Company: FOXX
Filing Date: 2025-11-18
Form Type: 10-Q
Source: 0001213900-25-112192
Chunk: 101

Company: Foxx Development Holdings Inc.
Filing Date: 2025-11-18
Form: 10-Q
Item: Item 8
Chunk 101
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es. Such estimated costs for warranties are estimated at the time of
delivery, and these warranties are not service warranties separately sold by the Company. Generally, the estimated claim rates of warranties
are based on actual warranty experience or the Company’s best estimate. As of September 30, 2025, and June 30, 2025, the Company
accrued warranty reserves of $389,134 and $328,438, respectively recorded under accrued liabilities and other current liabilities, and
these reserves were recognized based on estimation and judgment from the Company’s management. 

E-commerce Customers

The Company recognizes a
contract with a customer when the contract is committed in writing and signed electronically on an e-commerce platform, the rights of
parties, including payment terms, are identified, the contract has commercial substance, and collectability is probable.

A performance obligation is a promise in a contract to transfer a distinct
good or service to the customer and is the unit of accounting in ASC 606. For all the Company’s contracts, the Company has
identified one performance obligation, which is primarily satisfied at a point in time upon delivery of products based on terms stated
in the contracts on shipping destination at its individual customer shipping address, which is the Company’s obligation to deliver
the product to the end user/individual customer, depending on the specified contract. The Company’s e-commerce customers pay the
order in full balance prior to shipment to the e-commerce platform and the e-commerce platform withholds the payment for 30 days
before remitting payments to the Company. The Company offered one month of free exchange or return. As a result, the Company recognized
its revenues from the e-commerce customers, in the third-party e-commerce platform, net of estimated sales returns, discount, and rebate,
as a consideration reducing the transaction price. Historically, sales returns were insignificant to the Company’s operations. For
the three months ended September 30, 2025 and 2024, the Company did not recognize any estimated sales returns. There is no transaction
prices allocated to future periods or future obligations and no revenue was recognized for performance obligations satisfied in previous
periods.

9

App Service Commission Revenue

The Company provides an App Service (as defined below) by installing
applications from App (as defined below) developer partners (the “Partners”) onto its mobile devices and facilitating the
distribution of these devices to end users (the “App Service”). The App Service commission revenue is generated when end users