INHD 10-K
Inno Holdings Inc. (INHD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the fiscal year ending
For the transition period from __________ to __________.
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As of December 15, 2025, there were shares of common stock, no par value, issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This annual report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this annual report, including in the following sections: “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. When used in this annual report, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements include, but are not limited to, statements contained in this annual report relating to our business strategy, our future operating results, and our liquidity and capital-resources outlook. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy, and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees of assurance of future performance. We caution you, therefore, against relying on any of these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation:
| ● | 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 compete, 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, our operations, and results of operations. |
Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
USE OF CERTAIN DEFINED TERMS
Unless the context otherwise requires, in this annual report on Form 10-K references to:
| ● | the “Company,” “INNO,” the “registrant,” “we,” “our,” or “us” mean INNO HOLDINGS INC. and its subsidiaries; | |
| ● | “year” or “fiscal year” means the year ending September 30; | |
| ● | all dollar or $ references, when used in this prospectus, refer to United States dollars; | |
| ● | “Hong Kong” or “HK” refers to the Hong Kong Special Administrative Region of the People’s Republic of China; | |
| ● | “HKD,” “HK$” or “H.K. Dollars” refers to the official legal currency of Hong Kong; | |
| ● | “Common stock” refers to Inno Holdings Inc.’s shares of common stock, no par value. |
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PART I
ITEM 1. BUSINESS
Overview
INNO HOLDINGS INC. (“INNO,” “we,” “us,” or “Company”) is an innovative technology company that engages in the business of recycled consumer electronic devices. We source and purchase pre-owned consumer electronic devices such as smartphones and tablets from suppliers and sell the electronic devices to wholesalers that re-sell these products to their wholesale and/or retail customers in Southeast Asia, Middle East Asia, Europe and other regions. We conduct our business of recycled consumer electronic devices through two Hong Kong-based wholly-owned subsidiaries Lear Group Limited and Baymax High Technology Co., Limited, acquired by the Company in October and December 2024, respectively.
Previously the Company engaged in the business of manufacturing cold-formed-steel and offering a range of services required to transform raw materials into precise steel framing products and prefabricated homes. In the second quarter of 2025, the Company decided to discontinue its cold-formed-steel business and sold all of the Company’s ownership in the subsidiaries through which the Company conducted its cold-formed-steel business. From March 2025 till April 2025, the Company completed the disposition of all its ownership or membership interests in its former wholly- and partially-owned subsidiaries, namely Inno Metal Studs Corp, Inno AI Tech Corp., Inno Disrupts Inc., and Castor Building Tech LLC.
Our Products
Recycled consumer electronic devices
The recycled consumer electronic devices offered by us include smartphones (various models of iPhone) and tablets (various models of iPad). For the years ended September 30, 2025, revenues generated from recycled iPhones accounted for 100% of our revenue.
We expect to expand our products into more categories in the future including but not limited to laptops, such as MacBook, and other accessories, such as smartwatches and headphones.
Our Customers
Currently we derive all of our revenues from wholesale customers. Such wholesaler customers purchase recycled consumer electronic devices from us and then re-sell them in Southeast Asia, Middle East Asia, Europe and other regions.
Our Suppliers
We currently rely on a limited number of suppliers that collect pre-owned consumer electronic devices from network carriers, companies, and individuals. For the year ended September 30, 2025, two suppliers accounted for all of the Company’s total purchases. We endeavor to broaden our supplier base. However, we maintain a high standard requirement for supplies of recycled consumer electronic devices. Before purchasing products from a new supplier, the Company will perform a background check, taken into consideration the new supplier’s past track record.
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Our Competitive Strengths
Purchase and sale of high quality Like-New products
Recycled consumer electronic devices vary greatly in their quality. Our business strategy is purchasing and selling high quality Like-New electronic devices that have minimal signs of use, scratches, cracks or scuffs to the screen or rear housing. Such business strategy contributes to not only high efficiency on inspection, testing and refurbishment of the purchased products but also extremely low return rate from our global customers.
Dynamic inventory level management
We maintain a dynamic level of inventories of recycled consumer electronic devices, based on our knowledge of the prevailing market trend and estimation of electronic devices price fluctuation. We continuously adjust our inventory levels by lowering inventory of products in downward trend and increasing inventory of those in upward trend.
Fast response to our customers’ needs
We respond fast to our customers’ needs. The fast response is enabled by the inventories maintained in our leased warehouse in Hong Kong that are ready for shipping to our customers. Also, since our products are high quality Like-New devices, our warehouse personnels can quickly package and ship the goods via third party couriers. These measures help shorten the time between our receipt of customers’ orders and the delivery of the goods. Fast response to our customers’ needs contribute to higher level of customer loyalty to our products.
Flexible product pricing algorithm
We have developed a database and algorithm for pricing strategies in purchase and sales of recycled consumer electronic devices. We are able to set prices in a flexible way to balance demands and profitability by comprehensively considering factors including the current market price of similar products, historical transaction prices of similar products, size of the order, specifications of the products, and the quantity of the products.
Strategic location of Hong Kong
Our operating subsidiaries, Lear Group Limited and Baymax High Technology Co., Limited, are located in Hong Kong. Hong Kong is one of the busiest ports and enjoys the advantage of duty-free status, making it a major hub for the global recycled electronic devices industry. Located in Hong Kong, the Company can conveniently receive recycled electronic devices from, and have them dispatched to, most of the regions in the world.
Marketing
We endeavor to broaden our customer base. Our marketing strategy is a long-term plan to achieve our Company’s mission by understanding the needs of customers and creating a distinct and sustainable competitive advantage. We intend to leverage our marketing and sales efforts to establish new potential customers. We also intend to leverage customer referrals, which in the past have been a source of new business. We believe that the reputation we have developed with our current customers represents an important part of our marketing effort.
We have a digital market channel and a social media presence. Our marketing channels include creating and implementing ad campaigns, and word of mouth. Also, we are actively conducting market research to determine the viability of our new products and new patents. We have increased our marketing budget and formed a professional sales team to increase our online marketing, which we believe can help us grow our revenue.
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Business Plan
Diversify the product portfolio
We built a solid business model of recycling and reselling smartphones and tablets. With the experience and capital gained over the years, we plan to further diversify our product portfolio by participating in laptops, such as MacBook, and other accessories, such as smartwatches and headphones.
Expand into strategic overseas markets
The Company expects the recycled consumer electronic devices market to experience robust growth in Southeast and Middle Asia in the near future. To shorten the supply chain and better interact with the clients located in these strategic markets, the Company intends to set up offices in Singapore, Malaysia, Dubai and other areas in Southeast and Middle Asia in the next five years. We expect this strategic move to help increase its revenues and market presence.
Expand the wholesale business and develop a B2B Marketplace Platform
We plan to further expand our wholesale customer base in recycled consumer electronic devices. The Company is now in process of developing a Business to Business (“B2B”) marketplace platform that will facilitate manufacturers and distributors as suppliers to sell direct to business buyers as wholesalers. This marketplace platform, empowered by cloud computing, big data, and high-frequency matchmaking technology, will provide sellers with marketplace technology to enhance and grow their business while offering buyers access to an exclusive collection of top brands at or below wholesale prices. The platform is expected to supplement the Company’s traditional business model of individual negotiations and attract potential customers. We expect to obtain more customers and suppliers through this marketplace platform.
Potential acquisitions for horizonal and vertical integration
In accordance with our growth strategy, the Company intends to pursue horizonal and vertical integration by acquiring companies operating within the industry of recycled consumer electronic devices. The objective of this horizonal and vertical integration is to strengthen and expand our capabilities within the market. We will position ourselves to offer a comprehensive range of solutions encompassing the entire value chain of recycled consumer electronic devices.
To fortify our supply chain and augment our capabilities, we will consider the strategic acquisition of distributors/wholesalers with the proceeds from our equity and/or debt financing activities to pursue potential acquisitions. The targeted companies would include the ones that enjoy the popularities in the industry, including but not limited to the companies that have already built stable sales connection to whole and retail customers in regions that we currently do not reach to, such as North and South America. The Company may also consider the strategic acquisition of its competitors within the industry in order to strengthen its capabilities of inspection, testing and refurbishment as well as pricing.
Recruit additional employees
We plan to employ additional personnel to meet the Company’s growth needs. Our hiring plan includes the recruitment of marketing personnel to build and improve our brand recognition, the sales personnels to meet and satisfy the increased wholesale demands from our existing and new customers, and also a financial and accounting team to strengthen our financial control system.
Enhance business infrastructures
The Company plans to upgrade its business infrastructure to better prepare for its future growth, including the inventory management and information system. In order to improve our dynamic inventory management, we plan to upgrade the inventory management system so that the Company’s inventories of recycled consumer electronic devices can be maintained at a more efficient and flexible level. In addition, the Company may develop a proprietary device testing software to further facilitate the inspection and testing process of purchased recycled consumer electronic devices. With the updated infrastructures, we expect to increase the efficiency and data security in our business operations.
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Seasonality
We experience a moderate level of seasonality in our business primarily as a result of new product launches by consumer electronic devices manufacturers and promotional campaigns by e-commerce platforms. New product launches by major cell phone brands such as Apple each year also boost our customer traffic and purchase orders. All of these activities can affect our results for those quarters. The seasonality in our business also results from major promotions and holidays such as Black Friday, Cyber Monday, and Christmas Holiday. Overall, the historical seasonality of our business has been relatively moderate. Our financial condition and results of operations for future periods may continue to fluctuate.
Radio Dealers License (unrestricted)
Our operating subsidiaries Lear Group Limited and Baymax High Technology Co., Limited have obtained the Radio Dealers License (Unrestricted), the document required to conduct the trade or business in apparatus or material for radio-communications or any components part thereof, including the performing of repairs and refurbishment, and the import and export of radio-communications transmitting apparatus. The current term of the License of Lear Group Limited and Baymax High Technology Co., Limited will expire on September 30, 2025 and December 31, 2025, respectively. We will comply with the requirements and keep the license valid.
Competition
The recycled consumer electronic wholesale industry in Hong Kong is competitive and relatively fragmented, with approximately 1,000 wholesalers engaged in sourcing, grading, refurbishing and resale of pre-owned consumer electronic devices. The major competitors of the Company include the following:
| ● | Guang Yi Co. Ltd., founded in 2020, is primarily engaged in the international wholesaling and trading of cellphones and other consumer electronic devices in various grades, including brand new, nearly new, and average grading. Suppliers of Guang Yi Co. Ltd. include telecommunication companies and over 100 other vendors. In addition, the Guang Yi Co. Ltd. has built a global buy-back network to recycle pre-owned cellphones through a B2C channel. |
| ● | Brightway Trading Co., established in 2013, is focusing on the submarket of cell phones returned by customers. Brightway Trading Co. sources cellphones of all conditions from Europe, the U.K., the U.S. |
| ● | CommNet Telecom Limited, a Hong Kong based consumer electronic devices recycling firm that started its business in 2004, specializes in the import and export of brand new and used cell phones. The majority of CommNet Telecom Limited’s suppliers are located in the U.S. and the U.K. |
Government Regulations
As we conduct business in Hong Kong through our wholly-owned subsidiaries, our business operations are subject to various regulations and rules promulgated by the Hong Kong government. The following is a brief summary of the Hong Kong laws and regulations that currently and materially affect our business. This section does not purport to be a comprehensive summary of all present and proposed regulations and legislation relating to the industries in which we operate.
Hong Kong Laws and Regulations Relating to Trade Descriptions
Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) (the “TDO”), which came into full effect in Hong Kong on April 1, 1981, aims to prohibit false or misleading trade description and statements to goods and services provided to the customers during or after a commercial transaction. Pursuant to the TDO, any person in the course of any trade or business applies a false trade description to any goods or supply or offers to supply them commits an offence and a person also commits the same offence if he/she is in possession for sale or for any purpose of trade or manufacture of any goods with a false description. The TDO also provides that traders may commit an offence if they engage in a commercial practice that has a misleading omission of material information of the goods, an aggressive commercial practice, involves bait advertising, bait and switch or wrong acceptance of payment. It is also an offence for any person to have in his possession for sale or for any purpose of trade or manufacture any goods to which a false trade description is applied. To amount to a false trade description, the falsity of the trade descriptions has to be to a material degree. Trivial errors or discrepancies in trade descriptions would not constitute an offence. What constitutes a material degree will vary with the facts.
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Contravention of the prohibitions in the TDO is an offence, with a maximum penalty of up to HK$500,000 and five years’ imprisonment. However, the TDO also provides regulators with the ability to accept (and publish) written undertakings from businesses and individuals not to continue, repeat or engage in unfair trade practices in return of which regulator will not commence or continue investigations or proceedings relating to that matter. Regulators will also be empowered to seek an injunction against businesses and persons engaging in unfair trade practices or who have breached an undertaking.
Hong Kong Laws and Regulations Relating to Sale of Goods
Pursuant to Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) (the “SOGO”), which came into full effect in Hong Kong on August 1, 1896, in every contract of sale, there is an implied warranty that the goods are free, and will remain free until the time when the property is to pass, from any charge or encumbrance not disclosed or known to the buyer before the contract is made and that the buyer will enjoy quiet possession of the goods except so far as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed or known. The SOGO provides that there is an implied condition that the goods shall correspond with the description where there is a contract for the sale of goods by description, and there is any implied condition or warranty as to the quality or fitness for any particular purpose of goods supplied under a contract of sale. Where the seller sells goods in the course of a business, there is an implied condition that the goods supplied under the contract are of merchantable quality, except that there is no such condition (i) as regards defects specifically drawn to the buyer’s attention before the contract is made; or (ii) if the buyer examines the goods before the contract is made, as regards defects which that examination ought to reveal; or (iii) if the contract is a contract for sale by sample, as regards defects which would have been apparent on a reasonable examination of the sample. Where there is a contract for sale by sample, there are implied conditions that (i) the bulk shall correspond with the sample in quality, (ii) the buyer shall have a reasonable opportunity of comparing the bulk with the sample, and (iii) the goods shall be free from any defect, rendering them unmerchantable, which would not be apparent on reasonable examination of the sample. Under SOGO, where any right, duty or liability would arise under a contract of sale of goods by implication of law, it may (subject to the Control of Exemption Clauses Ordinance (Chapter 71 of the Laws of Hong Kong)) be negatived or varied by express agreement, or by the course of dealing between the parties, or by usage if the usage is such as to bind both parties to the contract.
