Foxx Development Holdings Inc.
For the period ended Sep 30, 2025. Filed Nov 18, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 18, 2025
FOXX$1.60-12.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001213900-25-043597
Item 2. – Management’s Discussion and Analysis of Financial Condition And Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-18.
0001213900-25-112192
Item 2. – Management’s Discussion and Analysis of Financial Condition And Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 157 previous paragraphs and 114 current paragraphs.
73 unchanged; 34 reworded; 6 added; 39 removed; 11 previous and 1 current paragraphs rearranged.
Tables are not compared: 20 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (6)
Current report
For the three months ended September 30, 2025, our sales remained consistent with our historical level, as we retained our three major customers and continued to sell our new products and services during the period. In addition, we have launched new wearable products, such as smart watches, smart rings, smart glasses, trackers and headsets, and App service commission revenue in May 2025 which have driven up our sales for these wearable products and App service commission revenue for the three months ended September 30, 2025 as compared to the same period in 2024.
Current report
Gross profit percentage for mobile phones increased from 0.7% for the three months ended September 30, 2024 to 13.0% for the same period in 2025. This was primarily due to the increasing sales in new phone models with higher gross profit margins and the reduction of shipping and tariff costs as we negotiated with our vendor to cover such costs.
Current report
For the three months ended September 30, 2025, our gross profit percentage of other services was 81.0%. We did not have other logistic and warehouse management services for the three months ended September 30, 2024.
Current report
Net cash used in operating activities was approximately $0.4 million for the three months ended September 30, 2025 and was primarily attributable to (i) approximately $2.9 million net loss, (ii) approximately $6.0 million increase in accounts receivable due to the increase of credit sales during the period, (iii) approximately $0.5 million payment in operating lease liabilities as we commenced our factory and warehouse lease in July 2025, and (iv) approximately $0.1 million non-cash recovery of credit losses as we collected receivables that had been previously reserved for under the allowance for credit losses. The cash outflow was offset by (v) non-cash expenses of approximately $1.2 million, which includes depreciation, amortization of operating right-of-use assets, stock-based compensation, and impairment of inventories, (vi) approximately $5.4 million increase in accounts payable due to purchase with vendors to meet customer demand, (vii) approximately $0.8 million decrease in prepaid expenses and other current assets due to the decrease of prepaid rent payment in connection with our factory and warehouse leases which commenced in July 2025, (viii) approximately $0.7 million decrease in inventories as we engaged in dropship arrangement beginning in July 2025 where products were shipped directly to our customers rather than stored in our warehouse as inventory, (ix) approximately $0.4 million increase in contract liabilities aligned with the decrease of inventory, (x) approximately $0.3 million increase in other payables and accrued liabilities mainly due to accrued interest payable related to the financing offered by our vendors based upon the timing of our payment to their accounts payable and accrued professional fees that associated with business expansion, such as consulting fees, testing fees and legal fees, and (xi) approximately $0.2 million decrease in contract assets as we reduced new purchase and sold off inventory.
Current report
There were no investing activities for the three months ended September 30, 2025.
Current report
Critical Accounting Estimates
Removed paragraphs (39)
Previous report
For the three months ended March 31, 2025, our sales went back to our historical level, as we have added three new major customers and launched new products and services during the period.
Previous report
For the nine months ended March 31, 2025, our sales went back to our historical level, as we have added three new major customers and launched new products and services during the period.
Previous report
Our revenue primarily derived from sales of electronic products. The total revenues increased by approximately $10.9 million, or 2,117.1%, to approximately $11.4 million for the three months ended March 31, 2025 as compared to $0.5 million for the three months ended March 31, 2024. The increase of the total revenue was mainly attributable to the sales from three new major wholesale customers who aggregately accounted for 65% of our sales and to launching a new line of products, which is the wearable electronic products, and new service.
Previous report
Our cost of goods sold mainly consists of cost of merchandise and freight. Total cost of goods sold increased by approximately $10.1 million, or 1,838.3%, to approximately $10.7 million for the three months ended March 31, 2025 as compared to $0.6 million for the three months ended March 31, 2024. The increase in cost of goods sold is a direct result of an increase in our revenue, consistent with the acquisition of our three new major wholesale customers and new product line as discussed above for the three months ended March 31, 2025 as compared to the same period in 2024.
Previous report
For the three months ended March 31, 2025 and 2024, our overall gross profit percentage was 5.8% and (7.7)%, respectively. The increase in gross profit percentage of 13.5% was primarily due to the increases in gross profit percentage for tablet, mobile phone, wearable products and others and App service commission revenue and others.
Previous report
Gross profit percentage of tablets improved from 0% to 20.2% from the three months ended March 31, 2024 to the same period in 2025. This was primarily due to our change of business strategy as discussed above, which lead to the increase in the unit selling price of electronic products, and the decrease in the unit purchase price of the purchasing goods.
Previous report
Gross loss percentage for mobile phones decreased from (7.7)% to (2.8)% for the three months ended March 31, 2024, to the same period in 2025. This decrease was primarily due to the increasing sales of mobile phones with higher gross profit percentage during the three months ended March 31, 2025.
Previous report
General and administrative expenses increased approximately $1.2 million, or 230.2%, to approximately $1.8 million for the three months ended March 31, 2025 from approximately $0.6 million for the three months ended March 31, 2024. The increased general and administrative expense were mainly attributable to the approximately $0.2 million increase in professional expense on audit, legal and accounting fees as we became a public company, approximately $0.2 million increase in salary and wages as we made more new hires during the three months ended March 31, 2025, approximately $0.4 million increase in credit losses due to the increasing risk of uncollectable accounts from one customer, approximately $0.2 million increase in stock-based compensation as we granted restricted stock units in November 2024 to our management team members under employee incentive plan, and approximately $0.2 million increase in other general and administrative miscellaneous expenses, such as insurance, rent expense, travel expense, and office expense due to increased expenses in the increased of our operations. We anticipate a continued rise in our G&A as we persist in executing our business expansion plan and integrating IoT-enabled devices alongside our cloud platform to streamline operations in 2025.
Previous report
The provision for income taxes was $0 and approximately $20,000 for the three months ended March 31, 2025 and 2024, decreased by $20,000 or 100.0% as we had made full allowance of our deferred tax assets on net operating losses for the three months ended March 31, 2025. Foxx had provision for income taxes of approximately $20,000 resulted from timing difference between calendar year on income tax return in 2022 and fiscal year of operation of June 30, for which those operating losses incurred from January 2023 to June 2023 cannot be carried back. At the same time, we had provided 100% allowance on its deferred tax assets on net operating losses for the three months ended March 31, 2024.
Previous report
Comparison for the nine months ended March 31, 2025 and 2024
Previous report
Revenues
Previous report
Cost of Goods Sold
Previous report
Our cost of goods sold for tables decreased by approximately $0.2 million, or 35.2%, to approximately $0.3 million for the nine months ended March 31, 2025 from $0.5 million for the same period in 2024. Cost of goods sold for mobile phone products increased by approximately $44.7 million, or 5,551.9%, to approximately $45.5 million for the nine months ended March 31, 2025 from $0.8 million for the same period in 2024, which is consistent with the direct result of an increase in our revenue. Cost of goods sold for wearable products and others increased by approximately $2.9 million, or 100.0%, to approximately $2.9 million for the nine months ended March 31, 2025 from $0 for the same period in 2024. Other service cost increased by approximately $21,000, or 100.0% to approximately $21,000 for the nine months ended March 31, 2025 from $0 for the same period in 2024.
Previous report
Gross Profit
Previous report
Our gross profit increased by approximately $3.2 million, or 5,329.2%, to approximately $3.3 million for the nine months ended March 31, 2025, from approximately $60,000 for the nine months ended March 31, 2024.
Previous report
Gross profit (loss) percentage for mobile phones increased from (16.7)% to 2.4% from the nine months ended March 31, 2024, to the same period in 2025. This was primarily due to our change of business strategy as discussed above, which lead to the increase in the unit selling price of electronic products, and the decrease in the unit purchase price of the purchasing goods.
Previous report
For the nine months ended March 31, 2025, our gross profit percentage of wearable products and others was 12.2%. We did not have this kind of products for the nine months ended March 31, 2024.
Previous report
Operating Expenses
Previous report
Total operating expenses increased by approximately $9.0 million, or 457.8%, to approximately $10.9 million for the nine months ended March 31, 2025 from approximately $1.9 million for the nine months ended March 31, 2024.
Previous report
Selling Expenses
Previous report
Selling expenses increased, approximately $3.9 million, or 779.0%, to approximately $4.4 million for the nine months ended March 31, 2025, from approximately $0.5 million for the nine months ended March 31, 2024. The increased selling expenses was mainly attributable to approximately $1.8 million increase in commission, payroll and payroll related expense as we recruited and hired more salespersons to our team during the nine months ended March 31, 2025, approximately $0.9 million increase in consulting fees, as the Company engaged additional sales consultant to enhance our sales efforts, approximately $0.3 million increase in warranty expenses due to the increase in sales, approximately $0.4 million increase in advertising and marketing expenses to boost sales, approximately $0.1 million increase in stock-based compensation as we granted restricted stock units in November 2024 to our sales team members under employee incentive plan, consultants and independent directors under employee incentive plan, and approximately $0.4 million increase in sampling, testing and certification expenses, which all directly related with boosting the brand awareness, adding new product models, and to attract more business opportunities in the electronic devices market during the nine months ended March 31, 2025.
Previous report
General and Administrative Expenses
Previous report
Research and Development — related party
Previous report
Research and Development
Previous report
Other income (expense), net
Previous report
Total other income (expense), net increased by approximately $2.9 million, or 1,708.4%, to approximately $2.7 million other income for the nine months ended March 31, 2025, from approximately $0.2 million other expense for the nine months ended March 31, 2024. The increase was primarily due to the change in fair value of earnout liabilities in connection with the Business Combination and offset by the interest expenses incurred related to the financing offered by our vendors based upon the timing of our payment to their accounts payable.
Previous report
Provision for income taxes
Previous report
Net Loss
Previous report
Net loss increased by approximately $2.8 million, or 137.6%, to approximately $2.1 million for the nine months ended March 31, 2025, from approximately $4.9 million for the nine months ended March 31, 2024. Such change was mainly due to the reasons discussed above.
Previous report
Foreign Currency Translation Adjustment
Previous report
Net cash used in operating activities was approximately $4.3 million for the nine months ended March 31, 2024 and was primarily attributable to (i) approximately $2.1 million net loss, (ii) approximately $0.2 million increase in accounts receivable due to Foxx began to provide credit term to its new customers, (iii) approximately $1.7 million increased in prepayment and other current assets due to Foxx engaged with new vendors which required purchase deposits, (iv) approximately $0.7 million increased in inventories due to Foxx changed its business strategy where it rented warehouse in the U.S. to store its inventories, (v) approximately $19,000 in repayment of other payable to a related party in connection with their consulting fees, (vi) approximately $19,000 in payment of operating lease liability, and (vii) approximately $16,000 decreased in income taxes payable. The cash outflow was offset by (viii) non-cash expenses of approximately $50,000, which includes depreciation, amortization of operating right-of-use asset, (ix) approximately $0.1 million increased in customer deposits and (x) approximately $0.3 million increased in other payables and accrued liabilities.
Previous report
Net cash used in investing activities was approximately $40,000 for the nine months ended March 31, 2025, attributable to approximately $68,000 purchase of some equipment for warehouse and an automobile for our business uses and offset by approximately $28,000 proceeds from sale of the automobile.
