks](index=34&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) This item is not required for smaller reporting companies - Not required for smaller reporting companies[151](index=151&type=chunk) [Item 4: Controls and Procedures](index=34&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective, with no material changes in internal controls - Disclosure controls and procedures were evaluated and deemed effective as of **January 31, 2020**[153](index=153&type=chunk) - No material changes in internal controls over financial reporting occurred during the quarter[155](index=155&type=chunk) [PART II - Other Information](index=35&type=section&id=PART%20II%20-%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other disclosures [Item 1: Legal Proceedings](index=35&type=section&id=Item%201%3A%20Legal%20Proceedings) The Company is not currently aware of any legal proceedings expected to have a material adverse effect on its business or financial condition - The Company is not aware of any material adverse legal proceedings[156](index=156&type=chunk) [Item 1A: Risk Factors](index=35&type=section&id=Item%201A%3A%20Risk%20Factors) This item is not required for smaller reporting companies - Not required for smaller reporting companies[157](index=157&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report - None to report[157](index=157&type=chunk) [Item 3: Default Upon Senior Securities](index=35&type=section&id=Item%203%3A%20Default%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report - None to report[157](index=157&type=chunk) [Item 4: Mine Safety Disclosures](index=35&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - Not Applicable[158](index=158&type=chunk) [Item 5: Other Information](index=35&type=section&id=Item%205%3A%20Other%20Information) No other information is specifically reported under this item [Item 6: Exhibits](index=35&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, and various XBRL documents - Includes Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350[159](index=159&type=chunk) - Various XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation) are filed as exhibits[159](index=159&type=chunk) [Signatures](index=36&type=section&id=Signatures) The report is duly signed on behalf of Coda Octopus Group, Inc. by its Chief Executive Officer and Chief Financial Officer - Report signed by Annmarie Gayle, Chief Executive Officer, and Michael Midgley, Chief Financial Officer[163](index=163&type=chunk) - Signatures dated **March 16, 2020**[163](index=163&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 2019 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-38154 CODA OCTOPUS GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 34-200-8348 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Id ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2019 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ | --- | --- | |----------------------------------------------------------------------------------------------------------- ...

[PART I - Financial Information](index=3&type=section&id=PART%20I%20-%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) The company's financial statements for the period ended April 30, 2019, reflect significant year-over-year growth across assets, revenue, and profitability [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of April 30, 2019, the company's balance sheet strengthened significantly, driven by increased assets and stockholders' equity while liabilities decreased Consolidated Balance Sheet Highlights (Unaudited) | Account | April 30, 2019 ($) | October 31, 2018 ($) | Change | | :--- | :--- | :--- | :--- | | **Total Assets** | **31,948,932** | **28,736,611** | **+11.2%** | | Cash | 9,257,932 | 7,512,422 | +23.2% | | Total Current Assets | 20,965,165 | 18,122,307 | +15.7% | | Property and Equipment, net | 6,121,877 | 5,246,183 | +16.7% | | **Total Liabilities** | **3,808,905** | **4,349,661** | **-12.4%** | | Total Current Liabilities | 2,847,583 | 3,241,211 | -12.1% | | **Total Stockholders' Equity** | **28,140,027** | **24,386,950** | **+15.4%** | [Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20%28Loss%29%20and%20Comprehensive%20Income%20%28Loss%29) The company achieved substantial revenue growth and a significant turnaround to net income for both the three and six-month periods ended April 30, 2019 Key Performance Indicators - Income Statement (Unaudited) | Metric | Three Months Ended April 30, 2019 ($) | Three Months Ended April 30, 2018 ($) | YoY Change | Six Months Ended April 30, 2019 ($) | Six Months Ended April 30, 2018 ($) | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net Revenues** | **6,783,272** | **3,526,396** | **+92.4%** | **12,541,780** | **6,576,953** | **+90.7%** | | Gross Profit | 4,724,662 | 2,585,538 | +82.7% | 8,257,734 | 4,689,988 | +76.1% | | Income (Loss) from Operations | 2,282,753 | (80,569) | N/A | 3,625,224 | (152,415) | N/A | | **Net Income (Loss)** | **1,973,494** | **(77,325)** | **N/A** | **3,212,507** | **(245,264)** | **N/A** | | Diluted EPS | 0.18 | (0.01) | N/A | 0.30 | (0.03) | N/A | [Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity significantly increased for the six months ended April 30, 2019, primarily driven by net income and positive foreign currency translation - Total Stockholders' Equity grew from **$24,386,950** at October 31, 2018, to **$28,140,027** at April 30, 2019[14](index=14&type=chunk) - The growth in equity was primarily due to the net income of **$3,212,507** for the six-month period[12](index=12&type=chunk)[14](index=14&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company generated substantial cash from operating activities for the six months ended April 30, 2019, leading to a significant overall increase in cash Consolidated Cash Flow Summary (Unaudited) | Cash Flow Activity | Six Months Ended April 30, 2019 ($) | Six Months Ended April 30, 2018 ($) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | **3,208,619** | **242,715** | | Net Cash used in Investing Activities | (1,374,714) | (521,594) | | Net Cash used in Financing Activities | (481,231) | (211,029) | | **Net Increase in Cash** | **1,745,510** | **85,028** | | Cash at End of Period | 9,257,932 | 6,936,567 | [Notes to Unaudited Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes provide details on accounting policies, revenue recognition, customer concentration, segment performance, tax carryforwards, and subsequent events - The company adopted the new revenue recognition standard, Topic 606, on November 1, 2018, concluding that it did not have a material cumulative effect on financial statements as the previous policy was substantially consistent[19](index=19&type=chunk) - For the six months ended April 30, 2019, one customer accounted for **$3,209,220**, or **26% of net revenues**[53](index=53&type=chunk) - The company operates in two segments, Marine Technology (Products) and Marine Engineering (Services), with revenues for the six months ended April 30, 2019, almost evenly split at **$6,249,719** and **$6,292,061** respectively[65](index=65&type=chunk)[76](index=76&type=chunk) - As of October 31, 2018, the company had federal tax Net Operating Loss (NOL) carryforwards of **$8,353,186**, which will expire between 2028 and 2029[102](index=102&type=chunk) - Subsequent to the reporting period, on May 17, 2019, the company received a payment of **$166,514** representing short-swing profits recovered from a beneficial owner[108](index=108&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the significant revenue growth driven by both Marine Technology and Marine Engineering segments, alongside changes in gross margin, operating income, R&D investments, and the impact of Brexit and foreign currency fluctuations Six-Month Performance Comparison (Current vs. Previous Period) | Metric | Current Six Month Period (ended Apr 30, 2019) ($) | Previous Six Month Period (ended Apr 30, 2018) ($) | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | **12,541,780** | **6,576,953** | **+90.7%** | | - Services Segment Revenue | 6,292,061 | 2,360,720 | +167% | | - Products Segment Revenue | 6,249,719 | 4,216,233 | +48% | | Gross Profit Margin | 65.8% | 71.3% | -5.5 p.p. | | Operating Income (Loss) | 3,625,224 | (152,415) | N/A | | Net Income (Loss) | 3,212,507 | (245,264) | N/A | - The company is developing a first-generation prototype Heads Up Display (HUD) for NAVSEA under a Cooperative Research and Development Agreement (CRADA), with the first prototype approved as 'trial ready' and live trials planned with NASA[145](index=145&type=chunk)[146](index=146&type=chunk) - Management identifies the UK's withdrawal from the EU (Brexit) as a significant concern that could affect its UK operations, which generate a substantial portion of earnings[115](index=115&type=chunk)[116](index=116&type=chunk)[121](index=121&type=chunk) - Fluctuations in foreign currency, particularly the weakening of the British Pound against the US Dollar, negatively impacted results, decreasing net income by **$116,177** and net assets by **$938,186** for the six-month period[195](index=195&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - As of April 30, 2019, the company had working capital of **$18.1 million** and significantly reduced its HSBC loan outstanding balance to **$1.3 million**[186](index=186&type=chunk)[188](index=188&type=chunk) [Quantitative and Qualitative Disclosures about Market Risks](index=43&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) This section is not applicable as the company qualifies as a smaller reporting company - Disclosure about market risk is not required for smaller reporting companies[200](index=200&type=chunk) [Controls and Procedures](index=43&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of April 30, 2019, due to material weaknesses, with remediation efforts underway through increased accounting staff - Management concluded that disclosure controls and procedures were not