Telecommunications Ordinance (Chapter 106 of the Laws of Hong Kong) (the ‘‘TO’’)
Under the TO, a license, namely Radio Dealers License (Unrestricted), is required for dealing in the course of trade or business in apparatus or material for radio communications or in any component part of any such apparatus or in apparatus of any kind that generates and emits radio waves whether or not the apparatus is intended, or capable of being used, for radio communications. However, the above requirement does not apply to licensed exempted radio communications apparatus (e.g., mobile phones, short-range walkie-talkies, cordless phones) meeting prescribed specifications. Under the Radio Dealers License (Unrestricted), the licensee is permitted to deal in radio communications apparatus pursuant to section 9 of the TO. A Radio Dealers License (Unrestricted) is generally valid for a period of 12 months, and is renewable on payment of the prescribed fee, at the discretion of Office of the Communications Authority (“OFCA”).
Our operating subsidiaries Lear Group Limited and Baymax High Technology Co., Limited are licensees of the Radio Dealers Licenses (Unrestricted). The material licensing conditions are: (a) to store the licensed apparatus at a specified address, (b) to display the license at the licensed premises, (c) to keep and maintain complete and accurate registers for the last twelve months, of the licensed apparatus and of the licensee’s dealings and transactions therewith, except those apparatus which have been exempted, (d) not to deal locally in radio apparatus which is not of a type approved by the Communications Authority or not licensable in Hong Kong; and to only deliver radio apparatus to a customer if (i) they have been exempted by statute, (ii) the customer is not a tourist and is licensed to possess or use the apparatus, or (iii) the customer is a tourist who intends to export the apparatus after purchase.
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Radio Dealers Licenses have different dates of grant and are valid for a period of 12 months. Lear Group Limited’s and Baymax High Technology Co., Limited’s radio dealers license will expire on September 30, 2026 and December 31, 2025, respectively, and will be renewed upon expiry (subject to the discretion of OFCA). We will renew the Radio Dealers Licenses in accordance with the Telecommunications Regulations (Chapter 106A of the Laws of Hong Kong) by paying the required renewal fee to OFCA. We are not aware of any legal impediment to renew the Radio Dealers Licenses subject to the conditions below: (I) We have to pay to OFCA the required renewal fee as may from time to time be determined and required by OFCA on or before the respective date of expiry of the Radio Dealers Licenses; and (II) We have to comply with the “General Conditions to be observed by Licensee of Radio Dealers License (Unrestricted)” and the “Conditions” set out in the Radio Dealers Licenses.
Consumer Goods Safety Ordinance (Chapter 456 of the Laws of Hong Kong) (the “CGSO”) and Consumer Goods Safety Regulation (Chapter 456A of the Laws of Hong Kong) (the “CGSR”)
The CGSO is enacted to impose a duty on manufacturers, importers and suppliers of certain consumer goods to ensure that the consumer goods they supply are safe. Electrical products and any other goods the safety of which is controlled by specific legislation are not covered by the CGSO.
The CGSO prohibits a person from supplying, manufacturing, or importing into Hong Kong consumer goods unless the consumer goods comply with the general safety requirement or an approved standard for consumer goods. Currently there is no approved standard which has been approved in any regulation to the CGSO. Contravention with the above requirement is an offence and the offender is liable on first conviction to a fine at HK$100,000 and to imprisonment for one year, and on subsequent conviction to a fine of HK$500,000 and to imprisonment for two years.
It is a defense to the above offence if the commission of the offence was due to (a) the act or default of another person or reliance on information given by another, and (b) that it was reasonable in all the circumstances for him to have relied on the information, having regard in particular (i) to the steps which he took, and those which might reasonably have been taken, for the purpose of verifying the information; and (ii) to whether he had any reason to disbelieve the information. A court may take into consideration the existence of a certificate from an approved laboratory showing that the samples of consumer goods which are the subject of the prosecution had been tested before being sold and had complied with the safety standard or safety specification set out in the certificate.
The CGSR requires any warning or caution affixed on any consumer goods or their packages to be in both the English and the Chinese languages. The warning or caution shall be legible and be placed in a conspicuous position on (a) the consumer goods; (b) any package of the consumer goods; (c) a label securely affixed to the package; or (d) a document enclosed in the package. Any person who supplies consumer goods which do not comply with the above requirements commits an offence and is liable (a) on first conviction to a fine at HK$100,000 and to imprisonment for one year; and (b) on subsequent conviction to a fine of HK$500,000 and to imprisonment for two years.
Hong Kong Laws and Regulations Relating to Intellectual Properties Rights
Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) (“TMO”), which came into full effect in Hong Kong on April 4, 2003 provides the framework for the Hong Kong’s system of registration of trademarks and sets out the rights attached to a registered trade mark, including logo and a brand name. The TMO restricts unauthorized use of a sign which is identical or similar to the registered mark for identical and/or similar goods and/or services for which the mark was registered, where such use is likely to cause confusion on the part of the public. The TMO provides that a person may also commit a criminal offence if that person fraudulently uses a trademark, including selling and importing goods bearing a forged trade mar, or possessing or using equipment for the purpose of forging a trademark. However, pursuant to section 20 of the TMO, a registered trade mark is not infringed by the use of trade mark in relation to goods which have been put on the market anywhere in the world under that trade mark by the owner or with his consent (whether express or implied or conditional or unconditional), unless the condition of the goods has been changed or impaired after they have been put on the market, and the use of the registered trade mark in relation to those goods is detrimental to the distinctive character or repute of the trade mark.
Patents Ordinance (Chapter 514 of the Laws of Hong Kong), which came into full effect in Hong Kong on June 27, 1997 provides the framework for “re-registration” system of Chinese, UK and European patents in Hong Kong. Pursuant to Patents (Amendment) Ordinance 2016, which came into full effect in Hong Kong on December 19, 2019 provide a new framework for a new patent system — an “original grant patent” system, running in parallel with the “re-registration” system.
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Copyright Ordinance (Chapter 528 of the Laws of Hong Kong) (“CO”), which came into full effect in Hong Kong on June 27, 1997 provides comprehensive protection for recognized categories of underlying works such as literary, dramatic, musical and artistic works. The CO restricts unauthorized acts such as copying and/or making available copies to the public of a copy right work. The CO provides that a person commits an offence if he, without the license of the copyright owner of a copyright work imports an infringing copy of the work into Hong Kong, at any time within 15 months beginning on the first day of publication of the work in Hong Kong or elsewhere, otherwise than for his private and domestic use.
Human Capital Resources
The success of our business depends in large part on our ability to attract, retain, and develop a workforce of skilled employees at all levels of our organization. We provide employees with base wages and salaries that we believe are competitive and consistent with each employee’s position. We also work with local, regional, and state-wide agencies to facilitate workforce hiring and development initiatives. We had five and four full-time employees as of September 30, 2025 and 2024, respectively.
Corporate Structure
Our Company, INNO HOLDINGS INC., was incorporated in Texas on September 8, 2021. It originally had three subsidiaries, Inno Metal Studs Corp (“IMSC”), Castor Building Tech LLC (“CBT”), and Inno Research Institute LLC (“IRI”).
On January 21, 2024, the Company established Inno Disrupts Inc. (“Disrupts”), 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 January 27, 2024, the Company and the minority shareholder of IRI agreed to dissolve IRI, a subsidiary of IMSC with 65% ownership. The R&D activities previously carried out by IRI will be transferred to the new subsidiary, Inno AI Tech Corp.
On February 11, 2024, the Company formed Inno AI Tech Corp. (“AT”), a wholly owned entity in Texas to conduct AI tech research and consulting activities.
On October 18, 2024, the Company acquired all of the issued and outstanding shares of Lear Group Limited (“Lear”), a Hong Kong company, for a total consideration of $1,300. As a result of this transaction, Lear became a wholly-owned subsidiary of the Company.
On December 13, 2024, the Company acquired all of the issued and outstanding shares of Baymax High Technology Co., Limited (“Baymax”), a Hong Kong company, for a total consideration of $1,300. As a result of this transaction, Baymax became a wholly-owned subsidiary of the Company.
On March 4, 2025, the Company entered into a Share Purchase Agreement with a third-party Buyer, pursuant to which the Company sold all issued and outstanding shares of its wholly owned subsidiaries, IMSC and AT, to the Buyer for an aggregate purchase price of $1,000 in cash.
On March 28, 2025, the Company entered into a Membership Interest Purchase Agreement with a third-party Buyer and Core Modu LLC, a Texas limited liability company (“CM”), pursuant to which the Company sold all of the membership interest it owned in CM, which represented 15% of the outstanding membership interest in CM, to the Buyer for an aggregate purchase price of $700,000.
On March 28, 2025, the Company entered into a Membership Interest Purchase Agreement with a third-party Buyer and Castor Building Tech LLC, a California limited liability company (“CBT”), pursuant to which the Company sold all of the membership interest it owned in CBT, which represented 55% of the outstanding membership interest in CBT, to the Buyer for an aggregate purchase price of $1,000.
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On April 8, 2025, the Company entered into a Share Purchase Agreement with a third-party Buyer, pursuant to which the Company sold all issued and outstanding shares it owns in Disrupts for an aggregate purchase price of $100.
Below is the corporate structure of the Company as of September 30, 2025:
Corporate Information
Our principal executive office is located at RM1, 5/F, No. 43 Hung To Road, Kwun Tong, Kowloon, Hong Kong 999077. Our corporate website address is https://www.innoholdings.com. Our telephone number is +852-54795450.
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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. Nonetheless, we are voluntarily providing risk factors herein. You should consider carefully the following risk factors when evaluating our business and financial condition, together with all the other information in this Annual Report on Form 10-K, and in our other public filings with the SEC. The occurrence of any of the following risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. In addition, these risks are not the only ones faced by the Company. Additional risks not summarized hereafter or not presently known to the Company or that the Company currently believes are immaterial may also impair business operations and financial results.
Risks Related to Our Business and Operations
We have shifted our primary business focus.
As of the date of this report, we were primarily engaged in the business of recycled consumer electronic devices. We source and purchase pre-owned consumer electronic devices such as smartphones and tablets from suppliers and sell the electronic devices to wholesalers that re-sell these products to their wholesale and/or retail customers in Southeast Asia, Middle East Asia, Europe and other regions. In the second quarter of 2025, we discontinued our previous business in cold-formed-steel business and sold all of the Company’s ownership in the subsidiaries through which the Company conducted its cold-formed-steel business.
Our experience in the business of recycled consumer electronic devices is limited. This strategic shift exposes us to uncertainties and risks associated with operating in a new industry. Our ability to execute our new business model, secure stable supply, maintain customer relationships, compete effectively and achieve profitability is uncertain. We also may face challenges in developing the operational infrastructure, internal controls and industry expertise required for this business. In addition, we may continue to incur transitional costs or potential liabilities associated with our discontinued operations. Any of these factors could materially and adversely affect our business, financial condition and results of operations.
Our future growth strategies may not be as effective as we expect.
We are actively seeking to expand our business into new industry sectors. As previously announced and disclosed in our filing with the SEC, we entered into a non-binding Memorandum of Understanding (MoU) with Megabyte Solutions Limited (“MEGABYTE”), a Web3 technology service provider. We plan to form a strategic partnership with MEGABYTE to jointly deploy the in-depth application of Web3 technology in the Company’s cross-border B2B marketplace platform under development. Additionally, in response to the supply chain and trade needs of B2B businesses, we and MEGABYTE plan to launch an innovative decentralized, blockchain-powered service model integrating hardware and software.
These initiatives remain in early stages, and there is no assurance that the partnership will be finalized, that the planned technologies will be successfully developed or commercialized, or that market acceptance will meet our expectations. Web3 and blockchain technologies are evolving rapidly and are subject to regulatory, operational and adoption risks. We may face challenges in securing required technical expertise, integrating new technologies into our platform, or achieving the anticipated synergies and economic benefits. If our growth strategies fail to generate the expected results, our business prospects, financial condition and results of operations could be materially and adversely affected.
We are operated primarily in Hong Kong.
As of the date of this report, we operate primarily in Hong Kong, and our business, financial condition and results of operations are subject to the economic, political, legal and regulatory environments of Hong Kong. Any adverse developments in these conditions (such as changes in trade policies, geopolitical tensions, regulatory requirements, data and cybersecurity laws, taxation rules, labor conditions, or market demand) could materially and adversely affect our operations.
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We face concentration risks in our revenue as we rely on our major customers.
A significant portion of our revenue is generated from a limited number of our major customers. For the year ended September 30, 2025, two customers accounted for 77% of the Company’s total revenues. For the year ended September 30, 2024, four customers accounted for 90% of the Company’s total revenues. If any of these customers reduces its purchase volume, experiences financial difficulties, delays payments, or terminates its relationship with us, our revenue and cash flows could be materially and adversely affected. Our dependence on a small customer base also limits our ability to negotiate favorable pricing and terms. If we fail to diversify our customer base or replace lost customers in a timely manner, our business, financial condition and results of operations may be materially harmed.
We face concentration risks in our purchases as we rely on our major suppliers.
We depend on a limited number of major suppliers for the purchase of pre-owned electronic device products. For the year ended September 30, 2025, two suppliers accounted for 100% of the Company’s total purchases. For the year ended September 30, 2024, two suppliers accounted for 58% of the Company’s total purchases. Any disruption in these supplier relationships could materially affect our ability to source inventory and meet customer demand. Our reliance on a concentrated supplier base also exposes us to risks associated with supplier financial instability, operational disruptions, and competitive pressures. If we are unable to diversify our supplier base or secure alternative sources of supply on commercially reasonable terms, our business, financial condition and results of operations could be materially and adversely affected.
