[FORM 10-K Filing Information](index=1&type=section&id=FORM%2010-K) [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides INNO HOLDINGS INC.'s Form 10-K identification details, including fiscal year, commission file number, and filer status - Registrant: **INNO HOLDINGS INC.**[3](index=3&type=chunk) - Fiscal Year End: **September 30, 2024**[2](index=2&type=chunk) - Common stock (INHD) is listed on **The Nasdaq Stock Market**[4](index=4&type=chunk) - Filer Status: **Non-accelerated filer, Smaller reporting company, Emerging growth company**[5](index=5&type=chunk) [Market Value and Shares Outstanding](index=2&type=section&id=Market%20Value%20and%20Shares%20Outstanding) As of March 31, 2024, non-affiliate common stock market value was approximately **$2.8 million**, with **3,057,043 shares outstanding** as of December 3, 2024 Market Value and Shares Outstanding | Metric | Value | | :----------------------------------------- | :------------ | | Market Value (non-affiliates, Mar 31, 2024) | $2,798,633 | | Shares Outstanding (Dec 3, 2024) | 3,057,043 | [Table of Contents](index=3&type=section&id=TABLE%20OF%20CONTENTS) [Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section warns that forward-looking statements are subject to risks and uncertainties, including operational effectiveness, competition, and intellectual property protection, which may cause actual results to differ materially - Forward-looking statements are based on current expectations and assumptions, subject to inherent uncertainties, risks, and changes in circumstances[12](index=12&type=chunk) - Key risk factors include the ability to operate business segments, manage expenses, compete in an evolving industry, adapt to technology changes, and protect intellectual property[12](index=12&type=chunk) - The Company does not intend to update forward-looking statements unless required by law[14](index=14&type=chunk) [Use of Certain Defined Terms](index=4&type=section&id=USE%20OF%20CERTAIN%20DEFINED%20TERMS) [Defined Terms](index=4&type=section&id=Defined%20Terms) This section defines key terms used in the report, including 'Company,' 'INNO,' 'fiscal year,' and specific construction terminology like 'cold-formed steel' and 'prefab' - Defines 'Company,' 'INNO,' 'registrant,' 'we,' 'our,' or 'us' as **INNO HOLDINGS INC.** and its subsidiaries[16](index=16&type=chunk) - Specifies 'year' or 'fiscal year' refers to the period ending **September 30**[16](index=16&type=chunk) - Provides definitions for construction terms: framing, stud, truss, joist, cold-formed steel (CFS/LGS), turnkey cost, and prefab[16](index=16&type=chunk) [PART I](index=6&type=section&id=PART%20I) [Business Overview](index=6&type=section&id=ITEM%201.%20BUSINESS) INNO HOLDINGS INC. is a building-technology company transforming construction with proprietary cold-formed steel-framing, manufacturing steel members and prefab homes, and launched new AI tech consulting services in 2024 - **INNO HOLDINGS INC.** aims to transform the construction industry using proprietary cold-formed steel-framing technology[19](index=19&type=chunk) - The company manufactures cold-formed steel members and offers full services, including structural designs, metal stud production, and preassembly of steel wall panels and prefabricated homes[19](index=19&type=chunk)[21](index=21&type=chunk) - In **2024**, INNO launched Inno AI Tech Corp. for research and consulting services, establishing a new revenue stream[23](index=23&type=chunk)[38](index=38&type=chunk) [Our Products](index=6&type=section&id=Our%20Products) INNO offers cold-formed steel framing, modular prefab homes (Castor Cube), and a Mobile Factory for on-site production, leveraging proprietary software for efficient, durable, and sustainable construction solutions - Cold-formed steel framing products (roof trusses, wall panels, joist systems) are a cost-effective, noncombustible alternative to traditional materials, used in various building types[24](index=24&type=chunk) - Castor Cube is a **743-square-foot** modular home designed for high structural stability, earthquake/wind resistance, and pest prevention, capitalizing on the growing prefab home market[29](index=29&type=chunk)[30](index=30&type=chunk) - The Mobile Factory is a portable, IoT-managed production facility capable of producing steel-framing members on-site, reducing transportation costs and enabling urgent deployment in remote or disaster areas[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk) [Related Services](index=8&type=section&id=Related%20Services) INNO provides land development and contractor services for projects using its metal framing, and its Inno AI Tech Corp. generated **$205,000** in 2024 from research and consulting services - INNO participates in land development and contractor services, leveraging its metal framing products for projects like apartment complexes and retirement communities[37](index=37&type=chunk) - Inno AI Tech Corp., formed in **February 2024**, provides research and consulting services, generating **$205,000** in revenue in **2024** by supporting a client in establishing a steel technology company[38](index=38&type=chunk) [Our Customers](index=8&type=section&id=Our%20Customers) INNO serves B2B customers for steel framing and B2B/B2C for prefab homes and consulting, with **three major customers accounting for 90% of total revenues in 2024**, indicating high customer concentration - Sales model for cold-formed steel framing is business-to-business, targeting developers, builders, and contractors[39](index=39&type=chunk) - Sales model for Castor Cube prefab homes and Inno AI Tech Corp. consulting services is expected to be either business-to-business or business-to-customer[39](index=39&type=chunk) Customer Revenue Concentration | Year Ended September 30, | % of Total Revenues from 3 Major Customers | | :----------------------- | :----------------------------------------- | | 2024 | 90% | | 2023 | 53% | [Our Suppliers](index=9&type=section&id=Our%20Suppliers) INNO relies on a limited number of suppliers, with **two suppliers accounting for 58% of total purchases in 2024** and **51% of accounts payable**, generally operating without written agreements Supplier Purchase Concentration | Year Ended September 30, | % of Total Purchases from Top Suppliers | | :----------------------- | :-------------------------------------- | | 2024 | 58% (two suppliers) | | 2023 | 57% (three suppliers) | Accounts Payable Concentration | As of September 30, | % of Total Accounts Payable to Top Two Suppliers | | :------------------ | :----------------------------------------------- | | 2024 | 51% | | 2023 | 55% | - The Company generally does not have written agreements with its suppliers, making purchases through individual orders[43](index=43&type=chunk) [Our Competitive Strengths](index=9&type=section&id=Our%20Competitive%20Strengths) INNO's strengths include continuous innovation, integrated manufacturing from design to prefabrication, and **8-16% cost savings** with cold-formed steel over wood, focusing on patentable products and off-site technology - INNO is committed to continuous technology innovation, focusing on patentable products and commercializing research in cold-formed steel for resilient buildings[44](index=44&type=chunk) - The company offers a fully integrated manufacturing process, from design to metal stud production and prefabrication, utilizing off-site building technology to reduce on-site labor and improve quality control[45](index=45&type=chunk) - INNO's products offer **8-16% cost savings** compared to traditional wood framing, driven by the rising cost of wood and the inherent advantages of steel[47](index=47&type=chunk)[48](index=48&type=chunk) [Market Opportunity](index=10&type=section&id=Market%20Opportunity) INNO targets a **$33.5 billion U.S. market** in 2024, including light-gauge steel framing (projected to reach **$52.73 billion by 2030**), prefabricated homes, and wood framing replacement, driven by sustainability and efficiency Market Size and Growth Projections | Market Segment | 2023/2024 Value (USD) | Projected 2030 Value (USD) | CAGR (2023-2030) | | :----------------------------------- | :-------------------- | :------------------------- | :--------------- | | Global Light-Gauge Steel Framing | $37.27 billion (2023) | $52.73 billion | 5.1% | | U.S. Prefabricated Home Manufacturing | $13.3 billion (2024) | $53 billion | 7% (U.S. modular home market) | | U.S. Wood Framing (Target Market) | $27.5 billion (2024) | N/A | N/A | | INNO's Total Target Market (U.S.) | ~$33.5 billion (2024) | N/A | N/A | - Market growth is fueled by increased construction spending, a shift towards sustainable materials, and regulatory changes (e.g., Los Angeles banning wood-frame building in certain areas) promoting alternatives like steel[50](index=50&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk) - Cold-formed steel framing is positioned as an optimal alternative due to its sustainability, fire/termite resistance, consistent quality, and reduced carbon footprint[58](index=58&type=chunk) [Marketing](index=11&type=section&id=Marketing) INNO's marketing strategy focuses on leadership in intelligent steel-framing, leveraging customer referrals, strategic partnerships, industry education, and digital marketing to expand its customer base - Marketing strategy focuses on establishing INNO as a leader in intelligent steel-framing building systems and expanding its customer base[59](index=59&type=chunk) - Leverages strategic partners (real estate companies, general contractors, builders, developers) and customer referrals for new business[59](index=59&type=chunk)[61](index=61&type=chunk) - Actively educates the construction industry on the benefits of cold-formed steel framing through associations and is increasing online marketing efforts with a professional sales team[62](index=62&type=chunk)[63](index=63&type=chunk) [Research and Product Development/Innovations](index=12&type=section&id=Research%20and%20Product%20Development%2FInnovations) INNO's R&D focuses on cost-effective steel components and optimized production using proprietary CAD/BIM and roller machines, with innovations including a CFS portal frame system, lighter steel trusses, and honeycomb aluminum panels, targeting **100 potential patentable products** - INNO utilizes proprietary modified cold-formed roller machines and CAD/BIM solutions (Vertex) for accurate, information-rich design models and automated production of steel framing members[65](index=65&type=chunk) - Key innovations include a CFS portal frame system to replace shear walls, offering superior lateral resistance and flexible room layouts for modular homes (Castor Cube) and commercial buildings[67](index=67&type=chunk)[68](index=68&type=chunk) - Developing a cold-formed steel truss system for longer spans and lighter weight, and high-strength, light-weight honeycomb aluminum panels for versatile wall systems, with **100 potential patentable products** in the pipeline[69](index=69&type=chunk)[71](index=71&type=chunk) [Revenue Model](index=13&type=section&id=Revenue%20Model) INNO's revenue model includes wholesale light-gauge studs, prefabricated panels/trusses, on-site framing, engineering/consulting (including **$205,000 from Inno AI Tech Corp. in 2024**), machine sales/leasing, and replicable apartment products like 'Village 101' - Revenue streams include wholesale of customized light-gauge studs and tracks, prefabricated wall panels and trusses (with assembly services), and on-site structure framing work[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk)[77](index=77&type=chunk) - Services revenue includes stamped and sealed structural design, shop drawings, and AI tech research and consulting, which generated **$205,000** in **2024**[78](index=78&type=chunk)[79](index=79&type=chunk) - Developing 'Replicable Apartment products' like Village 101 (**155-unit** senior living) and other apartment options, aiming for scalable, high-quality housing solutions[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) [Cost of Sales](index=14&type=section&id=Cost%20of%20Sales) INNO's cost of sales primarily comprises materials (rolled steel, managed with fixed-price contracts and **three-month inventory**) and labor, with inbound freight included in cost of goods sold and outbound