Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 127

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 127
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, and these reserves were
recognized based on estimation and judgment from the Company’s management.

9

E-Commerce Customers

The Company recognizes a
contract with a customer when the contract is committed in writing and signed electronically on an E-Commerce platform, the rights of
parties, including payment terms, are identified, the contract has commercial substance, and collectability is probable.

A performance obligation is a promise in a contract to transfer a distinct
good or service to the customer and is the unit of accounting in ASC 606. A contract’s transaction price is allocated to each
performance obligation identified in the arrangement based on the relative standalone selling price of each distinct good or service in
the contract and recognized as revenue when, or as, the performance obligation is satisfied. For all the Company’s contracts, the
Company has identified one performance obligation, which is primarily satisfied at a point in time upon delivery of products based on
terms stated in the contracts on shipping destination at its individual customer shipping address, which is the Company’s obligation
to deliver the product to the end user/individual customer, depends on the specified contract. The Company’s E-Commerce customers
pay the order in full balance prior to shipment to the E-Commerce Platform and the E-Commerce Platform withheld the payment for 30 days
before remitting payments to the Company. The Company offered one month of free exchange or return. As a result, the Company recognized
its revenues from the E-Commerce customers, in the third-party E-commerce platform, net of estimated sales returns, discount, and rebate,
as a consideration reducing the transaction price. Historically, sales returns were insignificant to the Company’s operations. For
the three and nine months ended March 31, 2025 and 2024, the Company did not recognize any estimated sales returns. There are no transaction
prices allocated to future periods or future obligations and no revenue was recognized for performance obligations satisfied in previous
periods.

Gross versus Net Revenue Reporting

The determination of whether
revenues should be reported on a gross or net basis is based on the Company’s assessment of whether it is the principal or an agent
in the transaction in accordance with ASC 606-10-55 and depends on whether the promise to the customer is to provide the products
or to facilitate a sale by a third party. The nature of the promise depends on whether the Company controls the products prior to transferring
them. When the Company controls the products, the promise is to provide and deliver the products