There is no assurance that the Company will be profitable.
There is no assurance that we will earn profits in the future, or that profitability will be sustained. There is no assurance that future revenues will be sufficient to generate the funds required to continue our business development and marketing activities. If we do not have sufficient capital to fund our operations, we may be required to reduce our sales and marketing efforts or forego certain business opportunities.
The Company may not have the ability to manage its growth.
The Company anticipates that significant expansion will be required to address potential growth in its customer base and market opportunities. The Company’s anticipated expansion is expected to place a significant strain on the Company’s management, operational, and financial resources. To manage any material growth of its operations and personnel, the Company may be required to improve existing operational and financial systems, procedures, and controls and to expand, train, and manage its employee base. There can be no assurance that the Company’s planned personnel, systems, procedures, and controls will be adequate to support the Company’s future operations, that management will be able to hire, train, retain, motivate, and manage required personnel, or that the Company’s management will be able to successfully identify, manage, and exploit existing and potential market opportunities. If the Company is unable to manage growth effectively, its business, prospects, financial condition, and results of operations may be materially adversely affected.
We rely on the leadership of our management team and the performance of highly skilled personnel.
The Company is, and will be, heavily dependent on the skill, acumen, and services of the management and other employees of the Company. Our future success depends on our continuing ability to attract, develop, motivate, and retain highly qualified and skilled employees. Qualified individuals are in high demand, and we may incur significant costs to attract them. In addition, the loss of any of our senior management or key employees could materially adversely affect our ability to execute our business plan, and we may not be able to find adequate replacements. During the financial year ended September 30, 2025, we experienced changes in senior management, including the replacement of our Chief Executive Officer and Chief Financial Officer. All of our officers and employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. The loss of any of our senior management or key employees could materially adversely affect our ability to execute our business plan, and we may not be able to find adequate replacements. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees. If we do not succeed in attracting well-qualified employees or retaining and motivating existing employees, our business could be harmed.
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We have incurred costs in our compliance measures as a public company.
As a public company, we are required to comply with extensive regulatory, reporting, corporate governance and internal control requirements. These obligations have resulted in increased legal, accounting, administrative and compliance costs, and we expect such costs to continue. We may also be required to dedicate significant management time and resources to maintain and enhance our compliance programs. If we fail to comply with applicable requirements or if our compliance efforts become more costly than anticipated, our business, financial condition and results of operations could be adversely affected.
Litigation is costly and time-consuming and could have a material adverse effect on our business, results of operations, and reputation.
The Company, as well as the Company’s directors and officers, may be subject to a variety of civil or other legal proceedings relating to the business affairs of companies with which they are, were or may be in the future affiliated, with or without merit. From time to time in the ordinary course of the Company’s business, we may become involved in various legal proceedings — including commercial, employment, and other litigation and claims — as well as governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert management’s attention and resources, and cause us to incur significant expenses. Furthermore, because litigation is inherently unpredictable, the results of any such actions may have a material adverse effect on our business, operating results, or financial condition.
Even if the claims are without merit, the costs associated with defending these types of claims may be substantial, in terms of time, money, and management distraction. In particular, patent and other intellectual property litigation may be protracted and expensive, and the results are difficult to predict and may require us to stop offering certain features, purchase licenses, or modify our products and features while we develop non-infringing substitutes or may result in significant settlement costs.
The results of litigation and claims to which we may be subject cannot be predicted with certainty. Even if these matters do not result in litigation or are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, results or operations, and reputation.
Risks Related to Our Financing Activities
We may need new or additional financing in the future to expand our business, and our inability to obtain capital on satisfactory terms or at all may have an adverse impact on our operations and our financial results.
We may need new or additional financing in the future to expand our business, refinance existing indebtedness, or make strategic acquisitions, and our inability to obtain capital on satisfactory terms or at all may have an adverse impact on our operations and our financial results. As we grow our business, we may have to incur significant capital expenditures. We may make capital investments to, among other things, build new or upgrade our existing facilities, purchase or lease new equipment, and enhance our production processes. If we are unable to access capital on satisfactory terms and conditions, we may not be able to expand our business or meet our payment requirements under our existing credit facilities. Our ability to obtain new or additional financing will depend on a variety of factors, many of which are beyond our control. We may not be able to obtain new or additional financing because we may have substantial debt, our current receivable and inventory balances may not support additional debt availability, or we may not have sufficient cash flows to service or repay our existing or future debt. In addition, depending on market conditions and our financial performance, equity financing may not be available on satisfactory terms or at all. Moreover, if we raise additional funds through issuances of equity or convertible debt securities, our current stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. If we are unable to access capital on satisfactory terms and conditions, this could have an adverse impact on our business, results of operations, and financial condition.
Future issuances of our shares or other equity securities may result in significant dilution to our existing shareholders.
To raise additional capital, we have issued and may continue to issue additional shares of our common stock or securities convertible into or exercisable for our shares of common stock. Any such issuance would dilute the ownership interests of our existing shareholders and could adversely affect the market price of our securities. We cannot predict the timing, size or terms of future issuances, and shareholders may suffer significant and substantial dilution.
Our financing activities may negatively affect our cash flows and financial flexibility.
Our financing transactions may require us to incur expenses, pay interest or other financing costs, or allocate cash to service obligations. These payments may reduce funds available for operations, limit our financial flexibility, and increase our vulnerability to adverse business conditions. If our cash flows are insufficient to meet financing obligations, our business and results of operations could be harmed.
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Frequent or unfavorable financing transactions may harm our reputation and investor confidence.
If we engage in repeated or sizable capital raising activities, particularly at discounts to market price, investors may perceive us as overly reliant on external financing. Such perception may adversely affect investor confidence, harm our reputation in the capital markets, and contribute to downward pressure on the trading price of our securities. Negative market perception could also make future financings more difficult or costly to complete.
We may not be able to access the capital markets when needed, which could adversely affect our operations.
Our ability to raise capital through public or private offerings of securities depends on market liquidity, our business and financial performance, our trading volume, regulatory developments and general economic conditions. Market volatility, declining stock price, or low investor demand may restrict our ability to obtain financing in a timely manner or on acceptable terms. If we cannot raise capital when required, we may be unable to execute our business plans, meet working capital needs or respond to competitive pressures.
Risks Relating to Ownership of Our Securities
The market price of our common stock may be volatile and could, following any offering or sale, decline significantly and rapidly.
The price at which our securities are offered or sold in any registered or exempt offering will be determined by negotiations between us and the applicable underwriter, placement agent or investor, and such price may not be indicative of the prices that will prevail in the open market following the offering. The market price of our common stock may decline below the offering price, and you may not be able to sell your shares at or above the price you paid, or at all. Following any such offering, the public price of our common stock in the secondary market will continue to be determined by private buy-and-sell transactions effected through broker-dealers and may fluctuate significantly in response to various factors, many of which are outside our control.
We may experience extreme stock price volatility unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for investors to assess the rapidly changing value of our common stock.
Recently, a number of publicly traded companies, particularly those with relatively small public floats, have experienced extreme stock price run-ups followed by rapid price declines and elevated volatility. We have been and may continue to be susceptible to significant stock price volatility, extreme price run-ups, lower trading volume and reduced liquidity than large-capitalization companies. Our common stock may be subject to rapid and substantial price volatility, low volumes of trades and wide bid-ask spreads. Such volatility, including any rapid price appreciation followed by decline, may be unrelated to our actual or expected operating performance, financial condition or prospects, making it difficult for investors to assess the value of our common stock.
In addition, if the trading volumes of our common stock are low, persons buying or selling in relatively small quantities may easily influence the price of our common stock. Low trading volume could cause the price of our common stock to fluctuate significantly, including large percentage changes in a single trading day. Holders of our common stock may not be able to readily liquidate their investment or may be forced to sell at depressed prices due to limited liquidity. Broad market fluctuations and general economic and political conditions may also adversely affect the market price of our common stock.
As a result of this volatility, investors may experience losses on their investment in our common stock. A decline in the market price of our common stock could adversely affect our ability to issue additional common stock or other securities and our ability to obtain additional financing in the future. No assurance can be given that an active or liquid market for our common stock will be sustained, and if an active market does not continue, holders of our common stock may be unable to readily sell their shares or may not be able to sell their common stock at all.
We may not be able to satisfy the listing requirements of Nasdaq to maintain a listing of our common stock.
As a company listed and publicly traded on Nasdaq, we must meet certain financial and liquidity criteria to maintain such listing status. If we violate the maintenance requirements for continued listing of our common stock, our common stock may be delisted. In addition, our board may determine that the cost of maintaining our listing on a national securities exchange outweighs the benefits of such listing. A delisting of our common stock from Nasdaq may materially impair our stockholders’ ability to buy and sell our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock. In addition, the delisting of our common stock could significantly impair our ability to raise capital in the future.
We may be subject to securities litigation, which is expensive and could divert our management’s attention.
The market price of our securities may be volatile, and in the past, companies that experienced volatility in the market price of their securities were subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
As a smaller reporting company, we currently do not have formalized cybersecurity measures, a dedicated cybersecurity team or specific protocols in place to manage cybersecurity risks. Our approach to cybersecurity is in the developmental stage, and we have not yet conducted comprehensive risk assessments, established an incident response plan or engaged with external cybersecurity consultants for assessments or services.
Given our current stage of cybersecurity development, we have not experienced any significant cybersecurity incidents to date. However, we recognize that the absence of a formalized cybersecurity framework may leave us vulnerable to cyberattacks, data breaches and other cybersecurity incidents. Such events could potentially lead to unauthorized access to, or disclosure of, sensitive information, disrupt our business operations, result in regulatory fines or litigation costs and negatively impact our reputation among customers and partners.
We are in the process of evaluating our cybersecurity needs and developing appropriate measures to enhance our cybersecurity posture. This includes considering the engagement of external cybersecurity experts to advise on best practices, conducting vulnerability assessments and developing an incident response strategy. Our goal is to establish a cybersecurity framework that is commensurate with our size, complexity and the nature of our operations, thereby reducing our exposure to cybersecurity risks.
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In
addition,
For a discussion of potential cybersecurity risks affecting us, please refer to the “Risk Factors” section of our Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 20, 2023 titled “Our systems and information technology infrastructure may be subject to security breaches and other cybersecurity incidents.”
ITEM 2. PROPERTIES
We lease our principal executive office and warehouse which is located at RM1, 5/F, No. 43 Hung To Road, Kwun Tong, Kowloon, Hong Kong 999077. The lease for this principal executive office and warehouse had a 12-month term beginning on November 1, 2024 and ending on October 31, 2025. On June 1, 2025, this lease was terminated without penalty and a new lease agreement was entered with the landlord. The new lease term is from June 1, 2024 to May 31, 2026, with a monthly rent of $12,000. The facility consists of approximately 1,400 square feet of indoor space.
The lease agreement contains standard commercial lease terms including but not limited to provisions regarding utilities, alterations, maintenance and repair, insurance and indemnification.
We believe that our current leased property is in good condition and suitable for the conduct of our business.
ITEM 3. LEGAL PROCEEDINGS
We are not currently a party to any material legal proceedings, investigations or claims. From time to time, we involve in legal matters arising in the ordinary course of our business. There can be no assurance that such matters will not arise in the future or that any such matters in which we are involved, or which may arise in the ordinary course of our business, will not at some point proceed to litigation or that such litigation will not have a material adverse effect on our business, financial condition or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
We have our common stock listed on The Nasdaq Capital Market under the symbol “INHD”.
Holders
As of September 30, 2025, there were 19 stockholders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
Reverse Stock Split
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 common share and per-share amounts in this Form 10-K have been retroactively restated to reflect the effect of the Reverse Stock Split.
Dividend Policy
We have not declared any cash dividends since inception, and we do not anticipate paying any dividends in the foreseeable future. Instead, we anticipate that all of our earnings will be used to provide working capital, to support our operations, and to finance the growth and development of our business. The payment of dividends is within the discretion of the Board and will depend on our earnings; capital requirements; financial condition; prospects; applicable Texas law, which provides that dividends are only payable out of surplus or current net profits; and other factors our Board might deem relevant. There are no restrictions that currently limit our ability to pay dividends on our common stock other than those generally imposed by applicable state law.
Transfer Agent
VStock Transfer, LLC., 18 Lafayette Place, Woodmere, New York 11598.
Recent Sales of Unregistered Securities
During the period from October 1, 2024 to September 30, 2025, we have granted or issued the following securities that were not registered under the Securities Act:
| Issuance of common stock. |
| ● | On November 4, 2024, the Company issued 500,000 shares of its common stock to certain investors for an aggregate purchase price of $2,000,000 at $4.00 per share in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act or Regulation S promulgated under the Securities Act. |
| ● | On November 20, 2024, the Company issued 277,083 shares of its common stock to certain investors at a purchase price per share of $4.80 in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act or Regulation S promulgated under the Securities Act. |
| ● | On December 13, 2024, the Company issued 452,084 shares of its common stock to certain investors at a purchase price per share of $4.80 in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act or Regulation S promulgated under the Securities Act. |
| ● | On December 23, 2024, the Company issued 700,000 shares of its common stock to certain investors at a purchase price per share of $2.50 in reliance on the exemption from registration requirements thereof provided by Section 4(a)(2) of the Securities Act or Regulation S promulgated under the Securities Act. |
| ● | On June 20, 2025, the Company issued 1,400,000 shares of its common stock to certain accredited investor a consideration of $1,050,000. |
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The issuance of the common stock in private placements was deemed exempt from registration under Section 4(a)(2) of, and/or Rule 506(b) of Regulation D and/or Regulation S promulgated under the Securities Act in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipient of such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
Use of Proceeds from our Initial Public Offering of Common Stock
On December 18, 2023, we closed our initial public offering (the “IPO”), in which we sold and issued 250,000 shares of our common stock at a price to the public of $4.00 per share. We received approximately $7,859,533 in aggregate net proceeds from our IPO after deducting underwriting discounts and commissions and other offering expenses. AC Sunshine Securities LLC was the underwriter of our IPO.
