Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 18

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 18
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 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 “Guarantees”. Such estimated costs for warranties are estimated at the time of delivery, and these
warranties are not service warranties separately sold by the Company. Generally, the estimated claim rates of warranties are based on
actual warranty experience or the Company’s best estimate. As of March 31, 2025 and June 30, 2024, the Company accrued warranty
reserves of $361,960 and $48,361, respectively recorded under accrued liabilities and other current liabilities, 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