Delaware
|
34-200-8348
|
|
(State or other jurisdiction of
|
(I.R.S. Employer
|
|
incorporation or organization)
|
Identification Number)
|
s
|
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act. Yes o No x
|
s
|
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes o No x
|
s
|
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 x No o
|
s
|
Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(229.405 of this chapter) is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. o
|
s
|
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, or a
non-accelerated filer or a smaller reporting
company.
|
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Smaller
reporting company x
|
s
|
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No x
|
s
|
State issuer's revenues for its
most recent fiscal year:
$13,224,435.
|
s
|
State the aggregate market value
of the voting and non-voting common equity held by non-affiliates computed
by reference to the price at which the common equity was last sold, or the
average bid and asked price of such common equity, as of the April 30,
2009, representing the last business day of the registrant’s most recently
completed second fiscal quarter: approximately $320,000. For purposes of
this computation, all directors and executive officers of the registrant
are considered to be affiliates of the registrant. This assumption is not
to be deemed an admission by the persons that they are affiliates of the
registrant.
|
s
|
State the number of shares
outstanding of each of the issuer's classes of common equity, as of the
latest practicable date: 49,050,244 as of January 21,
2010.
|
PART I
|
||||
ITEM
1.
|
BUSINESS
|
3
|
||
ITEM
2.
|
PROPERTIES
|
16
|
||
ITEM
3.
|
LEGAL
PROCEEDINGS
|
17
|
||
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
17
|
||
PART II
|
||||
ITEM
5.
|
MARKET
FOR REGIST RANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
18
|
||
ITEM
6.
|
SELECTED
FINANCIAL DATA
|
18
|
||
ITEM
7.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
19
|
||
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
30
|
||
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
30
|
||
ITEM
9A(T)
|
CONTROLS
AND PROCEDURES
|
30
|
||
PART III
|
||||
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
32
|
||
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
34
|
||
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
40
|
||
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
|
41
|
||
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
43
|
||
ITEM
15.
|
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
|
44
|
||
SIGNATURES
|
|
46
|
|
s
|
Marine
geophysical survey (commercial), which focuses on oil and gas,
construction and oceanographic research and exploration. Our current
products encompass geophysical data collection and analysis, through to
printers to output geophysical data collected by sonar that are marketed
to survey companies, research institutions and salvage companies. This was
our original focus, from founding in 1994.
.
|
|
s
|
Underwater
defense/security ,
which focuses on ports and harbors, state and federal government agencies
and defense contractors. We started to focus on this market following the
acquisition of OmniTech AS, a Norwegian company, in December 2002 (now
operating under the name of Coda Octopus Omnitech AS). Omnitech
developed a prototype system, the Echoscope®, a unique, patented
instrument which supplies accurate three-dimensional visualization,
measurement, data recording and mapping of underwater objects. We have
completed developing and are marketing this first real time, high
resolution, three-dimensional underwater sonar imaging device which we
believe has important applications in the fields of port security, defense
and undersea oil and gas
development.
|
|
w
|
First mover advantage in 3D sonar
markets based on our patented technology, research and development efforts
and extensive and successful tests that date back almost two decades as
well as the resulting broad customer acceptance, as evidenced by orders
for our product and its derivatives from government agencies, research
institutes and oil and gas companies, that conduct their own testing prior
to placing orders, as well as repeat orders from significant customers for
this product and its derivatives. There is usually a significant time
period between introduction of the product to a prospective customer and
the purchase order. Prospective customers need to test the product
in the environment in which they intend to use it to ensure that it is
suitable for its intended purpose. We hold the patent for a“
Method for
Producing a 3D image
” of, for example, a submerged object and/or underwater environment.
This patent, first applied for in Norway in 1998, is recorded in the
European Patents Register, Australia, Norway and the USA. This
method is the culmination of approximately 20 years of research and
testing led by the three inventors/scientists, who worked for OmniTech AS.
These individuals continue to work for us and are actively involved in
producing and advancing the Echoscope®, which incorporates this patent. We
have also recently been granted two (2) additional patents which
complements our existing patent for a “Method for
Producing a 3D Image”.
|
|
s
|
Early recognition of need for 3D
real-time sonar in defense/security applications. We believe that we are
the first to bring to market a product with the capability of producing a
3D image of submerged or underwater objects or environment. Prior to the
deployment of this method in producing an image of a submerged or
underwater object or environment was accomplished strictly by
two-dimensional (2D) sonar.
|
|
s
|
Expansion into new geographies
like North America and Western
Europe.
|
|
s
|
Expansion into new commercial
markets like commercial marine survey and underwater construction with
innovative products.
