INNO HOLDINGS INC. 10-Q

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 December 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 Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 2465 Farm Market 359 South , Brookshire , TX 77423 (Address of principal executive offices, including ZIP Code) (800) 909-8800 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of each exchange on which registered Common stock, no par value INHD The Nasdaq Stock Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ As of February 14, 2025, there were 4,410,482 shares of common stock, no par value, issued and outstanding. Table of Contents Page PART I FINANCIAL INFORMATION ITEM 1: Financial Statements 1 Condensed Consolidated Balance Sheets – December 31, 2024 (Unaudited) and September 30, 2024 1 Condensed Consolidated Statements of Operations - Three Months Ended December 31, 2024 and 2023 (Unaudited) 3 Condensed Consolidated Statements of Changes in Stockholders’ Equity - Three Months Ended December 31, 2024 and 2023 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows - Three Months Ended December 31, 2024 and 2023 (Unaudited) 5 Notes to Unaudited Condensed Consolidated Financial Statements 6 ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 20 ITEM 3: Quantitative and Qualitative Disclosures About Market Risk 26 ITEM 4: Controls and Procedures 26 PART II OTHER INFORMATION ITEM 1: Legal Proceedings 27 ITEM 1A: Risk Factors 27 ITEM 2: Unregistered Sales of Equity Securities and Use of Proceeds 27 ITEM 3: Defaults Upon Senior Securities 28 ITEM 4: Mine Safety Disclosures 28 ITEM 5: Other Information 28 ITEM 6: Exhibits 29 SIGNATURES 30 i INNO HOLDINGS INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets December 31, 2024 September 30, 2024 (unaudited) ASSETS Current assets Cash and cash equivalent $ 4,804,138 $ 1,526,661 Accounts receivable, net - - Inventories 2,226,074 333,074 Prepayments and other current assets 548,479 428,873 Total current assets 7,578,691 2,288,608 Non-current assets Right-of-use assets 476,859 570,295 Equity Investments 1,400,000 - Property and equipment, net 1,244,193 1,300,583 Goodwill, net - - Other non-current assets - 9,851 Total non-current assets 3,121,052 1,880,729 Total assets $ 10,699,743 $ 4,169,337 LIABILITIES AND EQUITY Current liabilities Accounts payable 278,972 271,507 Deferred revenue 590,260 590,260 Other payables and accrued liabilities 224,866 287,952 Other payables – related party 11,108 1,000 Other payables 11,108 1,000 Short-term loan payable 50,000 50,000 Operating lease liability – current 4,283 60,236 Long-term notes payable – current portion 52,515 51,898 Total current liabilities 1,212,004 1,312,853 Non-current liabilities Notes payable 45,612 58,948 Total non-current liabilities 45,612 58,948 Total liabilities 1,257,616 1,371,801 Commitments and contingency — — 1 INNO HOLDINGS INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets December 31, 2024 September 30, 2024 (unaudited) Stockholders’ Equity Common stock, no par value; 100,000,000 shares authorized; 4,209,127 and 2,279,960 shares issued and outstanding on December 31, 2024 and September 30, 2024 * — — Additional paid in capital 17,998,534 10,748,534 Accumulated deficit ( 8,342,341 ) ( 7,738,644 ) Non-controlling interest ( 214,066 ) ( 212,354 ) Total equity 9,442,127 2,797,536 Total liabilities and equity $ 10,699,743 $ 4,169,337 * On October 9, 2024, the Company completed a 1-for-10 reverse stock split of its issued and outstanding common stock, no par value, (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to October 9, 2024 were automatically converted into one-tenth (1/10) of a share of common stock. The Reverse Stock Split did not reduce the number of authorized shares of Common Stock and did not change the par value of the Common Stock. The Reverse Stock Split affected all stockholders uniformly. Except to the extent that the Reverse Stock Split resulted in the stockholders’ fractional shares being rounded up, no other effects affect stockholder’s ownership percentage of the Company’s shares of Common Stock. 199,787 fractional shares were issued in connection with the Reverse Stock Split. All references to number of shares, and to per share information in the consolidated financial statements have been retroactively adjusted. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 2 INNO HOLDINGS INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations For the Three Months Ended December 31, 2024 and 2023 (unaudited) 2024 2023 For the Three Month Ended December 31, 2024 2023 REVENUES Revenue - products $ 196,000 $ 166,617 Revenue - consulting services - - Revenue - licensing income 2,000 - Total revenue 198,000 166,617 COSTS OF REVENUE: Costs of goods sold 180,000 169,617 Total cost of sales 180,000 169,617 GROSS PROFIT / (LOSS) 18,000 ( 3,000 ) OPERATING EXPENSES: Selling, general and administrative expenses (exclusive of expenses shown separately below) 578,578 785,536 Impairment loss on goodwill 3,514 - Depreciation 20,209 21,060 Total operating expenses 602,301 806,596 LOSS FROM OPERATIONS ( 584,301 ) ( 809,596 ) OTHER INCOME (EXPENSE) Interest income (expenses), net ( 1,391 ) ( 6,629 ) Other non-operating income (expense) ( 19,717 ) ( 239 ) Total other (expenses) income, net ( 21,108 ) ( 6,868 ) LOSS BEFORE INCOME TAXES ( 605,409 ) ( 816,464 ) PROVISION FOR INCOME TAXES - 800 NET LOSS ( 605,409 ) ( 817,264 ) Non-controlling interest ( 1,712 ) ( 15,746 ) NET LOSS ATTRIBUTABLE TO INNO HOLDINGS INC. $ ( 603,697 ) $ ( 801,518 ) WEIGHTED AVERAGE NUMBER OF COMMON STOCK* Basic and Diluted 2,782,406 1,860,499 LOSSES PER SHARE Basic and Diluted $ ( 0.22 ) $ ( 0.43 ) * On October 9, 2024, the Company completed a 1-for-10 reverse stock split of its issued and outstanding common stock, no par value, (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to October 9, 2024 were automatically converted into one-tenth (1/10) of a share of common stock. The Reverse Stock Split did not reduce the number of authorized shares of Common Stock and did not change the par value of the Common Stock. The Reverse Stock Split affected all stockholders uniformly. Except to the extent that the Reverse Stock Split resulted in the stockholders’ fractional shares being rounded up, no other effects affect stockholder’s ownership percentage of the Company’s shares of Common Stock. 199,787 fractional shares were issued in connection with the Reverse Stock Split. The computation of basic and diluted Losses Per Share were retroactively adjusted for all periods presented. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 3 INNO HOLDINGS INC. AND SUBSIDIARIES Condensed Consolidated Statements of Changes in Stockholders’ Equity For the Three Months Ended December 31, 2024 and 2023 Shares * Amount Capital Deficit interest Total Common Stock* Additional Paid in Accumulated Non- controlling Shares Amount Capital Deficit interest Total Balance, September 30, 2023 1,825,173 $ — $ 2,830,000 $ ( 4,524,815 ) $ ( 248,771 ) $ ( 1,943,586 ) Net loss ( 801,518 ) ( 15,746 ) ( 817,264 ) Shares issued upon IPO completion 250,000 — 7,859,534 — — 7,859,534 Balance, December 31, 2023 (unaudited) 2,075,173 $ — $ 10,689,534 $ ( 5,326,333 ) $ ( 264,517 ) $ 5,098,684 Common Stock* Additional Paid in Accumulated Non- controlling Shares Amount Capital Deficit interest Total Balance, September 30, 2024 2,279,960 $ — $ 10,748,534 $ ( 7,738,644 ) $ ( 212,354 ) $ 2,797,536 Balance 2,279,960 $ — $ 10,748,534 $ ( 7,738,644 ) $ ( 212,354 ) $ 2,797,536 Net loss — — — ( 603,697 ) ( 1,712 ) ( 605,409 ) Shares issued for cash 1,929,167 — 7,250,000 — — 7,250,000 Balance, December 31, 2024 (unaudited) 4,209,127 $ — $ 17,998,534 $ ( 8,342,341 ) $ ( 214,066 ) $ 9,442,127 Balance 4,209,127 $ — $ 17,998,534 $ ( 8,342,341 ) $ ( 214,066 ) $ 9,442,127 * On October 9, 2024, the Company completed a 1-for-10 reverse stock split of its issued and outstanding common stock, no par value, (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to October 9, 2024 were automatically converted into one-tenth (1/10) of a share of common stock. The Reverse Stock Split did not reduce the number of authorized shares of Common Stock and did not change the par value of the Common Stock. The Reverse Stock Split affected all stockholders uniformly. Except to the extent that the Reverse Stock Split resulted in the stockholders’ fractional shares being rounded up, no other effects affect stockholder’s ownership percentage of the Company’s shares of Common Stock. 199,787 fractional shares were issued in connection with the Reverse Stock Split. The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 4 INNO HOLDINGS INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows 2024 2023 For the Three Months Ended December 31, (unaudited) 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 605,409 ) $ ( 817,264 ) Adjustments to reconcile net income to cash used in operating activities: Depreciation expense 20,209 21,060 Stock-based compensation expense 9,000 31,250 Non-cash operating lease expense 53,633 21,877 Fixed assets disposal loss 63,035 250 Impairment loss 3,514 — Inventories ( 1,893,000 ) 5,382 Deferred offering costs — ( 51,701 ) Prepayments and other current assets ( 128,606 ) ( 1,603 ) Accounts payable 7,465 115,463 Unearned revenue — ( 118,303 ) Operating lease liabilities ( 6,299 ) — Other payables and accrued liabilities ( 65,300 ) 598,392 Other current liabilities 10,108 — Net cash used in operating activities ( 2,531,650 ) ( 195,197 ) CASH FLOWS FROM INVESTING ACTIVITIES: Fixed assets additions ( 26,854 ) ( 54,452 ) Purchase of investment in equity investee ( 1,401,300 ) — Proceed from fixed assets disposal — 1,569 Net cash used in investing activities ( 1,428,154 ) ( 52,883 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from related parties — 91,000 Payments to related parties — ( 325,372 ) Payments to short-term loans — ( 287,089 ) Payment to long-term note ( 12,719 ) ( 8,087 ) Proceeds from IPO — 8,450,000 Shares issued for cash 7,250,000 — Net cash provided by financing activities 7,237,281 7,920,452 CHANGES IN CASH AND CASH EQUIVALENT 3,277,477 7,672,372 CASH AND CASH EQUIVALENT, beginning of period 1,526,661 4,898 CASH AND CASH EQUIVALENT, ending of period $ 4,804,138 $ 7,677,270 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for income tax $ — $ — Cash paid for interest $ 1,763 $ 14,826 Noncash deferred offering costs offset to APIC upon IPO completion $ — $ 590,466 Right-of-use assets obtained in exchange for operating lease liabilities $ 3,500 $ — Deposit applied to lease liability $ 9,851 $ — The accompanying notes are an integral part of these Condensed Consolidated Financial Statements. 