Company: FOXX
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001213900-25-098953
Chunk: 1254

Company: Foxx Development Holdings Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 7
Chunk 1254
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2023 and March 2024, offset by
approximately $0.4 million in payments of deferred offering costs, the repayment of related party loans of approximately $0.1
million, and the principal payments of long-term loan of approximately $16,000.

Off-Balance
Sheet Arrangements

As
of June 30, 2025, we had no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to our members.

Critical
Accounting Estimate

The
consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of
these consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Estimates are based on historical
experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the
basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We have
identified certain accounting estimates that are critical to the preparation of the consolidated financial statements. Certain accounting
estimates are particularly sensitive because of their significance to the consolidated financial statements and because of the possibility
that future events affecting the estimate may differ significantly from management’s current judgments. We believe that the critical
accounting estimates, assumptions, and judgments that have the most significant impact on our consolidated financial statements are described
below.

Income
Taxes

We
record deferred tax assets and liabilities based on the net tax effects of tax credits, operating loss carryforwards, and temporary differences
between the carrying amounts of assets and liabilities for financial reporting purposes compared to the amounts used for income tax purposes.
We regularly review our deferred tax assets for recoverability with consideration for such factors as historical losses, projected future
taxable income, and the expected timing of the reversals of existing temporary differences. A valuation allowance is recorded when it
is more likely than not that some portion or all of the deferred tax assets will not be realized. Management believes the deferred tax
assets, based largely on the history of tax losses, warrant a full valuation allowance based on the weight of available negative evidence.
Currently, the key factor on our assumption of providing 100% valuation allowance was purely