|
s
|
Recent sole source classification
for one of our products and its derivatives by certain government
procurement agencies.
|
|
s
|
inspection of harbor
walls;
|
|
s
|
inspection of ship
hulls;
|
|
s
|
inspection of bridge
pilings;
|
|
s
|
ROV navigation (obstacle
avoidance);
|
|
s
|
AUV navigation and target
recognition (obstacle
avoidance);
|
|
s
|
construction - pipeline touchdown
placement and inspection;
|
|
s
|
obstacle avoidance
navigation;
|
|
s
|
bathymetry (measurement of water
depth to create 3D terrain
models);
|
|
s
|
monitoring underwater
construction;
|
|
s
|
underwater intruder
detection;
|
|
s
|
dredging and rock
dumping;
|
|
s
|
contraband
detection;
|
|
s
|
locating and identifying objects
undersea, including mines.
|
Option
|
Description
|
Estimated Purchase Price
|
Time Period for Delivery
|
||||
Option 1
RANGE
RESOLUTION ENHANCEMENT
|
Development
of core beam forming hardware and related technology to improve the
current 3 or 4cm range resolution to 1 or 2cm, and increase target
detection of objects on harbor walls and other close range
applications.
|
$
|
634,065
|
Completed
|
|||
Option 2
INCREASE
ECHOSCOPE FREQUENCY
|
Development
of new transducer and channel board hardware to allow operation at higher
frequencies (up to 500KHz) which will increase the resolution of the
data
|
$
|
378,084
|
Completed
|
|||
Option 3
AUTOMATED
CHANGE DETECTION
|
|
Development
of software compatible with the UIS platform and designed for on-line
detection and post-processing analysis of captured Echoscope® data. In
essence, the software will have the capability of registering any changes
of new data collected against a baseline survey and automatically alert
end-user to the changes (i.e the presence of something that was not there
on the last inspection - example of a harbor wall).
|
$
|
1,152,948
|
Expected
to be completed April 2010
|
||
Option 4
ADVANCED
PROTOTYPE UIS SYSTEM
|
Building
of up to seven (7) additional UIS Systems to agreed USCG
specifications.
|
$
|
3,291,750
|
Completed
|
|||
Option 5
DEVELOPMENT
OF ONE PIECE F190
|
Development
of a F190 Positioning System to replace the standard two piece system
currently used in the UIS.
|
$
|
247,434
|
Completed
|
|
s
|
Coda Octopus Products - four
persons distributed in the UK and one part time staff member in New
York.
|
|
s
|
Coda Octopus Martech - three full
time staff based in Weymouth,
UK
|
|
s
|
Coda Octopus Colmek – three full
time and one part time staff
|
|
s
|
Coda Octopus Innalogic - one
staff member based in New York City,
USA
|
|
s
|
Product: The extension of our
product line (particularly Echoscope®) through adding value to produce
both higher added functionality products (eg. UIS™, the Company’s
Underwater Inspection System), and higher volume products exploiting that
same techgnology base.
|
|
s
|
Price: The maintenance and
enhancement of profit margin through value add (as described
above).
|
|
s
|
Place: The use of strategic
partnerships, at the higher value end of the market, particularly to
provide solutions rather than product (eg. the provision, through
partnership, of a complete port security solution to a major port), and
the use of existing and new sales agents to provide sales leads for lower
value but very important “pure” product
sales.
|
|
s
|
Promotion: The attendance and
illustration of our capabilities at trade shows, use of customer mailing,
advertising and trade public
relations.
|
s
|
Patent No. 6,438,071 concerns the
“Method for Producing a 3-D Image” and is recorded in the European Patents
Register File #SH-44923; Australia #55375/99; Norway #307014 and US Patent
Office # 6,438,071. This patent relates to the method for producing an
image of a submerged object (3), e.g. a shipwreck or the sea bottom,
comprising the steps of emitting acoustic waves from a first transducer
toward a first chosen
volume.
|
s
|
Patent
No. 6,532,192 concerns “Subsea Positioning System and Apparatus”, recorded
in the US Patent Office. This patent relates to subsea positioning system
and apparatus.
|
|
s
|
Patent No. 7,466,628 concerns a ’Method of constructing mathematical representations of objects from reflected sonar signals | |
s
|
Patent No. 7,489, 592 concerns a ‘method of automatically performing a patch test for a sonar system is disclosed, where data from a plurality of overlapping 3D sonar scans of a surface as the platform is moved are used to compensate for biases in mounting the sonar system on the platform’. |
|
s
|
Application number US11760417
concerns “Combined pressure compensator and cooling
unit”;
|
|
s
|
Application number US12061298
concerns “Acoustic coating”;
|
|
s
|
Application number US12103839
concerns “Fast averaged volumetric rendering of large sets polar/range
data using minimal intermediate storage”;
and
|
|
s
|
Application number US12138702
concerns “Edge enhancement of 2D polar range data using a common cartesian
coordinate system”.
