Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 130

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 130
---
 in the operating lease liabilities are separately presented within the cash flows from
operating activities on the consolidated statements of cash flows. The Company records lease expenses for operating leases on a straight-line
basis over the lease term.

The Company reviews the impairment
of its right-of-use assets consistent with the approach applied for its other long-lived assets on an annual basis. The Company reviews
the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the
asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset
from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount
of operating lease right-of-use assets in any tested asset group and include the associated lease payments in the undiscounted future
pre-tax cash flows. For the three and nine months ended March 31, 2025 and 2024, the Company did not recognize impairment loss against
its right-of-use assets.

For a lease with a term of
12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease
assets and lease liability. For the lease that with lease term of one year or shorter, the Company has elected to not recognize right-of-use
asset and lease liability.

Stock-based compensation 

The measurement and recognition
of compensation expense for all stock-based payment awards made to employees and directors, including employee stock options and restricted
stock, is based on estimated fair value of the awards on the date of grant, of which stock options uses the Black-Scholes option pricing
model, inclusive of assumptions for risk-free interest rates, expected dividends, expected terms, expected volatility, and the fair value
of the underlying stock, and restricted stock is based on the market value of the Company’s common stock. The value of awards that
are ultimately expected to vest is recognized as expense on a straight-line basis over the vesting service periods in the consolidated
statements of operations. Forfeitures are accounted for as they occur.

11

Warrants

The Company accounts for
warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms
and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), and ASC 815,
Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants