INNO HOLDINGS INC. 10-K

ITEM 9A. CONTROLS AND PROCEDURES This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies. Disclosure Controls and Procedures An evaluation was performed under the supervision of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms due to material weaknesses in our internal controls described below. ● Lack of sufficient personnel commensurate with our accounting and reporting requirements and insufficient segregation of duties within accounting functions. ● Lack of adequate policies and procedures in internal control function to ensure that proper control and procedures have been designed and implemented over key business cycles. We plan to hire additional qualified personnel with relevant experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework. However, we cannot assure you that we will remediate our material weaknesses in a timely manner. Inherent Limitations Over Internal Controls Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our control systems are designed to provide such reasonable assurance of achieving their objectives. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Changes in Internal Control over Financial Reporting We have made no change in our internal control over financial reporting during the last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 35 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors and Executive Officers The following are our executive officers and directors and their respective ages and positions as of the date of this annual report. Name Age Position Dekui Liu 42 Chief Executive Officer, Director and Chairman Tianwei (Solomon) Li 35 Chief Financial Officer Dr. Li (Alice) Gong 38 Chief Operation Officer Ying Liu 68 Director Xiaogang (John) Zhang 40 Independent Director Chen Sung 73 Independent Director Richard B. Haws, PE 67 Independent Director Dekui (“DK”) Liu — Chief Executive Officer, Director and Chairman Mr. Liu has over 10 years of ground-up experience within the real estate development industry in the United States. Three generations of his family have been engaged in industrial industry. Having grown up in the entrepreneurial environment, he took his family’s inherited interest in machinery. Practical experience in machinery made him proficient in mechanical principles, electronics principles, and hydraulic transmission principles. Prior to founding INNO, Mr. Liu was the founder and CEO of WBBC Company, engaging in industrial products manufacturing, international trades, and construction from October 2012 to October 2022. Mr. Liu was also the CEO of Hwami Builder LLC from August 2018 to August 2020 and president at the real estate holdings company, Cube Development & Supply LLC from May 2019 to September 2020. Concurrently in October 2019, he founded Inno Metal Studs Corp where he has served as CEO from its inception to the present day. He has also served as the CEO and a Director of INNO from September 2021 to the present day. He is the author of five mechanical-related pending patents in the United States. Mr. Liu obtained his A.S. Degree in 2003 in Dalian, China, with a major in Mechanical and Electrical Engineering. Tianwei (Solomon) Li — Chief Financial Officer Mr. Li is a highly accomplished finance professional with a diverse background spanning various prestigious institutions. From November 2021 to the present July 2023, he has served as a licensed banker at both J.P Morgan Securities LLC and JPMorgan Chase Bank, N.A., where he combined his matchless expertise in financial management, venture capital, and financial advisory to create real value for clients. Before joining INNO HOLDINGS INC, Mr. Li worked as an exclusive banker at J.P Morgan Securities LLC. From October 2021 to December 2021, he worked as a registered representative at Sutter Securities Inc, providing investment advice and navigating complex regulatory frameworks. Prior to that, from November 2020 to December 2021, he worked as a registered representative at Boustead Securities, LLC, where he offered investment, management, and consulting services to over 50 portfolio companies. Notably, Mr. Li held leadership positions as Vice President at both Multipoint Resources Management Corp, from April 2019 to December 2019, and CATHY LOGISTICS INC, from February 2019 to August 2019, where he demonstrated exceptional leadership skills and strategic decision-making abilities. With a master’s Mr. Li also worked as an agent at Provident Real Estate from October 2019 to February 2022. With a master’s degree in Business Administration and holding the US Financial Industry Regulatory Agency Series 7 and 63 Securities licenses, Mr. Li exemplifies professionalism and regulatory compliance in his work. Combining his extensive practical experience with his strong academic foundation, Mr. Li is committed to delivering exceptional financial solutions and building long-lasting client relationships. 