Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 22

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 22
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 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.

11

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 concluded that its warrants qualify
for equity accounting treatment.

Upon completion of the Business
Combination, all of ACAC’s outstanding public and private warrants (See Note 16) were replaced by the Company’s public and
private warrants. The Company treated such warrants replacement as a warrant modification and no incremental fair value was recognized
for the three and nine months ended March 31, 2025.

Basic and diluted loss per share

Basic EPS is measured as
net loss divided by the weighted average common shares outstanding for the period.

Diluted net loss per share
attributable to common stockholders adjusts basic loss per share for the potentially dilutive impact of non-participating shares of common
stock. Dilutive equivalent shares are excluded from the computation of diluted loss per share if their effects would be anti-dilutive.
Common stock issuable upon the conversion of the stock options, the RSUs (defined in Note 16) and warrants are using the treasury stock