|
s
|
5 are employed in
research and development in our Bergen
facility
|
s
|
9 are employed in research and
development in Edinburgh
|
s
|
17 are employed in sales,
marketing, production and administration in
Edinburgh
|
s
|
4 are employed in management,
administration and sales at our New York City
office
|
s
|
3 are employed in sales and
support in Florida
|
s
|
30 are employed in
Weymouth
|
s
|
20 are employed in Colmek in Salt
Lake City, the main categories of employees being engineers and
technician.
|
ITEM
2.
|
PROPERTIES
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
Year Ended October 31, 2008
|
HIGH
|
LOW
|
||||||
First
Quarter
|
$
|
0.88
|
$
|
0.45
|
||||
Second
Quarter
|
$
|
0.80
|
$
|
0.35
|
||||
Third
Quarter
|
$
|
0.39
|
$
|
0.28
|
||||
Fourth
Quarter
|
$
|
0.30
|
$
|
0.11
|
Year Ending October 31, 2009
|
HIGH
|
LOW
|
||||||
First
Quarter
|
$
|
0.20
|
$
|
0.11
|
||||
Second
Quarter
|
$
|
0.16
|
$
|
0.05
|
||||
Third
Quarter
|
$
|
0.12
|
$
|
0.05
|
||||
Fourth
Quarter
|
$
|
0.11
|
$
|
0.01
|
1.
|
It raised approximately $33
million in funds, through three private placements primarily with
institutional investors. The Company raised approximately $8 million in
2006, approximately $13 million in April/May 2007, and approximately $12
million in a convertible debt transaction that was completed in February
2008.
|
2.
|
It completed the
commercialization of the Echoscope® and successfully deployed its
real-time 3D technology and products on three continents with major
corporations, governments, ports, law enforcement agencies and security
organizations.
|
3.
|
It significantly broadened both
its revenue base and its base of expertise in engineering, defense
electronics, military and security training, and software development
primarily through the acquisition of four privately held companies.
Management believes that broadening the base of the Company in these
specific areas was necessary to position Coda Octopus as a reliable and
experienced contractor, subcontractor and supplier of 3D sonar products
and systems on a worldwide
basis.
|
4.
|
Beginning
in July 2007,the US Department of Defense (DoD) Technical Support Working
Group (TSWG) funded Coda Octopus to build and deliver next-generation
Underwater Inspection Systems™ (UIS) for the US Coast Guard and other
potential users. The program has included money to build and deliver
current systems, as well as a roadmap for their future development. During
the year ended October 31, 2007, the Company delivered three UIS systems
to the US Coast Guard against a purchase order totaling $2.59 million. In
FY 2008 the Company was funded for an additional $1.53 million to develop
certain mutually agreed technical enhancements to the system. The
Company’s latest contract with TSWG covers the funding of an additional
$1.4 million for additional enhancements and the delivery of additional
systems. The Company believes it has successfully completed the key
second-stage enhancements sought by the DoD and the Coast Guard. As a
result, management believes that the Company is positioned to build and
deploy fully integrated systems that meet the highest standards in the
world.
|
5.
|
The Company has also taken
advantage of its first mover status in real-time 3D sonar to start to open
up several potentially significant vertical markets in the private sector.
Thus far, the three areas of focus have been Dredging, Underwater
Construction, and Security. In each of these areas, the Company has
selected a lead customer and has worked with that customer to develop and
deploy a system that management believes will have wide application
throughout the segment. In the case of Rotterdam-based Van Oord, Coda
Octopus was funded to develop a particular application, and in other cases
the Company has financed the development
internally.
|
s
|
Marine geophysical survey
(commercial), which focuses on oil and gas, and oceanographic research and
exploration, where we market to survey companies, research institutions
and salvage companies. This was our original focus, with current products
spanning geophysical data collection and analysis, through to printers to
output geophysical data collected by
sonar.
|
s
|
Underwater defense/security,
where we market to ports and harbors, state, local and federal government
agencies, law enforcement agencies and defense contractors. We have
recently completed developing and commenced marketing our Underwater
Inspection System (UIS™), the first real-time, high resolution,
three-dimensional underwater sonar imaging system, which we believe has
particularly important applications in the fields of port security,
defense and undersea oil and gas
development.
