Company: FOXX
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-014221
Chunk: 112

Company: Foxx Development Holdings Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 8
Chunk 112
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 flows from
operating activities on the consolidated statements of cash flows. The Company records lease expenses for operating leases on a straight-line
basis over the lease term.

The Company reviews the impairment
of its right-of-use assets consistent with the approach applied for its other long-lived assets on an annual basis. The Company reviews
the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the
asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset
from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount
of operating lease right-of-use assets in any tested asset group and include the associated lease payments in the undiscounted future
pre-tax cash flows. For the three and six months ended December 31, 2024 and 2023, the Company did not recognize impairment loss against
its right-of-use assets.

For a lease with a term of
12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease
assets and lease liability. For the lease that with lease term of one year or shorter, the Company has elected to not recognize right-of-use
asset and lease liability.

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