Company: FOXX
Filing Date: 2025-01-10
Form Type: S-1
Source: 0001213900-25-002199
Chunk: 93

Company: Foxx Development Holdings Inc.
Filing Date: 2025-01-10
Form: S-1
Chunk 93
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 The Company developed a Monte Carlo Model that values the earnout subject revenue milestones. The Monte Carlo Model technique applied generates many possible (but random) price paths for the underlying(s) via simulation, and then calculates the associated payment value of the security features. The price of the underlying common stock is modeled such that it follows a geometric Brownian motion with constant drift, and constant volatility. The stock price is determined by a random sampling from a normal distribution. Since the underlying random process is the same, for enough price paths, the value of security is derived from path dependent scenarios and outcomes. The model simulates the underlying economic factors, including the projected revenue that influenced which of these events would occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e., stock price, revenue, etc.). Probabilities were assigned to each variable such as the timing and pricing of events over the term of the instruments based on management projections. This led to a cash flow simulation over the life of the instrument. A discounted cash flow was completed to determine the value for the earnout liabilities. Prior to the Business Combination, we were a private company and lacked company -specifichistorical and implied volatility information of its stock, and as such, the expected revenue volatility was based on historical volatility of industry outlook and the expected revenue volatility and stock volatility was based on the historical volatility of publicly traded peer companies for a term equal to the remaining expected term of the earnout period. 53 CORPORATE HISTORY AND STRUCTURE Foxx Development Holdings Inc., or the Company, was incorporated as a Delaware corporation under the name “Acri Capital Merger Sub I Inc.” on November 13, 2023, and merged with and into Acri Capital Acquisition Corporation, or ACAC, on September 26, 2024, upon which the Merger Sub changed its name to “Foxx Development Holdings Inc.” Foxx Development Inc., or Old Foxx, was incorporated as a Texas corporation on March 17, 2017 and merged with and into Acri Capital Merger Sub II Inc., or Merger Sub, on September 26, 2024, upon which the Merger Sub changed its name to “Foxx Development Inc.” (the “Operating Subsidiary”). The Company, together with the Operating Subsidiary, is a technology innovation company in the communications sector and operates in various locations across the United States. Foxx currently generates most of its revenue from the sales of tablets and