Previous report
Critical Accounting Estimate
Previous report
Earnout Liabilities
Previous report
At the closing of the Business Combination, pursuant to the Business Combination Agreement, the shareholders of Old Foxx were entitled to receive up to a total of 4,200,000 contingent earnout shares (“Earnout Shares”) in the form of our common stock. The Earnout Shares will be issued upon certain vesting schedules based on our financial performance for the fiscal year ended June 30, 2024 and 2025. The Earnout Shares are classified as a liability at the closing of the Business Combination on September 26, 2024 and measured at fair value at each reporting period, with changes in fair value included in the consolidated statements of operations.
Previous report
When determining the fair value measurements for earnout liabilities which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the earnout liabilities arising from the Business Combination.
Previous report
The Company developed a Monte Carlo Model that values the earnout subject revenue milestones. The Monte Carlo Model technique applied generates many possible (but random) price paths for the underlying(s) via simulation, and then calculates the associated payment value of the security features. The price of the underlying common stock is modeled such that it follows a geometric Brownian motion with constant drift, and constant volatility. The stock price is determined by a random sampling from a normal distribution. Since the underlying random process is the same, for enough price paths, the value of security is derived from path dependent scenarios and outcomes.
Previous report
The model simulates the underlying economic factors, including the projected revenue that influenced which of these events would occur, when they were likely to occur, and the specific terms that would be in effect at the time (i.e., stock price, revenue, etc.). Probabilities were assigned to each variable such as the timing and pricing of events over the term of the instruments based on management projections. This led to a cash flow simulation over the life of the instrument. A discounted cash flow was completed to determine the value for the earnout liabilities.
Previous report
Prior to the Business Combination, we were a private company and lacked company-specific historical and implied volatility information of its stock, and as such, the expected revenue volatility was based on historical volatility of industry outlook and the expected revenue volatility and stock volatility was based on the historical volatility of publicly traded peer companies for a term equal to the remaining expected term of the earnout period.
Reworded paragraphs (34)
Previous wording
The ACAC securities previously traded on the Nasdaq Capital Market (“Nasdaq”) were delisted and ceased trading following the Closing. On September 27, 2024, one business day after the Closing, our Common Stock and Warrant became listed on the Nasdaq under trading symbols “FOXX” and “FOXXW,” respectively.
Current wording
The ACAC securities previously traded on the Nasdaq Capital Market (“Nasdaq”) were delisted and ceased trading following the Closing. On September 27, 2024, one business day after the Closing, our Common Stock and Warrants became listed on the Nasdaq under trading symbols “FOXX” and “FOXXW,” respectively.
Previous wording
We manage inventory and meet market demand through our build-to-order business model. After customers place purchase orders in bulks with us, we place purchase orders with suppliers to manufacture the products that meet customers’ products specifications and budget requirements. Prior to 2023, we have relied on limited suppliers for the manufacturing of mobile phone and tablet products and on limited customers for the distribution of these products. We selectively concentrated our resources on our tablet and mobile phone products because such products held the strongest market potential and revenue generation capability at the time when remote work and online classes became more prevalent.
Current wording
We manage inventory and meet market demand through our build-to-order business model. After customers place purchase orders in bulk with us, we place purchase orders with suppliers to manufacture the products that meet customers’ products specifications and budget requirements. Prior to 2023, we relied on limited suppliers for the manufacturing of mobile phone and tablet products and on limited customers for the distribution of these products. We selectively concentrated our resources on our tablet and mobile phone products because such products held the strongest market potential and revenue generation capability at the time when remote work and online classes became more prevalent.
Previous wording
Beginning in 2023, we adjusted our business strategy to avoid reliance on limited suppliers and customers and to diversify suppliers and customers to mitigate the concentration and reliance risk. We have added new product models across each product line to target a broader range of customers. As of the date hereof, we have reached out to a total of eight wholesale customers to expand our operations in the market and expects to secure purchase orders from these new customers. At the same time, to meet the various product demands of current and prospective customers, we have connected with suppliers who can provide manufacturing support when we secure purchase orders from our customers. In addition, we plan to further expand our product offerings and to launch an IoT platform to manage all end-products sold, and began setting up a service team for our business to business (B2B) model in the artificial IoT department. Through the efforts of expanding product offerings and reaching to broader customer base, we will be able to move away from relying on limited customers and suppliers. As we dedicated our resources to expansion, we experienced a significant decrease in the sales of tablet and mobile phone products during the year ended June 30, 2024 as compared to the same period in 2023: (i) new customers began orders in much smaller quantities as compared to our previous customer in order to build up a trustworthy relationship; (ii) similarly and relevantly, we placed order with new suppliers in much smaller quantities to build up relationship and ensure the quality of the products; and (iii) new product models on both tablet and mobile phones order by new customers required approximately 6-9 months from development to mass production.
Current wording
Beginning in 2023, we adjusted our business strategy to avoid reliance on limited suppliers and customers and to diversify suppliers and customers to mitigate the concentration and reliance risk. We have added new product models across each product line to target a broader range of customers. As of the date hereof, we have reached out to a total of eight wholesale customers to expand our operations in the market and expect to secure purchase orders from these new customers. At the same time, to meet the various product demands of current and prospective customers, we have connected with suppliers who can provide manufacturing support when we secure purchase orders from our customers. In addition, we plan to further expand our product range and to launch an IoT platform to manage all end products sold and began setting up a service team for our business to business (B2B) model in the artificial IoT department. Through the efforts to expand product range and reaching a broader customer base, we will be able to move away from relying on limited customers and suppliers. As we dedicated our resources to expansion, we experienced a significant decrease in the sales of tablet and mobile phone products during the year ended June 30, 2024 as compared to the same period in 2023: (i) new customers began orders in much smaller quantities as compared to our previous customer in order to build up a trustworthy relationship; (ii) similarly and relevantly, we placed order with new suppliers in much smaller quantities to build up relationship and ensure the quality of the products; and (iii) new product models on both tablet and mobile phones order by new customers required approximately 6-9 months from development to mass production.