36 Dr. Li (Alice) Gong — Chief Operation Officer Dr. Gong has over 10 years of experience in the field of financial analysis, having collaborated with renowned research organizations including Morningstar China where she was a data analyst from August 2007 to August 2008. Prior to founding INNO, Dr. Gong was a Graduate Research and Teaching Assistant for the Ph.D. Program of Applied Economics, Auburn University, in Alabama from August 2010 until May 2015. She also taught economics as an adjunct instructor at each of Herzing University and North American University from May 2016 to August 2016 and August 2021 to December 2021, respectively. As the COO of INNO beginning in February 2023, and as General Manager of Inno Metal Studs Corp from October 2020 to present, Dr. Gong utilizes her deep understanding of economics to analyze current market trends, finding creative ways to increase INNO’s profits and expand our consumer base. Dr. Gong is responsible for our overall operations, including generating revenue and controlling costs. Her duties at INNO include managing staff, overseeing the budget, employing marketing strategies, and many other facets of the business. Dr. Gong obtained a Ph.D. in Applied Economics from Auburn University in May 2015 and a Master of Science in Finance from Auburn University in May 2010. Ying Liu — Director Ms. Liu has more than 25 years of supply chain management experience, specifically in demand planning role. Prior to joining the Board of INNO in September of 2021, she worked at China National Petroleum Corporation, Dalian Branch from 1979-2010. She is skilled at using the analytical, marketing, and sales data of a company to effectively estimate future product demands. She advises to develop effective forecast models based on industry trends and demand patterns and support management with risk assessments and mitigation activities including advising on planning inventory flow, analyzing statistical data, and generating forecasting solutions. She received her A.S. Degree in Mathematics in 1976 in Dalian, China. Xiaogang (“John”) Zhang — Independent Director Mr. Zhang has served as a member of the Board since December 18, 2023, the day on which the Company closed its IPO. Mr. Zhang has extensive experience providing professional services for large entities throughout his twelve plus years of public accounting careers. From October 2018 to June 2021, Mr. Zhang served as audit manager and audit senior manager in KPMG’s Atlanta office leading the audit engagements of a number of multi-billion companies in Metro Atlanta. From October 2009 to September 2018, Mr. Zhang served as senior auditor in Pershing Yoakley & Associates, a healthcare accounting and consulting firm. His experience included audit services for large manufacturing companies, SEC filings, multi-hospital health systems, IFRS audits and local statuary audits. Mr. Zhang also currently serves as Director of Corporate Accounting of an industry leading packaging company, Altium Packaging LLC, overseeing the entire Corporate Accounting Team in Atlanta, Georgia, starting from June 2021. He received an MBA from East Tennessee State University in 2009 and a Master of Accountancy from East Tennessee State University in 2008. Chen Sung — Independent Director Mr. Sung has served as a member of the Board since December 18, 2023, the day on which the Company closed its IPO. Mr. Sung has over 30 years extensive experience in international trading and the construction industry. In 2018, he founded his own kitchen cabinet company, Bravo Home Products, Inc., and led the entire product development process, including design, manufacturing, and installation. As an engineer, he invented a hand-free classified dustbin device and still owns a patent in China for the device. He is also a community leader actively involved in the Chinese American Construction Professionals (“CACP”) organization where he serves as a communication coordinator. CACP is a non-profit trade organization in Southern California dedicated to enhancing members’ competitive-ness in global and local markets and providing networking opportunities for building and construction professionals. CACP’s corporate members include SOUTHERN CALIFORNIA EDISON, SoCalGas, Cathay Bank and Gensler. He also has served as a Fellow for Chinese American Construction Professionals, in California since 2015. He received an A.A. degree from Cypress College. 