5 INNO HOLDINGS INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements Note 1 — Nature of business and organization INNO HOLDINGS, INC., a Texas corporation (the “Company”), was incorporated on September 8, 2021. The Company is principally engaged in the marketing and sale of construction products along with full-scope construction services in the US. On January 18, 2022, the Company formed a limited liability company, Castor Building Tech LLC (“CBT”), in California. The Company owned 53 % of the equity interest in CBT. On October 16, 2023, the Company and the noncontrolling interest parties reached a new ownership agreement that the Company’s ownership increased to 55 %. According to the new ownership agreement, the ownership percentage change is retroactively effective from January 18, 2022. The impact of historical noncontrolling interest allocation from this ownership percentage change is immaterial. Effective as of January 21, 2022, the Company acquired 100 % of the ordinary shares of Inno Metal Studs Corp. (“IMSC”), a Texas corporation incorporated on October 31, 2019. Pursuant to the terms of the Share Purchase Agreement with IMSC’s former sole owner and CEO of the Company, Mr. Dekui Liu, the Company issued 15,170,000 shares of its common stock to Mr. Dekui Liu in exchange for his 100 % ownership in IMSC. Upon completion of the transaction, IMSC became a 100 % owned subsidiary of the Company. Inno Research Institute LLC (“IRI”), a Texas limited liability company was formed on September 8, 2021, is a 65 % owned subsidiary of IMSC. On January 27, 2024, IRI was voluntarily terminated and resulted in a disposal loss of $ 23,715 . The R&D activities carried out by IRI will be transferred to Inno AI Tech Corp, a new subsidiary of the Company. On January 21, 2024, the Company incorporated Inno Disrupts Inc., a wholly owned subsidiary in Texas. The purpose of Inno Disrupts Inc. is to remodel buildings using the Company’s framing steel products, enhance producing and marketing capabilities, manage the designated buildings in US, and other activities. On February 11, 2024, the Company incorporated Inno AI Tech Corp., a wholly owned entity to conduct AI tech research and consulting activities. On October 18, 2024, the Company completed the acquisition of 10,000 shares of Lear Group Limited (“Lear”), a Hong Kong company, from its shareholder for a total consideration of $ 1,300 . As a result of this transaction, Lear became a wholly-owned subsidiary of the Company. The acquisition of Lear was undertaken to support the Company’s entry into a new business initiative focused on electronic product trading. On December 13, 2024, the Company completed the acquisition of 10,000 shares of Baymax High Technology Co., Limited (“Baymax”), a Hong Kong company, from its shareholder for a total consideration of $ 1,300 . As a result of this transaction, Baymax became a wholly-owned subsidiary of the Company. 6 Note 2 — Basis of Presentation and Summary of significant accounting policies Basis of presentation The accompanying financial statements have been prepared in accordance with the generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The Company’s fiscal year end date is September 30. Certain information and footnote disclosures normally included in the Company’s annual audited financial statements and accompanying notes have been condensed or omitted in this accompanying interim consolidated financial statements and footnotes. Accordingly, the accompanying interim condensed consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024, filed with the Securities and Exchange Commission (“SEC”) on December 19, 2024. In the opinion of management, these unaudited consolidated financial statements include all adjustments and accruals, consisting only of normal, recurring adjustments that are necessary for a fair statement of the results of all interim periods reported herein. The results of the interim periods are not necessarily indicative of the results expected for the full fiscal year or any other interim period or any future year or period. Consolidated Principles of consolidation The Consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company balances and transactions have been eliminated. Going concern As of December 31, 2024, the Company had total cash and cash equivalent of $ 4,804,138 and accumulated deficit of $ 8,342,341 . For the three months ended December 31, 2024, the Company had incurred a net loss of $ 603,697 and used net cash in operations of $ 2,531,650 . These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Based on our current operating and investing plan, the management has concluded that substantial doubt is not alleviated regarding the Company’s ability to continue as a going concern for 12 months from the date of issuance of these financial statements. The Company’s continuation as a going concern is dependent on its ability to generate sufficient cash flows from operations to meet its obligations, and/or obtaining additional financing from its shareholders or other sources, as may be required. Use of estimates and assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates. Cash and cash equivalents Cash and cash equivalents consist of amounts held as cash on hand, bank and money market deposits, and marketable securities with maturities of less than 90 days. 7 From time to time, the Company may maintain bank balances in interest bearing accounts in excess of the $ 250,000 , which is currently the maximum amount insured by the Federal Deposit Insurance Corporation for interest bearing accounts (there is currently no insurance limit for deposits in noninterest bearing accounts). The Company has not experienced any losses with respect to cash. Management believes the Company is not exposed to any significant credit risk with respect to its cash. Accounts receivable During the ordinary course of business, the Company extends unsecured credit to its customers. Accounts receivable are stated at the amount the Company expects to collect from customers. Management reviews its accounts receivable balances each reporting period to determine if an allowance for credit loss is required. In October 2020, the Company adopted ASU 2016-13, Topics 326 — Credit Loss, Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (CECL) methodology, for its accounting standard for its trade accounts receivable. The Company continuously monitors the recoverability of accounts receivable. If there are any indicators that a customer may not make payment, the Company may consider making provision for non-collectability for that particular customer. At the same time, the Company may cease further sales or services to such customer. The following are some of the factors that the Company develops allowance for credit losses: ● the customer fails to comply with its payment schedule; ● the customer is in serious financial difficulty; ● a significant dispute with the customer has occurred regarding job progress or other matters; ● the customer breaches any of its contractual obligations; ● the customer appears to be financially distressed due to economic or legal factors; ● the business between the customer and the Company is not active; and ● other objective evidence indicates non-collectability of the accounts receivable. The adoption of the credit loss accounting standard has no material impact on the Company’s consolidated financial statements. Accounts receivable are recognized and carried at carrying amount less an allowance for credit losses, if any. The Company maintains an allowance for credit losses resulting from the inability of its customers to make required payments based on contractual terms. The Company reviews the collectability of its receivables on a regular and ongoing basis. The Company has also included in the calculation of allowance for credit losses based on its customers’ businesses and their ability to pay their accounts receivable. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. The Company also considers external factors to the specific customer, including current conditions and forecasts of economic conditions. In the event we recover amounts previously written off, we will reduce the specific allowance for credit losses. Fair values of financial instruments ASC 825, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and all other current assets and liabilities are approximate fair values due to their short-term nature. For other financial instruments to be reported at fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines the fair value of its financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels: Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date; Level 2 — Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and Level 3 — Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data. 8 As of December 31, 2024 and September 30, 2024, the Company did not have any other financial instruments reported at fair value. Revenue recognition The Company has adopted Accounting Standards Codification (“ASC”) 606 since its inception and recognizes revenue from product and service sales revenues, net of promotional discounts and return allowances, if any, when the following revenue recognition criteria are met: a contract has been identified, separate performance obligations are identified, the transaction price is determined, the transaction price is allocated to separate performance obligations and revenue is recognized upon satisfying each performance obligation. The Company transfers the risk of loss or damage upon delivery, therefore, revenue from product sales is recognized when it is delivered to the customer. For services, all sales are recognized upon completion based on terms stated in the sales agreements. The Company evaluates the criteria of ASC 606 — Revenue Recognition Principal Agent Considerations in determining whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. Generally, when the Company is primarily responsible for fulfilling the promise to provide a specified good or service, the Company is subject to inventory risk before the good or service has been transferred to a customer and the Company has discretion in establishing the price, revenue is recorded at gross. Payments received prior to the delivery of goods to customers are recorded as unearned revenue. Sales discounts are recorded in the period in which the related sale is recognized. Sales return allowances are estimated based on historical amounts and are recorded upon recognizing the related sales. Shipping and handling costs are recorded as selling expenses. Revenue from electronic products trading is recognized at the point of delivery when the customer obtains control of the products. Costs and expenses Costs and expenses are operating expenses, which consist of costs of material and labor, selling, general and administrative expenses, and depreciation, are expensed as incurred. Inventory Inventory consists of material and finished goods ready for sale and is stated at the lower of cost or net realizable value. The Company values its inventory using the FIFO costing method. The Company’s policy is to include as a part of cost of goods sold any freight incurred to ship the product from its vendors to warehouses. Outbound freight costs related to shipping costs to customers are considered periodic costs and are reflected in selling expenses. The Company regularly reviews inventory and considers forecasts of future demand, market conditions and product obsolescence. 