freight as a selling expense - Materials, primarily rolled steel, represent the largest cost component, managed through fixed-price forward contracts and a **three-month inventory** to mitigate price fluctuations[85](index=85&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) - Labor costs include hourly factory workers for producing and assembling prefabricated pieces, and non-employee contractors for turnkey projects[86](index=86&type=chunk) - Inbound freight is part of cost of goods sold, while outbound freight to customers is classified as a selling expense[87](index=87&type=chunk) [Other Expenses](index=14&type=section&id=Other%20Expenses) Other expenses primarily include payroll, rent, utilities, insurance, and professional fees, with the company focusing on lean operations in a business-friendly state - Other expenses mainly comprise payroll for salaried and hourly workers, rent, utilities, insurance, and consulting/professional fees[88](index=88&type=chunk) - The company focuses on lean and efficient operations, benefiting from a business-friendly state and available workforce[88](index=88&type=chunk) [Our Growth Strategy](index=15&type=section&id=Our%20Growth%20Strategy) INNO's growth strategy integrates revenue (capacity expansion, R&D for Castor Cube/Village 101, marketing, acquisitions), profit (automation, Mobile Factory, AI design optimization), and technology (thinner/lighter products, stainless steel, module wall applications) - Revenue growth strategy includes expanding factory operations, investing in R&D for products like Castor Cube and Village 101, increasing marketing, and pursuing vertical integration through acquisitions to offer comprehensive building solutions[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Profit growth strategy focuses on improving assembly automation with production robots, reducing transportation costs by utilizing the Mobile Factory, and optimizing AI design capabilities to reduce raw material usage[96](index=96&type=chunk)[97](index=97&type=chunk)[99](index=99&type=chunk) - Technology growth strategy involves developing thinner/lighter EQ products, stainless steel as a high-end building material, and leveraging module wall technology to expand applications[100](index=100&type=chunk)[101](index=101&type=chunk) [Strategic Partnerships](index=16&type=section&id=Strategic%20Partnerships) INNO has strategic partnerships with at least **10 regional and national developers** in Texas and California, who intend to use INNO's steel framing or modular solutions, providing INNO with customized offers and higher bid success rates - INNO maintains strategic partnerships with at least **10 regional and national developers and builders** in Texas and California[102](index=102&type=chunk) - These partners have a strong project pipeline and intend to utilize INNO's steel framing or modular building solutions (Castor Cube, Village 101)[102](index=102&type=chunk) - Strategic partnerships provide INNO with customized offers and increased probability of winning project bids[102](index=102&type=chunk) [Competitive Outlook](index=16&type=section&id=Competitive%20Outlook) INNO competes against lumber and traditional CFS, highlighting steel's superior strength, non-combustibility, and sustainability, while differentiating with proprietary software for customized punchouts and faster structure formation than 3D printing - Steel framing offers superior strength-to-weight ratio, non-combustibility, resistance to pests and mold, dimensional stability, lower builder's risk insurance, and high recyclability compared to lumber[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - INNO differentiates from traditional CFS manufacturers (e.g., Clark Dietrich, CEMCO) by using proprietary software for customized punchouts and automated screw hole punching, optimizing load-bearing capacity and reducing on-site labor[119](index=119&type=chunk)[120](index=120&type=chunk) - INNO's cold-formed steel technology avoids the cooling time and unique raw material requirements of 3D printing for prefab homes, offering faster structure formation and superior disaster resistance for products like Castor Cube[124](index=124&type=chunk)[125](index=125&type=chunk) [Government Regulations](index=18&type=section&id=Government%20Regulations) INNO's operations comply with building codes (IBC, CBC, FBC), environmental laws (USGBC awards for sustainability), and occupational health and safety regulations, with no material compliance expenditures in **2023 or 2024** - INNO's cold-formed steel-framing members comply with **2018/2015 IBC, 2019 CBC, and 2020 FBC**, and are inherently non-combustible, offering an advantage in fire safety regulations[128](index=128&type=chunk)[129](index=129&type=chunk) - The company adheres to U.S. federal, state, and local environmental laws, with manufacturing processes that minimize waste and prevent pollution, earning awards from the USGBC in **2020**[130](index=130&type=chunk)[132](index=132&type=chunk) - Operations are subject to federal, state, and local occupational health and safety laws, with procedures designed to promote compliance and no material expenditures for compliance in **2024 and 2023**[133](index=133&type=chunk)[135](index=135&type=chunk) [Human Capital Resources](index=19&type=section&id=Human%20Capital%20Resources) INNO's success depends on attracting and retaining skilled employees, with **4 full-time employees and 11 contractors as of September 30, 2024**, a decrease from 2023, and **three marketing consultants engaged in 2024** - The company's success depends on attracting, retaining, and developing a skilled workforce, offering competitive wages and collaborating with workforce development agencies[136](index=136&type=chunk) Human Capital Resources | Metric | September 30, 2024 | September 30, 2023 | | :---------------------- | :----------------- | :----------------- | | Full-time Employees | 4 | 11 | | At-will Contractors | 11 | 18 | | Marketing Consultants | 3 (in 2024) | N/A | [Intellectual Property Matters](index=19&type=section&id=Intellectual%20Property%20Matters) INNO currently has no registered IP or trademarks but has **five pending patent applications** for optimized CNC machine designs, a Z-shaped pendant, and honeycomb aluminum plates, with non-disclosure policies in place - INNO currently has no registered intellectual property rights or trademarks, but applications are pending[137](index=137&type=chunk) - **Five patent applications** are pending, covering optimized CNC machine designs (Cube 200, Cube 300), a Z-shaped pendant for exterior walls, and honeycomb aluminum plates for interior walls[137](index=137&type=chunk) - Despite non-disclosure policies, the company cannot assure complete protection of its intellectual property and manufacturing expertise[138](index=138&type=chunk) [Corporate Structure](index=20&type=section&id=Corporate%20Structure) INNO HOLDINGS INC., incorporated in Texas on **September 8, 2021**, includes subsidiaries like Inno Metal Studs Corp and Castor Building Tech LLC, and in **2024**, established Inno Disrupts Inc. and transferred R&D to Inno AI Tech Corp. - **INNO HOLDINGS INC.** was incorporated in Texas on **September 8, 2021**[139](index=139&type=chunk) - Key subsidiaries include Inno Metal Studs Corp (**100% owned**) and Castor Building Tech LLC (**55% owned** as of Oct 2023)[139](index=139&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk) - In **2024**, Inno Disrupts Inc. was established, and Inno Research Institute LLC was dissolved, with its R&D functions transferred to the newly formed Inno AI Tech Corp.[140](index=140&type=chunk)[141](index=141&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk) [Risk Factors](index=20&type=section&id=ITEM%201A.%20RISK%20FACTORS) As a 'smaller reporting company,' INNO HOLDINGS INC. is not required to provide specific risk factor information in this item - The Company is a 'smaller reporting company' and is not required to provide risk factor information in this item[143](index=143&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) There are no unresolved staff comments for INNO HOLDINGS INC. as of the filing date - No unresolved staff comments[144](index=144&type=chunk) [Cybersecurity](index=20&type=section&id=ITEM%201C.%20CYBERSECURITY) As a smaller reporting company, INNO lacks formalized cybersecurity measures and a dedicated team, but is evaluating needs, considering external experts, and developing a framework with Board oversight, despite no significant incidents - As a smaller reporting company, INNO currently lacks formalized cybersecurity measures, a dedicated team, or specific protocols[147](index=147&type=chunk) - The company has not experienced significant cybersecurity incidents but recognizes its vulnerability due to the absence of a formalized framework[148](index=148&type=chunk) - INNO is evaluating its cybersecurity needs, considering external experts, conducting vulnerability assessments, and developing an incident response strategy, with Board oversight for risk management[149](index=149&type=chunk)[150](index=150&type=chunk) [Properties](index=21&type=section&id=ITEM%202.%20PROPERTIES) INNO leases its principal executive and production facility in Brookshire, Texas, under a new agreement (Jan 2024-Jan 2027) with prepaid rent for 2027, having ended its California office lease in October 2024 - The principal executive office and production facility in Brookshire, Texas, is leased under a new agreement (**Jan 2024 - Jan 2027**) with prepaid rent for **2027**[152](index=152&type=chunk) - The California office relocated from Corona to Diamond Bar in **August 2023**, and the Diamond Bar lease was ended in **October 2024**[153](index=153&type=chunk) - The current leased property is considered in good condition and suitable for business operations[155](index=155&type=chunk) [Legal Proceedings](index=21&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) INNO is not a party to any material legal proceedings, though an ongoing litigation involves a subcontractor's alleged misappropriation of **over $1.3 million**, which INNO is contesting - The Company is not currently a party to any material legal proceedings, investigations, or claims[156](index=156&type=chunk) - An ongoing litigation involves a plaintiff claiming a subcontractor misappropriated **over $1.3 million**, with funds allegedly transferred to the company; INNO is contesting these claims[369](index=369&type=chunk) - There is no assurance that future legal matters will not arise or materially affect the business[156](index=156&type=chunk) [Mine Safety Disclosures](index=21&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Mine Safety Disclosures are not applicable to INNO HOLDINGS INC.'s operations - Mine Safety Disclosures are not applicable[157](index=157&type=chunk) [PART II](index=22&type=section&id=PART%20II) [Market for Common Equity, Related Stockholder Matters and Purchases of Equity Securities](index=22&type=section&id=ITEM%205.