What changed in INNO HOLDINGS INC.'s 10-K — 2024 vs 2025

INNO takes its name from “innovation” and is committed to the research and development of steel studs/tracks/headers, providing higher performance and greater efficiencies in all aspects of construction, making better structural solutions for both commercial and residential buildings, resulting in substantial labor cost savings, in our view.

We sell these finished products either to businesses or directly to customers. The finished products and cold-formed-steel members are used in a variety of building types, including residential, commercial, industrial, and infrastructure. We hope to transform the building industry by reducing construction times while providing more affordable, environmentally sustainable, and durable solutions compared to traditional construction materials and methods.

We believe we are also well positioned to disrupt the construction industry, which now accounts for $10 trillion of the global economy. We work with our customers to manufacture products in accordance with the customers’ drawings and specifications. Our work complies with specific national and international codes and standards applicable to the construction industry.

We believe that we have earned our reputation through outstanding technical expertise, attention to detail, and a total commitment to excellence in customer service. Our primary manufacturing operations are located on approximately five acres in Brookshire, Texas. Our facility houses state-of-the-art equipment that gives us the capability to manufacture 15,000 linear feet of product per day.

We offer a full range of services such as structural designs, metal stud production, and preassembly of metal studs into steel wall panels, which are required to transform raw materials into finished products that are compliant with local building codes.

Our manufacturing capabilities include fabrication operations, such as cutting, punching, forming and assembling, and machine operations, which includes computer numerical controlled (“CNC”) machine operations. We also provide support services for our manufacturing capabilities: manufacturing engineering (planning, fixture and tooling development, and manufacturing), quality control (inspection and testing), materials procurement, production control (scheduling, project management, and expediting), and final assembly.

All manufacturing at our facility is done in accordance with our written quality assurance program, which meets specific national codes as well as international codes, standards, and specifications.

For example, we have ICC-ES evaluation reports (ESR-4641) that show that our cold-formed steel-framing members are compliant with the 2018 and 2015 International Building Code (“IBC”), 2019 California Building Code (“CBC”), and 2020 Florida Building Code. The standards used for each customer project are specific to each customer’s needs, and we have implemented those standards into our manufacturing operations.

In 2024, we successfully launched a new revenue stream through our newly established subsidiary, Inno AI Tech Corp., which specializes in research and consulting services. Our Products Cold-Formed Steel Framing Cold-formed steel is the material of choice to lower building costs and adapt to modular or off-site buildings.

It is consistent in quality and form, and it can be shipped preassembled or it can be assembled on-site by workers with little training. Our steel roof trusses, wall panels, and joist systems are a cost-effective noncombustible alternative to traditional building materials.

They are now commonly used to build apartments, hotels, temporary housing, nursing homes, commercial buildings, industrial buildings, and single-family detached homes.

These types of structures are expected to be the targets of our Company’s sales and marketing team. 1 Our proprietary cold-formed roller machines are equipped with proprietary software, which optimizes production efficiency and supports individual part customization to ensure each cold-formed-steel member is produced to the exact specifications of the plans.

Our intelligent machines can precisely cut and punch out steel studs, leaving channels for the mechanical, electrical, and plumbing designs.

We arrive at an accurate, comprehensive, and information-rich design model with the utilization of light-gauge steel-framing engineering software , which creates a digital model of the project that includes all functional systems, geometric features, and aesthetics, such as electrical wiring, air conditioning, doors, and windows.

The light-gauge steel-framing engineering software is a shared multidisciplinary resource that allows collaborators to achieve maximum efficiency and effectiveness by compressing design lead time. We have created a full BIM solution that instructs our advanced cold-formed roller machines to produce each steel-framing piece to certain specifications.

After the design phase, our top-quality raw materials are processed on several production lines, each with made-to-order specific dimensions, screw holes, and cross-cut stitching. These customizations reduce the need for on-site manual calculations and simplify the assembling steps, both of which increase construction efficiency and reduce labor costs.