|
s
|
Underwater construction, where
our products are used for real-time monitoring of sub-sea construction, a
particularly challenging environment. We have also developed for one of
our customers a tailored software application to allow the laying of
concrete Accropodes™ (large concrete blocks) used for constructing
breakwaters. The advantage of our real-time system is in giving visibility
where previously divers were used to help with the construction, a
dangerous and inefficient
process.
|
s
|
Dredging, where our products are
used for pre-dredge survey and in a real-time mode where they monitor the
quality and precision of the dredge. The advantage we give is in improving
the dredge quality and drastically reducing the time involved – for
example, if a re-dredge is required, this can be done immediately from the
information we provide, instead of days or weeks later, when a new vessel
may even have to be used, incurring much greater
cost.
|
s
|
Other applications, such as
shallow water hydrography underwater logging, debris survey and treasure
hunting.
|
s
|
First mover advantage in 3D sonar
markets based on our patented technology, our research and development
efforts and extensive and successful testing in this area that date back
almost two decades as well as broad customer
acceptance.
|
s
|
Early recognition of the need for
3D real-time sonar in defense/security
applications.
|
s
|
Expansion into new geographies
like North America and Western
Europe.
|
s
|
Expansion into new commercial
markets like commercial marine survey with innovative
products.
|
s
|
Recent sole source classification
for one of our products and its derivatives by certain government
procurement agencies.
|
Description
|
Amount
|
|||
Reduction
in Research and Development:
|
$ | 321,837 | ||
Reductions
in other SG&A costs
|
$ | 3,061,991 | ||
Total
SG& A Cost Savings
|
$ | 3,383,828 | ||
Reductions
in Capital Expenditure
|
$ | 179,725 |
Period
|
Amount
|
|||
Quarter
Ended January 31, 2009
|
$ | 237,000 | ||
Quarter
Ended April 30, 2009
|
$ | 419,000 | ||
Quarter
Ended July 31, 2009
|
$ | 750,000 | ||
Quarter
Ended October 31, 2009
|
$ | 707,000 | ||
Total
cost saving against budget for the 2009 Period
|
$ | 2,113,000 |
2009
|
2008
|
|||||||
Rent
& Utlilities
|
211,550 | 156,560 | ||||||
Office
Exps
|
176,816 | 332,096 | ||||||
Payroll
|
1,773,265 | 2,055,700 | ||||||
Insurance
|
241,872 | 106,226 | ||||||
Professional
|
3,106,217 | 1,578,088 | ||||||
Forex
|
41,511 | 643,382 | ||||||
Marketing
|
320,330 | 824,593 | ||||||
Travel
|
203,834 | 362,673 | ||||||
Sale
of Asset
|
1,096 | - | ||||||
Total
Corp SG&A
|
6,076,491 | 6,059,319 | ||||||
Depreciation
and Amortization
|
279,821 | 198,185 | ||||||
Stock
Compensation
|
226,710 | 939,286 |
Quoted Prices
in Active
Markets for
Identical
Instruments
|
Significant
Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||||||||
Total
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Restricted Cash | $ | 994,081 | $ | 994,081 | ||||||||||||
Short
term Investment
|
$
|
51,000
|
$
|
51,000
|
||||||||||||
Total
|
$
|
1,045,081
|
$
|
1,045,081
|
-
|
-
|
||||||||||
Liabilities:
|
||||||||||||||||
Notes
Payable
|
$
|
13,233,523
|
$
|
-
|
$ |
13,233,523
|
-
|
|||||||||
Total
|
$
|
13,233,523
|
$
|
-
|
$ |
13,233,523
|
-
|
Pound
Sterling
|
Norwegian
Kroner
|
|||||||||||||||||||
Actual
Results
|
Constant
Rates
|
Actual
Results
|
Constant
Rates
|
Total
Effect
|
||||||||||||||||
Revenues
|
$
|
7,319,662
|
$
|
9,211,649
|
$
|
98,366
|
$
|
118,593
|
$
|
1,912,215
|
||||||||||
Costs
|
7,395,197
|
9,306,708
|
|
41,290
|
49,781
|
1,920,002
|
