Company: FOXX
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001213900-25-098953
Chunk: 205

Company: Foxx Development Holdings Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 1A
Chunk 205
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 pay the order in full
balance prior to shipment or in partial payments with credit terms of 30 to 90 days after shipment depends on the specified contract.
No sales returns are being given to its wholesale customers as they were being given additional 1-3% of
products on top of each customer’s order (see Note 3 - “Warranty” below). There are no transaction prices allocated
to future periods or future obligations and no revenue was recognized for performance obligations satisfied in previous periods.

Warranty

The
Company generally provides 30 days warranties or 1-year warranties for its product sold to its wholesale customer if an additional
1-3% of products on top of each customer’s order was not provided. For the sale transactions that were provided with 1-3% of
products on top of each customer’s order, these additional 1-3% products were recognized as cost of goods sold at the same
time the respective sale is recognized. For the sales transactions that the Company provided limited warranties to both wholesale
customers and E-Commerce customers, the Company records estimated future warranty costs under ASC 460
“Guarantees”. Such estimated costs for warranties are estimated at the time of delivery, and these warranties are
not service warranties separately sold by the Company. Generally, the estimated claim rates of warranties are based on actual
warranty experience or the Company’s best estimate. As of June 30, 2025 and 2024, the Company accrued warranty reserves of
$328,438 and $48,361, respectively recorded under accrued liabilities and other current liabilities, and these reserves were
recognized based on estimation and judgment from the Company’s management. 

E-Commerce Customers

The Company recognizes a
contract with a customer when the contract is committed in writing and signed electronically on an E-Commerce platform, the rights of
parties, including payment terms, are identified, the contract has commercial substance, and collectability is probable.

A
performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting
in ASC 606. For all the Company’s contracts, the Company has identified one performance obligation, which is primarily satisfied
at a point in time upon delivery of products based on terms stated in the contracts on shipping destination at its individual customer
shipping address, which is the Company’s obligation to deliver the product to the end user/individual customer, depending
on the specified contract. The Company’s E