%20MARKET%20FOR%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20PURCHASES%20OF%20EQUITY%20SECURITIES) INNO HOLDINGS INC.'s common stock (INHD) is listed on Nasdaq, underwent a **1-for-10 reverse stock split in October 2024**, has declared no cash dividends, and completed its IPO in **December 2023**, raising approximately **$7.86 million** - Common stock is listed on **The Nasdaq Capital Market** under the symbol 'INHD'[160](index=160&type=chunk) - The Company completed a **1-for-10 reverse stock split** on **October 9, 2024**, and previously a **1-for-2 reverse stock split** in **July 2023**[162](index=162&type=chunk)[163](index=163&type=chunk) - No cash dividends have been declared since inception; earnings are reinvested for working capital and business growth[166](index=166&type=chunk) - The IPO closed on **December 18, 2023**, generating approximately **$7,859,533** in aggregate net proceeds[179](index=179&type=chunk) [RESERVED](index=24&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information - This item is reserved[184](index=184&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operation](index=24&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATION) INNO, a building technology company, saw **total revenue increase by 11% to $885,495 in FY2024** (driven by new consulting/licensing) and net loss decrease by **19% to $3,251,127**, but faces going concern doubt due to insufficient cash for future operations - INNO's business involves manufacturing cold-formed steel products and prefabricated homes, with a new consulting service stream[185](index=185&type=chunk)[189](index=189&type=chunk) - Performance is affected by steel price fluctuations, inflation, interest rates, and geopolitical conditions[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - The company's cash and cash equivalents of **$1,526,661** as of **September 30, 2024**, are not believed to be sufficient to fund operations for the next twelve months, creating substantial doubt about its ability to continue as a going concern[215](index=215&type=chunk) [Results of Operation](index=26&type=section&id=Results%20of%20Operation) In **FY2024**, total revenue increased by **11% to $885,495** (driven by consulting/licensing), product revenue decreased by **51%**, SG&A rose by **68% to $3,678,866**, and net loss decreased by **19% to $(3,251,127)** Consolidated Statements of Operations Summary (YoY Change) | Metric | FY2024 ($) | FY2023 ($) | YoY Change (%) | | :----------------------------------------- | :------------ | :------------ | :------------- | | Revenue - products | 395,495 | 799,747 | -51% | | Revenue - consulting services | 205,000 | - | 100% | | Revenue – License income | 285,000 | - | 100% | | **Total Revenue** | **885,495** | **799,747** | **11%** | | Costs of materials and labor | 409,169 | 1,255,315 | -67% | | Selling, general and administrative expenses | 3,678,866 | 2,191,043 | 68% | | Impairment loss | 23,911 | - | 100% | | Depreciation | 87,116 | 69,437 | 25% | | Bad debt expense | 59,935 | 1,267,960 | -95% | | **Operating loss** | **(3,373,502)** | **(3,984,008)** | **-15%** | | Other income (expenses) | 123,175 | (39,196) | -414% | | Loss before income taxes | (3,250,327) | (4,023,204) | -19% | | Income tax expense | 800 | - | 100% | | **Net loss** | **(3,251,127)** | **(4,023,204)** | **-19%** | | Net loss attributable to INNO HOLDINGS INC. | (3,213,829) | (3,895,778) | -18% | - Product revenue decreased by **51%** due to varying project statuses, while new consulting and licensing streams significantly contributed to total revenue[200](index=200&type=chunk)[201](index=201&type=chunk) - Backlog as of **September 30, 2024**, was approximately **$14,000,000 to $19,000,000**, including a **$15,875,800** agreement with Vision Opportunity Fund LP (Vision 101)[202](index=202&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) INNO's cash and cash equivalents increased to **$1,526,661 in FY2024** (from **$4,898 in FY2023**) due to **$8 million IPO proceeds**, but insufficient cash for the next twelve months raises going concern doubt, necessitating additional **$5.5 million** capital raises post-year-end Cash and Cash Equivalents | As of September 30, | Cash and Cash Equivalents ($) | | :------------------ | :---------------------------- | | 2024 | 1,526,661 | | 2023 | 4,898 | - The cash increase was primarily driven by **$8 million** in net proceeds from the initial public offering closed in **December 2023**[212](index=212&type=chunk)[214](index=214&type=chunk) - Management believes current cash is insufficient for the next twelve months, creating substantial doubt about the company's ability to continue as a going concern, necessitating additional capital raises[215](index=215&type=chunk) - Subsequent to year-end, the company secured **$2,000,000** and approximately **$3.5 million** through private placements in **October and November 2024**, respectively[216](index=216&type=chunk)[217](index=217&type=chunk)[387](index=387&type=chunk)[389](index=389&type=chunk) [Cash Flows](index=29&type=section&id=Cash%20Flows) Net cash used in operating activities increased to **$5,075,412 in FY2024** (from **$1,225,941 in FY2023**), investing activities used **$547,060**, and financing activities provided **$7,144,235** (largely from IPO proceeds) Summary of Cash Flows | Cash Flow Activity | FY2024 ($) | FY2023 ($) | | :----------------- | :------------ | :------------ | | Operating | (5,075,412) | (1,225,941) | | Investing | (547,060) | (244,899) | | Financing | 7,144,235 | 1,425,110 | - The increase in net cash usage in operating activities was mainly due to a **$3,720,738** increase of working capital outflow[219](index=219&type=chunk) - Net cash provided by financing activities in **FY2024** was primarily due to **$8,450,000** net cash from the initial public offering[224](index=224&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=30&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURE%20ABOUT%20MARKET%20RISK) As a 'smaller reporting company,' INNO HOLDINGS INC. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a 'smaller reporting company' and is not required to provide quantitative and qualitative disclosures about market risk[229](index=229&type=chunk) [PART III](index=31&type=section&id=PART%20III) [Financial Statements and Supplementary Data](index=31&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section presents INNO HOLDINGS INC.'s audited consolidated financial statements for **FY2024 and FY2023**, including balance sheets, statements of operations, equity, and cash flows, with unqualified auditor opinions (one highlighting going concern) and detailed notes on accounting policies and subsequent events - Consolidated financial statements for **FY2024 and FY2023** include Balance Sheets, Statements of Operations, Changes in Stockholders' Equity, and Cash Flows[231](index=231&type=chunk) - Independent auditors (Simon & Edward, LLP for **2024**; TAAD LLP for **2023**) issued unqualified opinions, with TAAD LLP's report highlighting a going concern matter due to recurring losses[232](index=232&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - Notes to financial statements provide details on accounting policies, financial instrument fair values, revenue recognition, inventory, property and equipment, loans, related party transactions, equity, concentration of risk, commitments, contingencies, income taxes, and subsequent events[263](index=263&type=chunk)[269](index=269&type=chunk)[323](index=323&type=chunk) [Consolidated Balance Sheets](index=34&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased from **$2,545,762 in 2023 to $4,169,337 in 2024**, total liabilities decreased to **$1,371,801**, and total equity improved from a **$(1,943,586) deficit to $2,797,536** in 2024 Consolidated Balance Sheet Highlights | Metric | September 30, 2024 ($) | September 30, 2023 ($) | | :---------------------- | :--------------------- | :--------------------- | | Total Assets | 4,169,337 | 2,545,762 | | Total Liabilities | 1,371,801 | 4,489,348 | | Total Equity (Deficit) | 2,797,536 | (1,943,586) | - Cash and cash equivalents increased from **$4,898 in 2023 to $1,526,661 in 2024**[247](index=247&type=chunk) - Working capital improved from a deficit of **$(2,913,827) in 2023 to a positive $975,755 in 2024**[218](index=218&type=chunk) [Consolidated Statements of Operations](index=36&type=section&id=Consolidated%20Statements%20of%20Operations) Total revenue increased by **11% to $885,495 in 2024**, while net loss decreased by **19% to $(3,251,127)**, and losses per share improved from **$(2.15) to $(1.59)** Consolidated Statements of Operations Summary | Metric | FY2024 ($) | FY2023 ($) | | :----------------------------------------- | :------------ | :------------ | | Total Revenue | 885,495 | 799,747 | | Loss from Operations | (3,373,502) | (3,984,008) | | Net Loss | (3,251,127) | (4,023,204) | | Net Loss Attributable to INNO HOLDINGS INC. | (3,213,829) | (3,895,778) | | Losses Per Share (Basic and Diluted) | (1.59) | (2.15) | - Total revenue increased by **11%** year-over-year, primarily due to the introduction of consulting services and licensing income[198](index=198&type=chunk)[200](index=200&type=chunk) - Net loss decreased by **19%** year-over-year, reflecting changes in revenue, costs, expenses, and other income/expenses[211](index=211&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=37&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total equity shifted from a **$(1,943,586) deficit in 2023 to a positive $2,797,536 in 2024**, driven by **$7,859,534** in additional paid-in capital from the IPO and **$72,000** from shares issued for services Changes in Stockholders' Equity | Metric | September 30, 2024 ($) | September 30, 2023 ($) | | :----------------------------------- | :--------------------- | :--------------------- | | Additional Paid in Capital | 10,748,534 | 2,830,000 | | Accumulated Deficit | (7,738,644) | (4,524,815) | | Total Equity (Deficit) | 2,797,536 | (1,943,586) | - The IPO completion resulted in **$7,859,534** in additional paid-in capital[256](index=256&type=chunk) - Shares issued for services contributed **$72,000** to additional paid-in capital in **2024**[256](index=256&type=chunk) [Consolidated Statements of Cash Flows](index=38&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash increased by **$1,521,763 in 2024**, resulting in **$1,526,661** cash at year-end, driven by **$7,144,235** from financing (IPO proceeds) offsetting **$5,075,412** used in operations and **$547,060** in investing Consolidated Statements of Cash Flows Summary | Cash Flow Activity | FY2024 ($) | FY2023 ($) | | :----------------- | :------------ | :------------ | | Operating | (5,075,412) | (1,225,941) | | Investing | (547,060) | (244,899) | | Financing | 7,144,235 | 1,425,110 | | Net Change in Cash | 1,521,763 | (45,730) | | Cash, End of Period| 1,526,661 | 4,898 | - Net cash provided by financing activities was primarily due to **$8,450,000** net cash from the initial public offering in **2024**[224](index=224&type=chunk)[261](index=261&type=chunk) - Net cash used in operating activities increased significantly due to a **$3,720,738** increase in working capital outflow[219](index=219&type=chunk)[261](index=261&type=chunk) [Notes to Consolidated Financial Statements](index=39&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies (U.S. GAAP, reverse stock splits), key estimates, changes in accounts receivable (allowance for credit losses decreased to **$0 in 2024**), inventory, property, loans, related party transactions, equity changes, risk concentrations, commitments, contingencies, income taxes, and subsequent events including **$5.5 million** in private placements and a **$1.4 million** equity investment - The Company's financial statements are prepared in accordance with **U.S. GAAP**, with all inter-company balances and transactions eliminated[269](index=269&type=chunk)[270](index=270&type=chunk) - Allowance for credit losses decreased significantly to **$0 in 2024** from **$1,267,960 in 2023**, reflecting improved collection rates and discontinuing business with high-risk customers[207](index=207&type=chunk)[324](index=324&type=chunk) - Subsequent events include two private placements in **October and November 2024**, raising **$2 million** and approximately **$3.5 million** respectively, and a **$1.4 million** equity investment in CoreModu LLC[386](index=386&type=chunk)[387](index=387&type=chunk)[389](index=389&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=58&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) INNO HOLDINGS INC. reports no changes in or disagreements with its accountants on accounting and financial disclosure matters - No changes in or disagreements with accountants on accounting and financial disclosure[392](index=392&type=chunk) [Controls and Procedures](index=58&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) As of **September 30, 2024**, INNO's disclosure controls and procedures were ineffective due to inadequate internal control policies, with plans to remediate by hiring personnel or consultants, acknowledging inherent control limitations - Disclosure controls and procedures were not effective as of **September 30, 2024**, due to a lack of adequate policies and procedures in internal control functions over key business cycles[394](index=394&type=chunk)[395](index=395&type=chunk) - The company plans to hire additional personnel or consultants to design and implement internal controls to strengthen the system[395](index=395&type=chunk) - Management recognizes that internal control