||||||||||||||
Net
Income/(Losses)
|
(75,535)
|
(95,059)
|
57,075
|
68,812
|
(7,787)
|
|||||||||||||||
Assets
|
16,604,650
|
16,374,676
|
894,178
|
762,033
|
(362,120)
|
|||||||||||||||
Liabilities
|
13,335, 020
|
11,296,309
|
630,886
|
534,433
|
(2, 135,164)
|
|||||||||||||||
Net
Assets
|
3,269,630
|
5,078,367
|
263,293
|
227,600
|
1,773,044
|
Name
|
Age
|
Position(s)
|
||
Geoff
Turner
|
57
|
Chief
Executive Officer, Interim Chief Financial Officer and
Director
|
||
Blair
Cunningham
|
40
|
Chief
Technology Officer and Head of R&D Operations
|
||
Frank
B. Moore
|
73
|
Director
|
Name and Principal
Position
|
Year
|
Salary
|
Bonus
|
Restricted
Stock
Awards
|
Option
Awards
|
All Other
Compensation
|
Total
|
|||||||||||||||||||
($)
|
($)
|
($)
|
($)(5)
|
($)(6)
|
($)
|
|||||||||||||||||||||
Jason
Reid (1)
|
2009
|
289,904
|
-0-
|
-0-
|
-0-
|
10,200
|
500,385
|
|||||||||||||||||||
President
& CEO
|
2008
|
375,000
|
-0-
|
-0-
|
15,635
|
10,200
|
400,835
|
|||||||||||||||||||
Blair
Cunningham (2 )(3)
|
2009
|
161,875
|
-0-
|
-0-
|
-0-
|
18,866
|
239,333
|
|||||||||||||||||||
Chief
Technology Officer
|
2008
|
178,815
|
-0-
|
50,000
|
(7)
|
10,423
|
50,095
|
243,866
|
||||||||||||||||||
Anthony
Davis (2)
|
2009
|
161,875
|
-0-
|
50,000
|
(7)
|
-0-
|
72,825
|
262,063
|
||||||||||||||||||
President
US Operations
|
2008
|
178,815
|
-0-
|
-0-
|
10,423
|
11,962
|
236,962
|
|||||||||||||||||||
Geoff
Turner (2)(4)
|
2009
|
161,875
|
-0-
|
50,000
|
(7)
|
-0-
|
15,328
|
204,566
|
||||||||||||||||||
President
European Ops
|
2008
|
178,815
|
(7)
|
-0-
|
-0-
|
10,423
|
15,833
|
240,833
|
|
(1)
|
Reid
resigned his position as the Company’s President and Chief Executive
Officer effective September 23, 2009 and as Director on January 27,
2010.
|
|
(2)
|
All
cash amounts were paid in UK Pounds (the conversion rate used in this
table for these amounts is stated
above).
|
|
(3)
|
Mr.
Davis resigned his position effective January 16,
2010.
|
|
(4)
|
Mr.
Turner became Chief Executive Officer effective September 23,
2009.
|
|
(5)
|
Amount
represents the aggregate grant date fair value computed in accordance with
ASC 718. Information regarding the assumptions made in the valuation
reported and material terms of each grant are incorporated herein by
reference from “Note 4 Capital Stock” to our Consolidated Financial
Statements for the Year Ended October 31,
2009.
|
|
(6)
|
All
other compensation consisted of car allowances, re-location expenses,
disability payments, pension benefits and/or pay for vacation not taken.
Some of these amounts were paid in UK Pounds at the conversion rates shown
above.
|
|
(7)
|
Comprised
of 40,159 shares valued at $50,000.
|
Name
(a)
|
Number of
Securities Underlying
Unexercised
Options
(#)
Exercisable
(b)
|
Number of
Securities Underlying
Unexercised
Options
(#)
Unexercisable
(c)
|
Option
Exercise
Price
($)
(e)
|
Option
Expiration Date
(f)
|
|||||||||
Jason Reid(1)
|
400,000
|
$
|
1.00
|
May
2010
|
|||||||||
President
and Chief Executive Officer
|
25,500
|
49,500
|
1.30
|
August
2013
|
|||||||||
Anthony
Davis (2)
|
200,000
|
$
|
1.00
|
May
2010
|
|||||||||
President US Operations
|
17,000
|
33,000
|
1.30
|
August
2013
|
|||||||||
Geoff
Turner(3)
|
150,000
|
$
|
1.00
|
May
2010
|
|||||||||
President European
Operations
|
17,000
|
33,000
|
1.30
|
August
2013
|
|||||||||
Blair
Cunningham
|
237,500
|
$
|
1.30
|
May
2012
|
|||||||||
Chief
Technology Officer
|
17,000
|
33,000
|
1.30
|
August
2013
|
|
(1)
|
Reid
resigned his position as the Company’s President and Chief Executive
Officer effective September 23, 2009 and as Director on January 27,
2010.
|
|
(2)
|
Mr.
