Coda Octopus Group Com Usd0.01 (GREY:CDOC)

Second Quarter 2012 Results

For the six months ending April 30^th 2012, the Group achieved revenues of $9.6m, up from $6.8m for the previous year, and Net Income of $1.38m versus a Net Loss of $463k in the previous year. Another significant milestone for the Group is that it has recorded positive cash flow of $577k from its operations over the same period. EPS for the six monts ending April 30th 2012, were $0.02 vs a loss of $0.01 in prior year period.

Annmarie Gayle, Group CEO, said, "These results underline that the restructuring strategy which the new management embarked upon in 2009 was the right one for the Group. Under this strategy we reduced our Selling, General and Administrative Expenditure (SG&A) costs significantly (from $11.2m in 2009 to $5.3m in 2011, and $2.4m in the current year to date), and during which time we have also advanced our innovative patented technology on which our 3D sonar products including the Echoscope^® and UIS™ are based. Our continuation on this path will yield the right results for our stakeholders and the Group as a whole.

"We look forward in the latter parts of this fiscal year and into next year to the positive effects on our future results of the new products we recently announced, notably our Dimension^® ROV (Remotely Operated Vehicle) targeted real-time visualization sonar with ROV integration capabilities, and the F170™ family of positioning units."

Recent Developments

Our Group has been the subject of restructuring since October 2009.

Since the Group became a public company trading on the Pink Sheet in 2004 and moved its
headquarters to New York in 2005, it had reported continuing and significant losses.

A new senior management and board were put in place in September 2009 to address the losses, other
historical problems of the Group and to ensure its continuity as a going concern. Since September 2009,
the focus and strategy of the new management has been to restructure the Group by (i) negotiating the
removal of certain barriers to new investments that were contained in a series of securities purchase
agreements; (ii) reducing the Group’s cost base significantly; (iii) simplifying the Group structure; (iv)
restructuring some of the Group’s debts; and (v) taking the business to sustainable growth andprofitability.

In respect of its cost reduction strategy, the new management focused initially on stripping out the costs
associated with having an extended New York administrative center (including the rent and salaries of
the then senior management that was based in New York). Closing the New York administrative center
resulted in approximately $1,200,000 per annum savings in salaries associated with our headquarters
operations. We have drastically reduced the number of headquarters employees and consultants and
have now co-located our headquarters with our US marine technology operational arm, Coda Octopus
Products, Inc. in Lakeland, Florida.

Coda Octopus Group swings to non-GAAP profit of $0.05 in the first quarter. Reverses prior year loss.  Still in the midst of a restructuring process:

On March 16, 2009 the Company entered a “Cash Control Framework Agreement” with the Royal Bank of Scotland (the debt holder pursuant to which it is assumed that, subject to the Company being compliant with the terms of the transaction documents entered into on February 21, 2008, no adverse actions will be taken by the debt holder). This agreement has been extended until March 16, 2011 and it creates debtor book financing package to allow the Company to obtain up to $2.15M in working capital in exchange for receivables or project financing. As part of the terms of that agreement, the Company committed to a cost reduction program (including management pay cuts) to reduce significantly our SG&A, R&D and Capital Expenditure costs by an annualized $3.35 million.