systems have inherent limitations and cannot prevent all errors or fraud[396](index=396&type=chunk) [Other Information](index=58&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) This item contains no other information - No other information is reported in this item[398](index=398&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=58&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This disclosure is not applicable to INNO HOLDINGS INC. - This disclosure is not applicable[400](index=400&type=chunk) [PART III (Continued)](index=59&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=59&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) INNO's Board has **5 directors (3 independent)**, with Ding Wei as CEO and Tianwei Li as CFO, overseeing risk management; post-IPO, Audit and Compensation Committees were established, chaired by Yufang Qu (audit committee financial expert) - The Board of Directors comprises **5 directors**, with **3 independent directors** (Yufang Qu, Tao Tu, Yongbo Mo) as per Nasdaq standards[417](index=417&type=chunk)[419](index=419&type=chunk) - Key executive officers are Ding Wei (CEO, Director, Chairman) and Tianwei (Solomon) Li (CFO)[403](index=403&type=chunk)[405](index=405&type=chunk)[406](index=406&type=chunk) - The Board oversees risk management, including operational, financial, legal, regulatory, cybersecurity, strategic, and reputational risks, and monitors geopolitical developments[416](index=416&type=chunk) - Audit and Compensation Committees were established post-IPO, composed of independent directors. Yufang Qu chairs both and is an audit committee financial expert[420](index=420&type=chunk)[421](index=421&type=chunk)[425](index=425&type=chunk) [Executive Compensation](index=64&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) INNO, as an emerging growth company, discloses executive compensation for NEOs, aiming to attract and retain talent through base salaries and short-term incentives (e.g., **$50,000 IPO award to Tianwei Li**), with no equity incentives granted in **FY2023/2024** - The compensation program aims to attract, motivate, and retain executives, aligning their interests with shareholders through base salaries, short-term cash incentives, and long-term equity incentives[432](index=432&type=chunk) Summary Compensation Table for NEOs | Name and Principal Position | Year | Salary ($) | Bonus ($) | Total ($) | | :-------------------------- | :--- | :--------- | :-------- | :-------- | | Ding Wei (CEO) | 2024 | - | - | - | | | 2023 | - | - | - | | Dekui Liu (Former CEO) | 2024 | 70,833 | - | 70,833 | | | 2023 | 11,000 | - | 11,000 | | Tianwei (Solomon) Li (CFO) | 2024 | 180,000 | 50,000 | 230,000 | | | 2023 | 45,000 | - | 45,000 | | Dr. Li (Alice) Gong (Former COO) | 2024 | 152,587 | - | 152,587 | | | 2023 | 100,347 | - | 100,347 | | Weston Twigg (Former CFO) | 2024 | - | - | - | | | 2023 | 104,527 | - | 104,527 | - Mr. Li received a one-time IPO award of **$50,000** in **2024**. No incentive equity awards were granted in **FY2023 or FY2024**[433](index=433&type=chunk)[434](index=434&type=chunk)[445](index=445&type=chunk)[448](index=448&type=chunk) - The company adopted the **2023 Omnibus Incentive Plan** and an **Incentive Based Compensation Recoupment Policy**[446](index=446&type=chunk)[452](index=452&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=67&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) As of **December 6, 2024**, INNO had **3,057,043 shares outstanding**, with no beneficial ownership by directors/executive officers, and significant stockholders including West Lake Club Inc. (**20.94%**) and Changzheng Ye (**5.14%**) - As of **December 6, 2024**, there were **3,057,043 shares** of common stock issued and outstanding[457](index=457&type=chunk) Beneficial Ownership (as of Dec 6, 2024) | Name and Address of Beneficial Owner | Beneficially Owned Shares | Percent | | :----------------------------------- | :------------------------ | :------ | | Officers and Directors as a Group | — | — | | Changzheng Ye | 157,079 | 5.14% | | West Lake Club Inc. | 640,000 | 20.94% | - No awards were issued under the Company's equity compensation plan as of **September 30, 2024**[461](index=461&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=68&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) INNO engaged in related party transactions, including **$2,000** in loans from former CEO Mr. Dekui Liu, consulting from Yunited Assets LLC, purchases from Baicheng Trading LLC, and a **$15.88 million** project agreement with Vision Opportunity Fund LP, with a related person transaction policy and a majority independent Board - Short-term, interest-free loans from former CEO Mr. Dekui Liu, with **$2,000** outstanding as of **September 30, 2024**[463](index=463&type=chunk) - Consultation services from Yunited Assets LLC (minority owner of a subsidiary) and renovation design services/materials from Baicheng Trading LLC (related to Chairwoman)[464](index=464&type=chunk)[466](index=466&type=chunk) - A **$15,875,800** project development agreement with Vision Opportunity Fund LP (assigned to Vision 101), partially owned by a former shareholder, with **$244,185** received as deferred revenue as of **September 30, 2024**[468](index=468&type=chunk) - The company has a written related person transaction policy for review and approval, and a majority of its Board members are independent[469](index=469&type=chunk)[471](index=471&type=chunk) [Principal Accounting Fees and Services](index=70&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) INNO paid **$92,500** in audit fees to Simon & Edward, LLP for **FY2024** and **$178,383** to TAAD LLP for **FY2023**, with no other fees incurred, and the audit committee pre-approves all services Fees Paid to Principal Independent Registered Public Accounting Firm | Fee Type | FY2024 ($) | FY2023 ($) | | :--------------- | :--------- | :--------- | | Audit Fees | 92,500 | 178,383 | | Audit Related Fees | - | - | | Tax Fees | - | - | | All Other Fees | - | - | | **Total Fees** | **92,500** | **178,383**| - Simon & Edward, LLP served as the independent auditor for **FY2024**, and TAAD LLP for **FY2023**[472](index=472&type=chunk) - The audit committee's charter requires pre-approval of all audit and permitted non-audit services[475](index=475&type=chunk) [PART IV](index=70&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=70&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This section lists financial statements and exhibits for the Form 10-K, with all financial statements included under Item 8 and schedules omitted, detailing corporate governance documents, agreements, and certifications - All financial statements are included under **Item 8** of this Annual Report[477](index=477&type=chunk) - Financial statement schedules are omitted as the required information is included in the financial statements or notes, or not required[478](index=478&type=chunk) - The exhibit index includes corporate formation documents, bylaws, underwriter warrants, indemnification agreements, development and supply agreements, incentive plans, offer letters, and various certifications[482](index=482&type=chunk)[485](index=485&type=chunk) [Form 10-K Summary](index=72&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY) This item indicates that no Form 10-K summary is provided - No Form 10-K summary is provided[483](index=483&type=chunk) [Signatures](index=73&type=section&id=SIGNATURES) The Form 10-K report is signed by CEO Ding Wei and CFO Tianwei Li, along with other directors, on **December 9, 2024** - The report is signed by Ding Wei (Chief Executive Officer, Director and Chairman) and Tianwei Li (Chief Financial Officer) as principal executive and financial/accounting officers, respectively[488](index=488&type=chunk) - Additional signatures include directors Yufang Qu, Mengshu Shao, Tao Tu, and Yongbo Mo[488](index=488&type=chunk) - All signatures are dated **December 9, 2024**[488](index=488&type=chunk)[490](index=490&type=chunk)

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and related disclosures for INNO HOLDINGS INC [ITEM 1: Financial Statements](index=4&type=section&id=ITEM%201%3A%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for INNO HOLDINGS INC., including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining the company's financial position, performance, and significant accounting policies for the periods ended June 30, 2024, and September 30, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's assets, liabilities, and equity as of June 30, 2024, and September 30, 2023 | Metric | June 30, 2024 (Unaudited) | September 30, 2023 | Change (%) | | :-------------------------- | :------------------------ | :----------------- | :--------- | | Cash and cash equivalent | $1,890,903 | $4,898 | 38500% | | Total current assets | $2,545,681 | $1,188,858 | 114% | | Total assets | $4,373,336 | $2,545,762 | 72% | | Total current liabilities | $1,279,072 | $4,102,685 | -69% | | Total liabilities | $1,358,745 | $4,489,348 | -70% | | Additional paid in capital | $10,676,534 | $2,830,000 | 277% | | Accumulated deficit | $(7,451,492) | $(4,524,815) | 65% | | Total equity (deficit) | $3,014,591 | $(1,943,586) | 255% | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net loss for the three and nine months ended June 30, 2024 and 2023 | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (%) | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | Change (%) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Revenues | $45,682 | $104,058 | -56% | $395,495 | $501,672 | -21% | | Costs of materials and labor | $25,549 | $103,886 | -75% | $404,157 | $472,710 | -15% | | Selling, general and administrative expenses | $1,032,165 | $608,855 | 70% | $2,919,899 | $1,628,307 | 79% | | Bad debt expense | $0 | $867,360 | -100% | $59,935 | $1,267,960 | -95% | | Loss from operations | $(1,034,437) | $(1,493,807) | -31% | $(3,078,135) | $(2,917,852) | 5% | | Net loss attributable to INNO HOLDINGS INC. | $(1,064,702) | $(1,466,781) | -27% | $(2,926,677) | $(2,864,167) | 2% | | Basic and Diluted Losses Per Share | $(0.05) | $(0.08) | -37.5% | $(0.15) | $(0.16) | -6.25% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Outlines the changes in the company's equity components, including common shares and accumulated deficit, between September 30, 2023, and June 30, 2024 | Metric | September 30, 2023 | June 30, 2024 (Unaudited) | Change | | :-------------------------- | :----------------- | :------------------------ | :----- | | Common Shares | 18,251,726 | 20,751,726 | 2,500,000 shares issued upon IPO completion | | Additional Paid in Capital | $2,830,000 | $10,676,534 | $7,846,534 increase | | Accumulated Deficit | $(4,524,815) | $(7,451,492) | $(2,926,677) increase in deficit | | Total Equity (Deficit) | $(1,943,586) | $3,014,591 | $4,958,177 increase | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes the cash inflows and outflows from operating, investing, and financing activities for the nine months ended June 30, 2024 and 2023 | Cash Flow Activity | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | Change | | :---------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash used in operating activities | $(4,859,567) | $(1,066,467) | $(3,793,100) increase in usage | | Net cash used in investing activities | $(412,231) | $(226,900) | $(185,331) increase in usage | | Net cash provided by financing activities | $7,157,803 | $1,356,096 | $5,801,707 increase | | CASH AND CASH EQUIVALENT, beginning of period | $4,898 | $50,628 | $(45,730) decrease | | CASH AND CASH EQUIVALENT, ending of period | $1,890,903 | $113,357 | $1,777,546 increase | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1 — Nature of business and organization](index=9&type=section&id=Note%201%20%E2%80%94%20Nature%20of%20business%20and%20organization) Describes the company's primary business activities, organizational structure, and recent corporate changes - Company is primarily engaged in marketing and sale of construction products and full-scope construction services in the US[10](index=10&type=chunk) - Increased ownership in Castor Building Tech LLC to **55%** retroactively from January 18, 2022[10](index=10&type=chunk) - Voluntarily terminated Inno Research Institute LLC on January 27, 2024, transferring