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, 2026

☐ 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 has submitted electronically every Interactive Date File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ☐	Accelerated filer ☐
	Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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, 2026 is 11,276,152.

INDEX

	Page
PART I – Financial Information	3

Item 1: Financial Statements	3

Consolidated Balance Sheets as of January 31, 2026 (Unaudited) and October 31, 2025	3

Consolidated Statements of Income and Comprehensive Income for the Three Months Ended January 31, 2026 and 2025 (Unaudited)	5

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended January 31, 2026 and 2025 (Unaudited)	6

Consolidated Statements of Cash Flows for the Three Months Ended January 31, 2026 and 2025 (Unaudited)	7

Notes to Unaudited Consolidated Financial Statements	8

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3: Quantitative and Qualitative Disclosures about Market Risks	29

Item 4: Controls and Procedures	29

PART II – Other Information	30

Item 1: Legal Proceedings	30

Item 1A: Risk Factors	30

Item 2: Unregistered Sales of Equity Securities and Use of Proceeds	30

Item 3: Default Upon Senior Securities	30

Item 4: Mine Safety Disclosures	30

Item 5: Other Information	30

Item 6: Exhibits	30

Signatures	31

PART I. FINANCIAL INFORMATION

Item 1: Financial Statements

CODA OCTOPUS GROUP, INC.

Consolidated Balance Sheets

January 31, 2026 and October 31, 2025

	2026		2025
	Unaudited
ASSETS
CURRENT ASSETS

Cash and Cash Equivalents	$	30,446,369	$	28,682,615
Accounts Receivable		3,784,960		3,732,806
Inventory		14,195,378		13,636,512
Unbilled Receivables		1,906,633		2,988,779
Prepaid Expenses		365,303		434,021
Other Current Assets		461,892		531,469

Total Current Assets		51,160,535		50,006,202

FIXED ASSETS
Property and Equipment, net		7,371,004		7,295,791
Right of Use Assets		374,597		372,647

Total Fixed Assets		7,745,601		7,668,438

OTHER ASSETS
Goodwill		3,639,334		3,639,334
Intangible Assets, net		3,076,109		3,179,588

Total Other Assets		6,715,443		6,818,922

Total Assets	$	65,621,579	$	64,493,562

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

CODA OCTOPUS GROUP, INC.

Consolidated Balance Sheets (Continued)

January 31, 2026 and October 31, 2025

	2026			2025
	Unaudited
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

Accounts Payable	$	957,766		$	1,407,439
Current portion of operating lease liabilities		37,441			34,862
Accrued Expenses and Other Current Liabilities		2,538,054			2,475,952
Deferred Revenue		1,159,868			1,722,796

Total Current Liabilities		4,693,129			5,641,049

LONG TERM LIABILITIES
Deferred Tax Liability, net		327,728			317,949
Non-current operating lease liabilities		364,893			360,070
Deferred Revenue, less current portion		50,487			59,080

Total Long Term Liabilities		743,108			737,099

Total Liabilities		5,436,237			6,378,148

Commitments and contingencies		-			-

STOCKHOLDERS’ EQUITY

Common Stock, $.001 par value; 150,000,000 shares authorized, 11,270,575 issued and outstanding as of January 31, 2026 and 11,270,575 shares issued and outstanding as of October 31, 2025		11,271			11,271
Preferred Stock $.001 par value; 5,000,000 shares authorized, zero issued and outstanding as of January 31, 2026 and October 31, 2025		-			-
Treasury Stock		(61,933	)		(61,933	)
Additional Paid-in Capital		63,348,283			63,321,294
Accumulated Other Comprehensive Loss		(766,441	)		(1,878,657	)
Accumulated Deficit		(2,345,838	)		(3,276,561	)

Total Stockholders’ Equity		60,185,342			58,115,414

Total Liabilities and Stockholders’ Equity	$	65,621,579		$	64,493,562

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)

	2026			2025
	Three Months Ended January 31,
	2026			2025

Net Revenues	$	6,710,112		$	5,209,715
Cost of Revenues		2,343,078			1,781,245

Gross Profit		4,367,034			3,428,470

OPERATING EXPENSES
Research & Development		606,102			543,126
Selling, General & Administrative		2,750,862			2,223,322

Total Operating Expenses		3,356,964			2,766,448

INCOME FROM OPERATIONS		1,010,070			662,022

OTHER INCOME (EXPENSE)
Other Income		4,433			78,667
Interest Income		172,270			194,171

Total Other Income		176,703			272,838

INCOME BEFORE INCOME TAX EXPENSE		1,186,773			934,860

INCOME TAX (EXPENSE) BENEFIT
Current Tax (Expense)		(263,216	)		(48,874	)
Deferred Tax Benefit		7,166			26,989