9 If the estimated realizable value of the inventory is less than cost, the Company makes provisions in order to reduce its carrying value to its estimated net realizable value. The Company regularly assesses its inventory for obsolescence and records an allowance only when the inventory is no longer suitable for reproduction. The Company’s inventory generally has a long life cycle and does not become obsolete quickly. Deferred offering costs The Company capitalizes certain legal, accounting and other third-party fees that are directly related to an equity financing that is probable of successful completion until such financing is consummated. After consummation of an equity financing, these costs are recorded as a reduction of the proceeds received as a result of the financing. Should a planned equity financing be abandoned, terminated or significantly delayed, the deferred offering costs are immediately written off to operating expenses in the consolidated statements of operations in the period of determination. Property and equipment Property and equipment is stated at their historical cost, less accumulated depreciation. Depreciation on property and equipment is provided using the straight-line method over the estimated useful lives of the assets as follows: Schedule of depreciation on property and equipment Machinery and equipment 7 years Office equipment 5 years Motor vehicles 5 years Leasehold improvements the shorter of the lease term or the estimated useful life of the improvements Expenditures for renewals and betterments are capitalized while repairs and maintenance costs are normally charged to the statement of operations in the year in which they are incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the asset, the expenditure is capitalized as an additional cost of the asset. Upon sale or disposal of an asset, the historical cost and related accumulated depreciation or amortization of such asset were removed from their respective accounts and any gain or loss is recorded in the statements of income. The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends and prospects, the manner in which the property is used, and the effects of obsolescence, demand, competition and other economic factors. Based on this assessment, no impairment expenses for property and equipment were recorded during the three months ended December 31, 2024 and 2023. Goodwill Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the assets acquired and liabilities assumed. Goodwill is not amortized but are subject to impairment testing on an annually basis or more frequently if events or circumstances indicate a potential impairment. These events or circumstances could include a significant change in the business climate, regulatory environment, established business plans, operating performance indicators or competition. Potential impairment indicators may also include, but are not limited to, (i) significant changes to estimates and assumptions used in the most recent annual or interim impairment testing, (ii) downward revisions to internal forecasts, and the magnitude thereof, (iii) declines in our market capitalization below our book value, and the magnitude and duration of those declines, (iv) a reorganization resulting in a change to our operating segments, and (v) other macroeconomic factors, such as increases in interest rates that may affect the weighted average cost of capital, volatility in the equity and debt markets, or fluctuations in foreign currency exchange rates that may negatively impact our reported results of operations. 10 Leases On its inception date, the Company adopted ASC 842 — Leases (“ASC 842”), which requires lessees to record right-of-use (“ROU”) assets and related lease obligations on the balance sheet, as well as disclose key information regarding leasing arrangements. ROU assets represent our right to use an underlying asset for the lease terms and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Stock-based Compensation The Company applies ASC No. 718, “Compensation-Stock Compensation,” which requires that share-based payment transactions with employees and nonemployees upon adoption of ASU 2018-07, be measured based on the grant date fair value of the equity instrument and recognized as compensation expense over the requisite service period, with a corresponding addition to equity. Under this method, compensation cost related to employee share options or similar equity instruments is measured at the grant date based on the fair value of the award and is recognized over the period during which an employee is required to provide service in exchange for the award, which generally is the vesting period. In addition to the requisite service period, the Company also evaluates the performance condition and market condition under ASC 718-10-20. For an award which contains both a performance and a market condition, and where both conditions must be satisfied for the award to vest, the market condition is incorporated into the fair value of the award, and that fair value is recognized over the employee’s requisite service period or nonemployee’s vesting period if it is probable the performance condition will be met. If the performance condition is ultimately not met, compensation cost related to the award should not be recognized (or should be reversed) because the vesting condition in the award has not been satisfied. The Company will recognize forfeitures of such equity-based compensation as they occur. Income taxes The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized. As a result of the implementation of certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax position, as defined, ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. The Company has adopted the provisions of ASC 740 since inception and has analyzed filing positions in each of the federal and state jurisdictions where the Company is required to file income tax returns, as well as open tax years in such jurisdictions. The Company has identified the U.S. federal jurisdiction, and the states of Texas and California, as its “major” tax jurisdictions. However, the Company has certain tax attribute carryforwards which will remain subject to review and adjustment by the relevant tax authorities until the statute of limitations closes with respect to the year in which such attributes are utilized. The Company believes that its income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. The Company’s policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes. 11 Commitments and contingencies In the ordinary course of business, the Company is subject to certain contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes its liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and specific facts and circumstances of each matter. Earnings per share Basic earnings per share are computed by dividing net income attributable to holders of common stock by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share reflect the potential dilution that could occur if securities to issue common stock were exercised. Recently issued but not yet adopted accounting pronouncements In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The new guidance requires enhanced disclosures about income tax expenses. The Company is required to adopt this guidance in the first quarter of the fiscal year 2026. Early adoption is permitted on a prospective basis. We are currently evaluating the impact of this ASU on our annual income tax disclosures. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures. The new guidance requires enhanced disclosures about significant segment expenses. The Company is required to adopt this guidance for its annual reporting in fiscal year 2025 and for interim period reporting beginning the first quarter of fiscal year 2026 on a retrospective basis. Early adoption is permitted. We are currently evaluating the impact of this ASU on our segment disclosures. In June 2022, FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The amendments in this ASU clarify the guidance in ASC 820 on the fair value measurement of an equity security that is subject to a contractual sale restriction and require specific disclosures related to such an equity security. This standard is effective for fiscal years beginning after December 15, 2024. The Company does not expect the adoption of this standard to have a material impact on the consolidated financial statements. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements of operations and cash flows. Subsequent events The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date that the consolidated financial statements are available to be issued. Material subsequent events that required recognition or additional disclosure in the consolidated financial statements are presented. Note 3 — Inventories As of December 31, 2024 and September 30, 2024, inventories consisted of the following: Schedule of inventories December 31, 2024 September 30, 2024 (unaudited) Raw material $ 73,109 $ 73,109 Production inventory 259,965 259,965 Merchandise inventory 1,893,000 - Total $ 2,226,074 $ 333,074 As of December 31, 2024 and September 30, 2024, there was no allowance for obsolescence recorded. 