Previous wording
The ACAC securities previously traded on Nasdaq were delisted without any action needed to be taken on the part of the holders of such securities and are no longer traded on Nasdaq following the Closing. On September 27, 2024, one business day after the Closing, our Common Stock and Warrant became listed on the Nasdaq Capital Market (“Nasdaq”) under trading symbols “FOXX” and “FOXXW,” respectively.
Current wording
The ACAC securities previously traded on Nasdaq were delisted without any action needed to be taken on the part of the holders of such securities and are no longer traded on Nasdaq following the Closing. On September 27, 2024, one business day after the Closing, our Common Stock and Warrants became listed on the Nasdaq Capital Market (“Nasdaq”) under trading symbols “FOXX” and “FOXXW,” respectively.
Previous wording
One of the key differentiating factors of us is the rich blended nature of our management team. Our management team comprises executives with extensive experience in electronics industry with IoT services related experiences. The wide array of industry experience captured by our management team allows us to deliver advanced technology and superior products to our customers. Losing any member of our key executive team could significantly impact the quality of services and products that we currently offer. Such departures may prompt customers to explore alternative products or IoT cloud platforms offered by different vendors or service providers.
Current wording
One of the key differentiating factors of us is the rich blended nature of our management team. Our management team comprises executives with extensive experience in electronics industry with IoT services related experience. The wide array of industry experience captured by our management team allows us to deliver advanced technology and superior products to our customers. Losing any member of our key executive team could significantly impact on the quality of services and products that we currently offer. Such departures may prompt customers to explore alternative products or IoT cloud platforms offered by different vendors or service providers.
Previous wording
We invest significant resources in outsourcing partnerships and dedicates efforts to research and develop new products, solutions, agent platforms, and related services. This commitment is essential to uphold our competitiveness in the industry, especially in the realm of IoT services. Advancing technology and enhancing capabilities are pivotal for enterprise growth, necessitating continual progress in electronic product technologies, novel services, and expanded capabilities.
Current wording
We invest significant resources in outsourcing partnerships and dedicate efforts to research and develop new products, solutions, agent platforms, and related services. This commitment is essential to uphold our competitiveness in the industry, especially in the realm of IoT services. Advancing technology and enhancing capabilities are pivotal for enterprise growth, necessitating continual progress in electronic product technologies, novel services, and expanded capabilities.
Previous wording
Our ability to expand our products and services and diversifying customer base
Current wording
Our ability to expand our products and services and diversify customer base
Previous wording
Currently, our main revenue stream originates from the sale of tablets and mobile phones. As brand recognition and acceptance grow, we anticipate a surge in user adoption of our wireless services and intelligence products. Our capacity to broaden our products portfolio, offer new services and attract a more diversified customer base could significantly influence our future operating results.
Current wording
Currently, our main revenue stream originates from the sale of tablets and mobile phones. As brand recognition and acceptance grow, we anticipate a surge in user adoption of our wireless services and intelligent products. Our capacity to broaden our products portfolio, offer new services and attract a more diversified customer base could significantly influence our future operating results.
Previous wording
Our revenue primarily derived from sales of electronic products. The total revenues increased by approximately $50.6 million, or 3,760.2%, to approximately $52.0 million for the nine months ended March 31, 2025 as compared to $1.3 million for the nine months ended March 31, 2025. The increase of the total revenue was mainly attributable to the sales from three new major wholesale customers who aggregately accounted for 78% of our sales.
Current wording
Our revenue is primarily derived from sales of electronic products. The total revenues decreased by approximately $2.9 million, or 12.5%, to approximately $20.2 million for the three months ended September 30, 2025 as compared to $23.1 million for the three months ended September 30, 2024. The decrease of the total revenue was mainly attributable to the decrease in mobile phone products revenues, which accounted for 87% of our sales.
Previous wording
Revenue from the sales of tablets increased by approximately $0.2 million, or 100.0%, to approximately $0.2 million for the three months ended March 31, 2025 from $0 for the same period in 2024. Revenue from sales of phones, which accounts for 78% of total revenue, increased by approximately $8.4 million, or 1,626.0%, to approximately $8.9 million for the three months ended March 31, 2025 from $0.5 million for the same period in 2024 as we rolled out some new phone products beginning in January 2024 and the sales from two new major wholesale customers who aggregately accounted for 52% of our sales. Revenue from sales of wearable products and others, which was new for the three months ended March 31, 2025, increased by approximately $1.6 million, or 100.0%, to approximately $1.6 million for the three months ended March 31, 2025 from $0 for the same period in 2024 as we rolled out some new wearable products beginning in October 2024 and the sales from one new wholesale customer who aggregately accounted for 13% of our sales. Revenue from App service commission and others increased by approximately $0.7 million, or 100.0%, to approximately $0.7 million for the three months ended March 31, 2025 from $0 for the same period in 2024 as we started to generate income by providing installation of App service to our partners on our mobile devices and procure the distribution of these devices to the end users beginning in July 2024.