Total Income Tax (Expense)		(256,050	)		(21,885	)

NET INCOME	$	930,723		$	912,975

NET INCOME PER SHARE:
Basic	$	0.08		$	0.08
Diluted	$	0.08		$	0.08

WEIGHTED AVERAGE SHARES:
Basic		11,270,575			11,213,989
Diluted		11,290,802			11,299,737

NET INCOME	$	930,723		$	912,975

Foreign Currency Translation Adjustment		1,112,216			(1,028,586	)

Total Other Comprehensive Income/(Loss)	$	1,112,216		$	(1,028,586	)

COMPREHENSIVE INCOME/(LOSS)	$	2,042,939		$	(115,611	)

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, 2026 and 2025

(Unaudited)

	Shares		Amount		Capital			Income (Loss)			Deficit			Stock			Total
					Additional			Other
	Common Stock				Paid-in			Comprehensive			Accumulated			Treasury
	Shares		Amount		Capital			Income (Loss)			Deficit			Stock			Total

Balance, October 31, 2024		11,195,487	$	11,195	$	63,096,583		$	(2,510,831	)	$	(7,406,491	)	$	(61,933	)	$	53,128,523

Employee stock-based compensation		-		-		100,145			-			-			-			100,145
Stock issued for options exercised and stock grants		23,317		24		(24	)		-			-						-
Foreign currency translation adjustment		-		-		-			(1,028,586	)		-			-			(1,028,586	)
Net Income		-		-		-			-			912,975			-			912,975
Balance January 31, 2025		11,218,804	$	11,219	$	63,196,704		$	(3,539,417	)	$	(6,493,516	)	$	(61,933	)	$	53,113,057

Balance		11,270,575		11,271		63,321,294			(1,878,657	)		(3,276,561	)		-61,933			58,115,414
Balance, October 31, 2025		11,270,575		11,271		63,321,294			(1,878,657	)		(3,276,561	)		(61,933	)		58,115,414

Employee stock-based compensation		-		-		26,989			-			-			-			26,989
Foreign currency translation adjustment		-		-		-			1,112,216			-			-			1,112,216
Net Income		-		-		-			-			930,723			-			930,723
Balance, January 31, 2026		11,270,575	$	11,271	$	63,348,283		$	(766,441	)	$	(2,345,838	)	$	(61,933	)	$	60,185,342
Balance		11,270,575	$	11,271	$	63,348,283		$	(766,441	)	$	(2,345,838	)	$	(61,933	)	$	60,185,342

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

CODA OCTOPUS GROUP, INC.

Consolidated Statements of Cash Flows

(Unaudited)

	2026			2025
	Three Months Ended January 31,
	2026			2025
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	930,723		$	912,975
Adjustments to reconcile net income to net cash provided by operating activities:					.
Depreciation of property and equipment		229,280			205,646
Amortization of intangible assets		136,612			127,759
Stock-based compensation		26,989			100,145
Deferred income taxes		(7,166	)		(26,989	)
Allowance for credit loss		-			(41,256	)
Non Cash Operating Lease Expense		-			3,906
(Increase) decrease in operating assets:
Accounts receivable		76,322			85,988
Inventory		(79,162	)		149,535
Unbilled receivables		1,104,729			(612,135	)
Prepaid expenses		82,102			(200,717	)
Other current assets		79,392			428,541
Increase (decrease) in operating liabilities:
Accounts payable and other current liabilities		(480,655	)		(286,435	)
Deferred revenue		(622,259	)		(205,452	)
Net Cash provided by Operating Activities		1,476,907			641,511
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(82,248	)		(128,109	)
Purchases of other intangible assets		(23,165	)		(7,036	)
Net Cash provided by (used in) Investing Activities		(105,413	)		(135,145	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Cash Used in Financing Activities		-			-

EFFECT OF CURRENCY TRANSLATION ON CHANGES IN CASH AND CASH EQUIVALENTS		392,260			(443,475	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		1,763,754			62,891

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD		28,682,615			22,479,072

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD	$	30,446,369		$	22,541,963
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for taxes	$	274,164		$	6,968

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

CODA OCTOPUS GROUP, INC.