37 Richard B. Haws, PE — Independent Director Mr. Haws has served as a member of the Board since December 18, 2023, the day on which the Company closed its IPO. Mr. Haws has experience in commercial solutions and construction and building expertise. Starting in August 2004, Mr. Haws held various positions, including most recently senior research engineer and director of commercial solutions, at Nucor Buildings Corp, in Denton, Texas before retiring in August 2021. Mr. Haws is currently the chair of the American Iron and Steel Institute (“AISI”) Committee on Specifications and the AISI Standards Council. He has held both positions since January 2017. In his capacity as chair of the AISI Committee on Specifications and the AISI Standards Council, he leads the effort to integrate building information modeling into the design and detailing process, expands modeling to start at the estimate stage, and develops energy efficient systems to comply with increasingly more stringent energy code requirements. He was also chair of the Metal Building Manufacturers Association (“MBMA”) Energy Committee from April 2017 to May 2021. He received a master’s degree in Civil Engineering from Youngstown State University in 1983. Family Relationships The Board of Directors includes the mother of Dekui Liu, our Chief Executive Officer, Director and Chairman, Ying Liu. Code of Ethics Our Board has adopted a written code of business conduct and ethics (“Code of Ethics”) that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. We intend to post on our website a current copy of the Code of Ethics and all disclosures that are required by law regarding any amendments to, or waivers from, any provision of the Code of Ethics. Any person may obtain a copy of our Code of Ethics, without charge, by mailing a request to the Company at the address appearing on the front page of this annual Report on Form 10-K or by viewing it on our website found at https://www.innoholdings.com/code-of-business-conduct-and-ethics. Board Leadership Structure and Risk Oversight Our Board has responsibility for the oversight of our risk management processes and, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process includes receiving regular reports from board committees and members of senior management to enable our Board to understand our risk identification, risk management, and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, cybersecurity, strategic, and reputational risk. While the Company has not yet experienced a significant impact related to the situation in Ukraine caused by the Russian invasion, the Board will also closely monitor the risks in relation to such developments, including but not limited to risks related to cybersecurity, sanctions, supply chain, suppliers and service providers. Similarly, our board is monitoring US-China relations to monitor risks such as political disruption, supply chain, and foreign exchange. Board of Directors Our business and affairs are managed under the direction of our Board. Our Board consists of 5 directors, 3 of whom qualify as “independent” under the listing standards of Nasdaq. Directors serve until the next annual meeting and until their successors are elected and qualified. Officers are appointed to serve until their successors have been elected and qualified. Director Independence Our Board is composed of a majority of “independent directors” as defined under the rules of Nasdaq. Nasdaq Listing Rule 5605(a)(2) provides that an “ independent director ” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Under such definition, our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our Board has determined that Xiaogang Zhang, Chen Sung and Richard B. Haws are all independent directors of the Company. 38 Committees of the Board of Directors Committees of the Board were established and took effect upon the closing of our IPO on December 18, 2023. Our committees include an audit committee and a compensation committee. Each such committee has the composition and responsibilities described below: Audit Committee Our audit committee consists of Xiaogang Zhang, Chen Sung and Richard B. Haws. Chen Sung is the chairman of the audit committee. In addition, our Board has determined that Xiaogang Zhang is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended, or the Securities Act. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to: (a) reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the Board whether the audited financial statements should be included in our annual disclosure report; (b) discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; (c) discussing with management major risk assessment and risk management policies; (d) monitoring the independence of the independent auditor; (e) verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; (f) reviewing and approving all related-party transactions; (g) inquiring and discussing with management our compliance with applicable laws and regulations; (h) preapproving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; (i) appointing or replacing the independent auditor; (j) determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; (k) establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and (l) approving reimbursement of expenses incurred by our management team in identifying potential target businesses. The audit committee is composed exclusively of “independent directors” who are “financially literate” as defined under the Nasdaq listing standards. The Nasdaq listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. In addition, the Company has certified to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. 