Company: FOXX
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001213900-25-098953
Chunk: 210

Company: Foxx Development Holdings Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 1A
Chunk 210
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 tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that
has a greater than 50% likelihood of being realized on examination. For tax positions not meeting the “more likely than not”
test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income taxes are classified as income tax
expenses in the period incurred. Income tax returns for the years prior to 2019 are no longer subject to examination by U.S. tax
authorities.

Stock-based
compensation 

The
measurement and recognition of compensation expense for all stock-based payment awards made to employees and directors, including employee
stock options and restricted stock, is based on estimated fair value of the awards on the date of grant, of which stock options uses
the Black-Scholes option pricing model, inclusive of assumptions for risk-free interest rates, expected dividends, expected terms, expected
volatility, and the fair value of the underlying stock, and restricted stock is based on the market value of the Company’s common
stock. The value of awards that are ultimately expected to vest is recognized as expense on a straight-line basis over the vesting service
periods in the consolidated statements of operations. Forfeitures are accounted for as they occur.

 Warrants

The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s
specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”),
and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements
for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own Common Stock and whether
the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control,
among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the
time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

For
issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component
of equity at the time of issuance. The Company determined that upon further review of the warrant agreements, the Company