The offer and sale of all of the shares of our common stock in our IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-273429), which was declared effective by the SEC on November 9, 2023.
As of November 30, 2024, we used all of the net proceeds from our IPO for working capital and general corporate purposes. There was no material change in our use of the net proceeds from our IPO as described in our final prospectus filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on December 4, 2023.
Purchases of Equity Securities
Neither we nor any “affiliated purchaser,” as defined in Rule 10b-18(a)(3) of the Exchange Act, purchased any of our equity securities during the period covered by this annual report.
Securities Authorized for Issuance Under Equity Compensation Plans.
The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in Item 12 of this Annual Report on Form 10-K.
ITEM 6. [RESERVED]
ITEM 7. 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 consolidated financial statements and related notes that appear elsewhere in this Annual Report. 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.
Overview
We are an innovative technology company that engages in the business of recycled consumer electronic devices. We source and purchase pre-owned consumer electronic devices such as smartphones and tablets from suppliers and sell the electronic devices to wholesalers that re-sell these products to their wholesale and/or retail customers in Southeast Asia, Middle East Asia, Europe and other regions. We conduct our business of recycled consumer electronic devices through two Hong Kong-based wholly-owned subsidiaries Lear Group Limited and Baymax High Technology Co., Limited, acquired by the Company in October and December 2024, respectively.
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Previously the Company engaged in the business of manufacturing cold-formed-steel and offering a range of services required to transform raw materials into precise steel framing products and prefabricated homes. In the second quarter of 2025, the Company decided to discontinue its cold-formed-steel business and sold all of the Company’s ownership in the subsidiaries through which the Company conducted its cold-formed-steel business. From March 2025 till April 2025, the Company completed the disposition of all its ownership or membership interests in its former wholly- and partially-owned subsidiaries, namely Inno Metal Studs Corp, Inno AI Tech Corp., Inno Disrupts Inc., and Castor Building Tech LLC.
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 Years Ended September 30, 2025, and 2024
| Years Ended September 30, | ||||||||||||
| 2025 | 2024 | |||||||||||
| Revenue - products | $ | 2,846,250 | $ | - | 100 | % | ||||||
| Total Revenue | 2,846,250 | - | 100 | % | ||||||||
| Costs of materials and labor | 2,790,500 | - | 100 | % | ||||||||
| Selling, general and administrative expenses (exclusive of items shown separately below) | 4,414,709 | 844,844 | 423 | % | ||||||||
| Impairment loss on goodwill | 3,514 | - | 100 | % | ||||||||
| Operating loss | (4,362,473 | ) | (844,844 | ) | 416 | % | ||||||
| Other income (expenses) | (2,450,777 | ) | 237,952 | -1130 | % | |||||||
| Income tax expense | (800 | ) | (800 | ) | 0 | % | ||||||
| Net loss from discontinued operations | (195,796 | ) | (2,643,435 | ) | -93 | % | ||||||
| Net loss | (7,009,846 | ) | (3,251,127 | ) | 116 | % | ||||||
| Non-controlling interest | 69,517 | (37,298 | ) | -286 | % | |||||||
| Net loss attributable to INNO HOLDINGS INC. | $ | (7,079,363 | ) | $ | (3,213,829 | ) | 120 | % | ||||
Revenues
Revenue for the year ended September 30, 2025 increased 100% to $2,846,250 in comparison to $Nil for the year ended September 30, 2024. Revenue for the year ended September 30, 2025 consists solely of the Company’s new business of electronic products trading that started since October 2024. The new business of electronic products trading contributes to the increase in revenue for the year ended September 30, 2025 against the comparable period in 2024.
Our revenues are significantly impacted by demand for economic conditions including 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 Materials and Labor
Cost of Goods Sold (COGS) includes electronic products purchased from our suppliers. COGS for the year ended September 30, 2025 increased to $2,790,500 in comparison to $Nil for the year ended September 30, 2024. COGS for the year ended September 30, 2025 consists solely of electronic products purchased from our suppliers in the Company’s new business of electronic products trading that started since October 2024. The new business of electronic products trading contributes to the increase in COGS for the year ended September 30, 2025 against the comparable period in 2024.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses for the year ended September 30, 2025, increased 423% to $4,414,709 in comparison to $844,844 for the comparable period in 2024. This increase was primarily driven by stock compensation, legal expenses, auditing expenses and consulting expenses.
Operating Loss
Operating loss was $4,362,473 for the year ended September 30,2025, in comparison to an operating loss of $844,844 for the comparable period in 2024. The increase in operating loss was primarily attributed to the increase in selling, general and administrative expenses, as discussed above.
Other Income (Expense)
Other expenses for the year ended September 30, 2025, was $2,450,777, in comparison to other income of $237,952 for the comparable period in 2024. The increase in other expenses was primarily due to loss on investment disposal. Other income for the year ended September 30, 2024, were primarily attributable to the recognition of supporting services provided to one of customers and the interest income.
Net Loss
Net loss for the year ended September 30, 2025 was $7,009,846, in comparison to a net loss of $3,251,127 for the year ended September 30, 2024. The increase in net loss was primarily due to changes in revenue, costs, expenses and other income (expense) as outlined above.
Liquidity and Capital Resources
Sources of Liquidity
During the year ended September 30, 2025 and 2024, 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 $10,130,942 as of September 30, 2025 compared to $1,077,138 of cash as of September 30, 2024. The cash increase was primarily due to the proceeds from the multiple private offerings during the periods ended September 30, 2025 and offset by the cash usage in operating and investing activities during the periods ended September 30, 2025.
The Company has participated in several private-placement offerings during the quarter 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.
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.
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On June 2, 2025, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the investors (the “June 2025 Offering”), an aggregate of 1,058,000 shares (the “June 2025 Shares”) of its common stock, no par value, at a purchase price per share of $0.50. The June 2025 Offering closed on June 6, 2025 and the Company received gross proceeds of $529,000.
On January 27, 2025, the Company entered into a Standby Equity Purchase Agreement (the “January SEPA”) with certain investors effective as of January 28, 2025. Pursuant to January SEPA, the Company has the right to issue and sell to the investors, from time to time, up to $15 million worth of shares of the Company’s common stock, no par value per share, subject to the terms and conditions specified in the January SEPA. On June 20,2025, the Company issued and sold an aggregate of 1,400,000 shares (the “January 2025 SEPA Shares”) of its common stock at a purchase price per share of $0.75, pursuant to January SEPA.
On July 4, 2025, the Company entered into the Standby Equity Purchase Agreement (the “July SEPA”) with the Investors. Pursuant to July SEPA, the Company has the right to issue and sell to the investors, from time to time, up to $6 million worth of shares of the Company’s common stock, no par value per share, subject to the terms and conditions specified in the July SEPA. On August 27,2025, the Company issued and sold an aggregate of 3,200,000 shares of its common stock at a purchase price per share of $0.48, pursuant to July SEPA.
On September 10, 2025, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company offered, in a registered direct offering, 1,200,000 shares of its common stock, at a purchase price of $3.60 per share and pre-funded warrants to purchase up to 800,000 shares of common stock, at a purchase price of $3.59999 per pre-funded warrant (equal to $3.60 minus the exercise price of $0.00001 per pre-funded warrant). The closing of the offering occurred on September 11, 2025. The Company received net proceeds of approximately $6.69 million from the offering, after deducting the estimated offering expenses payable by the Company, including the placement agent fees. As of September 30, 2025, 799,998 pre-funded warrants were exercised for the issuance of 799,998 shares of the Company’s common stock.
On November 12, 2025, the Company entered into a sales agreement (the “Sales Agreement”) with Aegis Capital Corp. (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time, to or through the Sales Agent, shares of the Company’s common stock, with no par value, having an aggregate offering price of up to $50.0 million (the “At-the-Market Offering”). From November 12, 2025 to December 15, 2025, the Company issued an aggregate of 85,000,000 shares of Common Stock for the gross proceeds of approximately $28 million through the Sales Agent pursuant to the Sales Agreement. As of December 15, 2025, the Sales Agreement remains in-effect.
Working Capital
As of September 30, 2025 and 2024, our working capital was $13,527,273 and $2,797,536, respectively. The historical seasonality in our business 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 year ended September 30, 2025, net cash used in operating activities was $4,728,738, primarily driven by the net loss from continuing operation of $6,814,050 and net loss from discontinuing operation of $265,313, partially offset by non-cash items of stock-based compensation expense of $2,185,205, loss from investment disposal of $2,152,522, a $370,546 increase in fair value of SEPA, and working capital used cash of $1,962,214, which was primarily driven by a $133,710 increase in prepayments and other current assets, and a $2,107,000 increase in inventories, and operating cash flow used by discontinued operations of $398,948.
For the year ended September 30, 2024, net cash used in operating activities was $5,521,976, primarily driven by the net loss from continuing operation of $607,692 and net loss from discontinuing operation of $2,606,137, partially offset by non-cash items of $146,333 and working capital used cash of $3,882,169, which was primarily driven by a $3,844,630 increase of prepayments and other current assets, and a $37,539 decrease in accounts payable, accounts payable - related party, unearned revenue, operating lease liabilities and other current liabilities, and operating cash flow provided by discontinued operations of $1,479,390.
Investing Activities
For the year ended September 30, 2025, net cash used in investing activities was $3,277,453 and was primarily the result of investment in equity investee of $2,200,000, which is related to the investment in Aurora Technology Holding Limited and Flower Mouse Network Technology Limited.
| 19 |
For the year ended September 30, 2024, net cash used in investing activities was $547,060 and was mainly related to the purchase of machinery, tools, motor vehicles, and leasehold improvements by discontinued operations.
Financing Activities
Net cash provided by financing activities was $17,059,995 and $7,144,235, respectively, for the year ended September 30, 2025 and 2024.
For the year ended September 30, 2025, net cash provided by financing activities was due to the $17,059,995 net cash from the several private-placement offerings.
For the year ended September 30, 2024, net cash provided by financing activities was primarily due to the $8,450,000 net cash from the initial public offering, offset by $627,000 repayment to related parties and $180,000 payment of short-term loans and $485,765 used in financing activities by discontinued operations.
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 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 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 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 Consolidated Financial Statements upon adoption.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required under Regulation S-K for “smaller reporting companies.”
| 20 |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS
| Page | ||
| Financial Statements as of and for the Fiscal Years Ended September 30, 2025 and 2024 | ||
| Report of Independent Registered Public Accounting Firm PCAOB ID# ( |
F-2 | |
| Report of Independent Registered Public Accounting Firm PCAOB ID# ( |
F-3 | |
| Consolidated Balance Sheets as of September 30, 2025 and 2024 | F-4 | |
| Consolidated Statements of Operations for the years ended September 30, 2025 and 2024 | F-6 | |
| Consolidated Statements of Changes in Stockholders’ Equity for the years ended September 30, 2025 and 2024 | F-7 | |
| Consolidated Statements of Cash Flows for the years ended September 30, 2025 and 2024 | F-8 | |
| Notes to Consolidated Financial Statements | F-9 |
| F-1 |
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Inno Holdings Inc.
Opinion on the Financial Statements
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company incurred an accumulated deficit of $14,818,007 and a negative cash flow from operations amounting to $4,728,738 for year ended September 30, 2025. This raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (the “PCAOB”) and are required to be independent with respect to the Company in accordance with the United States federal securities laws. and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2025.
JWF Assurance PAC
December 15, 2025
PCAOB ID Number 7095
| F-2 |
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Inno Holdings Inc.
Brookshire, TX
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Inno Holdings Inc. and its subsidiaries (the “Company”) as of September 30, 2024, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters.
/s/
We have served as the Company’s auditor since 2024.
December 9, 2024, except for Note 10 which is dated December 12, 2025
| F-3 |
INNO HOLDINGS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of September 30, 2025 and 2024
| September 30, 2025 | September 30, 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalent | $ | $ | ||||||
| Inventories | ||||||||
| Prepayments and other current assets | ||||||||
| Current assets from discontinued operations | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Goodwill, net | ||||||||
| Equity investment | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Advance from customer | ||||||||
| Other payables and accrued liabilities | ||||||||
| Short-term loan payable | ||||||||
| Current liabilities from discontinued operations | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| SEPA liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| F-4 |
INNO HOLDINGS INC. AND SUBSIDIARIES
Consolidated Balance Sheets
As of September 30, 2025 and 2024
| September 30, 2025 | September 30, 2024 | |||||||
| Stockholders’ Equity | ||||||||
| Common stock, | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ||||||
| Total equity | ||||||||
| Total liabilities and equity | $ | $ | ||||||
| * |
The accompanying notes are an integral part of these Consolidated Financial Statements.
| F-5 |
INNO HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended September 30, 2025 and 2024
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| REVENUES: | ||||||||
| Revenue - products | $ | $ | ||||||
| Total revenue | ||||||||
| COSTS OF REVENUE: | ||||||||
| Costs of goods sold | ||||||||
| Total cost of sales | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES: | ||||||||
| Selling, general and administrative expenses (exclusive of expenses shown separately below) | ||||||||
| Impairment loss on goodwill | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest income, net | ||||||||
| Loss on investment disposal | ( | |||||||
| Change in fair value of SEPA | ( | |||||||
| Other non-operating income, net | ||||||||
| Total other (expenses) income, net | ( | ) | ||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ||||
| INCOME TAX EXPENSE | ( | ) | ( | ) | ||||
| NET LOSS FROM CONTINUING OPERATIONS | ( | ) | ( | ) | ||||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Non-controlling interest | ( | ) | ||||||
| NET LOSS ATTRIBUTABLE TO INNO HOLDINGS INC. | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE NUMBER OF COMMON STOCK* | ||||||||
| Basic and Diluted | ||||||||
| LOSSES PER SHARE | ||||||||
| Basic and Diluted from Continuing Operation | ) | ) | ||||||
| Basic and Diluted from Discontinuing Operation | ) | ) | ||||||
| Basic and Diluted, Total | $ | ) | $ | ) | ||||
| * |
The accompanying notes are an integral part of these Consolidated Financial Statements.
