Quarterly report pursuant to Section 13 or 15(d)

Segment Analysis

Segment Analysis

6 Months Ended

Apr. 30, 2018

NOTE 13 – SEGMENT ANALYSIS

We are operating in two reportable segments, which are managed separately based upon fundamental differences in their operations. Coda Octopus Martech and Coda Octopus Colmek (together “Marine Engineering Business” or “Services Segment”) operate as contractors, and the balance of our operations are comprised of product sales (“Marine Technology Business” or “Products Segment”).

Segment operating income is total segment revenue reduced by operating expenses identifiable with the business segment. Corporate includes general corporate administrative costs (“Overheads”).

The Company evaluates performance and allocates resources based upon operating income. The accounting policies of the reportable segments are the same as those described in the summary of accounting policies in our Consolidated Financial Statements of October 31, 2017.

There are inter-segment sales which have been eliminated in our financial statements but are disclosed in the tables below for information purposes.

The following table summarizes segment asset and operating balances by reportable segment as of and for the three and six months ended April 30, 2018 and 2017 respectively.

The Company’s reportable business segments operate in three geographic locations. Those geographic locations are:

* United States

* Europe

* Australia

Information concerning principal geographic areas is presented below according to the area where the activity has taken place for the three months ended April 30, 2018 and 2017 respectively:

	Marine Technology Business (Products)			Marine Engineering Business (Services)			Overhead			Total

Three Months Ended April 30, 2018

Revenues from External Customers	$	2,173,291		$	1,353,105		$	-		$	3,526,396

Cost of Revenues		217,222			723,636			-			940,858

Gross Profit		1,956,069			629,469			-			2,585,538

Research & Development		503,518			136,959			-			640,477
Selling, General & Administrative		850,521			614,718			560,391			2,025,630

Total Operating Expenses		1,354,039			751,677			560,391			2,666,107

Operating Income (Loss)		602,030			(122,208	)		(560,391	)		(80,569	)

Other Income (Expense)

Other Income		81,918			2,097			-			84,015
Interest Expense		(2,385	)		(14,752	)		(63,604	)		(80,741	)

Total other income (expense)		79,533			(12,655	)		(63,604	)		3,274

Income (Loss) before income taxes		681,563			(134,863	)		(623,995	)		(77,295	)

Income tax benefit (expense)		(6,431	)		-			6,401			(30	)

Net Income (Loss)	$	675,132		$	(134,863	)	$	(617,594	)	$	(77,325	)

Supplemental Disclosures

Total Assets	$	12,655,196		$	10,944,045		$	342,932		$	23,942,173

Total Liabilities		763,339			1,435,771			1,938,490			4,137,600

Revenues from Intercompany Sales - eliminated from sales above		315,954			132,837			675,000			1,123,791

Depreciation and Amortization		113,923			72,499			4,255			190,677

Purchases of Long-lived Assets		52,112			6,056			24,785			82,953

	Marine Technology Business (Products)			Marine Engineering Business (Services)			Overhead			Total

Three Months Ended April 30, 2017

Revenues from External Customers	$	3,299,545		$	1,979,213		$	-		$	5,278,758

Cost of Revenues		968,908			1,045,032			-			2,013,940

Gross Profit		2,330,637			934,181			-			3,264,818

Research & Development		247,758			-			-			247,758
Selling, General & Administrative		830,121			655,560			154,211			1,639,892

Total Operating Expenses		1,077,879			655,560			154,211			1,887,650

Operating Income (Loss)		1,252,758			278,621			(154,211	)		1,377,168

Other Income (Expense)

Other Income		86,643			-			-			86,643
Interest Expense		(181,806	)		(75,001	)		67,960			(188,847	)

Total other income (expense)		(95,163	)		(75,001	)		67,960			(102,204	)

Income (Loss) before income taxes		1,157,595			203,620			(86,251	)		1,274,964

Income tax benefit (expense)		-			-			-			-

Net Income (Loss)	$	1,157,595		$	203,620		$	(86,251	)	$	1,274,964

Supplemental Disclosures

Total Assets	$	12,119,417		$	12,616,569		$	422,059		$	25,158,045

Total Liabilities		1,223,741			1,654,104			8,600,374			11,478,219

Revenues from Intercompany Sales - eliminated from sales above		505,660			170,056			118,875			794,591

