Foxx Development Holdings Inc.
For the period ended Dec 31, 2025. Filed Feb 13, 2026.
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.
Dec 31, 2025 · Filed Feb 13, 2026
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 2025-09-30; filed 2025-11-18.
0001213900-25-112192
Item 2. – Management’s Discussion and Analysis of Financial Condition And Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-13.
0001213900-26-016441
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 114 previous paragraphs and 159 current paragraphs.
85 unchanged; 25 reworded; 36 added; 4 removed; 0 previous and 13 current paragraphs rearranged.
Tables are not compared: 14 previous and 20 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 (36)
Current report
During the six months ended December 31, 2025, we revised our business strategy and decided to exit the AIoT business. Accordingly, in December 2025, we completed the sales of our AIoT products and disposed of related AIoT equipment.
Current report
Nasdaq Listing Update
Current report
On November 5, 2025, we received a deficiency letter from the Nasdaq Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, for a period of 30 consecutive business days, our market value of listed securities (“MVLS”) closed below the $35,000,000 MVLS threshold required for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(2) (the “MVLS Rule”). In accordance with Nasdaq Listing Rule 5810(c)(3)(C), we have until May 4, 2026 to regain compliance with the MVLS requirement (the “Initial Compliance Period”). To regain compliance, our MVLS must close at $35 million or more for a minimum of ten consecutive business days during the Initial Compliance Period. If we do not regain compliance by the end of the MVLS Compliance Period, Nasdaq staff will provide written notice to us that our securities are subject to delisting. At that time, we may appeal any such delisting determination to a hearings panel. We intend to actively monitor our minimum market value of our listed securities and may, if appropriate, consider implementing available options to regain compliance with the MVLS requirement. There can be no assurance that we will be able to regain compliance with Nasdaq Listing Rule 5550(b)(2), or maintain compliance with any other listing requirements.
Current report
Tablet product sales were insignificant in our operations for the three months ended December 31, 2025. Revenue from the sales of tablets increased by approximately $0.1 million, or 65.6%, to approximately $0.3 million for the three months ended December 31, 2025 from $0.2 million for the same period in 2024. Revenue from sales of phones slightly increased by approximately $0.4 million, or 2.5%, to approximately $15.2 million for the three months ended December 31, 2025 from $14.8 million for the same period in 2024. Revenue from sales of wearable products and others decreased by approximately $1.1 million, or 63.8%, to approximately $0.6 million for the three months ended December 31, 2025 from $1.8 million for the three months ended December 31, 2024, as the consumers’ spending power was weakened and the demands of the wearable products rate was lowered during the three months ended December 31, 2025 period. Revenue from App service commission decreased by approximately $0.1 million, or 14.8%, to approximately $0.7 million for the three months ended December 31, 2025 from approximately $0.6 million for the three months ended December 31, 2024, as the consumers’ spending power was weakened. Revenue from other services were income generated by our other logistic and warehouse management and MVNO services and it was insignificant in our operations for the three months ended December 31, 2025.
Current report
Our cost of goods sold for tablets increased by approximately $0.1 million, or 89.0%, to approximately $0.2 million for the three months ended December 31, 2025 from $0.1 million for the same period in 2024. Cost of goods sold for mobile phone products for the six months ended December 31, 2025 was approximately $13.6 million, unchanged from the same period in 2024, 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 decreased by approximately $0.9 million, or 59.0%, to approximately $0.6 million for the three months ended December 31, 2025 from $1.5 million for the same period in 2024, which is the direct result of our negotiation with our vendor to cover shipping and tariff costs beginning in July 2025. Cost of other services was insignificant in our operations for the three months ended December 31, 2025.
Current report
Gross profit percentage of tablets decreased from 21.1% for the three months ended December 31, 2024 to 9.9% for the same period in 2025. This was primarily due to the decrease of sales of those with higher unit selling prices and lower unit purchase prices, as well as inventory impairment related to slow-moving inventory.
Current report
Gross profit percentage for wearable products and others decreased from 13.9% for the three months ended December 31, 2024 to 2.5% for the same period in 2025. This was primarily due to inventory impairment related to slow-moving inventory.
Current report
R&D expenses decreased by approximately $0.5 million, or 73.1%, from $0.7 million for the three months ended December 31, 2024 to $0.2 million for the same period in 2025. The decrease was primarily due to the reduction of headcounts and departmental expenses as we scaled back activities in the R&D department.