All steel-framing products produced by our Company are International Code Council (ICC) certified. The International Code Council is the leading global source of model codes and standards and building safety solutions that include product evaluation, accreditation, technology, training, and certification. The Code Council’s codes, standards, and solutions are used to ensure safe, affordable, and sustainable communities and buildings worldwide.

Our modular steel building framing systems avoid construction delays caused by partial or unsynchronized delivery of different building components. By breaking away from the methods of traditional stick-built building, our customers report that their construction timelines have been reduced by at least 20%. Castor Cube Due to high housing prices, some are having difficulties purchasing a home.

Housing market trends have shown a gradual preference for modular homes, which is a prefabricated building that consists of repeated sections called modules, and involves constructing sections away from the building site, then delivering them to the intended site where the installation is completed. We believe demand for prefab homes is on an upward growth trend in the United States.

According to the Straits Research Institute, North America’s share of the global modular building market was valued at $28 billion in 2021 and is expected to grow to $53 billion by 2030, representing a CAGR of 7%.

According to the summary of an IBISWorld report titled, “Prefabricated Home Manufacturing in the US — Market Size 2002-2029,” the prefabricated home manufacturing market size in the U.S. is expected to be $9.1 billion in 2023. We expect to capitalize on this trend by providing high-quality and affordable modular homes.

Most consumers are drawn to prefab homes because of their cost-effectiveness, efficiency, and permanent property characteristics. Castor Cube is a low-maintenance, single-story, 743-square-foot manufactured home with 4 color options that can resist earthquakes, withstand winds, and prevent pests. It is a cold-formed-steel building system equipped with honeycomb panels, and it is designed to maximize the strength-to-weight value.

As a result, it yields high structural stability. Castor Cube can be built on a foundation or used as a mobile home. The Castor Cube can be built on a foundation steel chassis, which can be single or used as a mobile multi-sectioned.

We are expanding and improving our facility in Texas and anticipate that this modular home product will be completely constructed within the next couple years. Once built, it will be transported to permanent locations for installation. The timeline for product delivery is not affected by weather since it will be manufactured in our 100% climate-controlled factory.

Furthermore, we expect that streamlined building process will shorten the completion time. Mobile Factory: Off-site Equipment Rental, Sales, Service, and Support We believe innovative technology can increase productivity in the building sector.

Research and development of more efficient methods in the manufacturing and building space is at the forefront of our business model. 2 Our Mobile Factory is an all-in-one, secured production facility that will produce steel-framing members onsite. It can print wall panels, floor truss, and roof truss components.

The size is customized for a trailer, which enables it to be transported anywhere, ranging from metropolitan suburbs to remote areas with little to no infrastructure. It is designed to enable immediate stud production on any site. Our Mobile Factory is complete with metal stud production equipment and a diesel generator.

This generator can supply continuous power to our cold-formed roller machine. The production capacity of our Mobile Factory is at least 1,000 linear feet per day. We believe this innovation is the good solution for urgent deployment in disaster areas or remote areas.

It is designed to reduce the cost and time of transportation of metal studs, which we believe can drive a lower carbon footprint for larger projects.

The Mobile Factory is operated and managed by Internet of Things (“IoT”) technology, a network of physical objects that are embedded with sensors, software and other technologies for the purpose of connecting and exchanging data with other devices and systems over the internet. INNO developed its proprietary IoT production management system independently.

The system controls equipment and manages the Mobile Factory via a dashboard, allowing the user to gain a comparative understanding of production parameters, such as operation data, machinery breakdown data, uptime data and production efficiency. Related Services We may from time to time participate in land development and contractor services if an opportunity exists to leverage our products.

Specifically, we have evaluated the development of apartment complexes, retirement communities, and remodels for projects that would incorporate our metal framing studs.