12 Note 4 — Prepayments and other current assets As of December 31, 2024 and September 30, 2024, prepayments and other current assets consisted of the following: Schedule of prepayments and other current assets December 31, 2024 September 30, 2024 (unaudited) Prepaid marketing and promotional services $ 29,500 $ 73,750 Advance to other service providers - 57,624 Advance to suppliers 250,638 250,638 Prepaid insurance 409 36,809 Prepaid for consulting services 221,529 - Other prepayments and current assets 46,403 10,052 Total $ 548,479 $ 428,873 Note 5 — Equity Investments On October 14, 2024, the Company entered into an equity investment agreement with an individual, securing a 15 % ownership interest in Core Modu LLC, and for which the Company does not have the ability to exercise significant influence. The investment totaled $ 1.4 million. The Company measure investments in equity investments without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis. Gains and losses on these securities are recognized in other income and expenses. Note 6 — Property and equipment, net As of December 31, 2024 and September 30, 2024, property and equipment consisted of the following: Schedule of property and equipment December 31, 2024 September 30, 2024 (unaudited) Machinery and equipment $ 346,900 $ 346,900 Office equipment 3,064 3,064 Motor vehicles 33,531 109,276 Construction-in-progress 1,007,737 980,883 Leasehold improvements 18,000 18,000 Total 1,409,232 1,458,123 Property and equipment, gross 1,409,232 1,458,123 Less: accumulated depreciation ( 165,039 ) ( 157,540 ) Property and equipment, net $ 1,244,193 $ 1,300,583 The Construction-in-progress is related to the project to expand the Company’s operation and manufacturing capabilities in a factory in Texas. This project is expected to be completed by the end of February 2025. For the three months ended December 31, 2024 and 2023, depreciation expenses amounted to $ 20,209 and $ 21,060 , respectively. Note 7 — Goodwill, net As of December 31, 2024 and September 30, 2024, goodwill consisted of the following: Schedule of goodwill, net Balance at September 30,2024 $ - Acquisition 3,514 Impairment losses ( 3,514 ) Balance at December 31, 2024 $ - Goodwill of $ 3,514 consists of $ 1,597 attributable to the acquisition of Baymax that occurred on December 13, 2024 and $ 1,917 attributable to the acquisition of Lear that occurred on October 18, 2024. The Company recorded a goodwill impairment charge of $ 3,514 for the three months ended December 31, 2024. 13 Note 8 — Loans payable Short-term loans Revolving line of credit On September 16, 2022, the Company entered into an agreement with Origin Bank for a revolving line of credit (the “Line of Credit”) of up to $ 1,000,000 with interest at the floating Prime Rate plus one percent ( 1.0 %) per annum, which is to be adjusted daily to the rate in effect. Interest shall be due and payable monthly as it accrues. The Line of Credit is secured by a Security Agreement and Financing Statement that covers certain properties of the Company and guaranteed by Mr. Dekui Liu, the former CEO of the Company. As of December 31, 2024, the line of credit was fully paid off and closed. For the three months ended December 31, 2024 and 2023, the Company recorded interest expense related to the Line of Credit of $ Nil and $ 13,296 , respectively. As of December 31, 2024 and September 30, 2024, the total outstanding balance of the Note was $ Nil and $ Nil , respectively. Short term loan without interest From June 2023 to August 2023, the Company borrowed short-term loans due on demand without interest, amounting to $ 230,000 from three individuals for operating purposes. As of December 31, 2024 and September 30, 2024, the outstanding loan balances due to these individuals were $ 50,000 and $ 50,000 , respectively. The balance was presented on the consolidated balance sheet as a short-term loan. Long-term loan Promissory note payable On October 28, 2021, the Company issued to BancorpSouth Bank a five-year unsecured 4.75 % promissory note, payable in equal monthly installments of $ 4,661 commencing November 28, 2021 (the “Note”). The principal amount of the Note was $ 248,500 . The Note is secured by a Security Agreement and Financing Statement that covers certain properties of the Company and guaranteed by Mr. Dekui Liu, the former CEO of the Company. For the three months ended December 31, 2024 and 2023, the Company recorded interest expense related to the note of $ 1,265 and $ 2,087 , respectively. As of December 31, 2024 and September 30, 2024, the total outstanding balance of the Note was $ 98,127 and $ 110,846 , respectively, which was presented on the consolidated balance sheet as a current portion of $ 52,515 and $ 51,898 , and a non-current portion of $ 45,612 and $ 58,948 , respectively. Note 9 — Lease The Company has adopted ASC 842 since its inception date. The Company has entered into a lease agreement for office and production space in Texas with a term from January 1, 2024 to January 1, 2027, with a monthly rent of $ 18,000 . The facility consists of 15,000 square feet of indoor space and 2.5 acres of concrete slab in the yard. Subsequently, on February 1, 2024, a mutual amendment to the lease agreement was executed. Under the terms of the amendment, the Company has opted to prepay the lease payments covering the period up to December 31, 2026, with the due date set for April 1, 2024. This prepayment arrangement secures a rent-free period for the final year of the lease, spanning the entirety of 2027. The Company has entered into a equipment operating lease agreement with a term of 14 months from January 10, 2024, at a rate of $ 2,166.67 per month. 14 In August 2023, the Company relocated its California office from Corona to Diamond Bar. The Company was obligated to pay the monthly rent for the office in Corona until February 1, 2024 when the landlord found a new lessee to occupy the facility. The right-of-use asset and lease liability were adjusted to reflect the termination of the lease. A loss of $ 24,710 was recognized in the income statement, representing the difference between the carrying amounts of the right-of-use assets $ 251,953 and the lease liability $ 221,156 (net with deposit of $ 39,699 ), as well as additional fees charged by the landlord. On June 20, 2024, the Company and the landlord settled the lease with a final lease payment of $ 55,000 , resulting in $ 44,204 of non-operating income. The lease in Diamond Bar, California has a term of 24 months from August 18, 2023 to August 17, 2025 at a rate of $ 4,730 to $ 4,926 per month. On October 28, 2024, the Company assigned to new lessee all of its right, title and interest of the Office lease. The right-of-use asset and lease liability were adjusted to reflect the termination of the lease. A loss of $ 6,351 was recognized in the income statement, representing the difference between the carrying amounts of the right-of-use assets $ 46,154 and the lease liability $ 39,803 (net with deposit of $ 9,851 ). In addition, the Company will be responsible for its pro rata share of certain costs, including utility costs, insurance and common area costs, as further detailed in the lease agreements. Total commitment for the full term of the leases is $ 665,985 . $ 476,859 and $ 570,295 of operating lease right-of-use assets and $ 4,283 and $ 60,236 of operating lease liabilities were reflected on December 31, 2024 and September 30, 2024 consolidated balance sheets, respectively. Schedule of operating lease cost The three months ended December 31, 2024 and 2023: 2024 (unaudited) 2023 (unaudited) Lease cost For the three months ended December 31, 2024 (unaudited) 2023 (unaudited) Operating lease cost (included in G&A in the Company’s statement of operations) $ 47,192 $ 51,705 Other information: Cash paid for amounts included in the measurement of lease liabilities $ 6,298 $ 24,726 Remaining term in years 0.17 - 3.00 1.0 – 3.33 Average discount rate – operating leases 9.5 % 8.5 % The supplemental balance sheet information related to leases is as follows: Schedule of supplement balance sheet information related to lease Operating leases December 31, 2024 September 30, 2024 (unaudited) Right of use asset – non-current $ 476,859 $ 570,295 Lease Liability – current 4,283 60,236 Lease Liability – non-current - - Total operating lease liabilities $ 4,283 $ 60,236 Maturities of the Company’s lease liabilities are as follows: Schedule of maturities lease liabilities Operating Lease For periods subsequent to December 31, 2024: The remaining three months ended September 30, 2025 $ 4,333 2026 - Less: Imputed interest/present value discount ( 50 ) Present value of lease liabilities $ 4,283 15 Note 10 — Related party transactions The Company borrows short term loans without interest from its Former CEO, Mr. Dekui Liu, for operation and cashflow needs from time to time. As of December 31, 2024, the amount due to Mr. Liu was $ 1,108 . As of September 30, 2024, the amount due to Mr. Liu was $ 1,000 . As of December 31, 2024, the Company had an outstanding balance of $ 10,000 owed to a shareholder, Qi Wang. The amount arose due to an overpayment of investment funds by Qi Wang. Starting in December 2022, for operation and cashflow needs, the Company advances funds from Zfounder Organization Inc., (“Zfounder”), one of the Company’s minority shareholders, and Wise Hill Inc., (“Wise Hill”), a company owned by a former shareholder of the Company who also serves as the CEO and Board member of Zfounder. The advanced amounts are non-interest bearing. As of December 31,2024, and September 30, 2024, the outstanding balance, due to Zfounder and Wise Hill, were $ Nil and $ Nil , respectively. During the three months ended December 31, 2024, other income of employee lease service from Zfounder was $ 34,000 . Zfounder was a principal shareholder of the Company as of September 30, 2024. In October 2024, Zfounder sold most of its shares of the Company to third parties, after which it became a minority shareholder of the Company, so both Zfounder and Wise Hill are no longer considered as related parties of the Company. 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, who also serves as the CEO and Board member of Zfounder. 