Foxx Development Holdings Inc.(FOXX)

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Foxx Development Poised to Join Russell Microcap Index
Globenewswire· 2025-06-06 13:05
Core Points - Foxx Development Holdings Inc. has been included in the Russell Microcap Index, marking a significant milestone for the company [1][2][3] - The Russell Microcap Index is reconstituted annually to reflect new and growing equities, ensuring companies meet market capitalization and liquidity requirements [2] - Inclusion in the Russell Microcap Index is expected to enhance the company's visibility among institutional investors and improve liquidity through automatic purchases by index funds and ETFs [3] Company Overview - Foxx Development is a provider of consumer electronics and integrated Internet-of-Things (IoT) solutions, serving both retail and institutional clients [4] - The company has strong research and development capabilities and focuses on building long-term partnerships with mobile network operators, distributors, and suppliers globally [4] - Foxx offers a diverse range of products, including mobile phones and tablets, and is developing end-to-end communication terminals and IoT solutions [4]
Foxx Development Holdings Inc.(FOXX) - 2025 Q1 - Quarterly Report
2025-05-15 01:17
PART I – FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20%E2%80%93%20Financial%20Statements%20(unaudited)) The unaudited financial statements show significant revenue growth alongside wider net losses and negative cash flow, raising substantial doubt about the company's ability to continue as a going concern [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities increased dramatically following the reverse recapitalization, while the company maintained a shareholders' deficit Condensed Consolidated Balance Sheet Highlights (in USD) | Metric | March 31, 2025 (Unaudited) | June 30, 2024 (Audited) | | :--- | :--- | :--- | | **Total Current Assets** | $30,437,895 | $4,333,959 | | Cash | $3,790,055 | $587,448 | | Accounts receivable, net | $7,146,701 | $251,894 | | Inventories | $16,661,931 | $1,768,072 | | **Total Assets** | **$32,852,344** | **$5,374,422** | | **Total Current Liabilities** | $33,384,340 | $8,948,981 | | Accounts payable | $29,354,980 | $1,396,860 | | **Total Liabilities** | **$34,407,591** | **$9,376,858** | | **Total Shareholders' Deficit** | **($1,555,247)** | **($4,002,436)** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(unaudited)) Revenues surged year-over-year, but the net loss widened due to substantially higher cost of goods sold and operating expenses Statement of Operations Highlights (Nine Months Ended March 31) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Revenues, Net | $51,984,361 | $1,346,663 | | Gross Profit | $3,252,155 | $59,901 | | Loss from Operations | ($7,609,700) | ($1,887,400) | | Net Loss | ($4,927,154) | ($2,074,011) | | Basic and Diluted Loss Per Share | ($0.83) | ($0.63) | Statement of Operations Highlights (Three Months Ended March 31) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Revenues, Net | $11,392,078 | $513,836 | | Gross Profit (Loss) | $663,313 | ($39,682) | | Loss from Operations | ($3,560,667) | ($792,609) | | Net Loss | ($4,084,511) | ($886,570) | | Basic and Diluted Loss Per Share | ($0.58) | ($0.27) | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Net cash used in operations continued while financing activities provided a net inflow, resulting in an overall increase in the company's cash balance Cash Flow Summary (Nine Months Ended March 31, in USD) | Metric | 2025 (Unaudited) | 2024 (Unaudited) | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,653,662) | ($4,250,712) | | Net cash used in investing activities | ($40,236) | ($7,064) | | Net cash provided by financing activities | $7,894,208 | $2,687,679 | | **Net change in cash** | **$3,202,607** | **($1,570,097)** | | Cash, end of the period | $3,790,055 | $254,752 | - Financing activities were driven by **$19.7 million in proceeds** from the reverse recapitalization and **$9.0 million** from a convertible promissory note, which were significantly offset by **$20.5 million in redemption payments**[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) The notes disclose a 'going concern' warning, significant customer and supplier concentration risks, and details of the reverse recapitalization - The company became a publicly traded entity on September 26, 2024, through a reverse recapitalization with Acri Capital Acquisition Corporation (ACAC)[19](index=19&type=chunk)[20](index=20&type=chunk) - Management has determined there is **substantial doubt about the Company's ability to continue as a going concern** due to net losses of approximately **$4.9 million**, net