Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 166

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 166
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 sales of tablets and smartphones. We expect to enter the U.S. IoT markets and potentially the private label
Mobile Virtual Network Operator (“MVNO”) market, with the aim of growing into a key player both domestically and globally.
We have been preparing to enter these markets by adding additional features and providing related services that enable Foxx-branded devices
to have IoT and MVNO capabilities.

31

We manage inventory and meet
market demand through our build-to-order business model. After customers place purchase orders in bulks with us, we place purchase orders
with suppliers to manufacture the products that meet customers’ products specifications and budget requirements. Prior to 2023,
we have relied on limited suppliers for the manufacturing of mobile phone and tablet products and on limited customers for the distribution
of these products. We selectively concentrated our resources on our tablet and mobile phone products because such products held the strongest
market potential and revenue generation capability at the time when remote work and online classes became more prevalent.

Beginning in 2023, we adjusted
our business strategy to avoid reliance on limited suppliers and customers and to diversify suppliers and customers to mitigate the concentration
and reliance risk. We have added new product models across each product line to target a broader range of customers. As of the date hereof,
we have reached out to a total of eight wholesale customers to expand our operations in the market and expects to secure purchase orders
from these new customers. At the same time, to meet the various product demands of current and prospective customers, we have connected
with suppliers who can provide manufacturing support when we secure purchase orders from our customers. In addition, we plan to further
expand our product offerings and to launch an IoT platform to manage all end-products sold, and began setting up a service team for our
business to business (B2B) model in the artificial IoT department. Through the efforts of expanding product offerings and reaching to
broader customer base, we will be able to move away from relying on limited customers and suppliers. As we dedicated our resources to
expansion, we experienced a significant decrease in the sales of tablet and mobile phone products during the year ended June 30, 2024
as compared to the same period in 2023: (i) new customers began orders in much smaller quantities as compared to our previous customer
in order to build up a trustworthy relationship; (ii) similarly and relevantly, we placed order with new suppliers in much smaller
quantities to build up relationship and