39 Compensation Committee Our compensation committee consists of Xiaogang Zhang, Chen Sung and Richard B. Haws, each of whom is an independent director. Each member of our compensation committee is also a non-employee director, as defined under Rule 16b-3 promulgated under the Exchange Act. Chen Sung is the chairman of the compensation committee. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to: (a) reviews, approves and determines, or makes recommendations to our Board regarding, the compensation of our executive officers; (b) administers our equity compensation plans; (c) reviews and approves, or makes recommendations to our Board, regarding incentive compensation and equity compensation plans; and (d) establishes and reviews general policies relating to compensation and benefits of our employees. Involvement in Certain Legal Proceedings To our knowledge, none of our current directors or executive officers has, during the past ten (10) years: (a) been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (b) had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two (2) years prior to that time; (c) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his or her involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; (d) been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; (e) been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (f) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in section 3(a)(26) of the Exchange Act), any registered entity (as defined in section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. 40 Director Qualifications In accordance with its charter, our nominating and corporate governance committee develops and recommends to our board of directors appropriate criteria, including desired qualifications, expertise, skills and characteristics, for selection of new directors and periodically reviews the criteria adopted by our board of directors and, if appropriate, recommends changes to such criteria. Board Diversity Our board of directors desires to seek members from diverse professional backgrounds who combine a strong professional reputation and knowledge of our business and industry with a reputation for integrity. Our board of directors does not have a formal policy with respect to diversity and inclusion but is in process of establishing a policy on diversity. Diversity of experience, expertise and viewpoints is one of many factors the nominating and corporate governance committee considers when recommending director nominees to our board of directors. Further, our board of directors seeks highly qualified women and individuals from minority groups to include in the pool from which new candidates are selected. Our board of directors also seeks members that have experience in positions with a high degree of responsibility or are, or have been, leaders in the companies or institutions with which they are, or were, affiliated, but may seek other members with different backgrounds, based upon the contributions they can make to our company. We believe that our current board composition reflects our commitment to diversity in the areas of professional background. Delinquent Section 16(a) Reports Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more than 10% of our outstanding shares of common stock (“Ten Percent Holders”) to file with the SEC reports of their share ownership and changes in their share ownership of our common stock. Directors, executive officers and Ten Percent Holders are also required to furnish us with copies of all ownership reports they file with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to us, the following directors, executive officers and Ten Percent Holders did not comply with all Section 16(a) filing requirements as of January 16, 2024 as follows: Messrs. Liu, Li, Sung, Zhang and Haws, and Mses. Gong and Liu, filed their Form 3s late in 2023. 41 ITEM 11. EXECUTIVE COMPENSATION Compensation for our Named Executive Officers As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act. This section discusses the material components of the executive compensation program for our named executive officers (“NEOs”) for the fiscal year ending September 30, 2023 (“Fiscal Year 2023”) and the fiscal year ending September 30, 2022 (“Fiscal Year 2022”). For Fiscal Year 2023, the Company’s NEOs were: ● Dekui Liu, Chief Executive Officer; ● Tianwei (Solomon) Li , Chief Financial Officer; and ● Dr. Li (Alice) Gong, Chief Operation Officer and General Manager of Inno Metal Studs Corp (a subsidiary of the Company); and ● Weston Twigg, former Chief Financial Officer. Compensation Program The objective of the compensation program of the Company and its subsidiaries (the “Company Group”) is to provide a total compensation package to each NEO that will enable the Company Group to attract, motivate and retain outstanding individuals, align the interests of our executive team with those of our shareholders, encourage