Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 181

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 2
Chunk 181
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-to-order business model. After customers place purchase orders in bulk with us, we place purchase orders
with suppliers to manufacture the products that meet customers’ products specifications and budget requirements. Prior to 2023,
we relied on limited suppliers for the manufacturing of mobile phone and tablet products and on limited customers for the distribution
of these products. We selectively concentrated our resources on our tablet and mobile phone products because such products held the strongest
market potential and revenue generation capability at the time when remote work and online classes became more prevalent.

Beginning in 2023, we adjusted our business strategy to avoid reliance
on limited suppliers and customers and to diversify suppliers and customers to mitigate the concentration and reliance risk. We have added
new product models across each product line to target a broader range of customers. As of the date hereof, we have reached out to a total
of eight wholesale customers to expand our operations in the market and expect to secure purchase orders from these new customers. At
the same time, to meet the various product demands of current and prospective customers, we have connected with suppliers who can provide
manufacturing support when we secure purchase orders from our customers. In addition, we plan to further expand our product range and
to launch an IoT platform to manage all end products sold and began setting up a service team for our business to business (B2B) model
in the artificial IoT department. Through the efforts to expand product range and reaching a broader customer base, we will be able to
move away from relying on limited customers and suppliers. As we dedicated our resources to expansion, we experienced a significant decrease
in the sales of tablet and mobile phone products during the year ended June 30, 2024 as compared to the same period in 2023: (i) new
customers began orders in much smaller quantities as compared to our previous customer in order to build up a trustworthy relationship;
(ii) similarly and relevantly, we placed order with new suppliers in much smaller quantities to build up relationship and ensure
the quality of the products; and (iii) new product models on both tablet and mobile phones order by new customers required approximately 6-9 months
from development to mass production.

In addition, on February 8,
2024, the U.S. Federal Communication Commission stopped accepting new enrollment in the Affordable Connectivity Program (ACP) and
announced that the ACP will stop accepting new applications and enrollments on February 7, 2024, and will stop