Company: FOXX
Filing Date: 2025-01-10
Form Type: S-1
Source: 0001213900-25-002199
Chunk: 158

Company: Foxx Development Holdings Inc.
Filing Date: 2025-01-10
Form: S-1
Chunk 158
---
 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 -taxcash flows of the related operations. The Company has elected to include the carrying amount of operating lease right -of-useassets in any tested asset group and include the associated lease payments in the undiscounted future pre -taxcash flows. For the three months ended September 30, 2024 and 2023, the Company did not recognize impairment loss against its right -of-useassets. 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-useasset and lease liability. Warrants The Company accounts for warrants as either equity -classifiedor liability -classifiedinstruments 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 Company’s own Common Stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of equity at the time of issuance. The Company determined that upon further review of the warrant agreements, the Company concluded that its warrants qualify for equity accounting treatment. Upon completion of the Business Combination, all of ACAC’s outstanding public and private warrants (See Note 16) were replaced by the Company’s public and private warrants. The Company treated such warrants replacement as a warrant modification and no incremental fair value was recognized for the three months ended September 30, 2024. F-14 FOXX DEVELOPMENT HOLDINGS INC. NOTES TO