Current report
Other (expense) income, net
Current report
Net (loss) income
Current report
Comparison for the six months ended December 31, 2025 and 2024
Current report
Revenues
Current report
Cost of Goods Sold
Current report
Gross Profit
Current report
Our gross profit increased by approximately $2.4 million, or 91.6%, to approximately $5.0 million for the six months ended December 31, 2025, from $2.6 for the six months ended December 31, 2024.
Current report
For the six months ended December 31, 2025 and 2024, our overall gross profit percentage was 13.4% and 6.4%, respectively. The increase in gross profit percentage of 7.0% was primarily due to the increase in gross profit percentage for mobile phone products, which accounted for 78% of our gross profit.
Current report
Gross profit percentage of tablets decreased from 20.5% for the six months ended December 31, 2024 to 11.5% for the same period in 2025. This was primarily due to inventory impairment related to slow-moving inventory.
Current report
Gross profit percentage for wearable products and others decreased from 13.9% for the six months ended December 31, 2024 to 1.5% for the same period in 2025. This was primarily due to the increasing sales in products with lower gross profit margins and inventory impairment related to slow-moving inventory.
Current report
For the six months ended December 31, 2025, our gross profit percentage of other services was 76.96%. We did not have other logistic and warehouse management and MVNO services for the six months ended December 31, 2024.
Current report
Operating Expenses
Current report
Total operating expenses increased by approximately $1.5 million, or 21.7%, to approximately $8.1 million for the six months ended December 31, 2025, from approximately $6.6 million for the six months ended December 31, 2024.
Current report
Selling Expenses
Current report
General and Administrative Expenses
Current report
General and administrative expenses increased approximately $2.5 million, or 84.2%, to approximately $5.5 million for the six months ended December 31, 2025 from approximately $3.0 million for the six months ended December 31, 2024. The increased general and administrative expense were mainly attributable to the approximately $0.7 million increase in professional expense on audit and accounting fees as we became a public company and incurred additional capital market and legal consulting fees, approximately $0.4 million increase in salary and wages as a result of allocating certain personnel compensation from selling expenses to general and administrative expenses, reflecting a change in the personnel’s primary responsibilities, approximately $1.3 million increase in rent due to the new factory and warehouse lease that commenced in July 2025, and approximately $0.2 million increase in stock-based compensation expenses as we granted restricted stock units in November 2024 to our general and administrative team members under employee incentive plan.
Current report
Research and Development — related party
Current report
Research and Development
Current report
R&D expenses decreased by approximately $0.2 million, or 31.0%, from $0.7 million for the six months ended December 31, 2024 to $0.5 million for the same period in 2025. The decrease was primarily due to the reduction of headcounts and departmental expenses as we scaled back activities in R&D department.
Current report
Other (expense) income, net
Current report
Total other (expense) income, net decreased by approximately $7.2 million, or 225.9%, to approximately $4.0 million of other expense, net for the six months ended December 31, 2025, from approximately $3.2 million of other income, net for the six months ended December 31, 2024. The decrease was primarily due to the increase of approximately $2.6 million interest expenses incurred related to the financing offered by our vendors based upon the timing of our payment to their accounts payable and the decrease of approximately $4.7 million change in fair value of earnout liabilities as we no longer had earnout liabilities after June 30, 2025.
Current report
Provision for income taxes
Current report
Net loss increased by approximately $6.4 million, or 748.7%, to approximately $7.2 million for the six months ended December 31, 2025, from approximately $0.8 million for the six months ended December 31, 2024. Such change was mainly due to the reasons discussed above.
Current report
Foreign Currency Translation Adjustment
Current report
Net cash provided by investing activities was approximately $9,000 for the six months ended December 31, 2025, attributable to the proceeds from sale of equipment.
Current report
Inventory Impairment
Current report
Inventory impairment is recognized to state our inventories at the lower cost or net realizable value. At least a quarterly basis, inventories are reviewed for potential write-downs for estimated obsolescence or unmarketable inventories which equals the difference between the costs of inventories and the estimated net realizable value. Net realizable value is determined based on management’s estimates of selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. These estimates require significant judgement and are based upon past sales experience, forecasts for future demand, market conditions, and other relevant factors. During the three months ended December 31, 2025 and 2024, inventory write-downs of $1,086,547 and $0, respectively, were recorded based on management’s estimates. During the six months ended December 31, 2025 and 2024, inventory write-down s of $1,570,862 and $0, respectively, were recorded based on management’s estimates.