cash used in operating activities of **$4.7 million** for the nine months ended March 31, 2025, and an accumulated deficit of **$16.0 million**[24](index=24&type=chunk)[26](index=26&type=chunk) Revenue Disaggregation (Nine Months Ended March 31) | Product/Service | 2025 Revenue | 2024 Revenue | | :--- | :--- | :--- | | Mobile phone products | $46,571,691 | $688,863 | | Wearable products and others | $3,358,138 | $0 | | Tablet products | $392,660 | $657,800 | | App service commission revenue, net, and others | $1,661,872 | $0 | | **Total revenues, net** | **$51,984,361** | **$1,346,663** | - The company faces significant concentration risk, with **three customers accounting for 79% of total revenues** and **one supplier accounting for 93% of total purchases** for the nine months ended March 31, 2025[134](index=134&type=chunk)[136](index=136&type=chunk) - A subsequent event on April 2, 2025, involving an Executive Order on reciprocal tariffs, could potentially impact the company's operating results and liquidity[163](index=163&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20%E2%80%93%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20And%20Results%20of%20Operations) Management discusses significant revenue growth driven by new customers, alongside rising operating expenses and strained liquidity leading to a 'going concern' warning [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Revenue and gross profit surged due to new wholesale customers, but a sharp increase in operating expenses led to a wider operating and net loss Comparison for the Nine Months Ended March 31, 2025 and 2024 | Metric | 2025 | 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $51,984,361 | $1,346,663 | $50,637,698 | 3,760.2% | | Gross profit | $3,252,155 | $59,901 | $3,192,254 | 5,329.2% | | Loss from operations | ($7,609,700) | ($1,887,400) | ($5,722,300) | 303.2% | | Net loss | ($4,927,154) | ($2,074,011) | ($2,853,143) | 137.6% | - The increase in revenue for the nine-month period was mainly attributable to sales from **three new major wholesale customers**, who collectively accounted for **78% of total sales**[220](index=220&type=chunk) - Selling expenses for the nine-month period **increased by 779.0% to $4.4 million**, driven by higher commissions, consulting fees, warranty expenses, and marketing efforts[232](index=232&type=chunk) - General and administrative expenses for the nine-month period **increased by 244.3% to $4.4 million**, primarily due to higher professional fees, increased salaries, and a **$0.5 million provision for credit losses**[233](index=233&type=chunk) [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is constrained by recurring losses and negative operating cash flow, raising substantial doubt about its ability to continue as a going concern - The company had cash of approximately **$3.8 million** and an accumulated deficit of **$16.0 million** as of March 31, 2025[241](index=241&type=chunk) - Management has determined that there is **substantial doubt about the company's ability to continue as a going concern** and is exploring financing options[242](index=242&type=chunk)[246](index=246&type=chunk) Cash Flow Summary (Nine Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,653,662) | ($4,250,712) | | Net cash provided by financing activities | $7,894,208 | $2,687,679 | | Net change in cash | $3,202,607 | ($1,570,097) | [Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=Item%203.%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable as the company qualifies as a smaller reporting company - The company has not provided quantitative and qualitative disclosures about market risk, stating it is not applicable[259](index=259&type=chunk) [Controls and Procedures](index=58&type=section&id=Item%204.%20%E2%80%93%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to identified material weaknesses in internal control over financial reporting - The CEO and CFO concluded that the company's **disclosure controls and procedures were not effective** as of the end of the period[260](index=260&type=chunk) - Material weaknesses identified include a lack of sufficient segregation of duties, inadequate control design, inability to prepare timely GAAP financial statements, and inefficient oversight[263](index=263&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=59&type=section&id=Item%201.%20%E2%80%93%20Legal%20Proceedings) A class action lawsuit was voluntarily dismissed, with the company agreeing to pay the plaintiff's legal fees to resolve the matter - A class action complaint, Semensato v. Foxx Development Holdings Inc., et al., was filed on November 22, 2024, and **voluntarily dismissed as moot on March 3, 2025**[266](index=266&type=chunk)[267](index=267&type=chunk) - To resolve the matter and avoid litigation costs, the company agreed to pay an **$85,000 "Mootness Fee"** to the plaintiff's counsel[267](index=267&type=chunk) [Risk Factors](index=59&type=section&id=Item%201A.