SecProbe.io

CORRESP
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filename1.htm

Louis
A. Brilleman, P.C.

1140
Avenue of the Americas, 9th Floor

New
York, NY 10036

Phone:
212-584-7805

Fax:
646-380-6635

April
17, 2019

Securities
and Exchange Commission

100
F Street, N.E.

Washington,
D.C. 20549

    Attention:

    Melissa
    Gilmore

    Melissa
    Raminpour

    Re:
    Coda
    Octopus Group, Inc. (the “Company”)

    Form
    10-K for the Fiscal Year Ended October 31, 2018

    Filed
    February 1, 2019

    File
    No. 001-38154

Dear
Ms. Gilmore and Ms. Raminpour:

By
letter dated April 9, 2019, the staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”)
issued comments on the Company’s Annual Report on Form 10-K for the year ended October 31, 2018 (the “Form 10-K”).
Below are the Company’s responses to the Staff’s comments. For ease of reference, each response is preceded by the
Staff’s comment.

Form
10-K for the Fiscal Year Ended October 31, 2018

Item
9A. Controls and Procedures

Evaluation
of Disclosure Controls and Procedures, page 34

    1.
    We
    note that you concluded your disclosure controls and procedures (DCP) were effective while also concluding that your internal
    control over financial reporting (ICFR) was not effective due to material weaknesses indicative of small companies with limited
    staffing resulting in inadequate review procedures. Please explain to us how you arrived at different conclusions in light
    of the existing material weakness. Your explanation should be comprehensive and address all of the components of the definition
    of disclosure controls and procedures. We refer you to Sections II.D and E of SEC Release 33-8238, in which the Commission
    recognizes that there is substantial overlap between ICFR and DCPs. For example, DCPs often include those components of ICFR
    that provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements
    in accordance with GAAP. Please include in your response an explanation as to how you determined that the material weaknesses
    in your ICFR was not one of the components of ICFR that is also included in disclosure controls and procedures. We have a
    similar concern with your DCP conclusion in your Form 10-Q for the period ended January 31, 2019.

The
Company advises the Staff that the existence of a material weakness as disclosed in the Form 10-K does not automatically render
the Company’s disclosure controls and procedures not effective. Rather, such determination is left to the judgment of the
Company’s management. Under Item 308 of Regulation S-K relating to management’s annual report on internal control
over financial reporting, a registrant’s management is not permitted to conclude that its internal control over financial
reporting is effective if there are one or more material weaknesses. In contrast, Item 307 of Regulation S-K does not require
management to conclude that disclosure controls and procedures are not effective if one or more material weaknesses are identified.

As
disclosed in the Form 10-K, the Company’s management identified material weaknesses which are indicative of many small companies
with limited staffing levels resulting in inadequate review procedures. Specifically, as a result of understaffing, misstatements
were detected in revenues, cost of revenues, inventory, deferred revenue, property and equipment, deferred income tax valuation
allowance, and sales, general, and administrative expenses. Following consultation with the Company’s independent auditors,
correcting entries were made in the Company’s financial statements for the year ended October 31, 2018. This material weakness
had no impact on the Company’s financial statements included in the Form 10-K.

The
Company identified the material weakness in the course of its year-end procedures in connection with the preparation of the financial
statements that were included in the Form 10-K. The above detailed misstatements were corrected prior to the filing of the Form
10-K. Management accordingly deemed the Company’s disclosure controls and procedures to be effective because it determined
that the Company had in place adequate and appropriate procedures, controls and protocols designed to ensure that information
required to be disclosed in the reports filed with the Commission are recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and forms. Management further determined that Company’s disclosure
controls and procedures were effective in that information required to be disclosed is accumulated and communicated to it to allow
timely decisions regarding required disclosure. The Company believes that these conclusions were further supported by the fact
that its control environment in place during fiscal 2018 resulted in the identification of the material weakness and that the
Form 10-K was filed in a timely manner.

The
Company also notes that it has recently retained additional resources to enable adequate processes and procedures regarding the
review of accounting records and supporting schedules to provide reasonable assurances to prevent future misstatements. Management
believes that these additional controls and procedures should remediate the identified material weakness. Management is continuing
to monitor these procedures and controls and has not observed a recurrence of the issues that led it to determine that a material
weakness existed as of October 31, 2018.

Lastly,
based on the Company’s experience in applying the procedures and controls adopted during the current fiscal year, management
expects that its assessment of the Company’s internal control over financial reporting as of October 31, 2019 will conclude
that this material weakness has been remediated. Due to this expectation and the Company’s belief that a material weakness
in its internal control over financial reporting is not necessarily an indication that its disclosure controls and procedures
are not effective, the Company does not believe that revisions to its disclosure would provide meaningful information to investors.

Management’s
Report on Internal Control over Financial Reporting, page 34

    2.
    We
    note that management has conducted an evaluation of the effectiveness of ICFR as of October 31, 2018 based on the Internal
    Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Please
    tell us and revise to include which version of the framework was used by management to evaluate the effectiveness of internal
    control over financial reporting (i.e., 2013). Refer to Item 308(a)(2) of Regulation S-K. Additionally, please revise to include
    your conclusion on effectiveness of ICFR to specifically state that it was not effective.

The
Company acknowledges the Staff’s comment. As discussed with the Staff, the Company will amend the Form 10-K to make revisions
in response to this comment as soon as all comments in the Staff’s letter are resolved.

Please
contact the undersigned at 212-584-7805 with any questions or comments regarding the foregoing.

    Very
    truly yours,

    /s/
    Louis A. Brilleman

    Louis
    A. Brilleman

    cc:
                                         Annmarie Gayle

      (Coda Octopus Group, Inc.)