Company: FOXX
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001213900-25-098953
Chunk: 228

Company: Foxx Development Holdings Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 1A
Chunk 228
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 granted under the employee incentive
plan. The total cost is expected to be recognized over a remaining period of 3.36 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 the first batch
of the 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. The entitlement of the second batch of the 2,100,000 Earnout Shares to the Old Foxx shareholders
were also forfeited, as the Company did not meet the earnout requirements for the fiscal year ended June 30, 2025 vesting schedule. These
2,100,000 Earnout Shares, which were classified as a liability and measured at fair value, were reduced to $0.

As
of June 30, 2025 and September 26, 2024 (issuance date), the fair value of the earnout liabilities was $0 and $5,688,007, respectively.
For the year ended June 30, 2025, the Company recognized $5,688,007 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. (See Note 17 – Fair value
measurement).

F-26

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, 5,240,000 private warrants and 2,603,917 working capital warrants, was converted automatically into one redeemable warrant
of the Company, exercisable for one share of common stock of the Company at an exercise price of $11.50 per share. All of these warrants
met the criteria for equity classification.

Each
whole Warrant entitles the registered holder to purchase one whole share of the Company’s common stock at a price of
$11.50 per share. Pursuant to