%20%E2%80%93%20Risk%20Factors) A new risk factor has been added concerning potential adverse effects from changes in United States tariff and import/export regulations - A new risk factor has been introduced regarding the potential adverse effects of **changes to U.S. tariff and import/export regulations** on the company's business[269](index=269&type=chunk) - The company is assessing the potential impact of the **April 2, 2025 Executive Order on reciprocal tariffs**, which could reduce projected operating results and liquidity[269](index=269&type=chunk)
Foxx Development Expands Entertainment Offerings Through FreeCast Partnership
Globenewswire· 2025-02-10 22:30
Core Insights - Foxx Development Holdings Inc. has entered into a strategic distribution agreement with FreeCast Inc. to integrate FreeCast's streaming platform into its mobile devices, enhancing user access to a wide range of entertainment options [1][2] - The integration will provide users with access to over 700 free channels, extensive on-demand content, and major streaming services like Netflix, Amazon Prime Video, HBO Max, and Hulu [2][3] - The partnership aims to simplify the streaming experience for consumers, addressing the complexity of content discovery across multiple platforms [3] Company Overview - Foxx Development is a leading provider of consumer electronics and IoT solutions, catering to both retail and institutional clients, with a focus on mobile devices [4] - The company is committed to long-term partnerships with mobile network operators, distributors, and suppliers globally, and is involved in developing end-to-end communication terminals and IoT solutions [4] FreeCast Overview - FreeCast Inc. is a streaming media platform that consolidates hundreds of content providers into a single interface, simplifying the management of multiple streaming services [5] - The platform offers access to over 700 free channels, premium on-demand content, and live TV streaming, enhancing the user experience in content discovery [5]
Foxx Development Holdings Inc.(FOXX) - 2024 Q3 - Quarterly Report
2024-11-19 22:10
PART I – FINANCIAL INFORMATION [Financial Statements (unaudited)](index=4&type=section&id=Item%201.%20%E2%80%93%20Financial%20Statements%20(unaudited)) Unaudited Q3 2024 financial statements reflect significant asset and liability growth, substantial revenue, and increased net loss post-Business Combination [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects significant increases in assets and liabilities, primarily due to the September 2024 Business Combination Condensed Consolidated Balance Sheet Highlights (in USD) | Metric | Sep 30, 2024 (Unaudited) | June 30, 2024 (Audited) | | :--- | :--- | :--- | | **Total Current Assets** | $47,554,303 | $4,333,959 | | **Total Assets** | $49,547,691 | $5,374,422 | | **Total Current Liabilities** | $47,949,557 | $8,948,981 | | **Total Liabilities** | $49,090,453 | $9,376,858 | | **Total Shareholders' Equity (Deficit)** | $457,238 | $(4,002,436) | - The **significant increase** in assets and liabilities is primarily due to the reverse recapitalization transaction that closed on September 26, 2024[12](index=12&type=chunk)[89](index=89&type=chunk) - New liabilities recognized include **$20.5 million** in Payables on shares redemption and **$5.7 million** in Earnout liabilities, both resulting from the Business Combination[11](index=11&type=chunk)[45](index=45&type=chunk)[47](index=47&type=chunk) [Condensed Consolidated Statements of Operations (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20(unaudited)) Q3 2024 operations show **$23.1 million** revenue from new customers, but increased operating expenses led to a **$2.3 million** net loss Statement of Operations Summary (in USD) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | **Revenues, Net** | $23,112,052 | $0 | | **Gross Profit** | $398,176 | $0 | | **Loss from Operations** | $(1,807,933) | $(511,610) | | **Net Loss** | $(2,266,789) | $(546,831) | | **Loss Per Share (Basic & Diluted)** | $(0.65) | $(0.17) | - The **significant increase in revenue** is attributed to sales from two new wholesale customers acquired during the period[205](index=205&type=chunk) - Operating expenses **increased significantly**, driven by higher selling expenses (**$1.2M** vs **$0.2M** YoY) and general & administrative expenses (**$1.0M** vs **$0.3M** YoY) due to business expansion and costs associated with being a public company[15](index=15&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk) [Condensed Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Q3 