Depreciation and Amortization		145,800			71,056			3,106			219,962

Purchases of Long-lived Assets		643,603			26,852			-			670,455

	Marine Technology Business (Products)			Marine Engineering Business (Services)			Overhead			Total

Six Months Ended April 30, 2018

Revenues from External Customers	$	4,216,233		$	2,360,720		$	-		$	6,576,953

Cost of Revenues		647,353			1,239,612			-			1,886,965

Gross Profit		3,568,880			1,121,108			-			4,689,988

Research & Development		945,792			365,224			-			1,311,016
Selling, General & Administrative		1,428,086			1,245,592			857,709			3,531,387

Total Operating Expenses		2,373,878			1,610,816			857,709			4,842,403

Operating Income (Loss)		1,195,002			(489,708	)		(857,709	)		(152,415	)

Other Income (Expense)

Other Income		88,573			2,097			-			90,670
Interest (Expense) Income		(6,804	)		(29,701	)		(146,984	)		(183,489	)

Total other income (expense)		81,769			(27,604	)		(146,984	)		(92,819	)

Income (Loss) before income taxes		1,276,771			(517,312	)		(1,004,693	)		(245,234	)

Income tax benefit (expense)		(6,596	)		-			6,566			(30	)

Net Income (Loss)	$	1,270,175		$	(517,312	)	$	(998,127	)	$	(245,264	)

Supplemental Disclosures

Total Assets	$	12,455,194		$	10,944,045		$	342,932		$	23,942,173

Total Liabilities		760,320			1,438,790			1,938,490			4,137,600

Revenues from Intercompany Sales - eliminated from sales above		471,218			10,189			675,000			1,156,407

Depreciation and Amortization		236,650			152,214			7,192			396,056

Purchases of Long-lived Assets		254,029			49,961			24,785			328,775

	Marine Technology Business (Products)			Marine Engineering Business (Services)			Overhead			Total

Six Months Ended April 30, 2017

Revenues from External Customers	$	5,750,144		$	4,886,817		$	-		$	10,636,961

Cost of Revenues		1,698,926			2,298,059			-			3,996,985

Gross Profit		4,051,218			2,588,758			-			6,639,976

Research & Development		498,988			-			-			498,988
Selling, General & Administrative		1,404,770			1,341,971			299,039			3,045,780

Total Operating Expenses		1,903,758			1,341,971			299,039			3,544,768

Operating Income (Loss)		2,147,460			1,246,787			(299,039	)		3,095,208

Other Income (Expense)

Other Income		136,059			-			-			136,059
Interest Expense		(532,141	)		(199,223	)		347,023			(384,341	)

Total other income (expense)		(396,082	)		(199,223	)		347,023			(248,282	)

Income before income taxes		1,751,378			1,047,564			47,984			2,846,926

Income tax benefit (expense)		-			-			-			-

Net Income	$	1,751,378		$	1,047,564		$	47,984		$	2,846,926

Supplemental Disclosures


Total Assets	$	12,119,417		$	12,616,569		$	422,059		$	25,158,045

Total Liabilities		1,223,741			1,654,104			8,600,374			11,478,219

Revenues from Intercompany Sales - eliminated from sales above		678,513			229,955			237,750			1,146,218

Depreciation and Amortization		247,263			142,781			6,317			396,361

Purchases of Long-lived Assets		2,289,063			49,033			12,470			2,350,566

	USA		Europe		Australia		Total

External Revenues by Geographic Locations

Three Months Ended April 30, 2018	$	1,934,365	$	1,476,668	$	115,363	$	3,526,396

Three Months Ended April 30, 2017	$	2,525,908	$	2,614,897	$	137,953	$	5,278,758

Six Months Ended April 30, 2018	$	3,021,991	$	3,298,704	$	256,258	$	6,576,953

Six Months Ended April 30, 2017	$	5,275,675	$	4,631,934	$	729,352	$	10,636,961