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 ...