individual and collective contributions to the successful execution of our short- and long-term business strategies and reward NEOs for performance. ● Base Salary. Each of the NEOs is paid a base salary commensurate with the executive’s skill set, experience, performance, role and responsibilities. For Fiscal Year 2023, the annual base salaries for Mr. Li, Dr. Gong and Mr. Twigg were $180,000, $100,347 and $250,000, respectively. For Fiscal Year 2022, the annual salaries for Mr. Liu and Dr. Gong were $80,000 and $100,347, respectively. Starting at the beginning of Fiscal Year 2023, Mr. Liu agreed to a temporary delay in the payment of his base salary. In June 2023, the Board approved of a temporary reduction in Mr. Liu’s base salary for Fiscal Year 2023, from $80,000 to $11,000. Starting Fiscal Year 2024, Mr. Liu’s base salary returned to $80,000. ● Short-Term Cash Incentives. During Fiscal Years 2023 and 2022, the Company Group did not grant any short-term cash bonuses to any of the NEOs. ● Long-Term Equity Incentives. During Fiscal Years 2023 and 2022, the Company Group did not grant any incentive equity awards to any of the NEOs. Summary Compensation Table The following table presents information regarding the total compensation awarded to, earned by and paid to the Company’s NEOs for services rendered to the Company Group in all capacities in its Fiscal Years 2023 and 2022. Name and Principal Position Year Salary ($) Total ($) Dekui Liu 2023 11,000 (1) 11,000 Chief Executive Officer 2022 80,000 80,000 Tianwei (Solomon) Li (2) 2023 45,000 45,000 Chief Financial Officer Dr. Li (Alice) Gong 2023 100,347 100,347 Chief Operation Officer and General Manager of Inno Metal Studs Corp 2022 100,347 100,347 Weston Twigg (2) 2023 104,527 104,527 Chief Financial Officer (former) (1) See above description of Mr. Liu’s base salary reduction for Fiscal Year 2023 above under “Compensation Program – Base Salary.” (2) Mr. Li was appointed Chief Financial Officer, effective July 17, 2023. Mr. Twigg resigned from the Company, effective July 3, 2023. Since neither individual was a named executive officer before Fiscal Year 2023, only their Fiscal Year 2023 compensation is reported in the table. 42 Narrative Disclosure to the Summary Compensation Table Employee Benefits The executive officers, including the NEOs, are eligible to receive the same employee benefits that are generally available to all full-time employees, subject to the satisfaction of certain eligibility requirements. In structuring these benefit plans, the Company Group seeks to provide an aggregate level of benefits that are comparable to those provided by similar companies. Agreements with our NEOs Other than Mr. Li, our NEOs not currently subject to an employment agreement with the Company Group. Effective July 17, 2023, Mr. Li was appointed by the Board to serve as the Company Group’s Chief Financial Officer. Pursuant to the terms of his Offer Letter with the Company, dated July 14, 2023 (the “Li Offer Letter”). Mr. Li’s initial employment term will run from July 17, 2023 to July 17, 2024. Starting July 17, 2024, his employment will be at-will. Pursuant to the Offer Letter Mr. Li will receive an annual base salary of $180,000 and be eligible for an annual performance-based bonus of Company options worth $200,000 disbursed proportionally on a monthly basis, subject to the Omnibus Plan. Subject to the consummation of the IPO and pursuant to the Offer Letter, Mr. Li is eligible for a one-time award of $50,000 within one week after consummation of the IPO for pre-IPO consulting services provided. The option awards and the IPO bonus of $50,000 have not been awarded as of the date of this filing. Mr. Li is also will be eligible to participate in all benefit plans generally offered to other senior executives of the Company in similar positions and with similar responsibilities. 2023 Omnibus Incentive Plan Our Board adopted, and our shareholders approved, the Inno Holdings, Inc. 2023 Omnibus Incentive Plan (the “Omnibus Plan”), effective July 18, 2023. No incentive equity awards have been granted under the Omnibus Plan as of the date hereof. The purpose of the Omnibus Plan is to: (i) encourage the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s objectives; (ii) give participants an incentive for excellence in individual performance; (iii) promote teamwork among its participants; and (iv) give the Company a significant advantage in attracting and retaining key employees, non-employee directors, and consultants. To accomplish these purposes, the Omnibus Plan provides for the grant of awards in the form of incentive stock options within the meaning of Section 422 of the Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based awards (including performance shares, performance units and performance bonus awards), and other stock-based or cash-based awards. A total of 2,013,552 shares of common stock was initially reserved and available for issuance under the Omnibus Plan. Outstanding