R&D activities to Inno AI Tech Corp[11](index=11&type=chunk) - Incorporated Inno Disrupts Inc. (Jan 2024) for building remodeling and Inno AI Tech Corp. (Feb 2024) for AI tech research and consulting[12](index=12&type=chunk) [Note 2 — Basis of Presentation and Summary of significant accounting policies](index=9&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Summary%20of%20significant%20accounting%20policies) Explains the accounting principles used in preparing the financial statements and outlines key accounting policies - Financial statements prepared in accordance with U.S. GAAP, with interim disclosures condensed[13](index=13&type=chunk)[14](index=14&type=chunk) - Substantial doubt about the Company's ability to continue as a going concern due to **accumulated deficit of $7,451,492** and **net loss of $2,962,072** for the nine months ended June 30, 2024, and **net cash used in operations of $4,859,567**[16](index=16&type=chunk) - Company adopted ASC 606 for revenue recognition, recognizing revenue when performance obligations are satisfied, and ASC 842 for leases, recording ROU assets and lease liabilities[26](index=26&type=chunk)[37](index=37&type=chunk) - Recently issued ASUs on Income Taxes (2023-09), Segment Reporting (2023-07), and Fair Value Measurement (2022-03) are being evaluated for potential impact, with adoption required in fiscal years 2025 or 2026[44](index=44&type=chunk)[45](index=45&type=chunk) [Note 3 — Accounts Receivable, Net](index=16&type=section&id=Note%203%20%E2%80%94%20Accounts%20Receivable%2C%20Net) Details the composition of accounts receivable and the allowance for credit losses for the specified periods | Metric | June 30, 2024 (Unaudited) | September 30, 2023 | | :----------------------------------- | :------------------------ | :----------------- | | Accounts receivable, net | $0 | $70,435 | | Allowance for credit losses, beginning | $1,267,960 | $0 | | Provision for credit loss | $59,935 | $1,267,960 | | Write-offs | $(1,327,895) | $0 | | Allowance for credit losses, end | $0 | $1,267,960 | [Note 4 — Inventories](index=16&type=section&id=Note%204%20%E2%80%94%20Inventories) Presents the breakdown of inventory by type, including raw materials and production inventory | Inventory Type | June 30, 2024 (Unaudited) | September 30, 2023 | | :----------------- | :------------------------ | :----------------- | | Raw material | $73,452 | $134,299 | | Production inventory | $264,978 | $259,994 | | Total | $338,430 | $394,293 | [Note 5 — Deferred offering costs](index=16&type=section&id=Note%205%20%E2%80%94%20Deferred%20offering%20costs) Explains the treatment and disposition of costs incurred in connection with the company's initial public offering | Metric | June 30, 2024 (Unaudited) | September 30, 2023 | | :------------------------ | :------------------------ | :----------------- | | Deferred offering costs | $0 | $538,765 | - The entire amount of deferred offering costs was charged to additional paid-in capital upon the completion of the initial public offering on December 18, 2023[50](index=50&type=chunk) [Note 6 — Prepayments and other current assets](index=16&type=section&id=Note%206%20%E2%80%94%20Prepayments%20and%20other%20current%20assets) Itemizes various prepaid expenses and other current assets held by the company | Asset Type | June 30, 2024 (Unaudited) | September 30, 2023 | | :------------------------------------------ | :------------------------ | :----------------- | | Prepaid marketing and promotional services | $128,368 | $0 | | Advance to other service providers | $66,748 | $0 | | Advance to suppliers | $25,127 | $87,217 | | Prepaid insurance | $79,840 | $3,663 | | Prepaid for services by stock grants | $0 | $83,333 | | Other prepayments and current assets | $16,265 | $6,254 | | Total | $316,348 | $180,467 | [Note 7 — Property and equipment, net](index=18&type=section&id=Note%207%20%E2%80%94%20Property%20and%20equipment%2C%20net) Provides a breakdown of the company's property and equipment, net of accumulated depreciation | Asset Type | June 30, 2024 (Unaudited) | September 30, 2023 | | :------------------------- | :------------------------ | :----------------- | | Machinery and equipment | $346,900 | $346,900 | | Office equipment | $3,064 | $5,488 | | Motor vehicles | $109,276 | $64,082 | | Construction-in-progress | $846,054 | $497,000 | | Leasehold improvements | $18,000 | $54,049 | | Total | $1,323,294 | $967,519 | | Less: accumulated depreciation | $(136,153) | $(97,935) | | Property and equipment, net | $1,187,141 | $869,584 | - Construction-in-progress is related to the project to expand the Company's operation and manufacturing capabilities in the factory in Texas[53](index=53&type=chunk) - Recorded **$23,911 impairment loss** for leasehold improvements due to early termination of a lease in Corona, CA[54](index=54&type=chunk) [Note 8 — Loans payable](index=18&type=section&id=Note%208%20%E2%80%94%20Loans%20payable) Details the company's outstanding loan obligations, including revolving lines of credit and promissory notes | Loan Type | June 30, 2024 (Unaudited) | September 30, 2023 | | :------------------------ | :------------------------ | :----------------- | | Revolving line of credit | $0 | $560,000 | | Short term loan (no interest) | $50,000 | $230,000 | | Promissory note payable (total) | $123,414 | $160,239 | | - Current portion | $51,287 | $49,393 | | - Non-current portion | $72,127 | $110,846 | - The revolving line of credit with Origin Bank was fully paid off and closed as of June 30, 2024[54](index=54&type=chunk) [Note 9 — Related party transactions](index=19&type=section&id=Note%209%20%E2%80%94%20Related%20party%20transactions) Discloses financial transactions and balances with related parties, including former executives and affiliated entities | Related Party | June 30, 2024 (Unaudited) | September 30, 2023 | | :-------------------------- | :------------------------ | :----------------- | | Amount due to Mr. Dekui Liu (Former CEO) | $2,000 | $327,372 | | Accounts payable – related party (Yunited) | $0 | $50,000 | | Accounts payable – related party (Baicheng) | $0 | $485,595 | | Outstanding balance due to Zfounder and Wise Hill | $0 | $177,000 | - Mr. Dekui Liu resigned as CEO, Chairman, and Director effective May 31, 2024, and transferred his shares[57](index=57&type=chunk) - Entered into a **$15,875,800 development and supply agreement** with Vision 101 (related party), with **$257,685 received as deferred revenue** and no revenue recognized as of June 30, 2024[61](index=61&type=chunk) [Note 10 — Equity](index=21&type=section&id=Note%2010%20%E2%80%94%20Equity) Describes the company's equity structure, including common stock and the impact of its initial public offering | Metric | June 30, 2024 (Unaudited) | September 30, 2023 | | :----------------------------------- | :------------------------ | :----------------- | | Common Stock Issued and Outstanding | 20,751,726 | 18,251,726 | | Total Authorized Shares | 100,000,000 | 100,000,000 | - Completed an Initial Public Offering (IPO) on December 18, 2023, issuing **2,500,000 shares at $4.00 per share**, generating **$10,000,000 gross proceeds** and **$8,450,000 net cash**[68](index=68&type=chunk)[69](index=69&type=chunk) - Paid **$13,000** to assume underwriters' warrants, reducing Additional Paid-in Capital, and the warrants are no longer outstanding as of June 30, 2024[68](index=68&type=chunk) [Note 11 — Concentration of risk](index=22&type=section&id=Note%2011%20%E2%80%94%20Concentration%20of%20risk) Identifies significant concentrations of risk related to cash deposits, customer revenues, and supplier accounts payable - As of June 30, 2024, the Company had **$1,199,883** in uninsured deposits with two financial institutions, exceeding the FDIC insurance limit[70](index=70&type=chunk) - For the three and nine months ended June 30, 2024, **one customer accounted for 98% and 100% of total revenues**, respectively, indicating high customer concentration risk[72](index=72&type=chunk) - As of June 30, 2024, accounts payable to **two suppliers accounted for 56% of total accounts payable**, indicating vendor concentration risk[72](index=72&type=chunk) [Note 12— Commitments and contingencies](index=22&type=section&id=Note%2012%E2%80%94%20Commitments%20and%20contingencies) Outlines the company's contractual commitments, lease obligations, and potential contingent liabilities - Entered a new Texas lease (Jan 2024 - Jan 2027) with monthly rent of **$18,000**, and prepaid lease payments until December 31, 2026, securing a rent-free period for 2027[74](index=74&type=chunk) - Terminated Corona, CA lease, recognizing a **$24,710 loss**, and later settled for **$55,000**, resulting in **$44,204 non-operating income**[75](index=75&type=chunk) | Lease Metric | June 30, 2024 | September 30, 2023 | | :-------------------------------- | :------------ | :----------------- | | Operating lease ROU assets | $630,663 | $437,770 | | Total operating lease liabilities | $79,578 | $488,094 | | Average discount rate | 9.5% | 8% | - Agreement to acquire a **$14.6 million real property** in Pomona, CA, was terminated on April 29, 2024, and the **$440,000 deposit was fully refunded**[80](index=80&type=chunk) - Received a Nasdaq notice on April 12, 2024, for non-compliance with the minimum bid price requirement (**$1.00**), with a **180-calendar day compliance period until October 9, 2024**[82](index=82&type=chunk)[83](index=83&type=chunk) [ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting key performance indicators, revenue and expense trends, and liquidity. It discusses the impact of the IPO on cash resources, ongoing challenges with profitability, and the need for additional capital, while also outlining strategies to mitigate risks and improve efficiency [Cautionary Note Regarding Forward-Looking Statements](index=25&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) Advises readers on the inherent uncertainties and risks associated with forward-looking information presented in the report - Forward-looking statements are subject to risks including operational effectiveness, expense management, industry competition, technological changes, and intellectual property protection[87](index=87&type=chunk) - Investors are cautioned not to place undue reliance on forward-looking statements, and the company does not undertake to update them[87](index=87&type=chunk) [Overview](index=25&type=section&id=Overview) Describes the company's core business of manufacturing cold-formed-steel members and providing construction services, including risk mitigation strategies - Company manufactures cold-formed-steel members and provides full-scope construction services, transforming raw materials into steel framing products and prefabricated homes[88](index=88&type=chunk) - Mitigates exposure to steel price fluctuations by entering fixed-price forward contracts with suppliers and maintaining a **1-3 month inventory** of actively used rolled steel coils[89](index=89&type=chunk)[90](index=90&type=chunk) [Key Performance Indicators ("KPIs")](index=25&type=section&id=Key%20Performance%20Indicators%20(%22KPIs%22)) Identifies and explains the primary metrics used by management to evaluate operational efficiency and financial performance - **Capital turnover rate of raw-material procurement**: Aims for **1-3 months** of raw materials inventory, establishing long-term relationships with suppliers for better payment cycles and efficient capital turnover[91](index=91&type=chunk) - **Collection period of accounts receivable**: Targets strategic relationships with large-scale homebuilders to reduce risk and aims for **100% payment** before products leave the shop[92](index=92&type=chunk) - **Lead time**: Strives to communicate frequently with customers and optimize production to minimize storage and shorten lead times[93](index=93&type=chunk) - **Growth of total operating income**: Maintains internal long-term targets for gross profit and operating income, focusing on profitable long-term growth[95](index=95&type=chunk) - **Production capacity improvement**: Committed to investing in capacity and efficiency to support larger orders and increase total operating income[95](index=95&type=chunk) [Results of Operation](index=27&type=section&id=Results%20of%20Operation) Analyzes the company's