Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 195

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 8
Chunk 195
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2023 and March 2024, offset by approximately $0.2 million in payments
of deferred offering costs, the repayment of related party loans of approximately $0.1 million, and the principal payments of long-term
loan of approximately $11,000. 

Off-Balance Sheet Arrangements

As of March 31, 2025, we
have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to our members.

Critical Accounting Estimate

The unaudited condensed consolidated
financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these unaudited
condensed consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Estimates are based
on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which
form the basis of making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
We have identified certain accounting estimates that are critical to the preparation of the unaudited condensed consolidated financial
statements. Certain accounting estimates are particularly sensitive because of their significance to the unaudited condensed consolidated
financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s
current judgments. We believe that the critical accounting estimates, assumptions, and judgments that have the most significant impact
on our unaudited condensed consolidated financial statements are described below.

47

Income Taxes

We record deferred tax assets
and liabilities based on the net tax effects of tax credits, operating loss carryforwards, and temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes compared to the amounts used for income tax purposes. We regularly
review our deferred tax assets for recoverability with consideration for such factors as historical losses, projected future taxable income,
and the expected timing of the reversals of existing temporary differences. A valuation allowance is recorded when it is more likely than
not that some portion or all of the deferred tax assets will not be realized. Management believes the deferred tax assets, based largely
on the history of tax losses, warrant a full valuation allowance based on the weight of available negative evidence. Currently, the