Equity Awards at 2023 Fiscal Year-End None of our NEOs had any outstanding equity awards in the Company as of September 30, 2023. Potential Payments Upon Termination or Change in Control Except for Mr. Li, none of our NEOs were eligible for any potential payments upon any form of termination or resignation of employment or a change in control of the Company if such event took place on September 30, 2023 or at any other point during Fiscal Year 2023. Since Li Offer Letter provides for a one-year term, if Mr. Li had been terminated by the Company on September 30, 2023, he would receive the balance of his base salary through the one-year anniversary of his start date. Mr. Twigg did not receive any payments or benefits in connection with his resignation from the Company, effective July 3, 2023. 43 Director Compensation Table Shaoren Liu and Ying Liu served as the Company’s non-employee directors during Fiscal Year 2023. Neither of the Company’s non-employee directors received any compensation related to the director’s Board service in Fiscal Year 2023 or had any outstanding equity awards as of September 30, 2023. Mr. Shaoren Liu resigned as a member of the Board, effective December 18, 2023. Emerging Growth Company Status We are an “emerging growth company,” as defined in the Jobs Act. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; and (iv) the date on which we are deemed to be a large accelerated filer under applicable SEC rules. We expect that we will remain an emerging growth company for the foreseeable future, but we cannot retain our emerging growth company status indefinitely and will no longer qualify as an emerging growth company on or before the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include: ● being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosures; ● not being required to comply with the requirement of an auditor needing to attest to our internal controls over financial reporting; ● not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or providing a supplement to the auditor’s report regarding additional information about the audit and the financial statements; ● reduced disclosure obligations regarding executive compensation; and ● not being required to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. 44 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Common Stock Shares as of the date of this annual report, with respect to the holdings of (1) each person who is the beneficial owner of more than 5% of Company voting stock, (2) each of our directors, (3) each executive officer, and (4) all of our current directors and executive officers as a group. Beneficial ownership of the voting stock is determined in accordance with the rules of the SEC and includes any shares of company voting stock over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership at any time within 60 days of January 16, 2024. Except as otherwise indicated, we believe that the persons named in this table have sole voting and investment power with respect to all shares of voting stock held by them. Applicable percentage ownership in the following table is based on 22,765,278 shares of common stock issued and outstanding and including 2,013,552 shares of common stock reserved for future issuance under the Plan, plus, for each individual, any securities that individual has the right to acquire within 60 days of January 16, 2024. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company. Name and Address of Beneficial Owner (1) Title Beneficially owned (2) Percent Officers and Directors Dekui Liu Chief Executive Officer, Director and Chairman 13,837,893 60.8 % Tianwei Li Chief Financial Officer — — Dr. Li (Alice) Gong Chief Operation Officer — — Ying Liu Director — — Xiaogang (John) Zhang Independent Director — — Chen Sung Independent Director — — Richard B. Haws, PE Independent Director — — Officers and Directors as a Group (total of 7 persons) 13,837,893 60.8 % 5% Stockholders Dekui Liu Chief Executive Officer, Director and Chairman 13,837,893 60.8 % Zfounder Organization Inc. (3)(4) Investor 3,013,685 13.2 % * Less than 1% (1) Unless otherwise indicated the business address for each of the individuals is 2465 Farm Market 359 South, Brookshire, TX 77423. (2) Approximate percentage of outstanding common stock includes 2,013,552 shares of common stock reserved for issuance under the Omnibus Plan. (3) The business address for Zfounder Organization Inc. is 12905 SW 42 nd St. Unit 222 Miami, FL 33175. (4) Beneficially owned by Wen Hua. Equity Compensation Plan Information As of September 30, 2023, there was no awards were issued by the Company under its equity compensation plan. 45 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE Unless described below, during the last two fiscal years, there are no transactions or series of similar transactions to which we were a party or will be a party, in which: ● the amounts involved exceed or will exceed $120,000; and ● any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of