Current wording
Tablet product sales were insignificant in our operations for the three months ended September 30, 2025. Revenue from the sales of tablets increased by approximately $46,000, or 961.4%, to approximately $51,000 for the three months ended September 30, 2025 from $5,000 for the same period in 2024. Revenue from sales of phones decreased by approximately $5.2 million, or 22.8%, to approximately $17.7 million for the three months ended September 30, 2025 from $22.9 million for the same period in 2024 as the consumers’ spending power was weakened and the mobile phone replacement rate was lowered. Previously, consumers tended to replace their phones every six months, whereas now many keep the same device for over a year. Revenue from sales of wearable products and others increased by approximately $2.1 million, or 100.0%, to approximately $2.1 million for the three months ended September 30, 2025 from $0 for the three months ended September 30, 2024, as we rolled out some new wearable products beginning in October 2024. Revenue from App service commission increased by approximately $0.2 million, or 76.3%, to approximately $0.4 million for the three months ended September 30, 2025 from $0.2 million for the three months ended September 30, 2024, as we engaged more partners and generate more income by providing installation of App service to our partners on our mobile devices and procure the distribution of these devices to the end users. Revenue from other services increased by approximately $2,000, or 100.0%, to approximately $2,000 for the three months ended September 30, 2025 from $0 for the three months ended September 30, 2024, as we started to generate income by providing other logistic and warehouse management services in April 2025.
Previous wording
Our cost of goods sold mainly consists of cost of merchandise and freight. Total cost of goods sold increased by approximately $47.4 million, or 3,687.2%, to approximately $48.7 million for the nine months ended March 31, 2025 as compared to $1.3 million for the nine months ended March 31, 2025. The increase in cost of goods sold is a direct result of an increase in our revenue, consistent with the acquisition of our three new major wholesale customers as discussed above for the nine months ended March 31, 2025 as compared to the same period in 2024.
Current wording
Our cost of goods sold mainly consists of cost of merchandise and freight. Total cost of goods sold decreased by approximately $5.2 million, or 23.0%, to approximately $17.5 million for the three months ended September 30, 2025 as compared to $22.7 million for the three months ended September 30, 2024. The decrease in cost of goods sold is a direct result of an decrease in our revenue, consistent with the decrease in mobile phone production costs, which accounted for 88% of our cost of goods sold.
Previous wording
Our cost of goods sold for tables increased by approximately $0.2 million, or 100.0%, to approximately $0.2 million for the three months ended March 31, 2025 from $0 for the same period in 2024. Cost of goods sold for mobile phone products increased by approximately $8.5 million, or 1,547.2%, to approximately $9.1 million for the three months ended March 31, 2025 from $0.6 million for the same period in 2024, which is consistent with the direct result of an increase in our revenue. Cost of goods sold for wearable products and others increased by approximately $1.4 million, or 100.0%, to approximately $1.4 million for the three months ended March 31, 2025 from $0 for the same period in 2024. Other service cost increased by approximately $21,000, or 100.0% to approximately $21,000 for the three months ended March 31, 2025 from $0 for the same period in 2024.
Current wording
Our cost of goods sold for tablets increased by approximately $35,000, or 758.4%, to approximately $40,000 for the three months ended September 30, 2025 from $5,000 for the same period in 2024. Cost of goods sold for mobile phone products decreased by approximately $7.3 million, or 32.4%, to approximately $15.3 million for the three months ended September 30, 2025 from $22.7 for the same period in 2024, which is consistent with the direct result of an decrease in our revenue, as we negotiated with our vendor to cover shipping and tariff costs beginning in July 2025. Cost of goods sold for wearable products and others increased by approximately $2.1 million, or 100.0%, to approximately $2.1 million for the three months ended September 30, 2025 from $0 for the same period in 2024, which is also the direct result of an increase in our revenue as we rolled out some new wearable products beginning in October 2024. Cost of goods sold for other services increased by approximately $400, or 100.0% to approximately $400 for the three months ended September 30, 2025 from $0 for the same period in 2024, which is also the direct result of an increase in our other revenue as we started to generate income by providing other services in April 2025.
Previous wording
Our gross profit increased by approximately $0.7 million, or 1,771.6%, to approximately $0.7 million for the three months ended March 31, 2025, from approximately $(40,000) for the three months ended March 31, 2024.
Current wording
Our gross profit increased by approximately $2.3 million, or 589.3%, to approximately $2.7 million for the three months ended September 30, 2025, from $0.4 for the three months ended September 30, 2024.
Previous wording
For the nine months ended March 31, 2025 and 2024, our overall gross profit percentage was 6.3% and 4.4%, respectively. The increase in gross profit percentage of 1.8% was primarily due to the increase in gross profit percentage for mobile phones, wearable products and others and App service commission revenue and others.
Current wording
For the three months ended September 30, 2025 and 2024, our overall gross profit percentage was 13.6% and 1.7%, respectively. The increase in gross profit percentage of 11.8% was primarily due to the increase in gross profit percentage for all products and services.
Previous wording
Gross profit percentage of tablets decreased from 26.6% to 20.4% from the nine months ended March 31, 2024 to the same period in 2025. This was primarily due the decrease of sales of those with higher unit selling prices and lower unit purchase prices.
Current wording
Gross profit percentage of tablets increased from 1.8% for the three months ended September 30, 2024 to 20.6% for the same period in 2025. This was primarily due to the decrease in sales of those with higher unit selling prices and lower unit purchase prices, and the reduction of shipping and tariff costs as we negotiated with our vendor to cover such costs.
Previous wording
For the three months ended March 31, 2025, our gross profit percentage of wearable products was 9.2%. We did not have this kind of products for the three months ended March 31, 2024.
Current wording
For the three months ended September 30, 2025, our gross profit percentage of wearable products was 1.2%. We did not sell wearable products for the three months ended September 30, 2024.
Previous wording
For the three months ended March 31, 2025, our gross profit percentage of App service commission and others was 97.2% because App service commission revenue was commission based revenue that was earned at a point in time when the revenue is generated from the App, that is when clicks and/or impressions occur at a point in time when the end users of the mobile devices use the App and we received the App revenue share (service commission) from our partners without cost of goods. We did not have this kind of service for the three months ended March 31, 2024.