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. As of December 31, 2024, amount of $ 244,185 has been received and recorded as deferred revenue, and $ Nil amount of revenue has been recognized. As Zfounder is now a minority shareholder of the Company, Vision is no longer considered as related parties of the Company. On October 14, 2024, the Company entered into an equity investment agreement with an individual, securing a 15 % ownership interest in Core Modu LLC (“Core Modu”). During the three months ended December 31, 2024, other income of employee lease service from Core Modu was $ 15,000 . The Company purchases prefab home, materials and supplies, including design services from Baicheng Trading LLC (“Baicheng”), a company with a director related to the former Chairwoman. As of December 31, 2024, and September 30, 2024, the outstanding balance of prepayments to Baicheng was $ 225,511 and $ 225,511 , respectively. As the former Chairwoman resigned from her position of the Company in October 2024, Baicheng is no longer considered as a related party of the Company. Note 11 — Equity The Company was incorporated in Texas on September 8, 2021. The total authorized shares of capital stock were 200,000,000 shares without par value. On November 30, 2022, the Company effected a forward stock split (the “Stock Split”) of the Company’s issued and outstanding shares of the common stock at a split ratio of 2-for-1. Further on July 24, 2023, the Company effected a reverse stock split (the “Reverse Stock Split”) of the Company’s issued and outstanding shares of the common stock at a split ratio of 1-for-2 such that every holder of common stock of the Company shall receive one share of common stock for every two shares of common stock held and to reduce the number of authorized shares of common stock from 200,000,000 to 100,000,000 . Shortly after the Reverse Stock Split, the Board of Directors of the Company approved issuance of additional shares to preserve the original purchase price per share of the shares sold in the period from February 1 to June 30, 2023. On October 9, 2024, the Company completed a 1-for-10 reverse stock split of its issued and outstanding common stock, no par value, (the “Reverse Stock Split”). As a result of the Reverse Stock Split, each share of common stock issued and outstanding immediately prior to October 9, 2024 were automatically converted into one-tenth (1/10) of a share of common stock. The Common Stock began trading on a Reverse Stock Split-adjusted basis on the Nasdaq Capital Market on October 10, 2024. The trading symbols for the Common Stock remains “INHD”. The Reverse Stock Split did not reduce the number of authorized shares of Common Stock and did not change the par value of the Common Stock. The Reverse Stock Split affected all stockholders uniformly. Except to the extent that the Reverse Stock Split resulted in the stockholders’ fractional shares being rounded up, no other effects affect stockholder’s ownership percentage of the Company’s shares of Common Stock. 199,787 fractional shares were issued in connection with the Reverse Stock Split. All share numbers of the Company’s Common Stock are stated on a post-split basis. 16 As of December 31, 2024 and September 30, 2024, after giving effect to the stock splits of the outstanding shares of Common Stock, there were 4,209,127 and 2,279,960 shares of Common Stock issued and outstanding, respectively. The total authorized number of shares of capital stock was 100,000,000 shares without par value. In December 2022, The Company issued 14,286 shares of its common stock at a price of $ 35.0 per share to an accredited investor for $ 500,000 in cash. In February 2023, The Company issued 2,703 shares of its common stock at a price of $ 37.0 per share to an accredited investor for $ 100,000 in cash. In March 2023, The Company issued 7,895 shares of its common stock at a price of $ 38.0 per share to an accredited investor for $ 300,000 in cash. On June 20, 2023, the Company issued 1,316 shares of its common stock for a total value of $ 50,000 for services to be rendered during next twelve months by the immediate relative of the Company’s Chief Financial Officer. On June 20, 2023, the Company issued 1,973 shares of its common stock for a total value of $ 75,000 for services to be rendered during next twelve months by one nonemployee contractor. These shares were valued at $ 38.0 per share, which was the per share price for the most recent sale of the Company’s capital stock to accredited investors. On January 1, 2024, the Company issued 5,000 shares of its common stock for a total value of $ 72,000 for services to be rendered during next twelve months by one advisor firm. For three months ended December 31, 2024 and 2023, the Company recorded $ 9,000 and $ 31,250 as stock compensation expense under Selling, general and administrative expenses. As of December 31, 2024 and September 30, 2024, the remaining balance of $ Nil and $ 9,000 was recorded as Prepayments and other current assets, respectively. The registration statement for the Company’s Initial Public Offering (the “Offering”) was declared effective on November 9, 2023. The Common Stock commenced trading on the Nasdaq Capital Market (the “Nasdaq”) on December 14, 2023, under the symbol “INHD.” The closing of the Offering took place on December 18, 2023. On December 18, 2023, in connection with the closing of the initial public offering of 250,000 shares (“the Shares”) of its common stock, no par value, the Company adopted its Amended and Restated Bylaws, effective the same day. In connection with the Offering of the Shares at an offering price of $ 40.0 per share, the Company also granted the underwriters an option exercisable for 45-days to purchase up to 37,500 shares of Common Stock as the Public Offering Price, less the underwriting discount to cover-over allotment. Additionally, the Company also issued warrants to the underwriters to purchase up to 20,125 shares of Common Stock at an exercise price of $ 48.0 per share, subject to adjustment as set forth in the warrants, exercisable from June 18, 2024 and valid until December 18, 2028 . On March 1, 2024, the Company entered into a warrant assumption agreement with the underwriter to assume those certain underwriter’s warrants for the purchase an aggregate amount of 20,125 shares of the Company’s common stock in connection with the Company’s initial public offering. Pursuant to the warrant assumption agreement, the Company paid an aggregate amount of $ 13,000 for the assumption of the Warrants. The paid amount of $ 13,000 was recorded to reduce Additional Paid-in Capital. As of September 30, 2024, the Warrants are no longer outstanding. The total gross proceeds from the Offering were $ 10,000,000 , before deducting underwriting discounts and other offering expenses associated with the Offering payable by the Company or paid by the Company. Transaction costs related to the offering amounted to $ 2,140,466 , consisting of $ 700,000 of underwriting fees, $ 345,876 of underwriting related expenses, $ 595,000 of legal fees and $ 499,590 of other costs. Of the total transaction cost of $ 2,140,466 , $ 590,466 in transaction costs were incurred and paid by the company before the closing date. These costs were recorded as deferred offering costs and were offset to equity upon the completion of the IPO. $ 8,450,000 total net cash from the Offering has been received by the Company on December 19, 2023. On October 31, 2024, the Company entered into a securities purchase agreement with certain investors, providing for the sale and issuance of 500,000 shares of the Company’s common stock, no par value, for an aggregate purchase price of $ 2,000,000 at $ 4.00 per share (the “October 2024 Private Placement”). The offering closed on November 6, 2024. 17 On November 13, 2024, the Company entered into a securities purchase agreement with nine non-U.S. investors, pursuant to which the Company agreed to issue and sell in a private placement offering (the “November 2024 Private Placement”) an aggregate of 729,167 shares of common stock, no par value, at a purchase price per share of $ 4.80 , for gross proceeds of approximately $ 3.5 million, of which proceeds will be used for working capital and other general corporate purposes. The offering closed on December 13, 2024. On December 11, 2024, the Company entered into a securities purchase agreement with nine non-U.S. investors, pursuant to which the Company agreed to issue and sell in a private placement offering (the “December 2024 Private Placement”) an aggregate of 700,000 shares of common stock, no par value, at a purchase price per share of $ 2.50 , for gross proceeds of approximately $ 1.75 million, of which proceeds will be used for working capital and other general corporate purposes. The offering closed on December 23, 2024. On January 16, 2025, pursuant to the Omnibus Incentive Plan, the Company granted 150,000 shares of our common stock to our Chief Executive Officer Ding Wei, and 51,355 shares of our common stock to our Chief Financial Officer Mengshu Shao. Note 12 — Concentration of risk Credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. As of December 31, 2024 and September 30, 2024, $ 4,804,138 and $ 1,526,661 , respectively, were deposited with various major financial institutions in the United States. Accounts at each institution in the United States are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $ 250,000 . As of December 31, 2024, the Company had deposits in excess of the FDIC insurance limit with one financial institution in the United States with $ 318,049 uninsured. As of September 30, 2024, the Company did not have deposit in excess of the FDIC insurance limit. Accounts receivable are typically unsecured and derived from revenue earned from customers, thereby exposing the Company to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. Customer and vendor concentration risk For the three months ended December 31, 2024, two customers accounted for 100 % of the Company’s total revenues. For the three months ended December 31, 2023, two customers accounted for 100 % of the Company’s total revenues. As of December 31, 2024 and September 30, 2024, $ Nil outstanding of accounts receivable. For the three months ended December 31, 2024, two suppliers accounted for 100 % of the Company’s total purchases. For the three months ended December 31, 2023, three suppliers accounted for 56 % of the Company’s total purchases. As of December 31, 2024 and September 30, 2024, accounts payable to two suppliers accounted for 77 % and 51 % of the Company’s total accounts payable, respectively. Note 13 — Commitments and contingencies From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. On July 23, 2024, the Company reached a settlement with a subcontractor’s customer for $ 73,000 . 