any of the foregoing had, or will have, a direct or indirect material interest. The Company borrows short term loans without interest from its majority shareholder and CEO, Mr. Dekui Liu, for operation and cashflow needs from time to time. As of Septembere 30, 2023, the amount due to Mr. Liu was $327,372. As of September 30, 2022, the outstanding balance due to Mr. Liu was $12,233. During the year ended September 30, 2022, the Company engaged Yunited Assets LLC (“Yunited”), a limited liability company owned by Mr. Cheng Yu, the minority owner of the Company’s subsidiary, Inno Research Institute, for consultation services on a project-by-project basis. During the years ended September 30, 2023 and 2022, the Company recorded $4,375 and $19,950, respectively, of project-based consulting service fees, included in cost of materials and labor. During the years ended September 30, 2023 and 2022, the Company also recorded $110,000 and $80,000 consulting fee to Yunited for Mr. Yu’s daily operating services included in the general and administrative expenses. As of September 30, 2023, the outstanding balance of accounts payable – related party due to Yunited was $50,000. As of September 30, 2022, there were no unpaid balances due to Yunited. During the year ended September 30, 2022, the Company purchased prefab home and other material and supplies from Baicheng Trading LLC, in which the father of Mr. Dekui Liu, the Company’s majority shareholder and CEO, is a director. As of both September 30, 2023 and 2022, the outstanding balance of accounts payable-related party was $485,595. In March 2022, the Company entered into an agreement with Wise Hill Inc. (“Wise Hill”), a Florida corporation wholly owned by a minority shareholder of the Company. Pursuant to the agreement, the Company sold prefab home products of $250,000 to Wise Hill. For the year ended September 30, 2022, the Company recorded revenue-related party of $250,000. As of September 30, 2023 and 2022, the outstanding balance of accounts receivable — related party due from Wise Hill was $0 and $100,000, respectively. In March 2023, the Company entered into an agreement with Vision Opportunity Fund LP, a Florida limited partnership partially owned by a minority shareholder of the Company. In August 2023, all rights, obligations and interests under the agreement were subsequently assigned by Vision Opportunity Fund LP to its general partner, New Vision 101 LLC (“Vision 101”). Pursuant to the agreement, the Company agreed to provide supplies and act as project developer for an amount equal to $15,875,800 plus applicable taxes. During the year ended September 30, 2023, no amount of revenue has been recognized. During the year ended September 30, 2023, the Company loaned $55,000 without interest from Zfounder Organization Inc., one of the Company’s minority shareholders for operation and cashflow needs. In addition, the Company loaned $222,000 without interest from Wise Hill Inc., a company owned by a minority shareholder of the Company who also serves as the CEO and Board member of Zfounder Organization Inc., for operation and cashflow needs. $100,000 of the advanced amounts have been considered as the payment of accounts receivable due from Wise Hill Inc. As of September 30, 2023, the outstanding balance due to Zfounder Organization Inc. and Wise Hill Inc. was $55,000 and $122,000, respectively. 46 Policies and Procedures for Related Person Transactions We have adopted a written related person transaction policy that set forth the following policies and procedures for the review and approval or ratification of related person transactions. A “related person transaction” is a transaction, arrangement or relationship in which INNO or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “related person” means: ● any person who is, or at any time during the applicable period was, one of INNO’s executive officers or directors; ● any person who is known by INNO to be the beneficial owner of more than 5% of INNO’s voting securities; ● any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of INNO’s voting securities, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of INNO’s voting securities; and ● any firm, corporation or other entity in which any of the foregoing persons is a partner or principal, or in a similar position, or in which such person has a 10% or greater beneficial ownership interest. We intend to establish policies and procedures designed to minimize potential conflicts of interest arising from any dealings we may have with our affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to its audit committee charter, the audit committee have the responsibility to review related party transactions. Director Independence A majority of our Board are independent directors, see the discussion above under the section “Item 10. Directors, Executive Officers and Corporate governance.” 