Company: FOXX
Filing Date: 2025-01-24
Form Type: 424B3
Source: 0001213900-25-006111
Chunk: 153

Company: Foxx Development Holdings Inc.
Filing Date: 2025-01-24
Form: 424B3
Chunk 153
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55-37Aand the indicators in ASC 606 -10-55-39. The Company considers this guidance in conjunction with the terms in its arrangements with both suppliers and customers. The Company orders the products and pays in advance from its supplier. When the supplier has completed production, the Company inspects and accepts the products in its suppliers’ warehouse or at the designated logistic warehouse of the supplier. This enables the Company to direct the use of these products but to also bear inventory risk as legal owners. The Company has the responsibility of fulfilling the promise to provide the products to its customers, and also includes an additional 2 -3% of products on top of each customer’s order, which covers any damage incurred in shipping and no refund and no return will be granted to customers; or provided a one -yearwarranty period with no additional 2 -3% of products on top of each customer’s order, depending on the specified contract. In addition, when establishing the selling prices for delivery of the products, the Company has control to set its selling price. All these factors indicate that the Company is acting as the principal in this transaction. As a result, revenue from the wholesale customer is presented on a gross basis. Warranty The Company generally provides 1 -yearwarranties for its product sold to its wholesale customer if an additional 2 -3% of products on top of each customer’s order was not provided. For the sale transactions that were provided with 2 -3% of products on top of each customer’s order, these additional 2 -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 -commercecustomers, the Company records estimated future warranty costs under ASC 460. 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 September 30, 2024 and June 30, 2024, the Company accrued warranty reserves of $133,279 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 -Commerceplatform, the rights of parties, including payment terms,