Company: FOXX
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-014221
Chunk: 105

Company: Foxx Development Holdings Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 8
Chunk 105
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 in receipts of inventories or refundable, the Company will recognize
an allowance account to reserve such balances. Management reviews its advances to suppliers on a regular basis to determine if the allowance
is adequate and adjusts the allowance when necessary. Delinquent account balances are written-off against allowance for credit losses
after management has determined that the likelihood of collection is not probable. The Company’s management continues to evaluate
the reasonableness of the valuation allowance policy and update it if necessary. As of December 31, 2024 and June 30, 2024, no allowance
for credit losses on contract assets was recorded.

Deferred transaction costs

The Company complies with
the requirements of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 340-10-S99-1,
“Other Assets and Deferred Costs — SEC Materials” (“ASC 340-10-S99”) and SEC Staff
Accounting Bulletin Topic 5A, “Expenses of Offering”. Deferred transaction costs consist of underwriting, legal,
accounting, and other professional expenses incurred through the balance sheet date that are directly related to the Business Combination
and that will be charged to shareholders’ equity (deficit) upon the completion of the Business Combination. The Company completed
the Business Combination on September 26, 2024. As of September 26, 2024, and the Company had deferred transaction costs of $893,577 and
charged against shareholders’ deficit. As of December 31, 2024 and June 30, 2024, the Company had deferred transaction costs
of $0 and $462,177, respectively.

Payables on shares redemption 

Payables on shares redemption
consisted of payables to the ACAC shareholders who exercised their redemption rights in connection with the Business Combination (See
Note 4).

Contract liabilities

Contract liabilities mainly
consisted of deposits received from customers before all the relevant criteria for revenue recognition are met and are recorded as customer
deposits.

Earnout liabilities

At the Closing of the Business
Combination, pursuant to the Business Combination Agreement, the stockholders of Old Foxx were entitled to receive up to a total of 4,200,000 contingent
earnout shares (“Earnout Shares”) in the form of common stock of the Company, par value $0.0001 per share (“Common Stock”).
The Earnout Shares would be issued upon certain vesting schedules based on the Company’s financial