Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 104

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 8
Chunk 104
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 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 months ended September 30, 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.

 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 are freestanding financial instruments
pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for
equity classification under ASC 815, including whether the warrants are indexed to the