NOTE 9 – CONTRACTS IN PROGESS

Costs and estimated earnings in excess of billings on uncompleted contracts represent accumulated project expenses and fees which have not been invoiced to customers as of the date of the balance sheet. These amounts are stated on the consolidated balance sheets as Unbilled Receivables of $353,302 and $1,080,384 as of April 30, 2022, and October 31, 2021, respectively.

Our Deferred Revenue of $896,406 and $1,879,790 as of April 30, 2022, and October 31, 2021, respectively, consists of billings in excess of costs and revenues received as part of our warranty obligations upon completing a sale, as elaborated further in the last paragraph of this note.

Sales of equipment include a separate performance obligation for warranty, which is treated as deferred revenue, along with sales for which the customer may purchase extended warranty option. These amounts are amortized over the relevant obligation period (12 months is our standard warranty or 24, 36 or 60 months for extended warranty, sold as Through Life Support (TLS) Package) from the date of delivery. These amounts are stated on the consolidated balance sheets as a component of Deferred Revenue and were $281,823 and $277,937 as of April 30, 2022, and October 31, 2021, respectively.

CODA OCTOPUS GROUP, INC.

Notes to the Consolidated Financial Statements

April 30, 2022, and October 31, 2021