18 The Company is currently involved in a litigation related to alleged fund transfers. A plaintiff claims that one of the Company’s subcontractors misappropriated over $ 1.3 million from a construction project in 2020-2021, transferring the funds to the company instead of fulfilling a judgment. While the case is in its early stages, initial investigations suggest that the Company did not receive any of these funds. The Company is vigorously contesting the plaintiff’s claims and have requested the dismissal of charges against the Company due to lack of evidence. Negotiations for dismissal are ongoing. Except as set forth above, we are not currently a party to any legal proceeding that we believe would adversely affect our financial position, results of operations, or cash flows and are not aware of any material legal proceedings contemplated by governmental authorities. Note 14 — Subsequent events On January 27, 2024, the Company entered into a Standby Equity Purchase Agreement with certain investors effective as of January 28, 2025. Pursuant to the Agreement, the Company has the right to issue and sell to the Investors, from time to time, up to $ 15 million worth of shares (the “Shares”) of the Company’s common stock, no par value per share (the “Common Stock”). The Common Stock is listed for trading on The Nasdaq Capital Market under the symbol “INHD”. The offer and sale of the Common Stock issuable hereunder will be made in reliance upon Section 4(a)(2) under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “Securities Act”), or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the transactions to be made hereunder. 19 ITEM 2. - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q. All share and per-share information presented in this report has been retroactively adjusted to reflect the 1-for-10 reverse stock split of our common stock, which was effective on October 9, 2024. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth under the heading “Cautionary Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Cautionary Note Regarding Forward-Looking Statements Some of the information in this document contains, or has incorporated by reference, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Forward-looking statements typically are identified by the use of terms such as “may,” “believe,” “anticipate,” “expect,” “plan,” “predict,” “estimate,” will be,” or other similar words and phrases, although some forward-looking statements are expressed differently. You should be aware that our actual results could differ materially from results anticipated in the forward-looking statements due to a number of factors, including, but not limited to, our ability to effectively operate our business segments, our ability to manage our research, development, expansion, growth, and operating expenses, our ability to evaluate and measure our business, prospects, and performance metrics, our ability to complete, directly and indirectly, and succeed in a highly competitive and evolving industry, our ability to respond and adapt to changes in technology and customer behavior, our ability to protect our intellectual property and to develop, maintain, and enhance a strong brand, and other factors relating to our industry, operations, and results of operations. You should also consider carefully the statements under “Risk Factors,” as disclosed in our Form 10-K, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements. Given these uncertainties, current or prospective investors are cautioned not to place undue reliance on any such forward-looking statements. We undertake no obligation to update any such factors or forward-looking statements to reflect future events or developments. Overview We are a building technology company that primarily manufactures cold-formed-steel members and offers a full range of services required to transform raw materials into precise steel framing products and prefabricated homes. We transform raw material (coils of rolled steel of various gauges and other materials) through our proprietary technologies to cut, punch and bend the steel into members or other components. These work-in-process components are further processed into finished products which are used in a variety of building types, including residential, commercial, industrial, and infrastructure. At each stage of the process, we are adding value to the original rolled steel (and other materials) to its final assembled use by businesses or directly to customers. Our largest commodity expense is our primary raw material — rolled steel in various gauges and widths. Like any commodity, steel is subject to supply/demand-based price fluctuations which can have an impact on the profitability of our business if prices change between the time we enter into a contract with a customer to deliver finished goods and the time the steel is purchased from the mill. We seek to mitigate our exposure to steel price fluctuations in two ways: ● Entering fixed price forward contracts with steel mills/suppliers for delivery in the future so that our bids for customer contracts have known pricing for the steel. This is particularly useful in larger projects that involve delivery of product over many months. ● Maintaining an approximately three-month inventory of our most actively used rolled steel coils (defined by width and gauge). This inventory requires an active forward-looking assessment of steel needs to meet expected demand. Maintaining inventory is a real financial exposure especially during periods of pricing volatility. 20 Since the quarter ended December 31, 2024, we have introduced a new business of electronic products trading. We source and purchase electronic devices, including pre-owned smartphones, tablets, and laptops, from suppliers in Asia, and sell these products to wholesale clients and retail customers in Southeast Asia, Europe and other areas. Recent Developments Expansion into Electronic Products Trading and Digital Transformation On December 13, 2024, we announced that the Company is now developing a new venture in electronic products trading while expanding its sales and distribution network across Asia. Furthermore, since December 2024, the Company has been undergoing a digital transformation in marketing, distribution and sales. This transformation aims to expand the Company’s reach into various electronic products and redefine the landscape of online marketing, sales and distribution. Reverse Stock Split On October 9, 2024, we effected a one-for-ten (1:10) reverse stock split of our issued and outstanding shares of common stock (the “Split”). As a result of the Split, every ten (10) shares of common stock issued and outstanding immediately prior to the effective date was automatically converted into one share of common stock. The Split was implemented to comply with Nasdaq’s minimum bid price requirement. The Split did not reduce the number of authorized shares of common stock and did not affect the par value of the common stock. October 2024 Private Placement On October 31, 2024, the Company entered into a securities purchase agreement with certain investors (the “October 2024 Investors”) providing for the sale and issuance of 500,000 shares of the Company’s common stock (the “October 2024 Shares”) for an aggregate purchase price of $2,000,000 at $4.00 per share. The offering closed on November 6, 2024. The issuance of the shares was made pursuant to the exemption from registration provided under Section 4(a)(2) of the Securities Act. In connection with the October 2024 Private Placement, the Company entered into a registration rights agreement with the October 2024 Investors, pursuant to which, among other things, the Company was required to prepare and file with the SEC one or more registration statements to register for the resale of the shares issued in the October 2024 Private Placement. On December 27, 2024, the Company filed a prospectus supplement to the Registration Statement on Form S-3 (File No. 333-284054) (the “Form S-3”), filed with the SEC on December 27, 2024, registering the October 2024 Shares. The Form S-3 was declared effective by the SEC on January 10, 2025. November 2024 Private Placement On November 13, 2024, the Company entered into a securities purchase agreement with nine non-U.S. investors (the “November 2024 Investors”) pursuant to which the Company agreed to issue and sell in a private placement offering an aggregate of 729,167 shares of common stock (the “November 2024 Shares”) at a purchase price per share of $4.80, for gross proceeds of approximately $3.5 million, of which proceeds will be used for working capital and other general corporate purposes. The November 2024 Private Placement closed in two tranches, with the initial issuance of 277,083 shares on November 20, 2024 and the subsequent issuance of 452,084 shares on December 13, 2024. The issuance and sale of the shares were exempt from registration under the Securities Act, pursuant to Rule 903 of Regulation S under the Securities Act because all of the investors were non-U.S. Persons (as defined under Rule 902 Section (k)(2)(i) of Regulation S). In connection with the November 2024 Private Placement, the Company entered into a registration rights agreement with the November 2024 Investors, pursuant to which, among other things, the Company was required to prepare and file with the SEC one or more registration statements to register for the resale of the shares issued in the November 2024 Private Placement. On December 27, 2024, the Company filed a prospectus supplement to the Form S-3, filed with the SEC on December 27, 2024, registering the November 2024 Shares. The Form S-3 was declared effective by the SEC on January 10, 2025. 