financial performance, including revenue, costs, and net loss, for the reported periods | Metric | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | Change (%) | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | Change (%) | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------- | :--------------------------- | :--------------------------- | :--------- | | Revenues | $45,682 | $104,058 | -56% | $395,495 | $501,672 | -21% | | Costs of materials and labor | $25,549 | $103,886 | -75% | $404,157 | $472,710 | -15% | | Selling, general and administrative expenses | $1,032,165 | $608,855 | 70% | $2,919,899 | $1,628,307 | 79% | | Bad debt expense | $0 | $867,360 | -100% | $59,935 | $1,267,960 | -95% | | Operating loss | $(1,034,437) | $(1,493,807) | -31% | $(3,078,135) | $(2,917,852) | 5% | | Net loss | $(1,050,881) | $(1,511,805) | -30% | $(2,962,072) | $(2,971,728) | 0% | - Revenue decrease for both periods was due to project completion status and the various stages of projects, with the company focusing on larger customers and obtaining permits for new large projects[97](index=97&type=chunk) - Backlog as of June 30, 2024, was approximately **$14,000,000 to $19,000,000**, including a **$15,875,800 agreement with Vision 101**, none of which has been recognized as revenue[98](index=98&type=chunk) - Bad debt expense significantly decreased by **$867,360** (3 months) and **$1,208,025** (9 months) due to strengthened risk control, discontinuing business with high-risk smaller customers, and maintaining a high collection rate[101](index=101&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet its short-term and long-term financial obligations and fund operations | Metric | June 30, 2024 | September 30, 2023 | Change | | :----------------------------------- | :------------ | :----------------- | :----- | | Cash and cash equivalents | $1,890,903 | $4,898 | $1,886,005 increase | | Working capital (deficit) | $1,266,609 | $(2,913,827) | $4,180,436 increase | - Cash increase primarily due to **$8.45 million net proceeds** from the initial public offering in December 2023[105](index=105&type=chunk)[106](index=106&type=chunk) - Management believes current cash is insufficient to fund operations for the next twelve months, creating substantial doubt about the company's ability to continue as a going concern, requiring additional capital[107](index=107&type=chunk) | Cash Flow Activity | 9 Months Ended June 30, 2024 | 9 Months Ended June 30, 2023 | Change | | :---------------------------------- | :--------------------------- | :--------------------------- | :----- | | Net cash used in operating activities | $(4,859,567) | $(1,066,467) | $(3,793,100) increase in usage | | Net cash used in investing activities | $(412,231) | $(226,900) | $(185,331) increase in usage | | Net cash provided by financing activities | $7,157,803 | $1,356,096 | $5,801,707 increase | [Critical Accounting Policies and Estimate](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimate) Highlights the accounting policies that require significant judgment and estimation by management - Critical accounting estimates include revenue recognition, inventory valuation, going concern assessment, and provision for income taxes[113](index=113&type=chunk) [New Accounting Standards](index=31&type=section&id=New%20Accounting%20Standards) Discusses recently issued accounting pronouncements and their potential impact on the company's financial statements - Evaluating ASU 2023-09 (Income Taxes), ASU 2023-07 (Segment Reporting), and ASU 2022-03 (Fair Value Measurement) for potential impact[114](index=114&type=chunk) - Adoption of these standards is required in fiscal years 2025 and 2026, with no material impact expected on consolidated financial statements[114](index=114&type=chunk) [ITEM 4. Controls and Procedures](index=32&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section addresses the effectiveness of the company's disclosure controls and internal controls over financial reporting. Management concluded that disclosure controls were ineffective due to material weaknesses, including insufficient personnel and inadequate policies. The company acknowledges inherent limitations in control systems and reports no material changes in internal controls during the period [Disclosure Controls and Procedures](index=32&type=section&id=Disclosure%20Controls%20and%20Procedures) Evaluates the effectiveness of the company's controls designed to ensure timely and accurate financial reporting - Disclosure controls and procedures were **not effective** as of June 30, 2024, due to material weaknesses[116](index=116&type=chunk) - Material weaknesses include lack of sufficient personnel for accounting/reporting, insufficient segregation of duties, and inadequate policies/procedures for internal control over key business cycles[117](index=117&type=chunk) - Company plans to hire additional qualified personnel and establish a financial and system control framework to remediate weaknesses[117](index=117&type=chunk) [Inherent Limitations Over Internal Controls](index=32&type=section&id=Inherent%20Limitations%20Over%20Internal%20Controls) Acknowledges that internal control systems have inherent limitations that prevent absolute assurance against misstatements - Internal control systems provide only reasonable, not absolute, assurance against errors and fraud[118](index=118&type=chunk) - Inherent limitations include faulty judgments, simple errors, circumvention by individuals or collusion, and management override[118](index=118&type=chunk) [Changes in Internal Control over Financial Reporting](index=32&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports on any material changes in the company's internal controls over financial reporting during the period - No material changes in internal controls over financial reporting during the period ended June 30, 2024[119](index=119&type=chunk) [PART II OTHER INFORMATION](index=33&type=section&id=PART%20II%20OTHER%20INFORMATION) Presents additional non-financial information and disclosures required for the reporting period [ITEM 1. LEGAL PROCEEDINGS.](index=33&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) The company is not currently involved in any material legal proceedings, investigations, or claims that would significantly impact its business, financial condition, or results of operations, although it may encounter routine legal matters in the ordinary course of business - Not currently a party to any material legal proceedings, investigations, or claims[121](index=121&type=chunk) [ITEM 1A. RISK FACTORS.](index=33&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company faces a significant risk of delisting from the Nasdaq Capital Market due to its common stock bid price falling below $1.00. It has a compliance period until October 9, 2024, to regain compliance, potentially through a reverse stock split. Failure to comply could negatively impact market price, liquidity, and access to capital, and could subject the stock to "penny stock" rules, further reducing trading activity - Received a Nasdaq notice on April 12, 2024, for non-compliance with the minimum bid price requirement (**$1.00**) for 30 consecutive business days[122](index=122&type=chunk) - Has **180 calendar days**, until October 9, 2024, to regain compliance by having its common stock close at or above **$1.00** for at least 10 consecutive business days[123](index=123&type=chunk) - Failure to regain compliance could lead to delisting, negatively impacting market price and liquidity, and potentially subjecting the stock to SEC "penny stock" rules, which require extensive broker disclosures and could reduce trading activity[124](index=124&type=chunk)[125](index=125&type=chunk)[126](index=126&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) The company did not engage in any purchases of equity securities reportable under Item 703 of Regulation S-K during the quarter ended June 30, 2024 - No equity securities were purchased by the company during the quarter ended June 30, 2024[128](index=128&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES.](index=34&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) The company reported no defaults upon senior securities during the period covered by this report - No defaults upon senior securities were reported[128](index=128&type=chunk) [ITEM 5. OTHER INFORMATION.](index=34&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) During the quarter ended June 30, 2024, no directors or officers of the company adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter ended June 30, 2024[129](index=129&type=chunk) [ITEM 6. EXHIBITS](index=34&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including key corporate documents, agreements, and certifications, some of which contain redacted information in compliance with SEC regulations - Exhibits include Amended and Restated Certificate of Formation, Bylaws, Underwriter's Warrant, Omnibus Incentive Plan, and various agreements[129](index=129&type=chunk) - Portions of some exhibits have been redacted in compliance with Regulation S-K Item 601(b)(10) due to immateriality and potential competitive harm[131](index=131&type=chunk) [SIGNATURES](index=36&type=section&id=SIGNATURES) Confirms the official submission of the report by authorized company officers - Report signed by Tianwei Li, CEO and CFO, on August 12, 2024[134](index=134&type=chunk)

PART I: FINANCIAL INFORMATION This section provides unaudited condensed consolidated financial statements, management's discussion, and controls and procedures [ITEM 1: Financial Statements](index=3&type=section&id=ITEM%201%3A%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for INNO HOLDINGS INC. and its subsidiaries, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and equity at specific dates Condensed Consolidated Balance Sheets | Metric | June 30, 2024 (unaudited) | September 30, 2023 | | :-------------------------- | :------------------------ | :------------------- | | Total assets | $4,373,336 | $2,545,762 | | Total liabilities | $1,358,745 | $4,489,348 | | Total equity (deficit) | $3,014,591 | $(1,943,586) | - The company's total assets increased by approximately **71.8%** from September 30, 2023, to June 30, 2024, while total liabilities decreased significantly by about **69.7%** This led to a substantial improvement in stockholders' equity, moving from a deficit of **$(1,943,586)** to a positive equity of **$3,014,591**[11](index=11&type=chunk)[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section outlines the company's financial performance, including revenues, expenses, and net loss over specific periods Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Revenues | $45,682 | $104,058 | $395,495 | $501,672 | | Total costs and expenses | $1,080,119 | $1,597,865 | $3,473,630 | $3,419,524 | | Loss from operations | $(1,034,437) | $(1,493,807) | $(3,078,135) | $(2,917,852) | | Net loss | $(1,050,881) | $(1,511,805) | $(2,962,072) | $(2,971,728) | | Net loss attributable to INNO HOLDINGS INC. | $(1,064,702) | $(1,466,781) | $(2,926,677) | $(2,864,167) | | Basic and Diluted Losses Per Share | $(0.05) | $(0.08) | $(0.15) | $(0.16) | - For the three months ended June 30, 2024, revenues decreased by **56% YoY**, while net loss decreased by **30% YoY** For the nine months ended June 30, 2024, revenues decreased by **21% YoY**, and net loss remained relatively stable with a slight decrease of **0.3% YoY**[15](index=15&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit Condensed Consolidated Statements of Changes in Stockholders' Equity | Metric | September 30, 2023 | June 30, 2024 | | :-------------------------------- | :----------------- | :------------ | | Common Stock Shares (outstanding) | 18,251,726 | 20,751,726 | | Additional Paid-in Capital | $2,830,000 | $10,676,534 | | Accumulated Deficit | $(4,524,815) | $(7,451,492) | | Total Equity (Deficit) | $(1,943,586) | $3,014,591 | - The company's total equity significantly improved from a deficit of **$(1,943,586)** as of September 30, 2023, to a positive **$3,014,591** as of June 30, 2024, primarily due to the issuance of **2,500,000 shares** upon IPO completion, contributing **$7,859,534** to additional paid-in capital[18](index=18&type=chunk) - The number of common stock shares issued and outstanding