Notes to the Unaudited Consolidated Financial Statements

January 31, 2026 and October 31, 2025

Note 1 – ACCOUNTING POLICIES AND SUPPLEMENTAL DISCLOSURES

We have prepared the accompanying consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting. These consolidated financial statements are unaudited and, in our opinion, include all material adjustments consisting of normal recurring adjustments and accruals necessary for a fair presentation of our consolidated cash flows, operating results, and balance sheets for the period presented. Operating results for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2026 due to seasonal, world events and other factors. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted in accordance with the rules and regulations of the U.S. Securities Exchange Commission (“SEC”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes presented in the Company’s Annual Report on Form 10-K for the year ended October 31, 2025 as filed with the Securities and Exchange Commission on January 29, 2026 and amended on Form 10-K/A as filed with the Securities and Exchange Commission on February 26, 2026.

Principles of Consolidation

The consolidated financial statements include the accounts of Coda Octopus Group, Inc. and its wholly owned domestic and foreign subsidiaries (“Group”). All material intercompany transactions and balances have been eliminated in the consolidated financial statements.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Estimates are used for, but not limited to, income taxes, useful lives of equipment, valuation of acquired intangibles and goodwill, stock-based compensation forfeiture rates, inventory valuation, collectability of receivables, impairment of property and equipment and operating leases. The accounting estimates and assumptions that require management’s most significant, challenging, and subjective judgment include estimates related to the percentage of completion method used to account for contracts including costs and earnings in excess of billings, billings in excess of costs and estimated earnings. Actual results realized by the Company may differ from management’s estimates.

Note 2 – REVENUE RECOGNITION

The Company recognizes revenue in accordance with the Financial Accounting Standards Board’s Topic 606, Revenue from Contracts with Customers (“Topic 606”).

Topic 606 has established a five-step process to determine the amount of revenue to record from contracts with customers. The five steps are:

	●	Identify the contract with the customer;

	●	Identify the performance obligations in the contract with customer;

	●	Determine the transaction price;

	●	Allocate the transaction price to performance obligations; and

	●	Recognize revenue when (or as) a performance obligation is satisfied.

CODA OCTOPUS GROUP, INC.

Notes to the Unaudited Consolidated Financial Statements

January 31, 2026 and October 31, 2025

Note 2 – REVENUE RECOGNITION (Continued)

We have three business segments:

	●	Marine Technology Business
	●	Acoustics Sensors and Materials Business; and
	●	Defense Engineering Services Business

Marine Technology Business (“Products Business”)

The Products Business revenues are earned under written contracts with its customers. Its Business Model includes:

	Ø	Outright sale of underwater solutions (including hardware and software)
	Ø	Rental of underwater equipment (including hardware and software)
	Ø	Field Installation and Support services
	Ø	Technical Support Services
	Ø	Warranty Coverage and Through Life Support (TLS) sales
	Ø	Customization of technology services

All products and services are sold on a stand-alone basis and those market prices are evidence of the value of these products and services. Revenue derived from outright sale is recognized when its performance obligations are met – typically upon delivery and passing of risks in accordance with the contract terms. For rentals we supply our rental equipment on a door-to-door basis and the rental period typically commences when the equipment is under the control of the customer and revenue derived from these contracts is recognized on a daily basis during the rental period. Revenue derived from services is recognized when our performance obligations are met under the terms of the contract. For contracts with multiple performance obligations, we recognize product revenue by allocating the transaction price to each performance obligation based on a relative standalone selling price basis and recognize revenue when performance obligations are met. Software license sales for which any services rendered are not considered distinct to the functionality of the software, we recognize revenue upon delivery of the software by the provision of the software installers and activation codes to the software.

Our contracts sometimes require customer payments in advance of revenue recognition. These are recognized as revenue when we have performed our obligations under the respective contracts. Until such time, we recognize these prepayments as deferred revenue.

Our contracts do not give the customer the right of return. Where there are contractual failures giving rise to post-sale obligations these are addressed under our warranty or through life support provisions. The Company calculates its warranty expense provision based on its historical warranty experience and adjustments are made periodically to reflect actual warranty expenses.

Acoustic Sensors and Materials Business (“PAL”)

PAL revenues are earned under written contracts with its customers. Its Business Model includes:

	Ø	Outright sale of sensors (including hardware and software) and materials
	Ø	Warranty Coverage
	Ø	Post Sale Calibration Services
	Ø	Customization of technology services

All products and services are sold on a stand-alone basis, and those market prices are evidence of the value of these products and services. Revenue derived from outright sale is recognized when its performance obligations are met – typically upon delivery and passing of risks in accordance with the contract terms. For contracts with multiple performance obligations, we recognize product revenue by allocating the transaction price to each performance obligation based on a relative standalone selling price basis and recognize revenue when performance obligations are met. Software license sales for which any services rendered are not considered distinct to the functionality of the software, we recognize revenue upon delivery of the software by the provision of the software installers and activation codes to the software.

