Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 156

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 8
Chunk 156
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 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.

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 key factor in our assumption of
providing 100% valuation allowance was purely based on our historical operating losses. Once we begin generating profit, we will re-evaluate
whether providing 100% valuation allowance is appropriate or if we can reassess such number.

41

Item 3. Quantitative and Qualitative Disclosures
About Market Risk

Not applicable. 

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and
with the participation of our senior management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation
of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Exchange Act, as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation,
our Chief Executive Officer and Chief Financial Officer concluded as of the Evaluation Date that our disclosure controls and procedures
were not effective such that the information relating to us required to be disclosed in our Commission reports (i) is recorded, processed,
summarized and reported within the time periods specified in Commission rules and forms, and (ii) is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.

Changes in Internal Control Over Financial
Reporting

There were no changes in
our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d