Company: FOXX
Filing Date: 2025-10-15
Form Type: 10-K
Source: 0001213900-25-098953
Chunk: 1988

Company: Foxx Development Holdings Inc.
Filing Date: 2025-10-15
Form: 10-K
Item: Item 8
Chunk 1988
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others. For the years ended June 30, 2025 and 2024, the Company had interest expenses that amounted to $4,959,055 and $278,328,
respectively. Of the total interest expense for the year ended June 30, 2025, $140,740 was related to convertible notes, $4,798,339 to
unpaid purchase balance, and $19,976 to borrowings and others. Of the total interest expense for the year ended June 30, 2024, $264,445
was related to convertible notes and $13,883 to borrowings and others.

F-14

Lease

The
Company accounts for leases in accordance with ASC 842 “Leases”. The Company categorizes leases with contractual
terms longer than 12 months as either operating or finance. Finance leases are generally those leases that substantially utilize
or pay for the entire asset over its estimated life. All other leases are categorized as operating leases. Costs associated with operating
lease assets are recognized on a straight-line basis within operating expenses over the term of the lease. As of June 30, 2025 and 2024,
the Company does not have finance leases.

The
Company determines if an arrangement is, or contains, a lease at inception. Operating lease assets represent the Company’s right
to control the use of an identified asset for a period of time, or term, in exchange for consideration, and operating lease liabilities
represent its obligation to make lease payments arising from the aforementioned right.

Operating
lease right-of-use (“ROU”) assets and liabilities are initially recorded based on the present value of lease payments over
the lease term, which includes the minimum unconditional term of the lease, and may include options to extend or terminate the lease
when it is reasonably certain at the commencement date that such options will be exercised. As the rate implicit for each of the Company’s
leases is not readily determinable, the Company uses incremental borrowing rate as effective interest rate, based on the information
available at the lease commencement date in determining the present value of its expected lease payments. Operating lease assets also
include any initial direct costs and any lease payments made prior to the lease commencement date and are reduced by any lease incentives
received. According to ASC 842-10-15-37, a lessee may, as an accounting policy election by class of underlying asset, choose not
to separate non-lease components from lease components and instead to account