21 December 2024 Private Placement On December 11, 2024, the Company entered into a securities purchase agreement with nine non-U.S. investors (the “December 2024 Investors”) pursuant to which the Company agreed to issue and sell in a private placement offering an aggregate of 700,000 shares of common stock (the “December 2024 Shares”) at a purchase price per share of $2.50, for gross proceeds of approximately $1.75 million, of which proceeds will be used for working capital and other general corporate purposes. The offering closed on December 23, 2024. The issuance and sale of the shares were exempt from registration under the Securities Act, pursuant to Rule 903 of Regulation S under the Securities Act because all of the investors were non-U.S. Persons (as defined under Rule 902 Section (k)(2)(i) of Regulation S). In connection with the December 2024 Private Placement, the Company entered into a registration rights agreement with the December 2024 Investors, pursuant to which, among other things, the Company was required to prepare and file with the SEC one or more registration statements to register for the resale of the shares issued in the December 2024 Private Placement. On December 27, 2024, the Company filed a prospectus supplement to the Form S-3 filed with the SEC on December 27, 2024, registering the December 2024 Shares. The Form S-3 was declared effective by the SEC on January 10, 2025. Key Performance Indicators (“KPIs”) In addition to the measures presented in our consolidated financial statements, our management regularly monitors certain KPIs for our business. The KPIs used by the Company include: The capital turnover rate of raw-material procurement Our business is reliant on timely delivery of raw materials. At the same time, our primary raw material (steel) is expensive to warehouse. We strive to achieve roughly 1-3 months of raw materials inventory to balance our cost of inventory against the risk of not having raw materials when needed. We do this by setting up long-term cooperative relationship with multiple local and national suppliers, including steel mills, in order to obtain a better payment cycle to secure the raw materials and to maximize the use of funds. At the same time, to match the raw-material usage of the sales order each quarter, we make quarterly purchase plans, to ensure the efficiency of capital turnover is higher. The collection period of accounts receivable Timely payments from customers are essential to a successful business. Based on our historical collectability experience, we will target strategic relationships with large-scale homebuilders and professional companies to reduce the risk associated with accounts receivable and reduce the days outstanding for accounts receivable. Eventually, we expect to achieve the goal of receiving 100% of the payment before products leave the shop. 22 Lead time Construction requires the coordination of many contractors, subcontractors, permitting, etc. that must be done on very exacting schedules where any delays will have a ripple effect down the chain. While there are many things we cannot control, we strive to communicate with the customers at a high frequency and make the best production arrangement to minimize storage period and shorten the lead time, which is one of the most important operating indicators of INNO. The growth of total operating income We maintain internal long-term targets for both gross profit and operating income, based partly on long-term revenue growth targets and partly on execution and internal controls. Ultimately, we strive to deliver profitable long-term growth. Production capacity improvement We are committed to investing in the improvement of production capacity and production efficiency to support larger orders and to meet the goal of increasing total operating income. Results of Operation The following table presents certain Consolidated statement-of-operations information and presentation of that data as a percentage of change from year to year. For the Three Months Ended December 31, 2024, and 2023 Three Months Ended December 31, 2024 2023 Revenues $ 198,000 166,617 19 % Costs of goods sold 180,000 169,617 6 % Selling, general and administrative expenses (exclusive of items shown separately below) 578,578 785,536 -26 % Impairment loss 3,514 - 100 % Depreciation 20,209 21,060 -4 % Operating loss (584,301 ) (809,596 ) -28 % Other income (expenses) (21,108 ) (6,868 ) 207 % Loss before income taxes (605,409 ) (816,464 ) -26 % Income tax expense - 800 -100 % Net loss (605,409 ) (817,264 ) -26 % Non-controlling interest (1,712 ) (15,746 ) -89 % Net loss attributable to Inno Holdings Inc. $ (603,697 ) (801,518 ) -25 % Revenues Revenue for the three months ended December 31, 2024 increased 19% to $198,000 in comparison to $166,617 for the three months ended December 31, 2023. Revenue for the three months ended December 31, 2024 consists solely of the Company’s new business of electronic products trading that started during this period. The new business of electronic products trading contributes to the increase in revenue for the three months ended December 31, 2024 against the comparable period in 2023. 23 Our revenues are significantly impacted by demand for residential and commercial buildings and electronic products, economic conditions including interest rates and costs of labor, materials and other variables that impact the cost of our finished goods. We cannot ensure that growth will continue, and our business may be adversely affected by the negative overall economic conditions currently being experienced. Costs of Goods Sold Cost of Goods Sold (COGS) includes raw materials (primarily rolled steel) and direct labor in the processing of raw materials through the manufacturing process, and electronic products purchased from our suppliers. COGS for the three months ended December 31, 2024, increased to $180,000 in comparison to $169,617 for the three months ended December 31, 2023. COGS for the three months ended December 31, 2024 consists solely of electronic products purchased from our suppliers in the Company’s new business of electronic products trading that started during this period. The new business of electronic products trading contributes to the increase in COGS for the three months ended December 31, 2024 against the comparable period in 2023. Selling, General and Administrative Expenses Selling, general and administrative expenses for the three months ended December 31, 2024, decreased 26% to $578,578 in comparison to $785,536 for the comparable period in 2023. The main reason for the decrease was the decrease in payroll expenses, bonus expenses and rent expenses. Operating Loss Operating loss was $584,301 for the three months ended December 31, 2024, in comparison to an operating loss of $809,596 for the comparable period in 2023. The decrease in operating loss was primarily attributed to the decrease in selling, general and administrative expenses, as discussed above. Other Income (Expense) Other expense for the three months ended December 31, 2024, was $21,108, in comparison to other expenses of $6,868 for the comparable period in 2023. Other expenses for the three months ended December 31, 2024, primarily consisted of a $63,035 donation expense, partially offset by a $49,675 income from non-operating consulting services. In contrast, other expenses for the three months ended December 31, 2023, were primarily attributable to loan interest. Net Loss Net loss for the three months ended December 31, 2024 was $605,409, in comparison to net loss of $817,264 for the three months ended December 31, 2023. The decrease in net loss was primarily due to changes in revenue, costs and expenses as outlined above. Liquidity and Capital Resources Sources of Liquidity During the three months ended December 31, 2024 and 2023, we primarily funded our operations with cash generated from operations, private and public shares offering, as well as through borrowing under our revolving line of credit, a long term promissory note, and related parties. We had cash of $4,804,138 as of December 31, 2024 compared to $1,526,661 of cash as of September 30, 2024. The cash increase was primarily due to the proceeds from the several private-placement offerings during the three months ended December 31, 2024, and offset by the cash usage in operating and investing activities during the periods ended December 31, 2024. The Company has participated in several private-placement offerings during the three months ended December 31, 2024. On October 31, 2024, the Company entered into a securities purchase agreement with certain investors, providing for the sale and issuance of 500,000 shares of the Company’s common stock, no par value, for an aggregate purchase price of $2,000,000 at $4.00 per share (the “October 2024 Private Placement”). The offering closed on November 6, 2024. 24 On November 13, 2024, the Company entered into a securities purchase agreement with nine non-U.S. investors, pursuant to which the Company agreed to issue and sell in a private placement offering (the “November 2024 Private Placement”) an aggregate of 729,167 shares of common stock, no par value, at a purchase price per share of $4.80, for gross proceeds of approximately $3.5 million, of which proceeds will be used for working capital and other general corporate purposes. The offering closed on December 13, 2024. On December 11, 2024, the Company entered into a securities purchase agreement with nine non-U.S. investors, pursuant to which the Company agreed to issue and sell in a private placement offering (the “December 2024 Private Placement”) an aggregate of 700,000 shares of common stock, no par value, at a purchase price per share of $2.50, for gross proceeds of approximately $1.75 million, of which proceeds will be used for working capital and other general corporate purposes. The offering closed on December 23, 2024. We do not believe the cash and cash equivalents on hand as of December 31, 2024 of $4,804,138 will be sufficient to fund our operations and capital expenditure requirements for the next twelve months from the date the consolidated financial statements are issued. We will be required to raise additional capital to continue to fund operations and capital expenditure. The uncertainties surrounding our ability to access capital when needed creates substantial doubt about our ability to continue as a going concern. Based on our need to raise additional funds to implement our business plans for the next twelve months, we have included a discussion concerning the presentation of our financial statements on a going concern basis in the notes to our consolidated financial statements. We will be required in the near future to issue debt or sell our Company’s equity securities in order to raise additional cash, although there are no firm arrangements in place for any such financing at this time. We cannot provide any assurances as to whether we will be able to secure the necessary financing, or the terms of any such financing transaction if one were to occur. The failure to secure such financing could severely curtail our plans for future growth or in more severe scenarios, the continued operations of our Company. Working Capital As of December 31, 2024 and September 30, 2024, our working capital (deficit) was $6,366,687 and $975,755, respectively. The historical seasonality in our business and our capital raising activities during the year can cause cash and cash equivalents, inventory, and accounts payable to fluctuate, resulting in changes in our working capital. Cash Flows Operating Activities For the three months ended December 31, 2024, net cash used in operating activities was $2,531,650, primarily driven by the net loss of $605,409, partially offset by non-cash items of $149,391 and working capital used cash of $2,075,632, which was primarily driven by a $2,012,606 increase in inventories and prepayments and other current assets. For the three months ended December 31, 2023, net cash used in operating activities was $195,197, primarily driven by the net loss of $817,264, partially offset by non-cash items of $74,437 and working capital provided cash of $547,630, which was primarily driven by a $595,552 increase in accounts payable, unearned revenue and other current liabilities. Investing Activities For the three months ended December 31, 2024, net cash used in investing activities was primarily the result of investment in equity investee of $1,400,000, which is related to the investment in Core Modu LLC. For the three months ended December 31, 2023, net cash used in investing activities was the result of additions to property and equipment of $54,452, which are mainly related to the purchase of machinery, tools, motor vehicles, and leasehold improvements. 