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

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 1
Chunk 10
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the “10-Q”) should be read in conjunction with information in
the Annual Report for the fiscal year ended June 30, 2025, on Form 10-K filed by the Company with the SEC on October 15, 2025.

Principles of consolidation

The unaudited condensed consolidated
financial statements include the financial statements of the Company and its subsidiaries. All transactions and balances among the Company
and its subsidiaries have been eliminated upon consolidation.

A subsidiary is an entity in which the Company, directly or indirectly,
controls more than one-half of the voting power; or has the power to govern the financial and operating policies, to appoint or remove
the majority of the members of the Board of Directors, or to cast a majority of votes at the meetings of directors.

Use of estimates and assumptions

The preparation of unaudited condensed consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements
and the reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates.

6

Foreign currency translation and transactions

The reporting currency of
the Company is the U.S. dollar. The functional currency for the holding company is the U.S. dollar (“USD”). In Singapore,
the Company conducts its business in the local currency, Singapore dollar (“SGD”), as its functional currency. Assets and
liabilities are translated at the unified exchange rate as quoted by the Federal Reserve System at the end of the period. The statements
of operations and cash flows are translated at the average translation rates during the reporting periods, and the equity accounts are
translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive loss.
Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional
currency are included in the results of operations as incurred.

Translation adjustments are
included in accumulated other comprehensive loss. The balance sheet amounts, with the exception of stockholders’ equity (deficit)
at September 30, 2025, were translated at SGD 1.29 to USD 1.00. The average translation rates applied to the unaudited condensed consolidated
statements of operations and cash flows for the three months ended September 30, 2025, were SGD 1.28 to USD 1.00. The stock