Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 70

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 1
Chunk 70
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 notes requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Estimates are based
on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which
form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
We have identified certain accounting estimates that are critical to the preparation of the unaudited condensed consolidated financial
statements. Certain accounting estimates are particularly sensitive because of their significance to the unaudited condensed consolidated
financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s
current judgments. We believe that the critical accounting estimates, assumptions, and judgments that have the most significant impact
on our unaudited condensed consolidated financial statements are described below.

Income Taxes

We record deferred tax assets and liabilities based on the net tax
effects of tax credits, operating loss carryforwards, and temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes compared to the amounts used for income tax purposes. We regularly review our deferred tax assets for
recoverability with consideration for such factors as historical losses, projected future taxable income, and the expected timing of the
reversals of existing temporary differences. A valuation allowance is recorded when it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Management believes the deferred tax assets, based largely on the history of tax losses,
warrant a full valuation allowance based on the weight of available negative evidence. Currently, the key factor in our assumption of
providing 100% valuation allowance was purely based on our historical operating losses. Once we begin generating profit, we will re-evaluate
whether providing 100% valuation allowance is appropriate or if we can reassess such number.

41

Item 3. Quantitative and Qualitative Disclosures
About Market Risk

Not applicable. 

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and
with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation
of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on