Company: FOXX
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-014221
Chunk: 11

Company: Foxx Development Holdings Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 1
Chunk 11
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condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results
could differ from these estimates.

6

Accounts receivable

Accounts receivables are
recognized and carried at the original invoiced amount less an allowance for any uncollectible accounts on credit losses. Allowance for
credit losses for accounts receivables is established based on various factors including historical payments and current economic trends. The
Company reviews its allowance for credit loss by assessing individual accounts receivable over a specific aging and amount. All other
balances are pooled based on historical collection experience. The estimate of expected credit losses is based on information about past
events, current economic conditions, and forecasts of future economic conditions that affect collectability. Accounts receivable are written-off
on a case by case basis after exhaustive efforts at collection are made, net of any amounts that may be collected. As of December 31,
2024 and June 30, 2024, $63,000 and $0, respectively, allowance for credit losses of accounts receivable was recorded and the Company
had net accounts receivable of $7,643,068 and $251,894, respectively.

Inventories

Inventories are stated at
the lower of cost or net realizable value, the estimated selling prices in the ordinary course of business, less reasonably predictable
costs of completion, disposal and transportation. Cost is determined using the “First in, First out” method. Inventories mainly
include electronic products and accessories which are purchased from the Company’s suppliers as merchandized goods and freight-in.
On an annual basis, inventories are reviewed for potential write-downs for estimated obsolescence or unmarketable inventories which equals
the difference between the costs of inventories and the estimated net realizable value, the estimated selling prices in the ordinary course
of business, less reasonably predictable costs of completion, disposal and transportation, based upon forecasts for future demand and
market conditions. When inventories are written down to net realizable value, it is not marked up subsequently based on changes in underlying
facts and circumstances. As of December 31, 2024 and June 30, 2024, the Company had inventories of $15,765,492 and $1,768,072, respectively.
During the three and six months ended December 31, 2024 and 2023, no inventory write-down was recorded.

Contract assets

Contract assets consisted
of cash deposited