Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 102

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 8
Chunk 102
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interact with Partner-developed mobile applications (“App” or “Apps”) installed on the Company’s mobile
devices, such as through clicks and/or impressions, App activations, and/or additional App installations, triggering the Partners’
obligation to pay the Company its App revenue share (service commission). The revenue shares are considered variable consideration. Those
revenue shares related to clicks, impressions, and additional App installations are determined based on the contract price negotiated
between the Partners and the third-party advertisers, while those related to App activations are determined based on the number of App
activations. The Partners are primarily responsible in developing and maintaining the App, and are the primary obligor to users of the
application and determine and control the revenue shares (service commission) to pay the Company. No refund or return policy is provided
to the Partners. The Company recognizes App Service commission revenue at a point in time when the activations and service commission
is earned, which is when the app activations, clicks/impressions, or additional app installations occur, and when the uncertainty of the
variable consideration is resolved.

Practical expedient

The
Company applies the practical expedient in ASC 606 to expense  as
incurred, the costs to obtain a contract with a customer when the amortization period is one year or less. The Company has no material
incremental costs for obtaining contracts with customers that the Company expects the benefit of those costs to be longer than one year,
which need to be recognized as assets for the three months ended September 30, 2025 and 2024.

Interest expenses

Interest expenses consist
primarily of interest incurred on convertible notes, unpaid purchase balance from a vendor (see Note 10), and borrowings and
others. For the three months ended September 30, 2025, and 2024, the Company had interest expenses that amounted to $2,011,905
and $408,995, respectively. Of the total interest expense for the three months ended September 30, 2025, $2,008,103 was related to unpaid
purchase balance and $3,802 to borrowings and others. Of the total interest expense for the three months ended September 30, 2024,
$140,740 was related to convertible notes, $263,696 to unpaid purchase balance, and $4,559 to borrowings and others.

Lease

The Company accounts for
leases in accordance with ASC 842, Leases. The Company categor