Company: FOXX
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001213900-25-043597
Chunk: 20

Company: Foxx Development Holdings Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Item 1
Chunk 20
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 to pay the Company of the App revenue share (service commission) as revenue. The Company’s
Partners are primarily responsible to develop and maintain the App, is the primary obligor to users of the of the App and determines and
controls the revenue shares (service commission) to pay the Company. No refund or return policy is provided to the Partners.

10

Practical expedient

The Company applies the practical
expedient in ASC 606 to expense costs as incurred for costs to obtain a contract with a customer when the amortization period is one year
or less. The Company has no material incremental costs of obtaining contracts with customers that the Company expects the benefit of those
costs to be longer than one year which need to be recognized as assets for the three and nine months ended March 31, 2025 and 2024.

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 March 31, 2025 and June 30, 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.