2024 cash flows show **$0.24 million** used in operations, with significant financing inflow from reverse recapitalization Cash Flow Summary (in USD) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(243,459) | $(1,387,649) | | **Net cash used in investing activities** | $(35,000) | $(4,144) | | **Net cash provided by (used in) financing activities** | $28,283,012 | $(205,824) | | **Net change in cash** | $28,004,553 | $(1,597,617) | | **Cash and restricted cash, end of period** | $28,592,001 | $227,232 | - The **large cash inflow** from financing activities was driven by proceeds from the reverse recapitalization (**$19.7M**) and the issuance of convertible promissory notes (**$9.0M**)[22](index=22&type=chunk)[90](index=90&type=chunk)[234](index=234&type=chunk) [Notes to Condensed Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) Notes detail the reverse recapitalization, going concern doubt, convertible note conversion, and customer/supplier concentration - The Business Combination on September 26, 2024, was treated as a **reverse recapitalization**, with Old Foxx as the accounting acquirer. The transaction raised approximately **$19.7 million** in net proceeds[26](index=26&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Management has determined there is **substantial doubt** about the Company's ability to continue as a **going concern** due to a net loss of **$2.3 million** for the quarter, an accumulated deficit of **$13.3 million**, and a working capital deficit of **$0.4 million**[30](index=30&type=chunk)[34](index=34&type=chunk) - Immediately prior to the Business Combination, **$15 million** in principal from convertible promissory notes plus accrued interest was converted into common stock[115](index=115&type=chunk) - The company has **significant customer and supplier concentration**. For the three months ended September 30, 2024, two customers accounted for **49%** and **39%** of total revenues, and one supplier accounted for **98%** of total purchases[137](index=137&type=chunk)[139](index=139&type=chunk) Disaggregated Revenue (Q3 2024) | By Product | Revenue (USD) | | :--- | :--- | | Mobile phone products | $23,107,297 | | Tablet products | $4,755 | | **Total** | **$23,112,052** | | By Business Line | Revenue (USD) | | :--- | :--- | | Wholesale revenues | $23,089,651 | | E-Commerce revenues | $22,401 | | **Total** | **$23,112,052** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=33&type=section&id=Item%202.%20%E2%80%93%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20And%20Results%20of%20Operations) Management discusses the company's business, significant financial changes post-Business Combination, and ongoing liquidity challenges, including substantial doubt about going concern [Overview](index=33&type=section&id=Overview) The company, a communications technology firm, diversified its strategy and recovered sales in Q3 2024 after an ACP-related demand impact - The company specializes in the **communications sector**, offering Foxx-branded tablets, smartphones, and wearables to distributors who sell to major US carriers like T-Mobile, AT&T, and Verizon[169](index=169&type=chunk)[170](index=170&type=chunk) - In 2023, the company shifted its strategy to **diversify suppliers and customers** to mitigate concentration risk. It also began **E-Commerce operations on TikTok Shop** in March 2024[170](index=170&type=chunk)[174](index=174&type=chunk) - The end of the U.S. Federal Communication Commission's **Affordable Connectivity Program (ACP)** in early 2024 temporarily impacted demand for the company's products[175](index=175&type=chunk) - For the three months ended September 30, 2024, sales returned to **historical levels** due to the addition of two new customers[176](index=176&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Q3 2024 revenues surged to **$23.1 million** from new wholesale customers, but operating expenses increased over **300%**, leading to a **$2.3 million** net loss Results of Operations Comparison (in USD) | Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues, net** | $23,112,052 | $0 | $23,112,052 | 100.0% | | **Gross profit** | $398,176 | $0 | $398,176 | 100.0% | | **Operating expenses** | $2,206,109 | $511,610 | $1,694,499 | 331.2% | | **Net loss** | $(2,266,789) | $(546,831) | $(1,719,958) | 314.5% | - The revenue increase was mainly attributable to sales from **two new wholesale customers**, which aggregately accounted for **88% of sales**[205](index=205&type=chunk) - Selling expenses **increased by 483.4%** to **$1.2 million** due to higher commissions, payroll, consulting fees, and warranty expenses related to the sales