Company: FOXX
Filing Date: 2025-02-14
Form Type: 10-Q
Source: 0001213900-25-014221
Chunk: 113

Company: Foxx Development Holdings Inc.
Filing Date: 2025-02-14
Form: 10-Q
Item: Item 8
Chunk 113
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 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 and six months ended December 31, 2024.

Basic and diluted earnings (loss) per share

Basic EPS is measured as
net income (loss) divided by the weighted average common shares outstanding for the period.

Diluted
net income (loss) per share attributable to common stockholders adjusts basic earnings (loss) per share for the potentially dilutive impact
of non-participating shares of common stock. Dilutive equivalent shares are excluded from the computation of diluted income (loss) per
share if their effects would be anti-dilutive. Common stock issuable upon the conversion of the stock options, the RSUs (defined in Note
16) and warrants are using the treasury stock method. Common stock issuable in connection with the Company’s convertible promissory
notes are using the if-converted method.  

11

Recently adopted accounting standards

The Company considers the
applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards
that are issued. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company
meets the definition of an emerging growth company and has elected the extended transition period for complying with new or revised accounting
standards, which delays the adoption of these accounting standards until they would apply to private companies.

In March