Defense Engineering Services Business (“Engineering Business”)

The Engineering Business revenues are earned under written contracts with its customers. Its Business Model includes:

	Ø	Provision of engineering services including small batch manufacturing of parts supplied into programs
	Ø	Supply of various types of proprietary products (such as Thermite® and FireSafe®)
	Ø	Warranty Coverage
	Ø	Post-Sale Service and Repair

CODA OCTOPUS GROUP, INC.

Notes to the Unaudited Consolidated Financial Statements

January 31, 2026 and October 31, 2025

Note 2 – REVENUE RECOGNITION (Continued)

With respect to revenues related to our Defense Engineering Services Business, there are contracts in place that specify the fixed hourly rate and other reimbursable costs to be billed based on material and direct labor hours incurred and revenue is recognized on these contracts based on material and the direct labor hours incurred. Revenues from fixed-price contracts are recognized on the percentage of completion method, measured by the percentage of costs incurred to date (materials and direct labor hours) against the estimated total cost (materials and direct labor hours) for each contract. This method is used as we consider expenditures for direct materials and labor hours to be the best available measure of progress on these contracts.

On a quarterly basis, we examine all our fixed-price contracts to determine if there are any losses to be recognized during the period. Any such loss is recorded in the quarter in which the loss first becomes apparent based upon costs incurred to date and the estimated costs to complete as determined by experience from similar contracts. Variations from estimated contract performance could result in adjustments to our operating results.

For contracts with multiple performance obligations, we recognize product revenue by allocating the transaction price to each performance obligation based on a relative standalone selling price basis and recognize revenue when performance obligations are met.

Recoverability of Deferred Costs

In accordance with Topic 606, we defer costs on projects for service revenue. Deferred costs consist primarily of incremental direct costs to customize and install systems, as defined in individual customer contracts, including costs to acquire hardware and software from third parties and payroll costs for our employees and other third parties. The pricing of these service contracts is intended to provide for the recovery of these types of deferred costs over the life of the contract.

We recognize such costs in accordance with our revenue recognition policy by contract. For revenue recognized under the percentage of completion method, costs are recognized as products are delivered or services are provided in accordance with the percentage of completion calculation. For revenue recognized over time, costs are recognized ratably over the term of the contract, commencing on the date of revenue recognition. At each quarterly balance sheet date, we review deferred costs, to ensure they are ultimately recoverable.

Any anticipated losses on uncompleted contracts are recognized when evidence indicates the estimated total cost of a contract exceeds its estimated total revenue.

Other Revenue Disclosures

See Notes 15 and 16 – Segment Analysis and Disaggregation of Revenue. These Notes, respectively, provide disclosure of our revenue by segment; revenues from external customers and cost of those revenues; and the split of revenue by geography including within and outside the USA.

Note 3 – COST OF GOODS SOLD

Our cost of goods sold includes the cost of materials and related direct costs. With respect to sales made through the Company’s sales agents distribution network, we include in our costs of goods sold, commission paid to agents for the specific sales they make. Without using agents, we would not be eligible to participate in the Request for Proposals (“RFP”) for these sales on which we incur commission costs. All other sales-related expenses, including those related to unsuccessful bids, are included in our selling, general and administrative (“SG&A”) costs. As a component of the cost of goods sold, commission costs incurred in the three month period ended January 31, 2026 and 2025 were $301,438 and $245,509, respectively.

Note 4 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments include cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses. The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair values because of the short-term nature of these instruments.

Note 5 – FOREIGN CURRENCY TRANSLATION

Assets and liabilities are translated at the prevailing exchange rates at the balance sheet dates. Related revenues and expenses are translated at weighted average exchange rates in effect during the reporting period. Stockholders’ equity is recorded at the historical exchange rates. Resulting translation adjustments are recorded as a separate component in stockholders’ equity as part of accumulated other comprehensive income or (loss) as may be appropriate. Foreign currency transaction gains and losses are included in the consolidated statements of income and comprehensive income.

CODA OCTOPUS GROUP, INC.

Notes to the Unaudited Consolidated Financial Statements

January 31, 2026 and October 31, 2025

Note 6 – OPERATING LEASES

We are contractually bound by a non-cancellable operating lease relating to our operating segment, PAL. Lease costs recognized in our consolidated statements of operations are summarized as follows:

SCHEDULE OF OPERATING LEASE COSTS

	January 31,			October 31,
	2026			2025

Lease liability	$	402,334		$	394,932
Future minimum lease payments		523,786			518,953
Remaining life of the lease in Years		7.17			7.42
Discount Rate		6.75	%		6.75	%

Estimated future minimum lease payments and imputed interest as of January 31, 2026, are as follows:

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