growth[214](index=214&type=chunk)[215](index=215&type=chunk) - General and administrative expenses **rose 216.9%** to **$1.0 million**, driven by non-capitalized IPO-related expenses, increased salaries from new hires, and other miscellaneous expenses[214](index=214&type=chunk)[216](index=216&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Despite a **$28.3 million** financing inflow, the company faces a **$0.4 million** working capital deficit and **substantial doubt** about its ability to continue as a going concern - As of September 30, 2024, the company had cash of approximately **$9.2 million**, a working capital deficit of **$0.4 million**, and an accumulated deficit of **$13.3 million**[224](index=224&type=chunk) - Management has determined that there is **substantial doubt** about the company's ability to continue as a **going concern**[227](index=227&type=chunk) Cash Flow Summary (Q3 2024 vs Q3 2023) | Metric | Q3 2024 (USD) | Q3 2023 (USD) | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(243,459) | $(1,387,649) | | **Net cash used in investing activities** | $(35,000) | $(4,144) | | **Net cash provided by (used in) financing activities** | $28,283,012 | $(205,824) | [Quantitative and Qualitative Disclosures about Market Risk](index=44&type=section&id=Item%203.%20%E2%80%93%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable to the company for this reporting period - The company states that this item is **not applicable**[245](index=245&type=chunk) [Controls and Procedures](index=44&type=section&id=Item%204.%20%E2%80%93%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were not effective due to former management abandoning operations, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **not effective** as of September 30, 2024[246](index=246&type=chunk) - The ineffectiveness was due to a period where former management **abandoned operations**, with new management only recently appointed to resume SEC filings[246](index=246&type=chunk) - There were **no changes** during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[247](index=247&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=45&type=section&id=Item%201.%20%E2%80%93%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings or subject to any material claims - As of the filing date, the company is **not involved in any material legal proceedings**[250](index=250&type=chunk) [Risk Factors](index=45&type=section&id=Item%201A.%20%E2%80%93%20Risk%20Factors) No material changes to the company's risk factors have occurred since the June 30, 2024, 10-K filing - The company refers to the risk factors disclosed in its 2024 Form 10-K and states there have been **no material changes**[251](index=251&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20%E2%80%93%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - **None reported** for the period[252](index=252&type=chunk) [Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20%E2%80%93%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **None reported**[253](index=253&type=chunk) [Mine Safety Disclosures](index=45&type=section&id=Item%204.%20%E2%80%93%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[254](index=254&type=chunk) [Other Information](index=45&type=section&id=Item%205.%20%E2%80%93%20Other%20Information) The company reported no other information - **None reported**[255](index=255&type=chunk) [Exhibits](index=45&type=section&id=Item%206.%20%E2%80%93%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL documents - The report includes **certifications** from the principal executive officer and principal financial officer, as well as XBRL data files[256](index=256&type=chunk)
Foxx Development Holdings Inc.(FOXX) - 2024 Q4 - Annual Report
2024-10-24 21:29
PART I [Business](index=5&type=section&id=Item%201.%20Business) Foxx Development Holdings Inc. is a communications technology company focused on tablets, smartphones, and expanding into the IoT market - The company was formed following a business combination between Acri Capital Acquisition Corporation (ACAC) and Foxx Development Inc., which closed on September 26, 2024 The new public entity is named Foxx Development Holdings Inc. and trades on Nasdaq under the symbol "FOXX"[11](index=11&type=chunk)[13](index=13&type=chunk)[14](index=14&type=chunk) - The company is strategically expanding beyond its core tablet and smartphone business into the Internet-of-Things (IoT) sector Key growth initiatives include developing a proprietary IoT Cloud Platform, wearables (smartwatches), health and wellness devices, and smart home solutions[35](index=35&type=chunk)[66](index=66&type=chunk)[76](index=76&type=chunk) - The company operates on a build-to-order business model, receiving bulk purchase orders from third-party