Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 154

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 8
Chunk 154
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 compensation, and impairment of inventories, (vi) approximately
$5.4 million increase in accounts payable due to purchase with vendors to meet customer demand, (vii) approximately $0.8 million
decrease in prepaid expenses and other current assets due to the decrease of prepaid rent payment in connection with our factory and
warehouse leases which commenced in July 2025, (viii) approximately $0.7 million decrease in inventories as we engaged in dropship
arrangement beginning in July 2025 where products were shipped directly to our customers rather than stored in our warehouse as inventory,
(ix) approximately $0.4 million increase in contract liabilities aligned with the decrease of inventory, (x) approximately $0.3 million
increase in other payables and accrued liabilities mainly due to accrued interest payable related to the financing offered by our vendors
based upon the timing of our payment to their accounts payable and accrued professional fees that associated with business expansion,
such as consulting fees, testing fees and legal fees, and (xi) approximately $0.2 million decrease in contract assets as we reduced
new purchase and sold off inventory.

Net cash used in operating
activities was approximately $0.2 million for the three months ended September 30, 2024 and was primarily attributable to (i) approximately
$2.2 million net loss, (ii) approximately $12.1 million increase in accounts receivable due to the increase of credit sales
during the period, (iii) approximately $2.8 million increase in inventories because we stored more inventories to meet the
demand of our anticipated sales orders, (iv) approximately $0.6 million increase in security deposit because we rented more
office space, (v) approximately $0.5 million decrease in contract liabilities aligned with the increase of inventory, and (vi) approximately
$0.2 million increase in prepaid expenses and other current assets due to our prepaid rent payment in connection with our warehouse
lease which commenced in February 2025. The cash outflow was offset by (i) non-cash expenses of approximately $0.3 million, which
includes depreciation, accrued interest expenses incurred from the convertible notes, change in fair value of earnouts and amortization
of operating right-of-use assets, (ii) approximately $17.9 million increase in accounts payable due to purchase of more inventories
with vendors to meet customer demand