Davis has resigned his position effective January 2010. All
options granted to him will expire within 90 days after that date, unless
exercised.
|
|
(3)
|
Geoff
Turner was appointed the Company’s Chief Executive Officer effective
September 23, 2009
|
Name**
(a)
|
Fees Earned or Paid
in Cash (1)
($)
(b)
|
Stock
Awards ($)
(c)
|
Option
Awards ($)
(d) (6)
|
Total
($)
(j)
|
||||||||||||
Paul
Nussbaum
|
$
|
7,500
|
(2)
|
$
|
-0-
|
$
|
57,675
|
(6a)
|
$
|
87,675
|
||||||
Rodney
Peacock
|
$
|
5,000
|
(3)
|
$
|
-0-
|
$
|
38,450
|
(6b)
|
$
|
58,450
|
||||||
Frank
Moore
|
$
|
6,042
|
(4)
|
$
|
60,000
|
$
|
-0-
|
$
|
66,667
|
|||||||
Faith
Griffin
|
$
|
4,167
|
(5)
|
$
|
60,000
|
$
|
52,016
|
(6c)
|
$
|
121,349
|
||||||
Nicholas
Franks
|
$
|
6,042
|
(6)
|
$
|
-0-
|
$
|
-0-
|
$
|
6,042
|
(1)
|
All
cash fees shown in the table above were earned by the directors and
accrued by the Company. However, none have been paid to the
directors to date. Figures do not include expenses incurred by
the directors in the course of their duties and which have accrued but not
been paid.
|
(2)
|
Consists
of an annual retainer in the amount of $22,500 and $1,875 per board
meeting attended.
|
(3)
|
Consists
of an annual retainer in the amount of $12,500 and $1,875 per board
meeting attended.
|
(4)
|
Consists
of an annual retainer of $12,500 and $1,875 per board meeting
attended. Pro-rated in accordance with appointment as a
director with effect from July 1,
2008.
|
(5)
|
Consists
of an annual retainer of $12,500 and $1,875 per board meeting attended,
$4,000 per annum as Chair of the Audit Committee, and $4,000 per annum as
member of the advisory board. Pro-rated in accordance with
appointment as a director with effect from July 1,
2008.
|
(6a)
|
Comprising
75,000 options valued based on date of issue using Black Scholes method
and booked into our accounts as an
expense.
|
(6b)
|
Comprising
50,000 options valued based on date of issue using Black Scholes method
and booked into our accounts as an
expense.
|
(6c)
|
Comprising
250,000 options valued based on date of issue using Black Scholes method
and booked into our accounts as an expense.
|
|
(6d)
|
On or around September 23, 2009 all retainers with Directors were terminated (with the exception of retainer with Mr. Frank Moore). |
(a)
|
assist the Company’s Management
with the analysis and effective and optimal implementation of its business
plan;
|
(b)
|
oversee the Company’s European
operations and performance of the
Group;
|
(c)
|
explore acquisitions, strategic
alliances, partnering opportunities and other cooperative ventures within
and without its industry
focus;
|
(d)
|
evaluate possible acquisitions
and strategic strategies and partnering candidates, including the
evaluation of targets and the structuring of related transactions;
and
|
(e)
|
advise and consult with executive
officers with respect to any of the above described
matters.
|
Amount and Nature of Beneficial
Ownership of Common Stock (2)
|
Percent of
Common Stock
|
|||||||
Geoff
Turner (3)
|
223,659
|
|
*
|
|||||
Blair
Cunningham (4)
|
523,659
|
1.1
|
%
|
|||||
Frank
B. Moore (5)
|
298,659
|
|
*
|
|||||
Greenhouse
Investments Limited (6)
12-14
David Place
St.
Helier
Jersey
JE24TD
|
23,299,839
|
44.9
|
% | |||||
The
Royal Bank of Scotland plc (7)
135
Bishopsgate, London EC2M 3UR, England
|
11,428,571
|
18.9
|
%
|
|||||
Vision
Opportunity Master Fund Limited (8)
317
Madison Avenue, Suite 1220.New York, NY 10017
|
4,943,276
|
9.9
|
%
|
|||||
All
Directors and Executive Officers as a Group
(three
persons):
|
1,045,977
|
2.1
|
%
|
Exhibit Number
|
|
Description
|
|
||
2.1
|
Plan
and Agreement of Merger dated July 12, 2004 by and between Panda and Coda
Octopus *
|
|
2.2
|
Share
Purchase Agreement dated June 26, 2006 between Colin Richard, Coda Octopus
(UK) Holdings Limited and Coda Octopus, Inc.*
|
|
2.