distributors which then informs production specifications with original design manufacturer (ODM) suppliers[60](index=60&type=chunk) - For the fiscal year ended June 30, 2024, research and development expenses were **$91,168**, primarily directed towards 5G product development[98](index=98&type=chunk) Fiscal Year Performance Comparison | Metric | FY ended June 30, 2024 ($) | FY ended June 30, 2023 ($) | | :--- | :--- | :--- | | **Revenue** | ~$3.2 million | ~$21.62 million | | **Tablets Sold** | ~12,000 | ~491,000 | | **Smartphones Sold** | ~80,000 | ~76,000 | [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business, regulatory, financial, and operational risks, including going concern uncertainty and internal control weaknesses - The company has a high concentration of suppliers and customers For the year ended June 30, 2024, three suppliers accounted for **98%** of total purchases, and three customers accounted for **86%** of total revenues[119](index=119&type=chunk)[128](index=128&type=chunk) - The business was significantly impacted by the wind-down of the Federal Communications Commission's (FCC) Affordable Connectivity Program (ACP), which stopped accepting new enrollments on February 8, 2024 The company believes this may lead to a temporary decline in sales[139](index=139&type=chunk)[140](index=140&type=chunk) - The company's operating losses have raised substantial doubt about its ability to continue as a going concern, as noted by its independent registered public accounting firm[221](index=221&type=chunk) - Management has identified six material weaknesses in its internal control over financial reporting as of June 30, 2024, including lack of segregation of duties, inadequate control design, and inability to prepare timely and accurate financial statements[228](index=228&type=chunk)[231](index=231&type=chunk) - The company faces risks related to potential changes in U.S. government regulations concerning information and communications technology (ICTS) sourced from foreign adversaries, which could impact its supply chain and operations[187](index=187&type=chunk)[188](index=188&type=chunk)[189](index=189&type=chunk) [Unresolved Staff Comments](index=58&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - Not applicable[282](index=282&type=chunk) [Cybersecurity](index=58&type=section&id=Item%201C.%20Cybersecurity) A formal Cybersecurity Incident Response Policy was established, with Board oversight and CTO-led daily management - A formal Cybersecurity Incident Response Policy was approved by the Board of Directors on September 24, 2024, following the business combination[284](index=284&type=chunk) - The Board of Directors administers its cybersecurity risk oversight function through the Audit Committee, which receives periodic briefings from the Chief Information Officer (CIO)[289](index=289&type=chunk) - The cybersecurity incident management team consists of the CTO, James Liao, and the senior vice president of the Operating Subsidiary, Ruobing Yu[290](index=290&type=chunk) [Properties](index=59&type=section&id=Item%202.%20Properties) The company leases its corporate headquarters and other facilities, anticipating future expansion needs Leased Facilities | Location | Square Footage | Purpose | Lease Expiration Date | | :--- | :--- | :--- | :--- | | Irvine, CA | 1548 | Flex Space | 09/30/2026 | | Alpharetta, GA | 300 | Office | 08/04/2024 | | Duluth, GA | 500 | Warehouse | 07/31/2024 | [Legal Proceedings](index=59&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material litigation or legal proceedings - As of the report date, the company is not a party to any material legal proceedings[294](index=294&type=chunk) [Mine Safety Disclosures](index=59&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - Not Applicable[295](index=295&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=60&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's stock and warrants trade on Nasdaq, with no plans for cash dividends and an adopted equity incentive plan - The company's common stock and public warrants are traded on Nasdaq under the symbols "FOXX" and "FOXXW"[297](index=297&type=chunk) - The company has never declared or paid cash dividends and does not intend to in the foreseeable future, retaining earnings for business development[298](index=298&type=chunk) - The 2024 Equity Incentive Plan became effective upon the business combination closing, with **1,454,019 shares** of common stock authorized for issuance, representing **20%** of the outstanding shares at closing[300](index=300&type=chunk)[302](index=302&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=61&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial performance for Foxx and ACAC, highlighting