increased from **18,251,726** to **20,751,726** during the nine months ended June 30, 2024[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | | :----------------------- | :------------------------------ | :------------------------------ | | Operating Activities | $(4,859,567) | $(1,066,467) | | Investing Activities | $(412,231) | $(226,900) | | Financing Activities | $7,157,803 | $1,356,096 | | Net Change in Cash | $1,886,005 | $62,729 | | Cash, End of Period | $1,890,903 | $113,357 | - Net cash used in operating activities significantly increased to **$(4,859,567)** for the nine months ended June 30, 2024, compared to **$(1,066,467)** in the prior year, primarily due to increased net loss and working capital outflow[22](index=22&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk) - Net cash provided by financing activities increased substantially to **$7,157,803**, mainly driven by **$8,450,000** net cash from the initial public offering in 2024[22](index=22&type=chunk)[161](index=161&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's business, accounting policies, and specific financial statement line items [Note 1 — Nature of business and organization](index=9&type=section&id=Note%201%20%E2%80%94%20Nature%20of%20business%20and%20organization) This note describes the company's primary business activities, organizational structure, and significant corporate changes - INNO HOLDINGS, INC. is primarily engaged in marketing and selling construction products and providing full-scope construction services in the US[24](index=24&type=chunk) - The company increased its ownership in Castor Building Tech LLC (CBT) to **55%** effective January 18, 2022[25](index=25&type=chunk) - In January 2024, Inno Research Institute LLC (IRI) was voluntarily terminated, with R&D activities transferred to a new wholly-owned subsidiary, Inno AI Tech Corp., incorporated in February 2024[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2 — Basis of Presentation and Summary of significant accounting policies](index=9&type=section&id=Note%202%20%E2%80%94%20Basis%20of%20Presentation%20and%20Summary%20of%20significant%20accounting%20policies) This note outlines the financial statement preparation basis, key accounting principles, and going concern assessment - The financial statements are prepared in accordance with U.S. GAAP and SEC regulations, with a fiscal year ending September 30[29](index=29&type=chunk) - The company's ability to continue as a going concern is in substantial doubt due to an accumulated deficit of **$7,451,492** and net cash used in operations of **$4,859,567** for the nine months ended June 30, 2024[33](index=33&type=chunk) - Revenue is recognized when performance obligations are satisfied, typically upon delivery of products or completion of services[48](index=48&type=chunk) - The company is evaluating the impact of recently issued ASUs on Income Tax Disclosures (ASU 2023-09) and Segment Reporting (ASU 2023-07), effective for fiscal years 2026 and 2025/2026 respectively[71](index=71&type=chunk)[72](index=72&type=chunk) [Note 3 — Accounts Receivable, Net](index=16&type=section&id=Note%203%20%E2%80%94%20Accounts%20Receivable%2C%20Net) This note details the company's accounts receivable balances, including allowances for credit losses and net amounts Accounts Receivable, Net | Metric | June 30, 2024 (unaudited) | September 30, 2023 | | :-------------------------- | :------------------------ | :------------------- | | Accounts receivable | $0 | $1,338,395 | | Less: allowance for credit losses | $0 | $(1,267,960) | | Accounts receivable, net | $0 | $70,435 | - The company had no net accounts receivable as of June 30, 2024, compared to **$70,435** as of September 30, 2023, indicating successful collection or write-off of prior balances[79](index=79&type=chunk) - Allowance for credit losses decreased from **$1,267,960** at the beginning of the nine months ended June 30, 2024, to **$0** at the end, primarily due to **$1,327,895** in write-offs[79](index=79&type=chunk) [Note 4 — Inventories](index=16&type=section&id=Note%204%20%E2%80%94%20Inventories) This note provides a breakdown of the company's inventory, including raw materials and production inventory Inventories | Inventory Type | June 30, 2024 (unaudited) | September 30, 2023 | | :--------------- | :------------------------ | :------------------- | | Raw material | $73,452 | $134,299 | | Production inventory | $264,978 | $259,994 | | Total | $338,430 | $394,293 | - Total inventories decreased by approximately **14.2%** from **$394,293** as of September 30, 2023, to **$338,430** as of June 30, 2024, mainly driven by a reduction in raw material inventory[80](index=80&type=chunk) [Note 5 — Deferred offering costs](index=16&type=section&id=Note%205%20%E2%80%94%20Deferred%20offering%20costs) This note explains the treatment and disposition of costs incurred in connection with the company's public offering - Deferred offering costs, which amounted to **$538,765** as of September 30, 2023, were reduced to **$Nil** as of June 30, 2024, as the entire amount was charged to additional paid-in capital upon the completion of the initial public offering on December 18, 2023[81](index=81&type=chunk) [Note 6 — Prepayments and other current assets](index=16&type=section&id=Note%206%20%E2%80%94%20Prepayments%20and%20other%20current%20assets) This note details the composition of the company's prepaid expenses and other short-term assets Prepayments and other current assets | Asset Type | June 30, 2024 (unaudited) | September 30, 2023 | | :-------------------------------- | :------------------------ | :------------------- | | Prepaid marketing and promotional services | $128,368 | $0 | | Advance to other service providers | $66,748 | $0 | | Advance to suppliers | $25,127 | $87,217 | | Prepaid insurance | $79,840 | $3,663 | | Prepaid for services by stock grants | $0 | $83,333 | | Other prepayments and current assets | $16,265 | $6,254 | | Total | $316,348 | $180,467 | - Total prepayments and other current assets increased by **75.3%** from **$180,467** as of September 30, 2023, to **$316,348** as of June 30, 2024, driven by new prepaid marketing, promotional services, and advances to service providers[83](index=83&type=chunk) [Note 7 — Property and equipment, net](index=18&type=section&id=Note%207%20%E2%80%94%20Property%20and%20equipment%2C%20net) This note presents the company's property and equipment, including additions, depreciation, and impairment losses Property and equipment, net | Asset Type | June 30, 2024 (unaudited) | September 30, 2023 | | :-------------------- | :------------------------ | :------------------- | | Machinery and equipment | $346,900 | $346,900 | | Office equipment | $3,064 | $5,488 | | Motor vehicles | $109,276 | $64,082 | | Construction-in-progress | $846,054 | $497,000 | | Leasehold improvements | $18,000 | $54,049 | | Total | $1,323,294 | $967,519 | | Less: accumulated depreciation | $(136,153) | $(97,935) | | Property and equipment, net | $1,187,141 | $869,584 | - Net property and equipment increased by **36.5%** to **$1,187,141** as of June 30, 2024, primarily due to a significant increase in construction-in-progress related to factory expansion in Texas[85](index=85&type=chunk) - An impairment loss of **$23,911** was recorded during the nine months ended June 30, 2024, to write down leasehold improvements due to early lease termination in Corona, CA[59](index=59&type=chunk)[86](index=86&type=chunk) [Note 8 — Loans payable](index=18&type=section&id=Note%208%20%E2%80%94%20Loans%20payable) This note outlines the company's various loan obligations, including revolving lines of credit and individual loans - The revolving line of credit with Origin Bank, totaling **$560,000** as of September 30, 2023, was fully paid off and closed by June 30, 2024[87](index=87&type=chunk) - Short-term loans from individuals decreased from **$230,000** as of September 30, 2023, to **$50,000** as of June 30, 2024, with **$180,000** repaid[88](index=88&type=chunk) - The outstanding balance of the long-term promissory note decreased from **$160,239** to **$123,414**, with current and non-current portions of **$51,287** and **$72,127** respectively as of June 30, 2024[90](index=90&type=chunk) [Note 9 — Related party transactions](index=19&type=section&id=Note%209%20%E2%80%94%20Related%20party%20transactions) This note discloses transactions and balances with related parties, including former executives and affiliated entities - The amount due to former CEO, Mr. Dekui Liu, decreased from **$327,372** as of September 30, 2023, to **$2,000** as of June 30, 2024, following his resignation and share transfer[91](index=91&type=chunk) - The company had no outstanding accounts payable to Yunited Assets LLC or Baicheng Trading LLC as of June 30, 2024, compared to **$50,000** and **$485,595** respectively as of September 30, 2023[93](index=93&type=chunk)[94](index=94&type=chunk) - An agreement with Vision 101 (a related party) for **$15,875,800** in supplies and project development has resulted in **$257,685** received as deferred revenue, with no revenue recognized as of June 30, 2024[95](index=95&type=chunk) [Note 10 — Equity](index=21&type=section&id=Note%2010%20%E2%80%94%20Equity) This note details changes in the company's equity structure, including common stock, IPO proceeds, and warrants - The company completed an Initial Public Offering (IPO) on December 18, 2023, issuing **2,500,000 shares** at **$4.00 per share**, generating **$10,000,000** in gross proceeds and **$8,450,000** in net cash after **$2,140,466** in transaction costs[104](index=104&type=chunk)[105](index=105&type=chunk) - The total authorized shares were reduced from **200,000,000** to **100,000,000**, and outstanding shares increased from **18,251,726** to **20,751,726** between September 30, 2023, and June 30, 2024[100](index=100&type=chunk)[101](index=101&type=chunk) - The company assumed underwriters' warrants for **201,250 shares** by paying **$13,000**, and these warrants are no longer outstanding as of June 30, 2024[104](index=104&type=chunk) [Note 11 — Concentration of risk](index=22&type=section&id=Note%2011%20%E2%80%94%20Concentration%20of%20risk) This note identifies significant concentrations of risk related to cash deposits, customers, and suppliers - As of June 30, 2024, the company had **$1,199,883** in uninsured deposits with two financial institutions, exceeding the FDIC insurance limit[108](index=108&type=chunk) - Customer concentration risk is high: one customer accounted for **98%** of total revenues for the three months ended June 30, 2024, and four customers for **100%** for the nine months ended June 30, 2024[110](index=110&type=chunk) - Vendor concentration risk is also present: two suppliers accounted for **100%** of total purchases for the three months ended June 30, 2024, and **58%** for the nine months ended June 30, 2024[111](index=111&type=chunk) [Note 12— Commitments and contingencies](index=22&type=section&id=Note%2012%E2%80%94%20Commitments%20and%20contingencies) This note describes the company's contractual commitments, lease terminations, and potential legal or regulatory contingencies - The company terminated its Texas facility lease without penalty on January 1, 2024, and entered a new lease with a monthly rent of **$18,000**, prepaying lease payments until December 31, 2026, to secure a rent-free 2027[113](index=113&type=chunk) - The Corona, CA office lease was terminated, resulting in a **$24,710** loss, and a subsequent settlement with the landlord on June 20, 2024, generated **$44,204** of non-operating income[114](index=114&type=chunk)[148](index=148&type=chunk) - The company received a Nasdaq notice on April 12, 2024, for non-compliance with the **$1.00** minimum bid price requirement and has until October 9, 2024, to regain compliance[122](index=122&type=chunk)[123](index=123&type=chunk) - An agreement to acquire a **$14.6 million** real property in Pomona, CA, was terminated on April 29, 2024, and the **$440,000** deposit was fully refunded[118](index=118&type=chunk) [ITEM 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=ITEM%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and operational results, including an overview of its business, key performance indicators, detailed analysis of revenues