Current wording
For the three months ended September 30, 2025 and 2024, our gross profit percentage of App service commission was 100.0%. This high margin was primarily attributable to the nature of App service commission revenue, which was commission based revenue that was earned at a point in time when the revenue is generated from the App, that is when clicks and/or impressions, activation of Apps, and installation of additional Apps occur at a point in time when the end users of the mobile devices interact with those Apps. We earned the App revenue share (service commission) from our partners without incurring any direct cost, as the pre-installation expenses were included in the research and development expenses prior to installation, and any labor costs with minimal time spent were immaterial to be allocated to cost of revenue.
Previous wording
Total operating expenses increased by approximately $3.4 million, or 461.0%, to approximately $4.2 million for the three months ended March 31, 2025 from approximately $0.8 million for the three months ended March 31, 2025.
Current wording
Total operating expenses increased by approximately $1.4 million, or 64.8%, to approximately $3.6 million for the three months ended September 30, 2025, from approximately $2.2 million for the three months ended September 30, 2024.
Previous wording
The increase in operating expense was mainly attributed to the following:
Current wording
The increase in operating expenses was mainly attributed to the following:
Previous wording
Selling expenses increased, approximately $1.4 million, or 899.5%, to approximately $1.6 million for the three months ended March 31, 2025, from approximately $0.2 million for the three months ended March 31, 2024. The increased selling expenses was mainly attributable to approximately $0.6 million increase in commission, payroll and payroll related expense as we recruited and hired more salespersons to our team during the three months ended March 31, 2025, approximately $0.3 million increase in consulting fees, as the Company engaged additional sales consultant to enhance our sales efforts, approximately $0.2 million increase in sampling, testing and certification expenses, approximately $0.1 million increase in stock-based compensation as we granted restricted stock units in November 2024 to our sales team members under employee incentive plan, and approximately $0.2 million increase advertising and marketing, which all directly related with boosting the brand awareness, adding new product models, and to attract more business opportunities in the electronic devices market during the three months ended March 31, 2025.
Current wording
Selling expenses decreased approximately $0.3 million, or 25.8%, to approximately $0.9 million for the three months ended September 30, 2025, from approximately $1.2 million for the three months ended September 30, 2024. The decreased selling expenses was mainly attributable to approximately $0.4 million decrease in commission, payroll and payroll related expenses and approximately $0.1 million decrease in consulting fees during the three months ended September 30, 2025, as we reduced salespersons and consultants to cut expenses and improve profitability to improve cost efficiency. The decrease was offset by approximately $0.1 million increase in stock-based compensation as we granted restricted stock units in November 2024 to our sales team members under employee incentive plan and approximately $0.1 million increase in sampling, testing and certification expenses.
Previous wording
General and administrative expenses increased approximately $3.4 million, or 244.3%, to approximately $4.4 million for the nine months ended March 31, 2025 from approximately $0.5 million for the nine months ended March 31, 2024. The increased general and administrative expense were mainly attributable to the approximately $1.0 million increase in professional expense on audit, legal and accounting fees as we became a public company, approximately $0.8 million increase in salary and wages as we made more new hires during the nine months ended March 31, 2025, approximately $0.5 million credit losses due to the increasing risk of uncollectable accounts from one customer, approximately $0.3 million increase in stock-based compensation as we granted restricted stock units in November 2024 to our management team members under employee incentive plan, and approximately $0.7 million increase in other general and administrative miscellaneous expenses, such as insurance, rent expense, travel expense, and office expense due to increased expenses in the increased of our operations. We anticipate a continued rise in our SG&A as we persist in executing our business expansion plan and integrating IoT-enabled devices alongside our cloud platform to streamline operations in 2025.
Current wording
General and administrative expenses increased approximately $1.4 million, or 152.7%, to approximately $2.4 million for the three months ended September 30, 2025 from approximately $1.0 million for the three months ended September 30, 2024. The increased general and administrative expense were mainly attributable to the approximately $0.5 million increase in professional expense on audit and accounting fees as we became a public company, approximately $0.2 million increase in salary and wages as we made more new hires after we became a public company, and approximately $0.7 million increase in rent due to the new factory and warehouse lease that commenced in July 2025.
Previous wording
Research and development (“R&D”) expenses from a related party increased by approximately $46,000, or 100.0%, where the increase was primarily due to an R&D project began in 2024. During the nine months ended March 31, 2025 and 2024, a related party completed additional 40% and 20%, respectively, of the 5G development project pursuant to a R&D agreement between us and the related party, and we recognized a R&D expense approximately of $91,000 and $46,000, respectively, accordingly based on the progression of the R&D project.
Current wording
Research and development (“R&D”) expenses from a related party decreased by approximately $23,000, or 100.0%, where the decrease was primarily due to an R&D project which commenced in 2024 and was completed in June 2025. During the three months ended September 30, 2024, a related party completed additional 10% of the remaining 5G development project pursuant to a R&D agreement between us and the related party, and we recognized a R&D expense approximately of $23,000 accordingly based on the progression of the R&D project. We did not have this expense for the same period in 2025.
Previous wording
R&D expenses increased by approximately $0.8 million, or 100.0%, from $0 for the three months ended March 31, 2024 to $0.8 million for the same period in 2025. The increase is due to hiring more employees and engaging third parties to provide development services for new products during the three months ended March 31, 2025. The increase is also attributable to approximately $0.1 million increase in stock-based compensation as we granted restricted stock units in November 2024 to our R&D team members under employee incentive plan.
Current wording
R&D expenses increased by approximately $0.3 million, or 4,260.2%, from $7,000 for the three months ended September 30, 2024 to $0.3 million for the same period in 2025. The increase is due to hiring of more employees and engaging third parties to provide development services for new products after we became a public company. The increase is also attributable to approximately $57,000 increase in stock-based compensation as we granted restricted stock units in November 2024 to our R&D team members under the Incentive Plan.