For example, we have agreed to provide project development services for our contract with Vision Opportunity Fund LP (assigned to Vision 101), partially owned by a minority shareholder of the Company, related to the development of an approximately 110,000 square feet retirement community. In February 2024, we formed Inno AI Tech Corp., which specializes in research and consulting services.

Throughout the year, we successfully supported a client in establishing a steel technology company. Our services included incorporation assistance, comprehensive training programs, in-depth market research, and strategic business development guidance. This engagement generated consulting revenue of $205,000. Our Customers We can serve commercial, residential, and industrial projects.

Cybersecurity threats pose significant risks to the integrity of our systems and data, potentially impacting our business operations, financial condition and reputation. 15 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 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.

On February 1, 2024, a mutual amendment to the lease agreement was executed. Under the terms of the amendment, we opted to prepay the lease payments covering the period up to December 31, 2026, with the due date set for April 1, 2024.

This prepayment arrangement secures a rent-free period for the final year of the lease, spanning the entirety of 2027. We had also entered into a lease agreement for office and production space in Corona, California with a term from May 1, 2022 until April 30, 2027 at a rate of $6,617 to $7,740 per month.

In August 2023, we relocated our California office from Corona to Diamond Bar. We were obligated to pay the monthly rent for the office in Corona until February 1, 2024 when the landlord found a new lessee to occupy the facility.

The lease in Diamond Bar, California has a term of 24 months from August 18, 2023 to August 17, 2025 at a rate of $4,730 to $4,926 per month. Subsequently on October 28, 2024, the lease in Diamond Bar was ended and assigned to a nonprofit organization.

Recent Sales of Unregistered Securities During the period from October 1, 2022 to September 30, 2024, we have granted or issued the following securities that were not registered under the Securities Act: (a) Issuance of common stock. ● On December 3, 2022, the Company issued 14,286 shares of its common stock to an accredited investor at $35 per share for $500,000 in cash. ● On March 13, 2023, the Company issued 2,703 shares of its common stock to an accredited investor at $37 per share for $100,000 in cash. ● On April 25, 2023, The Company issued 7,895 shares of its common stock to an accredited investor at $38 per share for $300,000 in cash. ● On June 20, 2023, the Company issued 1,316 shares of its common stock for a total value of $50,000 for services to be rendered during next twelve months by the immediate relative of the Company’s Chief Financial Officer. ● On June 20, 2023, the Company issued 1,974 shares of its common stock for a total value of $75,000 for services to be rendered during next twelve months by one nonemployee contractor.

These shares were valued at $38 per share. ● On July 24, 2023, the Company issued 1,352 shares of its common stock to an accredited investor for no additional consideration following the Company’s previously disclosed reverse stock split in July 2023. ● On July 24, 2023, the Company issued 3,947 shares of its common stock to an accredited investor for no additional consideration following the Company’s previously disclosed reverse stock split in July 2023. ● On July 24, 2023, the Company issued 658 shares of its common stock to an accredited investor for no additional consideration following the Company’s previously disclosed reverse stock split in July 2023. ● On July 24, 2023, the Company issued 987 shares of its common stock to an accredited investor for no additional consideration following the Company’s previously disclosed reverse stock split in July 2023. ● On July 24, 2023, the Company issued 7,143 shares of its common stock to an accredited investor for no additional consideration following the Company’s previously disclosed reverse stock split in July 2023. ● On January 1, 2024, the Company granted 5,000 shares to one advisory firm for a total value of $72,000 for advisory services to be rendered during next twelve months.

The advisory firm helps and supports the Company in the capital market, including developing capital market strategies, sourcing different providers including investment banks and underwriters, etc.

(b) Warrants. ● On December 18, 2023, the Company issued warrants to AC Sunshine Securities LLC, the underwriter of its IPO (as defined below), to purchase up to 20,125 shares of common stock at an exercise price of $48 per share.

As of January 11, 2023, we have used approximately $0.9 million of the net proceeds from our IPO for working capital and general corporate purposes.