Current report
When inventories are written down to net realizable value, they are not marked up subsequently based on changes in underlying facts and circumstances.
Removed paragraphs (4)
Previous report
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 report
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 report
Other expense, net
Previous report
There were no investing activities for the three months ended September 30, 2025.
Reworded paragraphs (25)
Previous wording
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 wording
For the six months ended December 31, 2025, our sales remained consistent with our historical level, as we retained our two major customers and continued to sell our new products and services during the period.
Previous 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.
Current wording
Our gross profit increased by approximately $26,000, or 1.2%, to approximately $2.2 million for the three months ended December 31, 2025, from $2.2 for the three months ended December 31, 2024.
Previous 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.
Current wording
For the three months ended December 31, 2025 and 2024, our overall gross profit percentage was 13.3% and 12.5%, respectively. The increase in gross profit percentage of 1.2% was primarily due to the increase in gross profit percentage for mobile phone products, which accounted for 72% of our gross profit.
Previous wording
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 wording
Gross profit percentage for mobile phones increased from 8.2% for the three months ended December 31, 2024 to 10.4% for the same period in 2025. This was primarily due to the increasing sales in new phone models with higher gross profit margins with the reduction of shipping and tariff costs as we negotiated with our vendor to cover such costs.
Previous wording
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 wording
For the three months ended December 31, 2025, our gross profit percentage of other services was 36.9%. We did not have other logistics and warehouse management and MVNO services for the three months ended December 31, 2024.
Previous 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.
Current wording
Total operating expenses increased by approximately $8,000, or 0.2%, to approximately $4.4 million for the three months ended December 31, 2025, from approximately $4.4 million for the three months ended December 31, 2024.
Previous 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.
Current wording
Selling expenses decreased approximately $0.5 million, or 29.8%, to approximately $1.1 million for the three months ended December 31, 2025, from approximately $1.6 million for the three months ended December 31, 2024. The decreased selling expenses was mainly attributable to approximately $0.3 million decrease in payroll and payroll related expenses, approximately $0.3 million decrease in consulting fees, and approximately $0.1 million decrease in testing and certification expenses during the three months ended December 31, 2025, as we reduced salespersons and consultants and the test for products 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 advertising and marketing expenses primarily due to the increased marketing investment in e-commerce channels.
Previous 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.
Current wording
General and administrative expenses increased approximately $1.1 million, or 52.0%, to approximately $3.1 million for the three months ended December 31, 2025 from approximately $2.0 million for the three months ended December 31, 2024. The increased general and administrative expense were mainly attributable to the approximately $0.2 million increase in professional expense on audit and accounting fees as we became a public company and incurred additional capital market and legal consulting fees, approximately $0.1 million increase in salary and wages as a result of allocating certain personnel compensation from selling expenses to general and administrative expenses, reflecting a change in the personnel’s primary responsibilities, approximately $0.1 million increase in provision for credit losses due to continued aging of receivables, 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 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.
Current wording
Research and development (“R&D”) expenses from a related party decreased by approximately $46,000, 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 December 31, 2024, a related party completed additional 20% 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 $46,000 accordingly based on the progression of the R&D project. We did not have this expense for the same period in 2025.
Previous wording
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.
Current wording
Total other (expense) income, net decreased by approximately $5.7 million, or 156.3%, to approximately $2.1 million of other expense, net for the three months ended December 31, 2025, from approximately $3.7 million of other income, net for the three months ended December 31, 2024. The decrease was primarily due to the increase of approximately $1.0 million interest expenses incurred related to the financing offered by our vendors based upon the timing of our payment to their accounts payable and the decrease of approximately $4.7 million change in fair value of earnout liabilities as we no longer had earnout liabilities after June 30, 2025.
Previous 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.
Current wording
The provision for income taxes was $0 for each of the three months ended December 31, 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 $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.
Current wording
Net (loss) income decreased by approximately $5.7 million, or 400.9%, to approximately $4.3 million of net loss for the three months ended December 31, 2025, from approximately $1.4 million of net income for the three months ended December 31, 2024. Such change was mainly due to the reasons discussed above.
Previous 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.
Current wording
Changes in foreign currency translation adjustment of approximately $2,000 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 December 31, 2025.
Previous 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.