Previous wording
Total other expense, net increased by approximately $0.4 million, or 606.6%, to approximately $0.5 for the three months ended March 31, 2025, from approximately $74,000 for the three months ended March 31, 2024. The increase was primarily due to the interest expenses incurred related to the financing offered by our vendors based upon the timing of our payment to their accounts payable and offset by the change in fair value of earnout liabilities in connection with the Business Combination.
Current wording
Total other expenses, net increased by approximately $1.5 million, or 330.0%, to approximately $2.0 million for the three months ended September 30, 2025, from approximately $0.5 million for the three months ended September 30, 2024. The increase was primarily due to the increase of approximately $1.7 million interest expenses incurred related to the financing offered by our vendors based upon the timing of our payment to their accounts payable offset by the decrease of approximately $0.1 million interest expenses incurred related to three convertible promissory notes that were converted into our Common Stock in September 2024.
Previous wording
The provision for income taxes are $0 and approximately $20,000 for the nine months ended March 31, 2025 and 2024, decreased by $20,000 or 100.0% as we had made full allowance of our deferred tax assets on net operating losses for the nine months ended March 31, 2025. Foxx had provision for income taxes of approximately $20,000 resulted from timing difference between calendar year on income tax return in 2022 and fiscal year of operation of June 30, for which those operating losses incurred from January 2023 to June 2023 cannot be carried back. At the same time, we had provided 100% allowance on its deferred tax assets on net operating losses for the nine months ended March 31, 2024.
Current wording
The provision for income taxes are $0 for each of the three months ended September 30, 2025 and 2024 as we had made full allowance of our deferred tax assets on net operating losses.
Previous wording
Net loss increased by approximately $3.2 million, or 360.8%, to approximately $4.1 million for the three months ended March 31, 2025, from approximately $0.9 million for the three months ended March 31, 2024. Such change was mainly due to the reasons discussed above.
Current wording
Net loss increased by approximately $0.6 million, or 26.4%, to approximately $2.9 million of net loss for the three months ended September 30, 2025, from approximately $2.3 million net loss for the three months ended September 30, 2024. Such change was mainly due to the reasons discussed above.
Previous wording
Changes in foreign currency translation adjustment of approximately $400 are mainly due to the fluctuation of foreign exchange rates between SGD (the functional currency of our subsidiary) and the USD dollar (reporting currency) for the three months ended March 31, 2025.
Current wording
Changes in foreign currency translation adjustment of approximately $7,000 are mainly due to the fluctuation of foreign exchange rates between SGD (the functional currency of one of our subsidiaries) and the USD dollar (reporting currency) for the three months ended September 30, 2025.
Previous wording
As of March 31, 2025, we had cash and cash equivalents of approximately $3.8 million, while we had accumulated deficit of approximately $16.0 million. During the nine months ended March 31, 2025, we had net loss of approximately $4.7 million and net operating cash outflow of approximately $4.5 million.
Current wording
As of September 30, 2025, we had cash and cash equivalents of approximately $1.5 million, while we had working capital deficit of approximately $10.3 million and accumulated deficit of approximately $23.0 million. During the three months ended September 30, 2025, we had net loss of approximately $2.9 million and net operating cash outflow of approximately $0.4 million.
Previous wording
The following summarizes the key components of cash flows for the nine months ended March 31, 2025 and 2024.
Current wording
The following summarizes the key components of cash flows for the three months ended September 30, 2025 and 2024.
Previous wording
Net cash used in operating activities was approximately $4.7 million for the nine months ended March 31, 2025 and was primarily attributable to (i) approximately $4.9 million net loss, (ii) approximately $14.9 million increased in inventories because we stored more inventories to meet the demand of our anticipated sales orders, (iii) approximately $7.4 million increased in accounts receivable due to the increase of credit sales during the period, (iv) non-cash expenses of approximately $5.7 million, which primarily attributed to the change in fair value of earnouts, (v) approximately $1.0 million increased in prepaid expenses and other current assets due to our prepaid rent payment in connection with our warehouse lease to be commenced in February 2025, (vi) approximately $1.1 million increased in security deposit because we rented more office and warehouse space, (vii) approximately $0.3 million decreased in tax payable of ACAC due to the payment of tax at business combination, and (viii) approximately $0.4 million decrease in contract liabilities due to purchase of more inventories with vendors to meet customer demand. The cash outflow was offset by (ix) approximately $28.0 million increased in accounts payable due to purchase of more inventories with vendors to meet customer demand, (x) approximately $2.0 million increased in other payables and accrued liabilities mainly due to accrued professional fees that associated with business expansion, such as consulting fees, testing fees and legal fees, (xi) approximately $0.5 million increase in stock compensation due to restricted stock units granted to our employees, consultants and independent director under employee incentive plan, and (xii) approximately $0.5 million provision for credit losses due to the increasing risk of uncollectable accounts from one customer.
Current wording
Net cash used in operating activities was approximately $0.2 million for the three months ended September 30, 2024 and was primarily attributable to (i) approximately $2.2 million net loss, (ii) approximately $12.1 million increase in accounts receivable due to the increase of credit sales during the period, (iii) approximately $2.8 million increase in inventories because we stored more inventories to meet the demand of our anticipated sales orders, (iv) approximately $0.6 million increase in security deposit because we rented more office space, (v) approximately $0.5 million decrease in contract liabilities aligned with the increase of inventory, and (vi) approximately $0.2 million increase in prepaid expenses and other current assets due to our prepaid rent payment in connection with our warehouse lease which commenced in February 2025. The cash outflow was offset by (i) non-cash expenses of approximately $0.3 million, which includes depreciation, accrued interest expenses incurred from the convertible notes, change in fair value of earnouts and amortization of operating right-of-use assets, (ii) approximately $17.9 million increase in accounts payable due to purchase of more inventories with vendors to meet customer demand, and (iii) approximately $0.2 million increase in other payables and accrued liabilities mainly due to accrued professional fees that associated with business expansion, such as consulting fees, testing fees and legal fees.