25 Financing Activities Net cash provided by financing activities was $7,237,281 and $7,920,452, respectively, for the three months ended December 31, 2024 and 2023. For the three months ended December 31, 2024, net cash provided by financing activities was primarily due to the $7,250,000 net cash from the several private-placement offerings, offset by $12,719 payment of long term loans. For the three months ended December 31, 2023, net cash provided by financing activities was primarily due to the $8,450,000 net cash from the initial public offering, $91,000 proceeds from related parties and offset by $287,089 payment of short term loans and $325,372 repayment to related parties. Critical Accounting Policies and Estimate The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires us to make judgments, assumptions, and estimates that affect the amounts reported in the Condensed Consolidated Financial Statements and accompanying notes. Note 2 — Basis of Presentation and Summary of significant accounting policies in the Notes to the Consolidated Financial Statements included in Part II, Item 8 of our most recently filed Form 10-K, describes the significant accounting policies and methods used in the preparation of the Consolidated Financial Statements. Our critical accounting estimates, identified in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our most recently filed Form 10-K, include the discussion of estimates used for revenue recognition, inventory valuation, going concern assessment, and our provision for income taxes. Such accounting estimates require significant judgments and assumptions to be used in the preparation of the Condensed Consolidated Financial Statements included in this Form 10-Q, and actual results could differ materially from the amounts reported. New Accounting Standards From time to time, the FASB or other standards-setting bodies issue new accounting pronouncements. Updates to the FASB Accounting Standards Codification are communicated through issuance of an Accounting Standards Update. To understand the impact of recently issued guidance, whether adopted or to be adopted, please review the information provided in Note 2 — Basis of Presentation and Summary of significant accounting policies, “Recently issued but not yet adopted accounting pronouncements”, in the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q. Unless otherwise discussed, we believe that the impact of recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on our Condensed Consolidated Financial Statements upon adoption. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this item. ITEM 4. CONTROLS AND PROCEDURES. 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 Quarterly Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2024, 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 adequate policies and procedures in internal control function to ensure that proper control and procedures have been designed and implemented over key business cycles. 26 We plan to hire additional personnel or consultant with relevant experience and qualifications to design and implement internal control over key business cycles to strengthen the internal control system. 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 There have not been any changes in our internal controls over financial reporting during the period ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. From time to time, we become involved in legal proceedings arising in the ordinary course of our business. We believe that we do not have any threatened litigation which, individually or in the aggregate, would have a material adverse effect on our business, results of operations, financial condition and/or cash flows. ITEM 1A. RISK FACTORS. As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information in this Item. In any event, there have been no material changes in our risk factors as previously disclosed in our 2024 Annual Report on Form 10-K filed with the SEC on December 9, 2024. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. (A) Unregistered Sales of Equity Securities On October 31, 2024, the Company entered into a securities purchase agreement with certain investors (the “October 2024 Investors”) providing for the sale and issuance of 500,000 shares of the Company’s common stock (the “October 2024 Shares”) for an aggregate purchase price of $2,000,000 at $4.00 per share. The offering closed on November 6, 2024. The issuance of the shares was made pursuant to the exemption from registration provided under Section 4(a)(2) of the Securities Act. 27 In connection with the October 2024 Private Placement, the Company entered into a registration rights agreement with the October 2024 Investors, pursuant to which, among other things, the Company was required to prepare and file with the SEC one or more registration statements to register for the resale of the shares issued in the October 2024 Private Placement. On December 27, 2024, the Company filed a prospectus supplement to the Registration Statement on Form S-3 (File No. 333-284054) (the “Form S-3”), filed with the SEC on December 27, 2024, registering the October 2024 Shares. The Form S-3 was declared effective by the SEC on January 10, 2025. On November 13, 2024, the Company entered into a securities purchase agreement with nine non-U.S. investors (the “November 2024 Investors”) pursuant to which the Company agreed to issue and sell in a private placement offering an aggregate of 729,167 shares of common stock (the “November 2024 Shares”) at a purchase price per share of $4.80, for gross proceeds of approximately $3.5 million, of which proceeds will be used for working capital and other general corporate purposes. The November 2024 Private Placement closed in two tranches, with the initial issuance of 277,083 shares on November 20, 2024 and the subsequent issuance of 452,084 shares on December 13, 2024. The issuance and sale of the shares were exempt from registration under the Securities Act, pursuant to Rule 903 of Regulation S under the Securities Act because all of the investors were non-U.S. Persons (as defined under Rule 902 Section (k)(2)(i) of Regulation S). In connection with the November 2024 Private Placement, the Company entered into a registration rights agreement with the November 2024 Investors, pursuant to which, among other things, the Company was required to prepare and file with the SEC one or more registration statements to register for the resale of the shares issued in the November 2024 Private Placement. On December 27, 2024, the Company filed a prospectus supplement to the Form S-3, filed with the SEC on December 27, 2024, registering the November 2024 Shares. The Form S-3 was declared effective by the SEC on January 10, 2025. On December 11, 2024, the Company entered into a securities purchase agreement with nine non-U.S. investors (the “December 2024 Investors”) pursuant to which the Company agreed to issue and sell in a private placement offering an aggregate of 700,000 shares of common stock (the “December 2024 Shares”) at a purchase price per share of $2.50, for gross proceeds of approximately $1.75 million, of which proceeds will be used for working capital and other general corporate purposes. The offering closed on December 23, 2024. The issuance and sale of the shares were exempt from registration under the Securities Act, pursuant to Rule 903 of Regulation S under the Securities Act because all of the investors were non-U.S. Persons (as defined under Rule 902 Section (k)(2)(i) of Regulation S). In connection with the December 2024 Private Placement, the Company entered into a registration rights agreement with the December 2024 Investors, pursuant to which, among other things, the Company was required to prepare and file with the SEC one or more registration statements to register for the resale of the shares issued in the December 2024 Private Placement. On December 27, 2024, the Company filed a prospectus supplement to the Form S-3 filed with the SEC on December 27, 2024, registering the December 2024 Shares. The Form S-3 was declared effective by the SEC on January 10, 2025. (B) Use of Proceeds Not applicable. (C) Issuer Purchases of Equity Securities None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. MINE SAFETY DISCLOSURES. None. ITEM 5. OTHER INFORMATION. During the quarter ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. 28 ITEM 6. EXHIBITS EXHIBIT INDEX Incorporated by Reference Exhibit Description Schedule/ Form File Number Exhibits Filing Date 3.1 Certificate of Amendment to the Amended and Restated Certificate of Formation, dated as of October 8, 2024. 8-K 001-41882 3.1 October 8, 2024 10.1 Form of Securities Purchase Agreement 8-K 001-41882 10.1 November 1, 2024 10.2 Form of Registration Rights Agreement 8-K 001-41882 10.2 November 1, 2024 10.3++ Form of Securities Purchase Agreement 8-K 001-41882 10.1 November 19, 2024 10.4 Form of Registration Rights Agreement 8-K 001-41882 10.2 November 19, 2024 10.5++ Form of Securities Purchase Agreement 8-K 001-41882 10.1 December 13, 2024 10.6 Form of Registration Rights Agreement 8-K 001-41882 10.2 December 13, 2024 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 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Taxonomy Extension Schema Document 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101). * Filed or furnished herewith. ++ Exhibits and Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish a supplemental copy of any such omitted Exhibit or Schedules to the Securities and Exchange Commission upon request. 29 SIGNATURES Pursuant to the requirements 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. Date: February 14, 2025 By: /s/ Ding Wei Ding Wei Chief Executive Officer (Principal Executive Officer) Date: February 14, 2025 By: /s/ Mengshu Shao Mengshu Shao Chief Financial Officer (Principal Financial and Accounting Officer) 30