Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 16

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 1
Chunk 16
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 transaction price. Historically, sales returns were insignificant to the Company’s operations. For
the three months ended September 30, 2025 and 2024, the Company did not recognize any estimated sales returns. There is no transaction
prices allocated to future periods or future obligations and no revenue was recognized for performance obligations satisfied in previous
periods.

9

App Service Commission Revenue

The Company provides an App Service (as defined below) by installing
applications from App (as defined below) developer partners (the “Partners”) onto its mobile devices and facilitating the
distribution of these devices to end users (the “App Service”). The App Service commission revenue is generated when end users
interact with Partner-developed mobile applications (“App” or “Apps”) installed on the Company’s mobile
devices, such as through clicks and/or impressions, App activations, and/or additional App installations, triggering the Partners’
obligation to pay the Company its App revenue share (service commission). The revenue shares are considered variable consideration. Those
revenue shares related to clicks, impressions, and additional App installations are determined based on the contract price negotiated
between the Partners and the third-party advertisers, while those related to App activations are determined based on the number of App
activations. The Partners are primarily responsible in developing and maintaining the App, and are the primary obligor to users of the
application and determine and control the revenue shares (service commission) to pay the Company. No refund or return policy is provided
to the Partners. The Company recognizes App Service commission revenue at a point in time when the activations and service commission
is earned, which is when the app activations, clicks/impressions, or additional app installations occur, and when the uncertainty of the
variable consideration is resolved.

Practical expedient

The
Company applies the practical expedient in ASC 606 to expense  as
incurred, the costs to obtain a contract with a customer when the amortization period is one year or less. The Company has no material
incremental costs for obtaining contracts with customers that the Company expects the benefit of those costs to be longer than one year,
which need to be recognized as assets for the three months ended September 30, 2025 and 2024.

Interest expenses

Interest expenses consist
primarily of interest incurred on convertible notes, unpaid purchase balance from a vendor (see Note 10), and borrowings and
others. For the three months ended September 30, 2025,