Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 148

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 148
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 Forfeited   -    -    -    -   Unvested at March 31, 2025   727,009   $7.21   $5,243,400    3.61  

As of March 31, 2025, there
was $4,715,858 total unrecognized compensation cost related to unvested RSUs granted under the employee incentive plan. The total cost
is expected to be recognized over a remaining period of 3.61 years. 

Earnout Shares

As described in Note 4 -
Reverse recapitalization, the Earnout Shares that are contingently issuable in connection with the Business Combination are subject to
vesting based on the Company’s financial performance during the earnout period. The entitlement of 2,100,000 earnout shares to the
Old Foxx shareholders were forfeited in October 2024 because the Company did not meet the earnout requirements for the fiscal year ended
June 30, 2024 vesting schedule. These 2,100,000 earnout shares are not included or contributing to the value of the earnout liabilities.

As of March 31, 2025, the
Company’s 2,100,000 Earnout Shares that are contingently issuable in connection with the Business Combination are subject to vesting
based on the Company’s financial performance during the fiscal year ended June 30, 2025. The 2,100,000 Earnout Shares are classified
as a liability and measured at fair value, with changes in fair value included in the consolidated statements of operations.

As of March 31, 2025 and
September 26, 2024 (issuance date), the fair value of the earnout liabilities was $18 and $5,688,007, respectively. For the three and
nine months ended March 31, 2025, the Company recognized $1,032,267 and $5,687,989 of gains related to the change in fair value of earnout
liabilities included in the change in fair value of earnout liabilities in the consolidated statements of operations, respectively. (See
Note 17 – Fair value measurement).

22

Warrants

In connection with the reverse
recapitalization, each of 12,156,417 ACAC’s issued and outstanding warrants, which consisted of 4,312,500 public warrants, 5,