47 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES Independent Auditor For the years ended September 30, 2023 and 2022, the Company’s independent public accounting firm was TAAD LLP. Fees Paid to Principal Independent Registered Public Accounting Firm The aggregate fees billed by our Independent Registered Public Accounting Firm, for the years ended September 30, 2023 and 2022 are as follows: 2023 2022 Audit Fees (1) $ 178,383 $ 125,842 Audit Related Fees (2) Tax Fees (3) - - All other fees (4) - - Total Fees $ 178,383 $ 125,842 (1) Audit fees represent fees for professional services provided in connection with the audit of our annual financial statements and the review of our quarterly financial statements and those services normally provided in connection with statutory or regulatory filings or engagements including comfort letters, consents and other services related to SEC matters. This information is presented as of the latest practicable date for this annual report. (2) Audit-related fees represent fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and not reported above under “Audit Fees.” (3) TAAD did not provide us with tax compliance, tax advice or tax planning services (4) All other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding three categories. No such fees were incurred during the fiscal years ended September 30, 2023 and 2022. Audit Committee Pre-Approval Policies The charter of our audit committee provides that the duties and responsibilities of our audit committee include the pre-approval of all audit and non-audit services permitted by law or applicable SEC regulations (including fee and terms of engagement) to be performed by our external auditor. 48 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following documents are filed as part of this report: (1) Financial Statements All financial statements of the Company as set forth under Item 8 of this Annual Report on Form 10-K. (2) Financial Statement Schedules All schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required. (3) Exhibits. The following exhibits are filed, furnished or incorporated by reference as part of this Annual Report on Form 10-K. EXHIBIT INDEX 7 Incorporated by Reference Exhibit Description Schedule/ Form File Number Exhibits Filing Date 3.1 Amended and Restated Certificate of Formation dated July 14, 2023 S-1 333-273429 3.5 October 20, 2023 3.2 Amended and Restated Bylaws of Inno Holdings Inc., dated December 18, 2023 8-K 001-41882 3.1 December 18, 2023 4.1 Underwriter’s Warrant, dated December 18, 2023, issued by Inno Holdings Inc. 8-K 001-41882 4.1 December 18, 2023 4.2 Form of Common Stock Certificate S-1 333-273429 4.1 October 20, 2023 4.3* Description of Inno Holding Inc.’s Capital Stock 10.1 Form of Indemnification Agreement S-1 333-273429 10.1 October 20, 2023 10.2++ Development and Supply Agreement, by and between Vision Fund LP and Inno Metal Studs Corp, dated March 24, 2023. S-1 333-273429 10.2 October 20, 2023 10.3++ Addendum to Development and Supply Agreement, by and among Vision Opportunity Fund LP, New Vision 101 LLC and Inno Metal Studs Corp, dated August 9, 2023. S-1 333-273429 10.5 October 20, 2023 10.4 * Inno Holdings Inc. 2023 Omnibus Incentive Plan 10.5 Offer Letter, by and between Inno Holdings, Inc. and Tianwei Li, dated July 14, 2023. S-1 333-273429 10.4 October 20, 2023 10.6 Agreement for Purchase and Sale and Escrow Instructions, dated January 4, 2024 8-K 001-41882 10.1 January 16, 2024 14.1* Code of Business Conduct and Ethics 21.1 List of Subsidiaries of the Registrant S-1 333-273429 21.1 October 20, 2023 24.1* Power of Attorney (included in the signature page hereof). 31.1* Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97.1* Inno Holdings Inc. Incentive Based Compensation Recoupment Policy 99.1* Audit Committee Charter 99.2* Compensation Committee Charter * Filed or furnished herewith. ++ Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10). The omitted information is not material and would likely cause competitive harm to the Company if publicly disclosed. The Company agrees to furnish an unredacted copy to the SEC upon its request. # Certain schedules and exhibits have been omitted in compliance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of any omitted schedule or exhibit to the SEC upon its request. 7 NTD: Subject to ongoing review. 49 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. INNO HOLDINGS, INC. By: /s/ Dekui Liu Dekui Liu Chief Executive Officer (Principal Executive Officer) Date: January 16, 2024 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Position Date /s/ Dekui Liu Chief Executive Officer, Director and Chairman January 16, 2024 Dekui Liu (Principal Executive Officer) /s/ Tianwei Li Chief Financial Officer January 16, 2024 Tianwei Li (Principal Financial and Accounting Officer) /s/ Ying Liu Director January 16, 2024 Ying Liu /s/ Xiaogang Zhang Director January 16, 2024 Xiaogang Zhang /s/ Chen Sung Director January 16, 2024 Chen Sung /s/ Richard B. Haws Director January 16, 2024 Richard B. Haws 50