Foxx's revenue decline, net loss, and going concern issues, alongside ACAC's pre-merger financial status [FOXX Management's Discussion and Analysis](index=61&type=section&id=FOXX%20Management%27s%20Discussion%20and%20Analysis) Foxx's revenue significantly declined in fiscal 2024 due to strategic shifts and the ACP program's termination, leading to a substantial net loss and raising going concern doubts - The significant revenue decrease was attributed to a strategic shift to diversify suppliers and customers, which involved smaller initial orders, and the negative market impact from the termination of the Affordable Connectivity Program (ACP)[309](index=309&type=chunk)[310](index=310&type=chunk)[335](index=335&type=chunk) - Operating expenses rose **217.3%** to **$3.2 million**, driven by a **309.8%** increase in selling expenses and a **325.8%** increase in G&A expenses, reflecting investments in sales, marketing, and personnel for business expansion[344](index=344&type=chunk)[345](index=345&type=chunk)[346](index=346&type=chunk) - As of June 30, 2024, the company had a working capital deficit of approximately **$4.6 million** and an accumulated deficit of **$11.0 million** These factors, along with operating losses, have raised substantial doubt about its ability to continue as a going concern[353](index=353&type=chunk)[442](index=442&type=chunk) Results of Operations Comparison (Fiscal Years Ended June 30) | Line Item | 2024 ($) | 2023 ($) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenues, net** | $3,228,559 | $21,622,887 | $(18,394,328) | (85.1)% | | **Gross profit** | $115,943 | $1,108,780 | $(992,837) | (89.5)% | | **(Loss) income from operations** | $(3,128,470) | $86,227 | $(3,214,697) | (3,728.2)% | | **Net (loss) income** | $(3,430,642) | $58,191 | $(3,488,833) | (5,995.5)% | Cash Flow Summary (Fiscal Years Ended June 30) | Cash Flow Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Net cash (used in) provided by operating activities** | $(4,680,079) | $30,176 | | **Net cash used in investing activities** | $(8,743) | $(66,899) | | **Net cash provided by financing activities** | $3,451,421 | $1,839,830 | [ACAC Management's Discussion and Analysis](index=73&type=section&id=ACAC%20Management%27s%20Discussion%20and%20Analysis) ACAC, a blank check company, faced delisting risks and significant shareholder redemptions prior to its business combination, raising going concern doubts - ACAC was a blank check company that consummated its IPO of **8,625,000 units** on June 14, 2022, raising gross proceeds of **$86.25 million**[370](index=370&type=chunk)[371](index=371&type=chunk) - On July 23, 2024, ACAC received a delisting notice from Nasdaq because its Market Value of Listed Securities (MVLS) fell below the **$35 million** minimum requirement The company has until January 20, 2025, to regain compliance[383](index=383&type=chunk)[384](index=384&type=chunk) - Significant shareholder redemptions occurred in connection with extension meetings As of June 30, 2024, approximately **$21.2 million** remained in the Trust Account, down from an initial **$88.0 million**[393](index=393&type=chunk) - Management determined that conditions, including the need to complete a business combination by the deadline, raised substantial doubt about ACAC's ability to continue as a going concern prior to the merger[404](index=404&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=79&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is exempt from providing market risk disclosures - The company is not required to make disclosures under this item as it qualifies as a smaller reporting company[418](index=418&type=chunk) [Financial Statements and Supplementary Data](index=80&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes audited financial statements for Foxx and ACAC, with Foxx's auditor noting substantial doubt about its going concern ability - The Report of Independent Registered Public Accounting Firm for Foxx Development Inc. includes an explanatory paragraph regarding the company's ability to continue as a going concern, citing a significant **working capital deficiency** and **recurring losses**[424](index=424&type=chunk) - The financial statements for Acri Capital Acquisition Corporation (ACAC) are also included, covering the period prior to the business combination[420](index=420&type=chunk)[421](index=421&type=chunk) Foxx Development Inc. Consolidated Balance Sheet Highlights (As of June 30) | Account | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Total Assets** | $5,374,422 | $2,009,919 | | **Total Liabilities** | $9,376,858 | $2,581,713 | | **Total Shareholders' Deficit** | $(4,002,436) | $(571,794) | | **Working Capital Deficit** | $(4,615,022) | $(630,472) | [Controls