| F-6 |
INNO HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
For the Years Ended September 30, 2025 and 2024
| Common Stock* | Additional Paid in | Accumulated | Non- controlling | |||||||||||||||||||||
| Shares | Amount | Capital | Deficit | interest | Total | |||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||
| Shares issued upon IPO completion | ||||||||||||||||||||||||
| Disposal of subsidiary | - | |||||||||||||||||||||||
| Warrants assumption | - | ( | ) | ( | ) | |||||||||||||||||||
| Shares issued for service | ||||||||||||||||||||||||
| Fractional shares round up due to reverse stock split | ||||||||||||||||||||||||
| Balance, September 30, 2024 | ( | ) | ( | ) | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Disposal of subsidiary | - | |||||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||||||
| Shares issued for cash | ||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| * |
The accompanying notes are an integral part of these Consolidated Financial Statements.
| F-7 |
INNO HOLDINGS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended September 30, 2025 and 2024
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net loss from discontinuing operations | ( | ) | ( | ) | ||||
| Adjustments to reconcile net income to cash used in operating activities: | ||||||||
| Stock-based compensation expense | ||||||||
| Loss from investment disposal | ||||||||
| Impairment loss on goodwill | ||||||||
| Change in fair value of SEPA | ||||||||
| Inventories | ( | ) | ||||||
| Deferred offering costs | ( | ) | ||||||
| Prepayments and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accounts payable - related party | ( | ) | ||||||
| Advance from customer | ||||||||
| Operating lease liabilities | ( | ) | ||||||
| Other payables and accrued liabilities | ||||||||
| Operating cash flow used by discontinued operations | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of investment in equity investee | ( | ) | ||||||
| Proceed from investment disposal | ||||||||
| Net cash used in investing activities by discontinued operations | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Payments to related parties | ( | ) | ||||||
| Payments to short-term loans | ( | ) | ||||||
| Warrants assumption | ( | ) | ||||||
| Proceeds from IPO | ||||||||
| Shares issued for cash | ||||||||
| Net cash used in financing activities by discontinued operations | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| CHANGES IN CASH AND CASH EQUIVALENT | ||||||||
| CASH AND CASH EQUIVALENT, beginning of period | ||||||||
| CASH AND CASH EQUIVALENT, ending of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for income tax | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| Noncash deferred offering costs offset to APIC upon IPO completion | $ | $ | ||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | ||||||
| Deposit applied to lease liability | $ | $ | ||||||
The accompanying notes are an integral part of these Consolidated Financial Statements.
| F-8 |
INNO HOLDINGS INC. AND SUBSIDIARIES
Notes to 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
Effective
as of January 21, 2022, the Company acquired
Inno
Research Institute LLC (“IRI”), a Texas limited liability company was formed on September 8, 2021, is a
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 shares of Lear Group Limited (“Lear”), a Hong Kong company,
from its shareholder for a total consideration of $
On
December 13, 2024, the Company completed the acquisition of shares of Baymax High Technology Co., Limited (“Baymax”),
a Hong Kong company, from its shareholder for a total consideration of $
On
March 4, 2025, the Company entered into a Share Purchase Agreement with Architectix Limited, pursuant to which the Company sold all issued
and outstanding shares it owns in Inno Metal Studs Corp and Inno AI Tech Corp for an aggregate purchase price of $
On
March 28, 2025, the Company entered into a Membership Interest Purchase Agreement with Strucraft Group Limited, pursuant to which the
Company sold all the membership interest it owns in Castor Building Tech LLC, which represents
On
April 8, 2025, the Company entered into a Share Purchase Agreement with Strucraft Group Limited, pursuant to which the Company sold all
issued and outstanding shares it owns in Inno Disrupts Inc. for an aggregate purchase price of $
| F-9 |
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.
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.
Reclassifications
Certain amounts on the prior year’s consolidated balance sheets, consolidated statements of operations and cash flows were reclassified to conform to the current year presentation, with no effect on ending stockholders’ equity.
Going concern
As
of September 30, 2025, the Company had total cash and cash equivalent of $
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.
Standby Equity Purchase Agreement
On July 4, 2025, the Company entered into the SEPA with the Investors. Pursuant to SEPA, the Company has the right, but not the obligation, to issue and sell, from time to time at the Company’s discretion, up to $ million of shares of our common stock to the . The SEPA has a three-year term and may be terminated earlier by the Company, and the Company expect to use any proceeds for working capital and general corporate purposes. The SEPA, in its entirety, is classified as a derivative liability because it did not meet the equity classification criteria under ASC 815-10, Derivatives and Hedging (“ASC 815-10”). The SEPA derivative is valued based on a scenario-based valuation model utilizing the expected draws, probability of the draws and risk-free rate inputs. The change in the fair value of the derivative is recorded in the Consolidated Statements of Operations.
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.
From
time to time, the Company may maintain bank balances in interest bearing accounts in excess of the $
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.
| F-10 |
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.
Equity investment
The Company measure investments in equity investments without 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.
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. |
On
July 4, 2025, the Company entered into the SEPA with the Investors. Upon execution of the SEPA, the Company determined the fair value
of the SEPA derivative liability to be $
| F-11 |
The following tables summarize the changes in fair value of SEPA derivative liability for the years ended September 30, 2025. The SEPA derivative liabilities were not present for the year ended September 30, 2024.
| Level 3 Liabilities | Fair Value at September 30, 2024 | Issuances (Settlements) | Change in Unrealized (Gains) Losses | Fair Value at September 30, 2025 | ||||||||||||
| SEPA derivative liability | $ | $ | $ | $ | ||||||||||||
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.
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.
| F-12 |
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:
| Machinery and equipment | ||
| Office equipment | ||
| Motor vehicles | ||
| Leasehold 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,
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.
| F-13 |
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.
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.
Segment Reporting
The Company uses the management approach in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions, allocating resources and assessing performance as the source for determining the Company’s reportable segments. During the years ended September 30, 2025 and 2024, the Chief Executive Officer has been identified as the chief operating decision maker. The Company’s chief operating decision maker regularly reviews consolidated assets and consolidated operating results prepared under U.S. GAAP for the enterprise as a whole when making decisions about allocating resources and assessing performance of the Company. Consequently, management has determined that the Company only has one operating segment as defined under ASC 280-10-50.
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.
| F-14 |
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.
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.
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 July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The legislation includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Act and Jobs Act, modifications to the international tax framework, and the restoration of favorable business tax provisions, such as 100% bonus depreciation and the business interest expense limitation, among others. The legislation contains multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While we are continuing to evaluate the full impact of the legislation, we do not expect the OBBBA to have a material effect on our fiscal 2025 effective tax rate.
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 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.
| F-15 |
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 September 30, 2025 and 2024, inventories consisted of the following:
September 30, 2025 | September 30, 2024 | |||||||
| Merchandise inventory | $ | $ | ||||||
| Total | $ | $ | ||||||
As
of September 30, 2025 and 2024, there was
Note 4 — Prepayments and other current assets
As of September 30, 2024 and 2025, prepayments and other current assets consisted of the following:
September 30, 2025 | September 30, 2024 | |||||||
| Loan and Interest receivable | $ | $ | ||||||
| Receivable from sales of equity investment | ||||||||
| Advance to suppliers | ||||||||
| Prepaid rent | ||||||||
| Prepaid insurance | ||||||||
| Prepaid for legal fee | ||||||||
| Deposits | ||||||||
| Advance to other service providers | ||||||||
| Other prepayments and current assets | ||||||||
| Total | $ | $ | ||||||
On
February 28, 2025, the Company entered into a loan agreement with HST Trading Limited, providing a principal amount of $
Note 5 — Equity Investments
On
October 14, 2024, the Company entered into an equity investment agreement with an individual, securing a
On
March 28,2025, the Company entered into a Membership Interest Purchase Agreement with Strucraft Group Limited, pursuant to which the
Company sold all of the membership interest it owns in Core Modu LLC, which represents
| F-16 |
On
May 28, 2025, the Company entered into an equity investment agreement with Aurora Technology Holding Limited (“Aurora”),
securing a
On
August 6, 2025, Lear Group Limited, the subsidiary of the Company, entered into an equity investment agreement with Flower Mouse Network
Technology Limited (“Flower”), securing a
Note 6 — Goodwill, net
As of September 30, 2025 and 2024, goodwill consisted of the following:
| Balance at September 30,2024 | $ | |||
| Acquisition | ||||
| Impairment losses | ( | ) | ||
| Balance at September 30, 2025 | $ |
Goodwill
of $
Note 7 — Other payables and accrued liabilities
As of September 30, 2024 and 2025, prepayments and other current assets consisted of the following:
September 30, 2025 | September 30, 2024 | |||||||
| Payable to service providers | $ | $ | ||||||
| State tax payable | ||||||||
| Other payables | ||||||||
| Total | $ | $ | ||||||
Note 8 — Loans payable
Shont term loan without interest
From
June 2023 to August 2023, the Company borrowed short-term loans due on demand without interest, amounting to $
| F-17 |
Note 9 — Standby Equity Purchase Agreement
On July 4, 2025, the Company entered into the SEPA with the Investors. Pursuant to SEPA, the Company has the right, but not the obligation, to issue and sell, from time to time at the Company’s discretion, up to $ million of shares of our common stock to the . The SEPA has a three-year term and may be terminated earlier by the Company, and the Company expect to use any proceeds for working capital and general corporate purposes. The SEPA, in its entirety, is classified as a derivative liability because it did not meet the equity classification criteria under ASC 815-10, Derivatives and Hedging (“ASC 815-10”). Changes in the fair value are recognized in the Consolidated Statements of Operations. The SEPA is accounted for as a derivative and is recognized as a liability measured at fair value in accordance with ASC 820. The Company intends to utilize the SEPA to access capital to fund its operations. shares have been issued for the year ended September 30, 2025.
A
third-party independent appraiser was engaged to calculate the estimated fair value of the SEPA. The estimated fair value of the SEPA
liability on July 4, 2025, was $
| Valuation assumptions: | September 30, 2025 | July 4, 2025 | ||||||
| Expected draws | $ | $ | ||||||
| Expected probability of draws | % | % | ||||||
| Risk-free interest rate | % | % | ||||||
The estimated fair value of the liability was determined using a scenario-based valuation model which assigned a probability to a number of different outcomes. The inputs and assumptions utilized in the calculation require management to apply judgment and make estimates including:
| (a) | total
expected draws of $ | |
| (b) | the expected probability of the draws on the SEPA, which the Company estimate based on our expectation of the draws being completed; and | |
| (c) | risk-free interest rate, which was determined by reference to the U.S. Treasury yield curve for time periods commensurate with the expected term of the agreement in relation to the date of the expected draw. |
These estimates may be subjective in nature and involve uncertainties and matters of judgment and therefore cannot be determined with exact precision.
On August 27, 2025, the Company sold shares of common stock under the SEPA, raising approximately $.
Note 10 — Discontinued operations
On
March 4, 2025, the Company entered into a Share Purchase Agreement with Architectix Limited, pursuant to which the Company sold all issued
and outstanding shares it owns in Inno Metal Studs Corp (“IMSC”) and Inno AI Tech Corp (“AT”) for an aggregate
purchase price of $
On
March 28, 2025, the Company entered into a Membership Interest Purchase Agreement with Strucraft Group Limited, pursuant to which the
Company sold all the membership interest it owns in Castor Building Tech LLC (“CBT”), which represents
On April 8, 2025, the Company entered
into a Share Purchase Agreement with Strucraft Group Limited, pursuant to which the Company sold all issued and outstanding shares it
owns in Inno Disrupts Inc. (“Disrupts”) for an aggregate purchase price of $
| F-18 |
In accordance with the provisions of ASC 205-20, Presentation of Financial Statements, we have separately reported the assets and liabilities of the discontinued operations of IMSC, AT and CBT in the consolidated balance sheets. The assets and liabilities have been reflected as discontinued operations in the consolidated balance sheets as of September 30, 2025 and 2024, and consist of the following:
| September 30, 2025 | September 30, 2024 | |||||||
| Current assets from discontinued operations | ||||||||
| Cash and cash equivalent | $ | $ | ||||||
| Inventories | ||||||||
| Prepayments and other current assets | ||||||||
| Right-of-use assets | ||||||||
| Property and equipment, net | ||||||||
| Other current assets | ||||||||
| Total current assets from discontinued operations | $ | $ | ||||||
| Current liabilities from discontinued operations | ||||||||
| Accounts payable | $ | $ | ||||||
| Deferred revenue | ||||||||
| Other payables and accrued liabilities | ||||||||
| Other payables – related party | ||||||||
| Operating lease liability – current | ||||||||
Long-term notes payable – current portion | ||||||||
| Notes payable | ||||||||
| Total current liabilities from discontinued operations | $ | $ | ||||||
In accordance with the provisions of ASC 205-20, we have not included the results of operations from discontinued operations in the results of continuing operations in the consolidated statements of operations. The results of operations from discontinued operations for the years ended September 30, 2025 and 2024, have been reflected as discontinued operations in the consolidated statements of operations for the years ended September 30, 2025 and 2024, and consist of the following:
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | $ | $ | ||||||
| Cost of sales | ||||||||
| GROSS PROFIT | ||||||||
| Selling, general and administrative expenses (exclusive of expenses shown separately below) | ||||||||
| Impairment loss on goodwill | ||||||||
| Bad debt expense | ||||||||
| Depreciation | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| Interest expenses, net | ( | ) | ( | ) | ||||
| Other non-operating income (expense), net | ( | ) | ||||||
| Total other (expenses) income, net | ( | ) | ||||||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ||||||
| Net loss from discontinued operations to the Company | $ | ( | ) | $ | ( | ) | ||
| F-19 |
In accordance with the provisions of ASC 205-20, we have included the net cash provided by discontinued operations in the consolidated statements of cash flows. The net cash provided by discontinued operations in the consolidated statements of cash flows for the years ended September 30, 2025 and 2024, consists of the following:
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss from discontinuing operation | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income to cash used in operating activities: | ||||||||
| Non-controlling interest | ||||||||
| Loss from settlement | ||||||||
| Depreciation expense | ||||||||
| Bad debt expense | ||||||||
| Non-cash operating lease expense | ||||||||
| Fixed assets disposal loss | ||||||||
| Loss from investment disposal | ||||||||
| Impairment loss on goodwill | ||||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepayments and other current assets | ||||||||
| Accounts payable | ( | ) | ||||||
| Accounts payable - related party | ( | ) | ||||||
| Unearned revenue | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other payables and accrued liabilities | ( | ) | ( | ) | ||||
| Note payable | ( | ) | ||||||
| Net cash used in operating activities by discontinued operations | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Fixed assets additions | ( | ) | ( | ) | ||||
| Proceed from fixed assets disposal | ||||||||
| Net cash used in investing activities by discontinued operations | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from related parties | ||||||||
| Payments to short-term loans | ( | ) | ||||||
| Payment to long-term note | ( | ) | ||||||
| Net cash provided by financing activities | ( | ) | ||||||
| CHANGES IN CASH AND CASH EQUIVALENT | $ | ( | ) | $ | ||||
Note 11 — 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 September 30, 2025 and 2024, the amount due to Mr. Liu was $Nil and $
| F-20 |
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 September
30, 2025 and 2024, the outstanding balance, due to Zfounder and Wise Hill, were $ and $, respectively. During the year ended September
31, 2025, other income of employee lease service from Zfounder was $
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 $
On
October 14, 2024, the Company entered into an equity investment agreement with an individual, securing a
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 September 30, 2025 and 2024, the outstanding balance of prepayments
to Baicheng was $ and $
Note 12 — Equity
The Company was incorporated in Texas on September 8, 2021. The total authorized shares of capital stock were shares without par value.