3
|
Stock
Purchase Agreement dated April 6, 2007, between Miller & Hilton d/b/a
Colmek Systems Engineering, its shareholders and Coda Octopus (US)
Holdings Inc. *
|
|
3.1
|
Certificate
of Incorporation *
|
|
3.1(
a )
|
Certificate
of Designation Series A Preferred Stock *
|
|
3.1(
b )
|
Certificate
of Amendment to Certificate of Designation Series A Preferred Stock
*
|
|
3.1(
c )
|
Certificate
of Designation Series B Preferred Stock*
|
|
3.1(
d )
|
Certificate
of Amendment to Certificate of Incorporation
|
|
3.2
|
By-Laws
*
|
|
4.1
|
Form
of Warrant *
|
|
10.3
|
Employment
Agreement dated July 1, 2005 between the Company and Blair
Cunningham *
|
|
10.5
|
Employment
Agreement dated April 6, 2007, between Miller and Hilton d/b/a Colmek
Systems Engineering and Scott Debo *
|
|
10.8
|
Form
of Securities Purchase Agreement dated April 4, 2007 *
|
|
10.9
|
Sale
of Accounts and Security Agreement dated August 17, 2005 between the
Company and Faunus Group International, Inc. *
|
|
10.10
|
Standard
Form of Office Lease dated June 1, 2007 between the Company and Nelco Inc.
*
|
|
10.11
|
Collaboration
Agreement dated July 1, 2006 between Oxford Technical Solutions Ltd. and
Coda Octopus
|
|
10.12
|
Amendment
to Securities Purchase Agreements dated March 21, 2007 between Vision
Opportunity Master Fund Ltd. and Coda Octopus*
|
|
10.13
|
Securities
Repurchase Agreement dated April 10, 2007 between Coda Octopus and Vision
Opportunity Master Fund*
|
|
10.15
|
Award/Contract
dated July 2, 2007 issued by U.S.
Army*
|
10.16
|
Subscription
Agreement dated February 21, 2008, between the Company and The Royal Bank
of Scotland**
|
|
10.17
|
Form
of Loan Note Instrument dated February 21, 2008**
|
|
10.18
|
Form
of Loan Note Certificate**
|
|
10.19
|
Security
Agreement dated February 21, 2008**
|
|
10.20
|
Floating
Charge executed by Coda Octopus R&D Limited dated February 21,
2008**
|
|
10.21
|
Floating
Charge executed by Coda Octopus Products Limited dated February 21,
2008**
|
|
10.22
|
Form
of Guarantee**
|
|
10.23
|
Intercreditor
Deed dated February 20, 2008 between the Company, The Royal Bank of
Scotland and Faunus Group International**
|
|
10.24
|
Debenture
issued by Martech Systems (Weymouth) Limited**
|
|
10.25
|
2008
Incentive Stock Option Plan***
|
|
10.26
|
2008
Stock Purchase Plan****
|
|
10.27
|
Cash
Control Framework Agreement dated March 16, 2009 by and between the
Company, The Royal Bank of Scotland and Greenhouse Investment
Limited
|
|
23.1
|
Consent
by RBSM LLP
|
|
31
|
Chief
Executive Officer and Interim Chief Financial Officer and
Certification
|
|
32
|
Certification
Pursuant to 18 U.S.C. Section 1350
|
*
|
Incorporated
by reference to the Company’s Registration Statement on Form SB-2 (SEC
File No.143144)
|
**
|
Incorporated
by reference to the Company’s Anuual Report on Form 10-KSB for the year
ended October 31, 2007
|
***
|
Incorporated
by reference to the Company’s Proxy Statement filed with the Securities
and Exchange Commission June 13, 2008
|
****
|
Incorporated
by reference to the Company’s Registration Statement on Form S-8 (SEC File
No. 153254)
|
DATE: January
29, 2010
|
CODA
OCTOPUS GROUP, INC.