effective as of the end of the reporting period[202](index=202&type=chunk) - The ineffectiveness is attributed to material weaknesses related to limited staffing and inadequate review procedures[203](index=203&type=chunk) - Remediation efforts include increasing the number of accounting staff to improve segregation of duties and financial review[204](index=204&type=chunk) [PART II - Other Information](index=44&type=section&id=PART%20II%20-%20Other%20Information) [Legal Proceedings](index=44&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not currently involved in any material lawsuits or legal proceedings[206](index=206&type=chunk) [Risk Factors](index=44&type=section&id=Item%201A%3A%20Risk%20Factors) This section is not applicable as the company qualifies as a smaller reporting company - Disclosure of Risk Factors is not required for smaller reporting companies[207](index=207&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the reporting period, the company issued common stock to a director, exempt from registration under Section 4(2) of the Securities Act of 1933 - On or around February 3, 2019, the company issued **7,143 shares** of common stock to a director[207](index=207&type=chunk) - The securities were issued pursuant to an exemption from registration requirements under Section 4(2) of the Securities Act[208](index=208&type=chunk) [Default Upon Senior Securities](index=44&type=section&id=Item%203%3A%20Default%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - None[209](index=209&type=chunk) [Mine Safety Disclosures](index=44&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not Applicable[210](index=210&type=chunk) [Other Information](index=44&type=section&id=Item%205%3A%20Other%20Information) No information was reported under this item [Exhibits](index=44&type=section&id=Item%206%3A%20Exhibits) The report includes required CEO and CFO certifications and XBRL-related documents filed as exhibits - Exhibits filed include CEO/CFO certifications (Rule 13a-14(a) and Section 906) and XBRL data files[211](index=211&type=chunk)[212](index=212&type=chunk)

PART I - Financial Information [Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) The company's unaudited statements show a significant turnaround with net income reaching $1.24 million from a prior-year loss [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $31.1 million and stockholders' equity increased to $26.0 million as of January 31, 2019 Consolidated Balance Sheet Highlights (as of Jan 31, 2019 vs. Oct 31, 2018) | Metric | Jan 31, 2019 (Unaudited) | Oct 31, 2018 | | :--- | :--- | :--- | | **Total Current Assets** | $19,907,816 | $18,122,307 | | Cash and Cash Equivalents | $8,801,189 | $7,512,422 | | **Total Assets** | **$31,057,332** | **$28,736,611** | | **Total Current Liabilities** | $3,931,152 | $3,241,211 | | Total Liabilities | $5,028,069 | $4,349,661 | | **Total Stockholders' Equity** | **$26,029,263** | **$24,386,950** | [Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Net revenues grew 88.8% year-over-year to $5.76 million, resulting in a net income of $1.24 million Income Statement Summary (Three Months Ended Jan 31) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Net Revenues | $5,758,508 | $3,050,557 | +88.8% | | Gross Profit | $3,533,072 | $2,104,450 | +67.9% | | Income (Loss) from Operations | $1,342,471 | $(71,846) | Turnaround | | **Net Income (Loss)** | **$1,239,013** | **$(167,939)** | **Turnaround** | | **Diluted EPS** | **$0.12** | **$(0.02)** | **Turnaround** | [Consolidated Statement of Changes in Stockholders' Equity](index=7&type=section&id=Consolidated%20Statement%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to $26.03 million, driven by net income and foreign currency translation adjustments - Stockholders' equity increased by **$1.64 million** during the quarter, mainly due to **net income of $1,239,013** and **other comprehensive income of $297,855**[13](index=13&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The company generated $2.42 million in cash from operations, ending the period with a cash balance of $8.80 million Cash Flow Summary (Three Months Ended Jan 31) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $2,418,625 | $(160,337) | | Net Cash used in Investing Activities | $(919,135) | $(245,822) | | Net Cash (used in) from Financing Activities | $(508,578) | $4,587,664 | | **Net Increase in Cash** | **$1,288,767** | **$5,137,442** | | **Cash at End of Period** | **$8,801,189** | **$11,988,981** | [Notes to (Unaudited) Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20%28Unaudited%29%20Consolidated%20Financial%20Statements) Key notes detail revenue recognition adoption, customer concentration, debt reduction, and subsequent real estate transactions - The company adopted the new revenue recognition standard, **Topic 606**, concluding it had **no material effect** on revenue reporting[19](index=19&type=chunk) - For the three months ended January 31, 2019, **two customers