Revenue and Sales Performance - For the fiscal year ending June 30, 2024, the company aims to achieve revenue between $67 million and $100 million, with specific earnout shares contingent on meeting these revenue targets[160][162]. - Total revenues decreased by approximately $2.9 million, or 12.5%, to approximately $20.2 million for the three months ended September 30, 2025, compared to $23.1 million for the same period in 2024[181]. - Revenue from mobile phone products decreased by approximately $5.2 million, or 22.8%, to approximately $17.7 million for the three months ended September 30, 2025, as consumer spending power weakened[181]. - Revenue from wearable products 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[181]. - 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 same period in 2024[181]. Product Development and Market Expansion - The company has launched new wearable products, including smart watches and smart glasses, which contributed to increased sales for the three months ended September 30, 2025, compared to the same period in 2024[154]. - The company expects to enter the U.S. IoT markets and the private label Mobile Virtual Network Operator (MVNO) market, enhancing its product offerings and services[150]. - The company has expanded its presence in the U.S. communications sector, with locations in major cities such as San Francisco, Dallas, and New York, enhancing its sales and distribution capabilities[148]. - The company began e-commerce operations through TikTok Shop in March 2024, targeting end-users eligible for the Lifeline Program to boost sales[153]. Financial Performance and Expenses - 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 million for the same period in 2024[186]. - Operating expenses rose by approximately $1.4 million, or 64.8%, to $3.6 million for the three months ended September 30, 2025, compared to $2.2 million in 2024[194]. - General and administrative expenses increased by approximately $1.4 million, or 152.7%, to $2.4 million, primarily due to higher professional fees and new hires[197]. - Net loss for the three months ended September 30, 2025, was approximately $2.9 million, an increase of 26.4% from a net loss of $2.3 million in 2024[202]. - Cash and cash equivalents as of September 30, 2025, were approximately $1.5 million, with a working capital deficit of approximately $10.3 million[205]. Inventory and Accounts Management - The company recorded a $2.8 million increase in inventories to meet anticipated sales orders during the three months ended September 30, 2024[211]. - The company experienced a $17.9 million increase in accounts payable due to purchasing more inventories to meet customer demand during the three months ended September 30, 2024[211]. - Net cash used in operating activities was approximately $0.4 million, primarily due to a net loss and an increase in accounts receivable[210]. Strategic Initiatives and Risks - The company has diversified its supplier and customer base to mitigate risks associated with reliance on limited partners, resulting in a significant decrease in sales of tablets and mobile phones during the year ended June 30, 2024[152]. - The Affordable Connectivity Program (ACP) ceased accepting new enrollments in February 2024, impacting demand for the company's products across all channels[153]. - The management team’s retention is crucial for maintaining service quality and product offerings, as losing key members could impact customer loyalty[175]. - The company is committed to investing in technology and talent to sustain competitiveness in the electronics industry[176]. Cash Flow and Financing Activities - Net cash provided by financing activities was approximately $28.3 million for the three months ended September 30, 2024, mainly from $19.7 million proceeds from reverse recapitalization and $9.0 million from convertible promissory notes[214]. - Net cash provided by financing activities was approximately $7,000 for the three months ended September 30, 2025, mainly due to principal payments of long-term loans[213]. Accounting and Valuation - The company has identified critical accounting estimates that significantly impact its financial statements, particularly those related to deferred tax assets and liabilities[216]. - Management believes a full valuation allowance for deferred tax assets is warranted based on historical operating losses, with a reassessment planned once profitability is achieved[217].
Foxx Development Holdings Inc.(FOXX) - 2025 Q3 - Quarterly Report