and expenses, liquidity, capital resources, and critical accounting policies [Overview](index=25&type=section&id=Overview) This section provides an introduction to the company's business model, operations, and market strategies - INNO HOLDINGS is a building technology company specializing in manufacturing cold-formed-steel members and offering comprehensive construction services, transforming raw steel into precise framing products and prefabricated homes[129](index=129&type=chunk) - The company mitigates exposure to steel price fluctuations by entering fixed-price forward contracts and maintaining a **1-3 month** inventory of actively used rolled steel coils[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) [Key Performance Indicators ("KPIs")](index=25&type=section&id=Key%20Performance%20Indicators%20(%22KPIs%22)) This section outlines the key metrics used by management to assess operational efficiency and financial performance - **Capital turnover rate of raw-material procurement:** Aims for **1-3 months** of raw materials inventory, establishing long-term relationships with suppliers for better payment cycles and quarterly purchase plans to maximize fund efficiency[131](index=131&type=chunk)[132](index=132&type=chunk) - **Collection period of accounts receivable:** Targets strategic relationships with large-scale homebuilders and professional companies to reduce risk and days outstanding, with an eventual goal of **100%** payment before product delivery[133](index=133&type=chunk) - **Lead time:** Strives to communicate frequently with customers and optimize production to minimize storage and shorten lead times[134](index=134&type=chunk) - **Growth of total operating income:** Maintains internal long-term targets for gross profit and operating income, focusing on profitable long-term growth[135](index=135&type=chunk) - **Production capacity improvement:** Committed to investing in capacity and efficiency to support larger orders and increase total operating income[136](index=136&type=chunk) [Results of Operation](index=27&type=section&id=Results%20of%20Operation) This section analyzes the company's financial performance, detailing changes in revenues, expenses, and net loss Results of Operation | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Change (%) | Nine Months Ended June 30, 2024 | Nine Months Ended June 30, 2023 | Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :------------------------------ | :------------------------------ | :--------- | | Revenues | $45,682 | $104,058 | -56% | $395,495 | $501,672 | -21% | | Costs of materials and labor | $25,549 | $103,886 | -75% | $404,157 | $472,710 | -15% | | Selling, general and administrative expenses | $1,032,165 | $608,855 | 70% | $2,919,899 | $1,628,307 | 79% | | Impairment loss | $0 | $0 | - | $23,911 | $0 | 100% | | Depreciation | $22,405 | $17,764 | 26% | $65,728 | $50,547 | 30% | | Bad debt expense | $0 | $867,360 | -100% | $59,935 | $1,267,960 | -95% | | Operating loss | $(1,034,437) | $(1,493,807) | -31% | $(3,078,135) | $(2,917,852) | 5% | | Other income (expenses) | $(16,444) | $(17,998) | -9% | $116,863 | $(53,876) | -317% | | Net loss | $(1,050,881) | $(1,511,805) | -30% | $(2,962,072) | $(2,971,728) | 0% | | Net loss attributable to INNO HOLDINGS INC. | $(1,064,702) | $(1,466,781) | -27% | $(2,926,677) | $(2,864,167) | 2% | - Revenues decreased by **56%** for the three months and **21%** for the nine months ended June 30, 2024, primarily due to project completion status and focus on larger customers requiring permit acquisition[139](index=139&type=chunk) - Selling, general and administrative expenses increased significantly by **70%** and **79%** for the three and nine months, respectively, due to additional overhead costs for future expansion and public company regulatory standards[144](index=144&type=chunk) - Bad debt expense decreased by **100%** for the three months and **95%** for the nine months, reflecting strengthened risk control and a focus on customers with **30-day** payment terms[145](index=145&type=chunk) - Operating loss decreased by **31%** for the three months but increased by **5%** for the nine months, influenced by the interplay of decreased bad debt expense, increased SG&A, and lower revenue[146](index=146&type=chunk)[147](index=147&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet short-term obligations and fund operations, including cash position and financing activities - Cash and cash equivalents increased from **$4,898** as of September 30, 2023, to **$1,890,903** as of June 30, 2024, primarily due to proceeds from the initial public offering[152](index=152&type=chunk) - The company successfully closed an initial public offering on December 18, 2023, generating net proceeds of **$8 million**[154](index=154&type=chunk) - Management believes current cash and cash equivalents are insufficient to fund operations for the next twelve months, raising substantial doubt about the company's ability to continue as a going concern without additional financing[155](index=155&type=chunk) - Working capital improved from a deficit of **$(2,913,827)** as of September 30, 2023, to a positive **$1,266,609** as of June 30, 2024[156](index=156&type=chunk) [Cash Flows](index=30&type=section&id=Cash%20Flows) This section provides a detailed analysis of cash generated and used across operating, investing, and financing activities - Net cash used in operating activities increased significantly to **$4,859,567** for the nine months ended June 30, 2024, from **$1,066,467** in the prior year, driven by increased net loss and working capital outflow[157](index=157&type=chunk)[158](index=158&type=chunk) - Net cash used in investing activities increased to **$412,231**, primarily due to **$424,800** in additions to property and equipment, mainly for machinery, tools, motor vehicles, and leasehold improvements[160](index=160&type=chunk) - Net cash provided by financing activities surged to **$7,157,803**, largely due to **$8,450,000** net cash from the IPO, partially offset by loan and related party repayments[161](index=161&type=chunk) [Critical Accounting Policies and Estimate](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Estimate) This section highlights the significant accounting policies and estimates requiring management's judgment - Key critical accounting estimates include revenue recognition, inventory valuation, going concern assessment, and the provision for income taxes, which require significant judgments and assumptions[163](index=163&type=chunk) [New Accounting Standards](index=31&type=section&id=New%20Accounting%20Standards) This section discusses the potential impact of recently issued accounting pronouncements on the company's financial statements - The company is evaluating the impact of ASU 2023-09 (Income Tax Disclosures) and ASU 2023-07 (Segment Reporting), effective for fiscal years 2026 and 2025/2026 respectively[71](index=71&type=chunk)[72](index=72&type=chunk)[164](index=164&type=chunk) [ITEM 4. Controls and Procedures](index=32&type=section&id=ITEM%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2024, due to material weaknesses, including insufficient personnel and inadequate policies in internal control functions The company plans to hire additional qualified personnel to address these issues - As of June 30, 2024, the company's disclosure controls and procedures were deemed not effective due to material weaknesses[166](index=166&type=chunk) - Lack of sufficient personnel commensurate with accounting and reporting requirements and insufficient segregation of duties within accounting functions[170](index=170&type=chunk) - Lack of adequate policies and procedures in internal control function to ensure proper control and procedures have been designed and implemented over key business cycles[170](index=170&type=chunk) - The company plans to hire additional qualified personnel to strengthen the financial reporting function and establish a financial and system control framework[167](index=167&type=chunk) PART II: OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, other information, and exhibits [ITEM 1. LEGAL PROCEEDINGS.](index=33&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) The company is not currently a party to any material legal proceedings, investigations, or claims that would have a material adverse effect on its business, financial condition, or results of operations - The company believes it does not have any threatened litigation that would individually or in aggregate have a material adverse effect on its business, results of operations, financial condition, and/or cash flows[172](index=172&type=chunk) [ITEM 1A. RISK FACTORS.](index=33&type=section&id=ITEM%201A.%20RISK%20FACTORS.) The company faces a significant risk of delisting from the Nasdaq Capital Market due to its common stock trading below the $1.00 minimum bid price requirement Failure to regain compliance by October 9, 2024, could lead to delisting, negatively impacting market price, liquidity, and access to capital markets - On April 12, 2024, Nasdaq notified the company of non-compliance with the **$1.00** minimum bid price requirement for **30** consecutive business days[174](index=174&type=chunk) - The company has an initial compliance period until October 9, 2024, to regain compliance by having its common stock close at or above **$1.00** for at least **10** consecutive business days[174](index=174&type=chunk)[175](index=175&type=chunk) - Failure to regain compliance could lead to delisting, potentially subjecting the common stock to 'penny stock' rules, which would reduce trading activity and make it harder for stockholders to sell securities[176](index=176&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.](index=34&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) The company did not purchase any equity securities reportable under Item 703 of Regulation S-K during the quarter ended June 30, 2024 - No equity securities reportable under Item 703 of Regulation S-K were purchased by the company during the period from April 1, 2024, to June 30, 2024[181](index=181&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES.](index=34&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) There were no defaults upon senior securities reported by the company - The company reported no defaults upon senior securities[182](index=182&type=chunk) [ITEM 5. OTHER INFORMATION.](index=34&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) No director or officer of the company adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2024 - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the quarter ended June 30, 2024[183](index=183&type=chunk) [ITEM 6. EXHIBITS](index=34&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including organizational documents, underwriting agreements, incentive plans, and certifications, with details on their form, file number, and filing date - The exhibit index includes Amended and Restated Certificate of Formation, Amended and Restated Bylaws, Underwriter's Warrant, Form of Common Stock Certificate, Indemnification Agreement, Development and Supply Agreement, Omnibus Incentive Plan, Offer Letter, Agreement for Purchase and Sale and Escrow Instructions, and various certifications (31.1, 31.2, 32.1, 32.2)[185](index=185&type=chunk) SIGNATURES This section contains the official signatures certifying the accuracy and completeness of the financial report - The report was signed on August 12, 2024, by Tianwei Li, Chief Executive Officer and Chief Financial Officer (Principal Executive Officer, Financial and Accounting Officer) of INNO HOLDINGS, INC[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2024 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934: For the transition period from __________ to __________. Commission file number: 001-41882 INNO HOLDINGS INC. (Exact name of registrant as specified in its charter) Texas 87-4294543 (State or Other ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934: For the fiscal year ending September 30, 2023 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934: For the transition period from __________ to __________. Securities registered pursuant to Section 12(b) of the Act: Commission file number: 001-41882 INNO HOLDINGS INC. (Exact name of registrant as specified in its ...