On
November 30, 2022, the
On
October 9, 2024,
| F-21 |
As of September 30, 2025 and 2024, after giving effect to the stock splits of the outstanding shares of Common Stock, there were and shares of Common Stock issued and outstanding, respectively. The total authorized number of shares of capital stock was shares without par value.
In
December 2022, The Company issued shares ( shares pre–Reverse Stock Split) of its common stock at a price of $
per share to an accredited investor for $
In
February 2023, The Company issued shares ( shares pre–Reverse Stock Split) of its common stock at a price of $
per share to an accredited investor for $
In
March 2023, The Company issued shares ( shares pre–Reverse Stock Split) of its common stock at a price of $ per
share to an accredited investor for $
On
June 20, 2023, the Company issued shares ( shares pre-Reverse Stock Split) of its common stock for a total value of $
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 shares (“the Shares”) ( shares pre-Reverse Stock Split) of its common
stock,
The
total gross proceeds from the Offering were $
On
October 31, 2024, the Company entered into a securities purchase agreement with certain investors, providing for the sale and issuance
of shares of the Company’s common stock,
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
shares of common stock,
| F-22 |
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
shares of common stock, no par value, at a purchase price per share of $, for gross proceeds of approximately $
On January 16, 2025, pursuant to the Omnibus Incentive Plan, the Company granted shares of our common stock to our Chief Executive Officer Ding Wei, and shares of our common stock to our Chief Financial Officer Mengshu Shao.
On May 28, 2025, pursuant to 2025 Omnibus Incentive Plan, the Company granted shares of its common stock to the Company’s employees.
On
June 2, 2025, the Company entered into a securities purchase agreement with certain investors, pursuant to which the Company agreed to
issue and sell, in a registered direct offering by the Company directly to the investors (the “June 2025 Offering”), an aggregate
of shares (the “June 2025 Shares”) of its common stock, par value, at a purchase price per share of $. The
June 2025 Offering closed on June 6, 2025 and the Company received gross proceeds of $
On
January 27, 2025, the Company entered into a Standby Equity Purchase Agreement (the “January SEPA”) with certain investors
effective as of January 28, 2025. Pursuant to January SEPA, the Company has the right to issue and sell to the investors, from time to
time, up to $
On
July 4, 2025, the Company entered into the Standby Equity Purchase Agreement (the “July SEPA”) with the Investors. Pursuant
to July SEPA, the Company has the right to issue and sell to the investors, from time to time, up to $
On
September 10, 2025, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which
the Company offered, in a registered direct offering, shares of its common stock, at a purchase price of $ per share and
pre-funded warrants to purchase up to shares of common stock, at a purchase price of $per pre-funded warrant (equal to
$ minus the exercise price of $
Note 13 — 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 September 30, 2025 and 2024, $
| F-23 |
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 year ended September 30, 2025, two customers accounted for
For the year ended September 30, 2025, two suppliers accounted for % of the Company’s total purchases. For the year ended September 30, 2024, two suppliers accounted for % of the Company’s total purchases. As of September 30, 2025, $ outstanding of accounts payable. As of September 30, 2024, accounts payable to two suppliers accounted for % of the Company’s total accounts payable.
Note 14 — 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 $
In
December 2024, a former shareholder of the Company (the “Shareholder”) filed a complaint against the Company and other entities
and individuals affiliated with the Company in the Orange County Superior Court of California, alleging financial losses related to his
investment in entities affiliated with the Company.
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 15 — Income taxes
United States
On
December 22, 2017, the President of the United States signed into law H.R.1, formerly known as the Tax Cuts and Jobs Act (the “Tax
Legislation”). The Tax Legislation significantly revised the U.S. tax code by (i) lowering the U.S. federal statutory income tax
rate from
Other provisions of the new legislation include, but are not limited to, limiting deductibility of interest and executive compensation expense. These additional items have been considered in the income tax provision for the years ended September 30, 2025 and 2024.
| F-24 |
Texas
imposes a franchise tax that applies to most business entities that are formed or qualified to do business, or which are otherwise doing
business, in Texas. Under the Texas franchise tax, a
Hong Kong
Lear
and Baymax are incorporated in Hong Kong. Under the two-tiered profits tax rates regime in Hong Kong,
The income tax provision for the years ended September 30, 2025 and 2024 consisted of the following:
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Current: | ||||||||
| Federal | $ | $ | ||||||
| State | ||||||||
| Total current income tax provision | ||||||||
| Deferred: | ||||||||
| Federal | ( | ) | ( | ) | ||||
| State | ||||||||
| Increase/(decrease) in valuation allowance | ||||||||
| Total deferred taxes | ||||||||
| Total provision for income taxes | $ | $ | ||||||
The deferred tax asset as of September 30, 2025 and 2024 consisted of the following:
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net operating loss | $ | $ | ||||||
| Depreciation | ( | ) | ||||||
| Unearned revenue | ||||||||
| Investment in Passthrough Entities | ||||||||
| Others | ||||||||
| Total deferred tax assets | ||||||||
| Less: valuation allowance | ( | ) | ( | ) | ||||
| $ | $ | |||||||
The
company has U.S. federal net operating loss carry forwards of approximately $
| F-25 |
Valuation Allowance
We periodically assess whether it is more likely than not whether we will generate sufficient taxable income to realize our deferred tax assets and establish a valuation allowance if it’s we deem that will not likely be able to realize the benefit associated with our deferred tax assets. We consider all available positive and negative evidence and make certain assumptions to make this determination. We review our deferred tax liabilities, historical earnings, history of cycles of earnings and losses within our industry, our business environment and the potential to generate current and future earnings. We cannot determine at this time when we will be able to generate sufficient taxable income to realize our deferred tax assets. We therefore have recorded a full valuation allowance against our net deferred tax assets.
The Company is subject to U.S. federal income tax as well as state income tax in certain jurisdictions. The tax years 2021 to 2025 remain open to examination by the major taxing jurisdictions to which the Company is subject. The following is a reconciliation of income tax expenses at the effective rate to income tax at the calculated statutory rates:
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Statutory tax rate | ||||||||
| Federal | % | % | ||||||
| State (net of federal benefit) | ( | )% | ||||||
| Foreign tax rate differential | ( | )% | ||||||
| Net effect of state income tax deduction and other permanent differences | ( | )% | ( | )% | ||||
| Effective tax rate | ( | )% | ( | )% | ||||
As
of September 30, 2025 and 2024, the outstanding income tax payable was $
Note 16 — Segment Information
Reportable Segments
The Company operates as a single reportable segment, which is consistent with how the Chief Operating Decision Maker (“CODM”), the Chief Executive Officer, allocates resources and assesses performance. The Company’s operations are centralized and integrated, with financial results reviewed and managed on a consolidated basis. Accordingly, management has determined that the Company has one reportable segment under ASC Topic 280, Segment Reporting.
Measure of Segment Profit or Loss
The CODM reviews financial information on a consolidated basis, using Net Income as the primary measure of segment performance to monitor budget versus actual results and decide where to allocate and invest additional resources to achieve continued growth. Net Income is defined as revenue less cost of goods sold and operating expenses, and other segment items (including interest income, interest expense, other income and other expenses), and income taxes.
Significant Segment Expense Categories Provided to the CODM
The CODM regularly receives and reviews the following expense categories, which are included in the segment’s measure of profit or loss.
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ||||||||
| Sales and marketing expenses | ||||||||
| – Marketing service expenses | ||||||||
| General and administrative expenses | ||||||||
| – Payroll and stock-based compensation expenses | ||||||||
| – Professional service expenses | ||||||||
| – Office related expenses | ||||||||
| – Lease expenses | ||||||||
| – Travel expenses | ||||||||
| Other segment expenses (income), net | ( | ) | ||||||
| Income tax expense | ||||||||
| Net loss from continuing operations | $ | ( | ) | $ | ( | ) | ||
| Net loss from discontinued operations | ( | ) | ( | ) | ||||
| F-26 |
The following table presents revenues by geographic area based on the sales location of our products:
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Hong Kong | $ | $ | ||||||
| Total revenue | $ | $ | ||||||
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Restricted stock: | ||||||||
| – Stock awards | $ | $ | ||||||
| Total | $ | $ | ||||||
On January 16, 2025, pursuant to the Omnibus Incentive Plan, the Company granted shares of our common stock to our Chief Executive Officer Ding Wei, and shares of our common stock to our Chief Financial Officer Mengshu Shao. The stock grant does not have vesting period. The price of the granted stocks is based on the closing price of the Company’s stock on grant date, which is $ per share. As of September 30, 2025, there was no outstanding restricted shares under the Omnibus Incentive Plan.
On May 28, 2025, pursuant to 2025 Omnibus Incentive Plan, the Company granted shares of its common stock to the Company’s employees. The stock grant does not have vesting period. The price of the granted stocks is based on the closing price of the Company’s stock on grant date, which is $ per share. As of September 30, 2025, there was no outstanding restricted shares under the 2025 Omnibus Incentive Plan.
Note 18 — Subsequent events
On
October 2, 2025, the Company entered into a loan agreement with a non-related party, providing a principal amount of $
On
November 12, 2025, the Company entered into a sales agreement (the “Sales Agreement”) with Aegis Capital Corp. (the “Sales
Agent”), pursuant to which the Company may offer and sell, from time to time, to or through the Sales Agent, shares of the Company’s
common stock, with no par value, having an aggregate offering price of up to $
The Company is not obligated to sell any Placement Shares under the Sales Agreement. Subject to the terms and conditions of the Sales Agreement, the Sales Agent will use commercially reasonable efforts, consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of The Nasdaq Stock Market LLC (“Nasdaq”), to sell Placement Shares from time to time based upon the Company’s notice and instructions, up to the amount specified therein. Under the Sales Agreement, the Sales Agent may sell Placement Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, including sales made directly on Nasdaq or on any other existing trading market or directly to the Sales Agent as principal in negotiated transactions. The Sales Agent may also sell Placement Shares by any other method permitted by law, including in privately negotiated transactions, with the Company’s consent.
In accordance with the Sales Agreement, the Company will pay the Sales Agent in cash, upon each sale of Placement Shares pursuant to the Sales Agreement, an amount equal to three percent (3.0%) of the gross proceeds from each sale of Placement Shares. The Sales Agreement may be terminated by the Company and the Sales Agent at any time upon notice to the other party. If not terminated earlier, the Sales Agreement will automatically terminate upon the earlier to occur of (i) May 12, 2026 (the sixth month anniversary of the date of the Sales Agreement), or (ii) the issuance and sale of all of the Placement Shares under the Sales Agreement.
From
November 12, 2025 to December 15, 2025, the Company issued an aggregate of shares of Common Stock for the gross proceeds of
approximately $
Basic loss per share and diluted loss per share have been calculated in accordance with ASC 260 on computation of earnings per share for the years ended September 30, 2025 and 2024 as follows:
Potential dilutive securities are excluded from the calculation of diluted EPS in loss periods as their effect would be anti-dilutive.
For the Years Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Statement of Operations Summary Information: | ||||||||
| Net loss from continued operation | $ | ( | ) | $ | ( | ) | ||
| Weighted- average common shares outstanding – basic and diluted | ||||||||
| Net loss per share, basic and diluted from continued operation | $ | ) | $ | ) | ||||
| Net loss from discontinued operation | $ | ( | ) | $ | ( | ) | ||
| Weighted- average common shares outstanding – basic and diluted | ||||||||
| Net loss per share, basic and diluted from continued operation | $ | $ | ) | |||||
As of September 30, 2025 and 2024, there were no potentially dilutive shares.
| F-27 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES
Management’s Report on Internal Control over Financial Reporting
Our Chief Executive Officer and Chief Financial Officer are responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our Board, senior management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We continue to review our internal control over financial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the control deficiencies identified during this evaluation and set forth below, our senior management has concluded that we did not maintain effective internal control over financial reporting as of September 30, 2025 due to the existence of a material weakness in internal control over financial reporting as described below.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. The material weakness identified relates to 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, and lack of sufficient in-house accounting personnel with the requisite knowledge and experience in the application of U.S. GAAP. We have initiated remediation efforts, including engaging external consultants and will continue to monitor and enhance our internal controls.