Previous wording
Net cash used in investing activities was approximately $7,000 for the nine months ended March 31, 2024 attributable to the purchase of office equipment and furniture.
Current wording
Net cash used in investing activities was approximately $35,000 for the three months ended September 30, 2024, attributable to the purchase of an automobile for our business uses.
Previous wording
Net cash provided by financing activities was approximately $2.7 million for the nine months ended March 31, 2024 mainly attributable to $3.0 million proceeds from issuance of convertible promissory notes to New Bay Capital Limited in November 2023 and March 2024, offset by approximately $0.2 million in payments of deferred offering costs, the repayment of related party loans of approximately $0.1 million, and the principal payments of long-term loan of approximately $11,000.
Current wording
Net cash provided by financing activities was approximately $7,000 for the three months ended September 30, 2025, mainly attributable to the principal payments of long-term loan of approximately $7,000.
Previous wording
Net cash provided by financing activities was approximately $7.9 million for the nine months ended March 31, 2025, mainly attributable to approximately $19.7 million proceeds from the reverse recapitalization and $9.0 million proceeds from issuance of convertible promissory notes, proceeds of approximately $0.1 million from issuance of common stock through exercise of warrant, offset by the payment of redeeming shareholders in connection with the business combination of approximately $20.5 million, the repayment of short-term loans of approximately $0.3 million and approximately $0.1 million in payments of deferred transaction costs.
Current wording
Net cash provided by financing activities was approximately $28.3 million for the three months ended September 30, 2024, mainly attributable to approximately $19.7 million proceeds from the reverse recapitalization and $9.0 million proceeds from issuance of convertible promissory notes, offset by the repayment of short-term loans of approximately $0.3 million and approximately $0.1 million in payments of deferred transaction costs.
Previous wording
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 on our assumption of providing 100% valuation allowance was purely based on our historical operating losses. Once we began generating profit, we will re-evaluate whether providing 100% valuation allowance is appropriate or if we can reassess such number.
Current wording
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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
In addition, on October 15, 2025, upon the filing of the 2025 Audited Financial Statements as part of the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2025 filed with the SEC (the “2025 10-K”), any Earnout Shares that the Old Foxx Shareholders would be entitled to receive under the Vesting Schedule were automatically forfeited, as the Company did not meet any of the vesting conditions for the fiscal year ended June 30, 2025 within the Vesting Schedule.
Rearranged previous paragraphs (11)
Previous report — wording carried elsewhere
Research and development (“R&D”) expenses from a related party decreased by approximately $23,000, or 50.0%, where the decrease was primarily due to an R&D project began in 2024. During the three months ended March 31, 2024, a related party completed initiated a 5G development project pursuant to a R&D agreement between us and the related party, and we recognized a R&D expense approximately of $46,000 accordingly based on the progression of the R&D project. During the three months ended March 31, 2025, the related party completed additional 20% of the remaining 5G development project, and we recognized a R&D expense approximately of $23,000. We expect to finish our development of the 5G products in 2025.
Previous report — wording carried elsewhere
Our revenues from our revenue categories are summarized as follows:
Previous report — wording carried elsewhere
Tablet product sales were insignificant in our operations for the nine months ended March 31, 2025. Revenue from the sales of tablets decreased by approximately $0.3 million, or 40.3%, to approximately $0.4 million for the nine months ended March 31, 2025 from $0.7 million for the same period in 2024. Revenue from sales of mobile phones increased by approximately $45.9 million, or 6,660.7%, to approximately $46.6 million for the nine months ended March 31, 2025 from $0.7 million for the same period in 2024 as we rolled out some new mobile phone products beginning in January 2024 and the sales from three new major wholesale customers who aggregately accounted for 78% of our sales. Revenue from sales of wearable products and others increased by approximately $3.4 million, or 100.0%, to approximately $3.4 million for the nine months ended March 31, 2025 from $0 for the same period in 2024 as we rolled out some new wearable products beginning in October 2024. Revenue from App service commission and others increased by approximately $1.7 million, or 100.0%, to approximately $1.7 million for the nine months ended March 31, 2025 from $0 for the same period in 2024 as we started to generate income by providing installation of App service to our partners on our mobile devices and procure the distribution of these devices to the end users beginning in July 2024.
Previous report — wording carried elsewhere
Our cost of goods sold from their revenue categories are summarized as follows:
Previous report — wording carried elsewhere
Our gross profit from their major revenue categories is summarized as follows:
Previous report — wording carried elsewhere
For the nine months ended March 31, 2025, our gross profit percentage of App service commission and others was 98.8% because App service commission revenue was commission based revenue that was earned at a point in time when the revenue is generated from the App, that is when clicks and/or impressions occur at a point in time when the end users of the mobile devices use the App and we received the App revenue share (service commission) from our partners without cost of goods. We did not have this kind of service for the nine months ended March 31, 2024.
Previous report — wording carried elsewhere
Our operating expenses are summarized as follows:
Previous report — wording carried elsewhere
The increase in operating expense was mainly attributed to the following:
Previous report — wording carried elsewhere
R&D expenses increased by approximately $1.6 million, or 100.0%, from $0 for the nine months ended March 31, 2024 to $1.6 million for the same period in 2025. The increase is due to hiring more employees and engaging third parties to provide development services for new products during the nine months ended March 31, 2025. The increase is also attributable to approximately $0.1 million increase in stock-based compensation as we granted restricted stock units in November 2024 to our R&D team members under employee incentive plan.
Previous report — wording carried elsewhere
Our other income (expense), net is summarized as follows:
Previous report — wording carried elsewhere
Changes in foreign currency translation adjustment are mainly due to the fluctuation of foreign exchange rates between SGD (the functional currency of our subsidiary) and the USD dollar (reporting currency).