|
/s/ Geoff Turner | |
Chief Executive Officer |
Signature
|
Title
|
Date
|
|||
/s/
|
Geoff Turner
|
Chief Executive Officer, Interim
Chief Financial
Officer and Director
|
January 29, 2010
|
||
(Principal Executive and Financial Officer)
|
|||||
/s/
|
Frank Moore
|
Director
|
January 29, 2010
|
PAGE
|
||||
REPORT
OF INDEPENDENT REGISTERED CERTIFIED
|
F-1
|
|||
PUBLIC
ACCOUNTING FIRM
|
||||
CONSOLIDATED
BALANCE SHEETS
|
||||
OCTOBER
31, 2009 and 2008
|
F-2
|
|||
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
|
||||
FOR
THE YEARS ENDED OCTOBER 31, 2009 and 2008
|
F-3
|
|||
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
|
||||
FOR
THE TWO YEARS ENDED OCTOBER 31, 2009
|
F-4
|
|||
CONSOLIDATED
STATEMENT OF CASH FLOWS
|
||||
FOR
YEARS ENDED OCTOBER 31, 2009 and 2008
|
F-5
|
|||
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-6 - F-25
|
/S/RBSM LLP
|
|
New
York, New York
|
RBSM
LLP
|
January
29, 2010
|
October
31,
|
October
31,
|
|||||||
ASSETS
|
2009
|
2008
|
||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 275,885 | $ | 3,896,149 | ||||
Restricted
cash, Note 2
|
994,081 | 1,017,007 | ||||||
Short-Term
Investments, Note 4
|
51,000 | 153,000 | ||||||
Accounts
receivable, net of allowance for doubtful accounts
|
2,033,879 | 2,589,174 | ||||||
Inventory
|
2,798,425 | 2,317,322 | ||||||
Due
from related parties, Note 13
|
- | 54,166 | ||||||
Unbilled
receivables, Note 3
|
690,344 | 518,326 | ||||||
Other
current assets, Note 5
|
285,691 | 407,080 | ||||||
Prepaid
expenses
|
247,134 | 385,831 | ||||||
Total
current assets
|
7,376,439 | 11,338,055 | ||||||
Property
and equipment, net, Note 6
|
267,964 | 355,909 | ||||||
Deferred
financing costs, net of accumulated amortization
|
||||||||
of
$242,128 in 2009 and $181,596 in 2008, Note 12
|
1,271,170 | 1,513,297 | ||||||
Goodwill
and other intangible assets, net, Note 7
|
4,221,807 | 3,832,023 | ||||||
Total
assets
|
$ | 13,137,380 | $ | 17,039,284 | ||||
LIABILITIES
AND STOCKHOLDERS' (DEFICIT) EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable, trade
|
$ | 2,390,039 | $ | 1,159,849 | ||||
Accrued
expenses and other current liabilities
|
4,626,164 | 2,347,522 | ||||||
Deferred
revenues, Note 3
|
398,482 | 268,650 | ||||||
Deferred
payment related to acquisitions, Note 14
|
404,274 | - | ||||||
Accrued
dividends on Series A & B Preferred Stock
|
- | 53,874 | ||||||
Due
to related parties, Note 13
|
- | 41,904 | ||||||
Loans
and notes payable, short term, Note 12
|
12,358,597 | |||||||
Total
current liabilities
|
7,818,959 | 16,230,396 | ||||||
Loans
and notes payable, long term, Note 12
|
13,233,523 | 162,700 | ||||||
Total
liabilities
|
21,052,482 | 16,393,096 | ||||||
Stockholders'
(deficit) equity:
|
||||||||
Preferred
stock, $.001 par value; 5,000,000 shares authorized,
|
||||||||
6,287
and 6,407 shares Series A issued and outstanding, as of
|
||||||||
October
31, 2009 and 2008 respectively
|
6 | 6 | ||||||
Nil
and Nil shares Series B issued and outstanding as of
|
||||||||
October
31, 2009 and 2008 respectively
|
- | - | ||||||
Common
stock, $.001 par value; 100,000,000 shares
|
||||||||
authorized,
49,000,244 and 48,853,664 shares issued and outstanding
|
||||||||
as
of October 31, 2009 and 2008 respectively
|
49,000 | 48,854 | ||||||
Common
Stock subscribed
|
96,350 | 131,790 | ||||||
Additional
paid-in capital
|
51,766,495 | 51,433,049 | ||||||
Accumulated
other comprehensive loss
|
(696,617 | ) | (1,317,696 | ) | ||||
Accumulated
deficit
|
(59,130,336 | ) | (49,649,815 | ) | ||||
Total
stockholders' (deficit) equity
|
(7,915,102 | ) | 646,188 | |||||
Total
liabilities and stockholders' (deficit) equity
|
$ | 13,137,380 | $ | 17,039,284 |
2009
|
2008
|
|||||||
Net
revenue
|
$ | 13,224,435 | $ | 16,968,922 | ||||
Cost
of revenue
|
6,315,961 | 6,941,287 | ||||||
Gross
profit
|
6,908,474 | 10,027,635 | ||||||
Research
and development
|
2,652,713 | 3,525,023 | ||||||
Selling,
general and administrative expenses
|
11,238,961 | 13,204,254 | ||||||
Total
operating expenses
|
13,891,674 | 16,729,277 | ||||||
Operating
loss
|
(6,983,200 | ) | (6,701,642 | ) | ||||
Other
income
|
201,748 | 323,866 | ||||||
Interest
expense
|
(1,846,883 | ) | (1,538,724 | ) | ||||
Impairment
of investment in marketable securities
|
(782,595 | ) | - | |||||
Total
other expense
|
(2,427,730 | ) | (1,214,858 | ) | ||||
Loss
before income taxes
|
(9,410,930 | ) | (7,916,500 | ) | ||||
Provision
for income taxes
|
22,208 |