Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 16

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 16
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 transferred when the customer obtains control
of that asset. It also requires the Company to identify contractual performance obligations and determine whether revenue should be recognized
at a point in time or over time, based on when control of goods and services transfers to a customer.

To achieve that core principle, the Company applies the five steps
defined under ASC 606 “Revenue from Contracts with Customers”: (i) identify the contract(s) with a customer,
(ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction
price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

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 by providing installation of App services to the Company’s mobile devices.

8

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 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 the order in full balance prior to shipment or in partial payments with credit terms of
30 to 90 days after shipment depends on the specified contract. No sales returns are being given to its wholesale customers as they
were being given additional 2-3% of products on top of each customer’s order (see Note 3 - “Warranty” below). 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
re