Company: FOXX
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001213900-25-098953
Chunk: 1040

Company: Foxx Development Holdings Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 5
Chunk 1040
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 to stock price and forecasted revenues through June 30, 2025 will result in remeasurement
of the earnout liability and could result in material gains or losses being recognized in the statement of operations.

The
Company estimated the fair value per share of the underlying common stock based, in part, on the results of third-party valuations and
additional factors deemed relevant. The risk-free interest rate was determined by reference to the U.S. Treasury yield curve for time
periods approximately equal to the remaining contractual term of the earnouts.

Prior
to the Business Combination, the Company was a private company and lacked company-specific historical 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.

The
following table presents the observable and unobservable inputs of the earnout liability for earnout shares based on revenue targets
as of September 26, 2024 (issuance date):

    September 26,
    2024

    Inputs
     
    Input
    Method

    Input
    Value

    Simulated forecast of base monthly
    revenue
     
    Unobservable

    $
    7.4 million

    Industry revenue growth
     
    Unobservable

    1.7
    %
  
    Revenue volatility
     
    Unobservable

    30.5
    %
  
    Stock volatility
     
    Unobservable

    103.2
    %
  
    Stock price
     
    Observable

    $
    11.20

    Risk-free rate
     
    Observable

    4.16
    %
  
    Term
     
    Observable

    0.76 Years

    June
    30, 
2025

    Inputs
     
    Input
    Method

    Input
    Value

    Actual revenue
     
    Unobservable

    $
    5.5 million

    Term
     
    Observable

    0.00 Years

F-28

The
following table summarizes the activity for the Company’s Level 3 instruments measured at fair value on a recurring basis:

    Earnout
    Liabilities 
  
    Balance as of June 30, 2024 
    $    -