and Procedures](index=158&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to material weaknesses in internal control, with remediation plans underway - Management concluded that disclosure controls and procedures were not effective as of June 30, 2024[800](index=800&type=chunk) - Several material weaknesses in internal control over financial reporting were identified, including: - Lack of sufficient segregation of duties - Inadequate design and documentation of controls - Inability to prepare complete and accurate financial statements in a timely manner - Inefficient oversight from those charged with governance[804](index=804&type=chunk) - Remediation plans include hiring more qualified accounting personnel, implementing regular GAAP training, and establishing an internal audit function with the help of an external consulting firm[805](index=805&type=chunk) [Other Information](index=159&type=section&id=Item%209B.%20Other%20Information) No other information is reported in this section - None[807](index=807&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=160&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The report identifies executive officers and directors, detailing board composition and established governance committees - The executive team includes Greg Foley as CEO, "Joy" Yi Hua as Chairwoman and CFO, Haitao Cui as Executive VP, and James Liao as CTO[809](index=809&type=chunk) - The Board of Directors has a majority of independent directors (Eva Yiqing Miao, Edmund R. Miller, Jeff Feng Jiang), satisfying Nasdaq listing standards[818](index=818&type=chunk) - The company has established Audit, Compensation, and Nominating and Corporate Governance committees, each composed entirely of independent directors[821](index=821&type=chunk)[825](index=825&type=chunk)[826](index=826&type=chunk) [Executive Compensation](index=166&type=section&id=Item%2011.%20Executive%20Compensation) Post-merger, executive officers have employment agreements with set salaries, and independent directors receive annual cash compensation - Independent directors will receive an annual cash compensation of **$100,000**[846](index=846&type=chunk) Post-Closing Executive Officer Annual Base Salaries | Name | Title | Salary ($) | | :--- | :--- | :--- | | Greg Foley | CEO | $275,000 | | Haitao Cui | Executive VP | $300,000 | | "Joy" Yi Hua | Chairwoman & CFO | $300,000 | | James Liao | CTO | $180,000 | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=167&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details significant beneficial ownership stakes, including those held by directors and executive officers - All directors and executive officers as a group beneficially own **29.7%** of the company's common stock[850](index=850&type=chunk) Beneficial Ownership >5% | Beneficial Owner | Percentage of Class | | :--- | :--- | | BRR Investment Holding Corp. | **31.8%** | | Acri Capital Sponsor LLC | **29.7%** | | New Bay Capital Limited | **9.6%** | | BR Technologies PTE. Ltd. | **9.1%** | [Certain Relationships and Related Transactions, and Director Independence](index=168&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The company discloses related party transactions, including consulting and R&D fees paid to affiliated entities - For the year ended June 30, 2024, the company incurred **$324,000** in consulting fees to Azure Horizon LLC, an entity owned by former management[856](index=856&type=chunk) - The company incurred **$91,168** in research and development fees for the year ended June 30, 2024, paid to Wuhan Haoxun Communication Technology Co. Ltd, an entity controlled by an executive's family member[856](index=856&type=chunk) [Principal Accountant Fees and Services](index=170&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The company paid its principal accountant **$545,320** in audit fees for FY 2024, with all services pre-approved Accountant Fees | Fee Category | FY 2024 ($) | FY 2023 ($) | | :--- | :--- | :--- | | Audit Fees | $545,320 | $ - | | Audit-Related Fees | $ - | $ - | | Tax Fees | $ - | $ - | | All Other Fees | $ - | $ - | PART IV [Exhibits, Financial Statement Schedules](index=171&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements and provides an index of all exhibits filed with the Form 10-K - This section provides an index of all exhibits filed with the annual report, including the Business Combination Agreement, Certificate of Incorporation, Bylaws, Warrant Agreement, and various material contracts[862](index=862&type=chunk)[864](index=864&type=chunk)[865](index=865&type=chunk) [Form 10-K Summary](index=174&type=section&id=Item%2016.%20Form%2010-K%20Summary) No summary is provided in this section of the report - None[866](index=866&type=chunk)