Disclosure Controls and Procedures
An evaluation was performed under the supervision of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that, as of September 30, 2025, 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. |
| ● | Lack of sufficient in-house accounting personnel with the requisite knowledge and experience in the application of U.S. GAAP. |
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, and plan to hire additional in-house accounting personnel with the requisite knowledge and experience in the application of U.S. GAAP. 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.
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Changes in Internal Control over Financial Reporting
Other than the ongoing remediation efforts described above, we have made no change in our internal control over financial reporting during the last fiscal year that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
The following are our executive officers and directors and their respective ages and positions as of the date of this annual report.
| Name | Age | Position | ||
| Ding Wei | 45 | Chief Executive Officer, Director and Chairman | ||
| Mengshu Shao | 34 | Chief Financial Officer and Director | ||
| Yufang Qu | 59 | Independent Director | ||
| Tao Tu | 45 | Independent Director | ||
| Yongbo Mo | 29 | Independent Director |
Ding Wei — Chief Executive Officer, Director and Chairman
Mr. Wei, 45 years old, was appointed as our Chief Executive Officer, Director and Chairman on October 15, 2024. In addition, Mr. Wei is the founder, chairman, and general manager of Yangzhou Ruide Fei Technology Co., Ltd. and Yangzhou Yu Chen Saiwen Information Consulting Co., Ltd. since July 2014, where he was responsible for business operation and corporation management, including strategic planning, operations management, financial management, marketing, and team management. From 2009 to 2013, Mr. Wei served as the head of the administrative department at HYVA MECHANICS (CHINA) CO., LTD., during which he was responsible for human resources support, office operations management, team leadership, and compliance control. From 2006 to 2009, Mr. Wei was the deputy general manager and executive assistant to the chairman at Yangzhou Gaoshi Glasses Co., Ltd., and her was responsible for overseeing daily operations across multiple departments, developing and implementing organizational strategies, monitoring financial performance, and conducting performance evaluations. Mr. Wei holds a bachelor’s degree in computer science and information systems from CARICH Education of New Zealand.
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Mengshu Shao — Chief Financial Officer and Director
Ms. Shao, 34 years old, was appointed as a Director on October 23, 2024. Ms. Shao served as internal auditor manager at Agile Group from October 2021 to September 2024, where she was responsible for managing internal audit projects of corporation, including operational auditing, risk assessment and management, internal control evaluation, compliance monitoring, and fraud detection. From May 2019 to September 2021, Ms. Shao held the position of internal auditor at Cedar Holdings, where she worked on internal audit tasks of corporation, including risk assessment and management, operational audit, and internal control evaluation. From August 2016 to April 2019, Ms. Shao worked as an auditor at PwC Mainland China. Ms. Shao graduated from Jinan University in June 2016 with a master’s degree in accounting.
Yufang Qu — Independent Director
Ms. Qu, 59 years old, was appointed as a Director on October 15, 2024. Ms. Qu served as an accountant of Shuangyashan Shijixing Construction Engineering Co., Ltd. from 2004 to 2022, where she was responsible for organizing financial information, preparing financial statements, and providing financial analysis to help optimize financial structure and improve efficiency. Ms. Qu graduated from Shuangyashan Radio and Television University in 1993 with a bachelor’s degree in financial accounting.
Tao Tu — Independent Director
Mr. Tao TU, age 45, was appointed as a Director on May 31, 2024. Mr.Tu currently serves as the Director of Fuda Capital Ltd. and as the Chief Executive Officer at Jinyide Culture Media Co., Ltd., where he is responsible for strategic leadership, organizational management, external representation, financial Performance, and corporate governance. From 2017 to 2020, he served as the Chief Executive Officer at Jinyide Jewelry Co., Ltd., where he was responsible for corporate governance, marketing and development, customer relationship, and organizational development. Mr. Tu received his bachelor’s degree in Finance from the South-Central University for Nationalities.
Yongbo Mo — Independent Director
Mr. Mo, 29 years old, was appointed as a Director on October 23, 2024. Mr. Mo has been working at Shanghai Haineng Investment Consulting Company as a Product Manager since February 2022, where he is primarily responsible for leading and managing investment projects, including project screening, due diligence, financial analysis, risk assessment, project execution supervision, and post-project tracking and evaluation. From June 2018 to January 2022, Mr. Mo served as a Media Manager at Zhengzhou Houde Technology Co., Ltd., where he was primarily responsible for developing and implementing media strategies, which include maintaining media relationships, content operations, user operations, brand promotion, and commercial cooperation services. Mr. Mo graduated from Zhengzhou Information Technology Vocational School in September 2017 with a bachelor’s degree in Investment and Finance.
Family Relationships
There are no familial relationships between the directors or executive officers of the Company.
Code of Ethics
Our Board has adopted a written code of business conduct and ethics (“Code of Ethics”) that applies to our directors, officers, and employees, including our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. We intend to post on our website a current copy of the Code of Ethics and all disclosures that are required by law regarding any amendments to, or waivers from, any provision of the Code of Ethics. Any person may obtain a copy of our Code of Ethics, without charge, by mailing a request to the Company at the address appearing on the front page of this annual Report on Form 10-K or by viewing it on our website found at https://www.innoholdings.com/code-of-business-conduct-and-ethics.
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Insider Trading Policy
Board Leadership Structure and Risk Oversight
Our Board has responsibility for the oversight of our risk management processes and, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process includes receiving regular reports from board committees and members of senior management to enable our Board to understand our risk identification, risk management, and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, cybersecurity, strategic, and reputational risk. While the Company has not yet experienced a significant impact related to the situation in Ukraine caused by the Russian invasion, the Board will also closely monitor the risks in relation to such developments, including but not limited to risks related to cybersecurity, sanctions, supply chain, suppliers and service providers. Similarly, our board is monitoring US-China relations to monitor risks such as political disruption, supply chain, and foreign exchange.
Board of Directors
Our business and affairs are managed under the direction of our Board. Our Board consists of 5 directors, 3 of whom qualify as “independent” under the listing standards of Nasdaq.
Directors serve until the next annual meeting and until their successors are elected and qualified. Officers are appointed to serve until their successors have been elected and qualified.
Director Independence
Our Board is composed of a majority of “independent directors” as defined under the rules of Nasdaq. Nasdaq Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship which, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Under such definition, our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our Board has determined that Yufang Qu, Tao Tu and Yongbo Mo are all independent directors of the Company.
Committees of the Board of Directors
Committees of the Board were established and took effect upon the closing of our IPO on December 18, 2023. Our committees include an audit committee and a compensation committee. Each such committee has the composition and responsibilities described below:
Audit Committee
Our audit committee consists of Yufang Qu, Tao Tu and Yongbo Mo. Yufang Qu is the chairman of the audit committee. In addition, our Board has determined that Yufang Qu is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended, or the Securities Act. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:
| (a) | reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the Board whether the audited financial statements should be included in our annual disclosure report; | |
| (b) | discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; |
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| (c) | discussing with management major risk assessment and risk management policies; | |
| (d) | monitoring the independence of the independent auditor; | |
| (e) | verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; | |
| (f) | reviewing and approving all related-party transactions; | |
| (g) | inquiring and discussing with management our compliance with applicable laws and regulations; | |
| (h) | preapproving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; | |
| (i) | appointing or replacing the independent auditor; | |
| (j) | determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; | |
| (k) | establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and | |
| (l) | approving reimbursement of expenses incurred by our management team in identifying potential target businesses. |
The audit committee is composed exclusively of “independent directors” who are “financially literate” as defined under the Nasdaq listing standards. The Nasdaq listing standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement.
In addition, the Company has certified to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication.
Compensation Committee
Our compensation committee consists of Yufang Qu, Tao Tu and Yongbo Mo, each of whom is an independent director. Each member of our compensation committee is also a non-employee director, as defined under Rule 16b-3 promulgated under the Exchange Act. Yufang Qu is the chairman of the compensation committee. The compensation committee’s duties, which are specified in our Compensation Committee Charter, include, but are not limited to:
| (a) | reviews, approves and determines, or makes recommendations to our Board regarding, the compensation of our executive officers; | |
| (b) | administers our equity compensation plans; | |
| (c) | reviews and approves, or makes recommendations to our Board, regarding incentive compensation and equity compensation plans; and | |
| (d) | establishes and reviews general policies relating to compensation and benefits of our employees. |
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Involvement in Certain Legal Proceedings
To our knowledge, none of our current directors or executive officers has, during the past ten (10) years:
| (a) | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | |
| (b) | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two (2) years prior to that time; | |
| (c) | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his or her involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; | |
| (d) | been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; | |
| (e) | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or | |
| (f) | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in section 3(a)(26) of the Exchange Act), any registered entity (as defined in section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Director Qualifications
The Company does not have a standing nominating committee. Instead, our independent directors collectively fulfill the responsibilities that would otherwise be assigned to a nominating and corporate governance committee, including developing and recommending to our board of directors appropriate criteria, including desired qualifications, expertise, skills and characteristics, for selection of new directors and periodically reviews the criteria adopted by our board of directors and, if appropriate, recommends changes to such criteria. The Board believes that this approach is appropriate given the Company’s size, board composition and current governance structure.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who own more than 10% of our outstanding shares of common stock (“Ten Percent Holders”) to file with the SEC reports of their share ownership and changes in their share ownership of our common stock. Directors, executive officers and Ten Percent Holders are also required to furnish us with copies of all ownership reports they file with the SEC. To our knowledge, based solely on a review of the copies of such reports furnished to us, the following former directors, during the fiscal year ended September 30, 2025, all Section 16(a) filing requirements applicable to our executive officers, directors and Ten Percent Holders were complied with, with the exception of the following:
| Name | Number of Late Reports(1) | Number of Transactions Not Timely Reported | Failure to file Requested Forms(1) | |||||||||
| Ding Wei | 1 | 1 | 1 | |||||||||
| Mengshu Shao | 1 | 1 | 1 | |||||||||
| (1) | Failure to file Form 4 - Statement of Changes in Beneficial Ownership. |
The above individuals have each confirmed with the Company that they intend to complete filings of the delinquent Section 16(a) reports as soon as commercially practicable.
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ITEM 11. EXECUTIVE COMPENSATION
Compensation for our Named Executive Officers
As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act. This section discusses the material components of the executive compensation program for our named executive officers (“NEOs”) for the fiscal year ending September 30, 2025 (“Fiscal Year 2025”) and the fiscal year ending September 30, 2024 (“Fiscal Year 2024”).
For Fiscal Year 2025 and 2024, the Company’s NEOs were:
| ● | Dekui Liu, former Chief Executive Officer; | |
| ● | Tianwei (Solomon) Li, former Chief Financial Officer and former Chief Executive Officer; | |
| ● | Dr. Li (Alice) Gong, former Chief Operation Officer and General Manager of Inno Metal Studs Corp (a former subsidiary of the Company); | |
| ● | Ding Wei, Chief Executive Officer; and | |
| ● | Mengshu Shao, Chief Executive Officer. |
Compensation Program
The objective of the compensation program of the Company and its subsidiaries (the “Company Group”) is to provide a total compensation package to each NEO that will enable the Company Group to attract, motivate and retain outstanding individuals, align the interests of our executive team with those of our shareholders, encourage individual and collective contributions to the successful execution of our short- and long-term business strategies and reward NEOs for performance.
| ● | Base Salary. Each of the NEOs is paid a base salary commensurate with the executive’s skill set, experience, performance, role and responsibilities. | |
| ● | Short-Term Cash Incentives. During Fiscal Years 2025 and 2024, except for a one-time award of $50,000 to Mr. Tianwei Li upon the consummation of the IPO, the Company Group did not grant any short-term cash bonuses to any of the NEOs. | |
| ● | Stock Awards. During Fiscal Years 2025 and 2024, the Company Group granted incentive stock awards, pursuant to the Omnibus Incentive Plan, to NEOs including 150,000 shares of our common stock to Ding Wei, and 51,355 shares of our common stock to Mengshu Shao. |
Summary Compensation Table
The following table presents information regarding the total compensation awarded to, earned by and paid to the Company’s NEOs for services rendered to the Company Group in all capacities in its Fiscal Years 2025 and 2024.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Total ($) | |||||||||||||
| Ding Wei(1) | 2025 | 60,000 | - | 775,500 | - | |||||||||||||
| Chief Executive Officer | 2024 | - | - | - | - | |||||||||||||
| Mengshu Shao(2) | 2025 | 60,000 | - | 265,505 | ||||||||||||||
| Chief Financial Officer | 2024 | - | - | - | - | |||||||||||||
| Dekui Liu(3) | 2025 | - | - | - | - | |||||||||||||
| Former Chief Executive Officer | 2024 | 70,833 | - | - | 70,833 | |||||||||||||
| Tianwei (Solomon) Li(4) | 2025 | - | - | - | - | |||||||||||||
| Former Chief Financial Officer and Former Chief Executive Officer | 2024 | 180,000 | 50,000 | - | 230,000 | |||||||||||||
| Dr. Li (Alice) Gong(5) | 2025 | - | - | - | - | |||||||||||||
| Former Chief Operation Officer and General Manager of Inno Metal Studs Corp | 2024 | 152,587 | - | - | 152,587 | |||||||||||||
(1) On October 15, 2024, the Board appointed Ding Wei, to fill the Chief Executive Officer. The Company will compensate Ding Wei for his service as chief executive officer at a salary of $60,000 annually, subject to his continued service.
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(2) On January 3, 2025, the Board appointed Mengshu Shao, to fill the Chief Financial Officer. The Company will compensate Mengshu Shao for her service as chief financial officer at a salary of $60,000 annually, subject to her continued service.
(3) On May 31, 2024, Mr. Dekui Liu resigned from his position as Chief Executive Officer, Chairman, and as a Director of the Board of the Company.
(4) Tianwei Li was appointed Chief Financial Officer, effective July 17, 2023. On June 3, 2024, the Board appointed Mr. Li as Chief Executive Officer of the Company and continued to serve as the Company’s Chief Financial Officer following his appointment as Chief Executive Officer. On October 15, 2024, Mr. Li resigned from his position as Chief Executive Officer of the Company. On January 3, 2025, Mr. Li resigned from his position as Chief Financial Officer of the Company.