Current wording
Our revenue is primarily derived from sales of electronic products. The total revenues decreased by approximately $3.7 million, or 9.0%, to approximately $36.9 million for the six months ended December 31, 2025 as compared to $40.6 million for the six months ended December 31, 2024. The decrease of the total revenue was mainly attributable to the decrease in mobile phone products revenues, which accounted for 89% of our sales.
Previous 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.
Current wording
Tablet product sales were insignificant in our operations for the six months ended December 31, 2025. Revenue from the sales of tablets increased by approximately $0.1 million, or 90.2%, to approximately $0.3 million for the six months ended December 31, 2025 from $0.1 million for the same period in 2024. Revenue from sales of phones decreased by approximately $4.8 million, or 12.9%, to approximately $32.9 million for the six months ended December 31, 2025 from $37.7 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 $1.0 million, or 54.2%, to approximately $2.7 million for the six months ended December 31, 2025 from $1.7 million for the six months ended December 31, 2024, primarily due to the rollout of new wearable products beginning in October 2024, which resulted in only three months of sales recognized during the six months ended December 31, 2024. Revenue from App service commission increased by approximately $0.1 million, or 8.1%, to approximately $1.0 million for the six months ended December 31, 2025 from $0.9 million for the six months ended December 31, 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 was income generated by our other logistic and warehouse management and MVNO services and it was insignificant in our operations for the six months ended December 31, 2025.
Previous 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.
Current wording
Our cost of goods sold mainly consists of cost of merchandise and freight. Total cost of goods sold decreased by approximately $6.0 million, or 15.9%, to approximately $32.0 million for the six months ended December 31, 2025 as compared to $38.0 million for the six months ended December 31, 2024. The decrease in cost of goods sold is a direct result of a decrease in our revenue, consistent with the decrease in mobile phone production costs, which accounted for 91% of our cost of goods sold.
Previous 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.
Current wording
Our cost of goods sold for tablets increased by approximately $0.2 million, or 111.8%, to approximately $0.3 million for the six months ended December 31, 2025 from $0.1 million for the same period in 2024. Cost of goods sold for mobile phone products decreased by approximately $7.3 million, or 20.2%, to approximately $29.0 million for the six months ended December 31, 2025 from $36.3 for the same period in 2024, which is consistent with the direct result of an decrease in our revenue. The decrease is also attributable to the decrease in unit cost 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 $1.2 million, or 76.4%, to approximately $2.7 million for the six months ended December 31, 2025 from $1.5 million 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 other services was insignificant in our operations for the six months ended December 31, 2025.
Previous 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.
Current wording
Gross profit percentage for mobile phones increased from 3.7% for the six months ended December 31, 2024 to 11.8% for the same period in 2025. This was primarily due to the increasing sales of 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.
Previous 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.
Current wording
As of December 31, 2025, we had cash and cash equivalents of approximately $1.8 million, while we had working capital deficit of approximately $14.1 million and accumulated deficit of approximately $27.2 million. During the six months ended December 31, 2025, we had net loss of approximately $7.2 million and net operating cash outflow of approximately $93,000.
Previous wording
The following summarizes the key components of cash flows for the three months ended September 30, 2025 and 2024.
Current wording
The following summarizes the key components of cash flows for the six months ended December 31, 2025 and 2024.
Previous wording
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 wording
Net cash used in operating activities was approximately $93,000 for the six months ended December 31, 2025 and was primarily attributable to (i) approximately $7.2 million net loss, (ii) approximately $0.8 million payment in operating lease liabilities as we commenced our factory and warehouse lease in July 2025, (iii) approximately $0.6 million decrease in other payables and accrued liabilities as we committed to repaying supply chain finance interests, and (iv) approximately $0.2 million decrease in other payable – related parties primarily due to the repayment of unconverted working capital loan balance. The cash outflow was offset by (v) non-cash expenses of approximately $3.3 million, which includes depreciation, amortization of operating right-of-use assets, stock-based compensation, impairment of inventories, and provision of credit losses, net, (vi) approximately $3.4 million increase in accounts payable due to increased purchases for dropship orders and the progression of historical purchase orders into production, (vii) approximately $0.3 million decrease in prepaid expenses and other current assets due to the collection of prepayment refund from canceled purchase orders, (viii) approximately $0.9 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 $0.6 million decrease in accounts receivable aligned with the decrease of sales and ongoing collection of outstanding receivables, and (x) approximately $0.3 million decrease in contract assets primarily due to the progression of historical purchase orders into production and the sale of inventory.
