Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 100

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 8
Chunk 100
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 in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

8

The Company’s main business is selling electronic products  to
1) wholesale customers and 2) individual E-commerce customers, and the Company’s revenue also came from 3) the App Service commission
from providing installation of applications on the Company’s mobile devices and revenue share from clicks and impressions.

Wholesale Customers

The Company recognizes a
contract with a customer when the contract is committed in writing, 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 wholesale 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, either on Free on Board (“FOB”) shipping point or
destination, depending on the specified contract. The Company’s customers generally either pay for the order in full balance prior
to shipment or in partial payments with credit terms of 30 to 90 days after shipment depending on the specified contract. No sales
returns are being given to its wholesale customers as they were being given additional 1-3% of products on top of each customer’s
order (see Note 3 - “Warranty” below). There is no transaction prices allocated to future periods or future obligations and
no revenue was recognized for performance obligations satisfied in previous periods.

Warranty

The Company generally provides
30-day warranties or 1-year warranties for its product sold to its wholesale customer if an additional 1-3% of products on top of each
customer’s order was not provided. For the sale transactions that were provided with 1-3% of products on top of each customer’s
order, these additional 1-3% products were recognized as cost of goods sold at the same time the respective sale is recognized. For the
sales transactions that the Company provided limited warranties to both wholesale customers and e-commerce customers, the Company records
estimated future warranty costs under ASC 460, Guarante