(5) On October 15, 2024, Ms. Gong resigned from her position as Chief Operations Officer of the Company.
Narrative Disclosure to the Summary Compensation Table
Employee Benefits
The executive officers, including the NEOs, are eligible to receive the same employee benefits that are generally available to all full-time employees, subject to the satisfaction of certain eligibility requirements. In structuring these benefit plans, the Company Group seeks to provide an aggregate level of benefits that are comparable to those provided by similar companies.
Agreements with our NEOs
Other than Ding Wei and Mengshu Shao, our NEOs not currently subject to an employment agreement with the Company Group.
Effective July 17, 2023, Mr. Li was appointed by the Board to serve as the Company Group’s Chief Financial Officer. Pursuant to the terms of his Offer Letter with the Company, dated July 14, 2023 (the “Li Offer Letter”). Mr. Li’s initial employment term will run from July 17, 2023 to July 17, 2024. Starting July 17, 2024, his employment will be at-will. Pursuant to the Offer Letter Mr. Li will receive an annual base salary of $180,000 and be eligible for an annual performance-based bonus of Company options worth $200,000 disbursed proportionally on a monthly basis, subject to the Omnibus Plan. Subject to the consummation of the IPO and pursuant to the Offer Letter, Mr. Li is eligible for a one-time award of $50,000 within one week after consummation of the IPO for pre-IPO consulting services provided. The option awards have not been awarded as of the date of this filing. The IPO bonus of $50,000 was paid on April 19, 2024. Mr. Li is also will be eligible to participate in all benefit plans generally offered to other senior executives of the Company in similar positions and with similar responsibilities.
2023 Omnibus Incentive Plan
Our Board adopted, and our shareholders approved, the Inno Holdings, Inc. 2023 Omnibus Incentive Plan (the “2023 Omnibus Plan”), effective July 18, 2023. The purpose of the 2023 Omnibus Plan is to: (i) encourage the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s objectives; (ii) give participants an incentive for excellence in individual performance; (iii) promote teamwork among its participants; and (iv) give the Company a significant advantage in attracting and retaining key employees, non-employee directors, and consultants. To accomplish these purposes, the 2023 Omnibus Plan provides for the grant of awards in the form of incentive stock options within the meaning of Section 422 of the Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based awards (including performance shares, performance units and performance bonus awards), and other stock-based or cash-based awards. A total of 201,355 shares of common stock (or 2,013,552 shares of common stock before the Reverse Stock Split) was initially reserved and available for issuance under the 2023 Omnibus Plan.
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All of the incentive equity awards under the 2023 Omnibus Plan have been granted in January 2025, including 150,000 shares of our common stock to Ding Wei, and 51,355 shares of our common stock to Mengshu Shao.
2025 Omnibus Incentive Plan
Our Board adopted, and our shareholders approved, the Inno Holdings, Inc. 2025 Omnibus Incentive Plan (the “2025 Omnibus Plan”), effective March 17, 2025. The purpose of the 2025 Omnibus Plan is to: (i) encourage the profitability and growth of the Company through short-term and long-term incentives that are consistent with the Company’s objectives; (ii) give participants an incentive for excellence in individual performance; (iii) promote teamwork among its participants; and (iv) give the Company a significant advantage in attracting and retaining key employees, non-employee directors, and consultants. To accomplish these purposes, the 2025 Omnibus Plan provides for the grant of awards in the form of incentive stock options within the meaning of Section 422 of the Code, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance-based awards (including performance shares, performance units and performance bonus awards), and other stock-based or cash-based awards. A total of 880,000 shares of common stock was initially reserved and available for issuance under the 2025 Omnibus Plan.
All of the incentive equity awards under the 2025 Omnibus Plan have been granted in May 2025 to our non-NEO employees.
Outstanding Equity Awards at 2025 Fiscal Year-End
None of our NEOs had any outstanding equity awards in the Company as of September 30, 2025.
Potential Payments Upon Termination or Change in Control
As of September 30, 2025, none of our NEOs were eligible for any potential payments upon any form of termination or resignation of employment or a change in control of the Company. During Fiscal Years 2025 and 2024, none of our former NEOs received any payments or benefits in connection with their resignation from the Company.
Director Compensation Table
Neither of the Company’s non-employee directors received any compensation related to the director’s Board service in Fiscal Year 2025 and 2024 or had any outstanding equity awards as of September 30, 2025.
Incentive Based Compensation Recoupment Policy
On October 30, 2023, our Board of Directors adopted an executive compensation recoupment policy consistent with the requirements of the Exchange Act Rule 10D-1 and listing standards of The Nasdaq Stock Market LLC thereunder, to help ensure that incentive compensation is paid based on accurate financial and operating data, and the correct calculation of performance against incentive targets. Our policy addresses recoupment of amounts from performance-based awards paid to all corporate officers, including awards under our equity incentive plans, in the event of a financial restatement to the extent that the payout for such awards would have been less, or in the event of fraud, or intentional, willful or gross misconduct that contributed to the need for a financial restatement.
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Emerging Growth Company Status
We are an “emerging growth company,” as defined in the Jobs Act. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; and (iv) the date on which we are deemed to be a large accelerated filer under applicable SEC rules. We expect that we will remain an emerging growth company for the foreseeable future, but we cannot retain our emerging growth company status indefinitely and will no longer qualify as an emerging growth company on or before the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from specified disclosure requirements that are applicable to other public companies that are not emerging growth companies.
These exemptions include:
| ● | being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosures; | |
| ● | not being required to comply with the requirement of an auditor needing to attest to our internal controls over financial reporting; | |
| ● | not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or providing a supplement to the auditor’s report regarding additional information about the audit and the financial statements; | |
| ● | reduced disclosure obligations regarding executive compensation; and | |
| ● | not being required to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. |
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Common Stock Shares as of the date of this annual report, with respect to the holdings of (1) each person who is the beneficial owner of more than 5% of Company voting stock, (2) each of our directors, (3) each executive officer, and (4) all of our current directors and executive officers as a group.
Beneficial ownership of the voting stock is determined in accordance with the rules of the SEC and includes any shares of company voting stock over which a person exercises sole or shared voting or investment power, or of which a person has a right to acquire ownership at any time within 60 days of September 30, 2025. Except as otherwise indicated, we believe that the persons named in this table have sole voting and investment power with respect to all shares of voting stock held by them. Applicable percentage ownership in the following table is based on 97,948,480 shares of common stock issued and outstanding as of December 15, 2025.
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To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of our common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of securities of the Company, the operation of which may at a subsequent date result in a change in control of the Company.
| Name and Address of Beneficial Owner(1) | Title | Beneficially owned | Percent | |||||||
| Officers and Directors | ||||||||||
| Ding Wei | Chief Executive Officer, Director and Chairman | 150,000 | 0.15 | % | ||||||
| Mengshu Shao | Chief Financial Officer and Director | 51,355 | 0.05 | % | ||||||
| Yufang Qu | Independent Director | — | — | |||||||
| Tao Tu | Independent Director | — | — | |||||||
| Yongbo Mo | Independent Director | — | — | |||||||
| Officers and Directors as a Group (total of five persons) | — | — | ||||||||
| 5%+ Stockholders | ||||||||||
| (1) | Unless otherwise indicated, the business address for each of the individuals is RM1, 5/F, No. 43 Hung To Road, Kwun Tong, Kowloon, Hong Kong 999077. |
Equity Compensation Plan Information
As of September 30, 2025, a total of 1,081,355 shares of common stock awards were issued by the Company under its equity compensation plan, including:
| ● | A total of 201,355 shares of common stock under the 2023 Omnibus Plan were granted in January 2025, including 150,000 shares of common stock to Ding Wei, and 51,355 shares of our common stock to Mengshu Shao; and | |
| ● | A total of 880,000 shares of common stock under the 2025 Omnibus Plan were granted in May 2025, including 880,000 shares of common stock to non-NEO employees. |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Unless described below, from October 1, 2024 till September 30, 2025, there are no existing or currently proposed transactions or series of similar transactions to which we were a party or will be a party, in which:
| ● | the amounts involved exceed or will exceed $120,000; and | |
| ● | any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate family of any of the foregoing had, or will have, a direct or indirect material interest. |
The Company borrows short term loans without interest from its Former CEO, Mr. Dekui Liu, for operation and cashflow needs from time to time. As of September 30, 2025 and 2024, the amount due to Mr. Liu was $Nil and $1,000, respectively.
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 September 30, 2025 and 2024, the outstanding balance, due to Zfounder and Wise Hill, were $Nil and $Nil, respectively. During the year ended September 31, 2025, 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 September 30, 2025, the outstanding balance, due to Zfounder was $Nil and $Nil amount of revenue has been recognized during the year ended September 30, 2025. As of September 30, 2024, amount of $244,185 has been received and recorded as deferred revenue, and $Nil amount of revenue has been recognized during the year ended September 30, 2024. As Zfounder is now a minority shareholder of the Company and the Company sold all issued and outstanding shares it owns in Inno Metal Studs Corp on March 4, 2025, Vision 101 is no longer considered as related parties of the Company.
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On October 14, 2024, the Company entered into an equity investment agreement with an individual, securing a 15% ownership interest in Core Modu LLC. During the year ended September 30, 2025, other income of employee lease service from Core Modu was $15,000. On March 28, 2025, the Company agreed to sell all of the membership interest it owns in Core Modu LLC, which represents 15% of the outstanding membership interest in Core Modu LLC. Core Modu LLC is no longer considered as related parties of the Company.
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 September 30, 2025 and 2024, the outstanding balance of prepayments to Baicheng was $Nil 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.
Policies and Procedures for Related Person Transactions
We have adopted a written related person transaction policy that set forth the following policies and procedures for the review and approval or ratification of related person transactions. A “related person transaction” is a transaction, arrangement or relationship in which INNO or any of its subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any related person had, has or will have a direct or indirect material interest. A “related person” means:
| ● | any person who is, or at any time during the applicable period was, one of INNO’s executive officers or directors; | |
| ● | any person who is known by INNO to be the beneficial owner of more than 5% of INNO’s voting securities; | |
| ● | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of INNO’s voting securities, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of INNO’s voting securities; and | |
| ● | any firm, corporation or other entity in which any of the foregoing persons is a partner or principal, or in a similar position, or in which such person has a 10% or greater beneficial ownership interest. |
We intend to establish policies and procedures designed to minimize potential conflicts of interest arising from any dealings we may have with our affiliates and to provide appropriate procedures for the disclosure of any real or potential conflicts of interest that may exist from time to time. Specifically, pursuant to its audit committee charter, the audit committee have the responsibility to review related party transactions.
Director Independence
A majority of our Board are independent directors, see the discussion above under the section “Item 10. Directors, Executive Officers and Corporate governance.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Independent Auditor
For the years ended September 30, 2025 and 2024, the Company’s independent public accounting firms were JWF Assurance PAC and Simon & Edward, LLP, respectively.
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Fees Paid to Principal Independent Registered Public Accounting Firm
The aggregate fees billed by our Independent Registered Public Accounting Firm, for the years ended September 30, 2025 and 2024 are as follows:
| 2025 | 2024 | |||||||
| Audit Fees (1) | $ | 168,000 | $ | 92,500 | ||||
| Audit Related Fees (2) | - | - | ||||||
| Tax Fees | - | - | ||||||
| All other fees (3) | - | - | ||||||
| Total Fees | $ | 168,000 | $ | 92,500 | ||||
| (1) Audit fees represent fees for professional services provided in connection with the audit of our annual financial statements and the review of our quarterly financial statements and those services normally provided in connection with statutory or regulatory filings or engagements including comfort letters, consents and other services related to SEC matters. This information is presented as of the latest practicable date for this annual report. | |
| (2) Audit-related fees represent fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and not reported above under “Audit Fees.” | |
| (3) All other fees include fees billed by our independent auditors for products or services other than as described in the immediately preceding three categories. No such fees were incurred during the fiscal years ended September 30, 2025 and 2024. |
Audit Committee Pre-Approval Policies
The charter of our audit committee provides that the duties and responsibilities of our audit committee include the pre-approval of all audit and non-audit services permitted by law or applicable SEC regulations (including fee and terms of engagement) to be performed by our external auditor.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this report:
(a) Documents filed as part of this report
(1) Financial Statements
All financial statements of the Company are as set forth under Item 8 of this Annual Report on Form 10-K.
(2) Financial Statement Schedules
All schedules have been omitted because the required information is included in the financial statements or notes thereto or because they are not required.
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(b) Exhibits.
The following exhibits are filed, furnished or incorporated by reference as part of this Annual Report on Form 10-K.
EXHIBIT INDEX
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| * | Filed or furnished herewith. |
| ++ | Portions of this exhibit have been redacted in compliance with Regulation S-K Item 601(b)(10). The omitted information is not material and would likely cause competitive harm to the Company if publicly disclosed. The Company agrees to furnish an unredacted copy to the SEC upon its request. |
| # | Certain schedules and exhibits have been omitted in compliance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of any omitted schedule or exhibit to the SEC upon its request. |
ITEM 16. FORM 10-K SUMMARY.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INNO HOLDINGS, INC. | ||
| By: | /s/ Ding Wei | |
| Ding Wei | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: December 15, 2025 | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Name | Position | Date | ||
| /s/ Ding Wei | Chief Executive Officer, Director and Chairman | December 15, 2025 | ||
| Ding Wei | (Principal Executive Officer) | |||
| /s/ Mengshu Shao | Chief Financial Officer and Director | December 15, 2025 | ||
Mengshu Shao |
(Principal Financial and Accounting Officer) | |||
| /s/ Yufang Qu | Director | December 15, 2025 | ||
| Yufang Qu | ||||
| /s/ Tao Tu | Director | December 15, 2025 | ||
| Tao Tu | ||||
| /s/ Yongbo Mo | Director | December 15, 2025 | ||
| Yongbo Mo |
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