Previous 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.
Current wording
Net cash used in operating activities was approximately $4.5 million for the six months ended December 31, 2024 and was primarily attributable to (i) approximately $0.8 million net loss, (ii) approximately $14.0 million increased in inventories because we stored more inventories to meet the demand of our anticipated sales orders, (iii) approximately $7.5 million increased in accounts receivable due to the increase of credit sales during the period, (iv) non-cash expenses of approximately $4.1 million, which primarily attributed to the change in fair value of earnouts, (v) approximately $0.9 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 $0.6 million increased in security deposit because we rented more office space, and (vii) approximately $0.3 million decreased in tax payable of ACAC due to the payment of tax at business combination. The cash outflow was offset by (viii) approximately $22.8 million increased in accounts payable due to purchase of more inventories with vendors to meet customer demand, (ix) approximately $0.9 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, and (x) approximately $0.1 million increase in contract liabilities due to the increase of sales during the period.
Previous 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.
Current wording
Net cash used in investing activities was approximately $68,000 for the six months ended December 31, 2024, attributable to the purchase of some equipment for warehouse and an automobile for our business uses.
Previous 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.
Current wording
Net cash used in financing activities was approximately $12,000 for the six months ended December 31, 2025, mainly attributable to the principal payments of long-term loan of approximately $12,000.
Previous 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.
Current wording
Net cash provided by financing activities was approximately $7.9 million for the six months ended December 31, 2024, 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.
Rearranged current paragraphs (13)
Current report — wording carried from elsewhere
Our revenue is primarily derived from sales of electronic products. The total revenues decreased by approximately $0.8 million, or 4.4%, to approximately $16.7 million for the three months ended December 31, 2025 as compared to $17.5 million for the three months ended December 31, 2024. The decrease of the total revenue was mainly attributable to the decrease in wearable and other products revenues and service revenues.
Current report — wording carried from elsewhere
Our cost of goods sold mainly consists of cost of merchandise and freight. Total cost of goods sold decreased by approximately $0.8 million, or 5.2%, to approximately $14.5 million for the three months ended December 31, 2025 as compared to approximately $15.3 million for the three months ended December 31, 2024. The decrease in cost of goods sold is a direct result of a decrease in our revenue, consistent with the decrease in wearable and other production costs. The decrease is also attributable to the decrease in cost of mobile phone products as we negotiated with our vendor to cover shipping and tariff costs beginning in July 2025.
Current report — wording carried from elsewhere
Our other (expense) income, net is summarized as follows:
Current report — wording carried from elsewhere
Our revenues from our revenue categories are summarized as follows:
Current report — wording carried from elsewhere
Our cost of goods sold from their revenue categories are summarized as follows:
Current report — wording carried from elsewhere
Our gross profit from their major revenue categories is summarized as follows:
Current report — wording carried from elsewhere
For the six months ended December 31, 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.
Current report — wording carried from elsewhere
Our operating expenses are summarized as follows:
Current report — wording carried from elsewhere
The increase in operating expenses was mainly attributed to the following:
Current report — wording carried from elsewhere
Selling expenses decreased approximately $0.8 million, or 28.1%, to approximately $2.0 million for the six months ended December 31, 2025, from approximately $2.8 million for the six months ended December 31, 2024. The decreased selling expenses was mainly attributable to approximately $0.7 million decrease in commission, payroll and payroll related expenses and approximately $0.4 million decrease in consulting fees during the six months ended December 31, 2025, as we reduced salespersons and consultants to cut expenses and improve profitability to improve cost efficiency. The decrease was offset by approximately $0.2 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 in advertising and marketing expenses primarily due to the increased marketing investment in e-commerce channels.
Current report — wording carried from elsewhere
Research and development (“R&D”) expenses from a related party decreased by approximately $68,000, 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 six months ended December 31, 2024, a related party completed additional 30% 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 $68,000 accordingly based on the progression of the R&D project. We did not have this expense for the same period in 2025.
Current report — wording carried from elsewhere
The provision for income taxes was $0 for each of the six months ended December 31, 2025 and 2024 as we had made full allowance of our deferred tax assets on net operating losses.
Current report — wording carried from elsewhere
Changes in foreign currency translation adjustment of approximately $9,000 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 six months ended December 31, 2025.