accounted for 45% of net revenues** ($2,616,171)[49](index=49&type=chunk) - Total loans and notes payable **decreased significantly to $1.41 million** from $2.02 million, primarily due to the repayment of a **$500,000 CEO loan**[51](index=51&type=chunk) - Subsequent to the quarter's end, the company sold a residential property for **$725,000** and contracted to purchase a new business property for **$684,000**[82](index=82&type=chunk)[83](index=83&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes strong Q1 2019 results to an 88.8% revenue increase driven by both Products and Services segments [Consolidated Results of Operations](index=25&type=section&id=Consolidated%20Results%20of%20Operations) Revenue grew 88.8% YoY, driven by a 191% increase in the Services Segment, though gross margin declined due to sales mix Segment Revenue Growth (Q1 2019 vs Q1 2018) | Segment | Q1 2019 Revenue | Q1 2018 Revenue | Growth | | :--- | :--- | :--- | :--- | | Products Segment | $2,829,536 | $2,042,942 | +39% | | Services Segment | $2,928,972 | $1,007,615 | +191% | | **Total** | **$5,758,508** | **$3,050,557** | **+88.8%** | - The increase in Services Segment revenue was due to receiving **backlog defense contracts** for calendar years 2017 and 2018[108](index=108&type=chunk)[112](index=112&type=chunk) - **Gross margin percentage declined to 61.4%** from 69.0% YoY, reflecting a sales mix shift toward lower-margin services[113](index=113&type=chunk) - **R&D expenses decreased 14.8% YoY** due to the finalization of the Thermite® Octal development, but are expected to increase in fiscal 2019[114](index=114&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position with $16.0 million in working capital and significantly reduced its debt - As of January 31, 2019, the company had **working capital of $16.0 million** and **stockholders' equity of $26.0 million**[127](index=127&type=chunk) - Overall loan indebtedness was **reduced to $1.41 million** from $6.91 million in the prior-year quarter, causing a **75.6% drop in interest expense**[121](index=121&type=chunk)[129](index=129&type=chunk) [Inflation and Foreign Currency](index=29&type=section&id=Inflation%20and%20Foreign%20Currency) Unhedged foreign currency exposure negatively impacted net income by approximately $69,390 and net assets by $1.19 million Impact of Foreign Currency Fluctuations (Q1 2019) | Metric | Effect of Currency Change | | :--- | :--- | | Revenues | $(199,898) | | Net Income | $(69,390) | | Net Assets | $(1,185,878) | - The company operates in multiple currencies and **does not currently hedge its currency exposure**, making it subject to risks from exchange rate fluctuations[133](index=133&type=chunk)[134](index=134&type=chunk) [Quantitative and Qualitative Disclosures about Market Risks](index=29&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) This disclosure is not required for smaller reporting companies - Not required for smaller reporting companies[138](index=138&type=chunk) [Controls and Procedures](index=29&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - Based on an evaluation as of January 31, 2019, the CEO and CFO concluded that the company's **disclosure controls and procedures were effective**[140](index=140&type=chunk) - There were **no material changes** in internal controls over financial reporting during the quarter[142](index=142&type=chunk) PART II - Other Information [Legal Proceedings](index=30&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is not aware of any legal proceedings that would have a material adverse effect on the business - The company is **not currently aware of any material legal proceedings**[143](index=143&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A%3A%20Risk%20Factors) This disclosure is not required for smaller reporting companies - Not required for smaller reporting companies[144](index=144&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company issued 23,965 shares of common stock for $105,446 in a private placement exempt from registration - On November 16, 2018, the company issued **23,965 shares of common stock at $4.40 per share**, raising $105,446 in an unregistered sale[144](index=144&type=chunk)[145](index=145&type=chunk) [Other Items (3, 4, 5, 6)](index=30&type=section&id=Other%20Items%20%283%2C%204%2C%205%2C%206%29) The company reports no defaults on senior securities, notes mine safety is not applicable, and lists filed exhibits - Item 3: **No defaults upon senior securities**[146](index=146&type=chunk) - Item 4: **Mine Safety Disclosures are not applicable**[147](index=147&type=chunk) - Item 6 lists **exhibits filed**, including CEO/CFO certifications and XBRL documents[148](index=148&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended October 31, 2018 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 001-38154 CODA OCTOPUS GROUP, INC. (Exact name of registrant as specified in its charter) Delaware 34-200-8348 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Id ...