Foxx Development Holdings Inc.

Foxx Development Holdings Inc. is a technology innovation firm specializing in the communications sector, founded in Texas in 2017. The company's business model involves providing comprehensive hardware and software specifications to original design manufacturers, followed by engaging third-party agencies for necessary testing and certifications, including FCC Equipment Authorizations and Global Mobile Suppliers Association certifications. Their primary customers are distributors who sell Foxx-branded products in U.S. public channels and to major carriers like T-Mobile, AT&T, and Verizon. The company also initiated E-Commerce operations in March 2024, serving customers through platforms such as TikTok Shop. Additionally, Foxx provides an App Service by pre-installing applications from developer partners onto its mobile devices and facilitating their distribution to end-users ¹. The company operates as a single operating segment, with all revenues derived solely from the United States ².

The company's core business model is primarily driven by the sale of electronic products, specifically tablets and smartphones, and is expanding into services. Revenue generation is a mix of product sales and, more recently, recurring revenue streams from App Service commissions and other services. The company employs a build-to-order business model, receiving bulk purchase orders from third-party distributors and then working with suppliers to customize and manufacture products to meet customer specifications and budgets. This approach helps manage inventory costs and mitigate risks associated with demand changes ³.

Foxx offers a range of Foxx-branded products. Tablet products, such as the C10 LTE tablet launched in 2024, are designed to be affordable and feature a 10.1-inch HD display, MT8766 2.0GHz Processor, 4GB RAM, 64GB storage, 8MP + 8MP cameras, and 802.11 b/g/n/ac Wi-Fi support ⁴. Mobile phone products, including the MIRO product line launched in 2019, focus on high performance at competitive prices, featuring a 5.45-inch HD display, a 2450mAh battery, 8MP rear and 5MP front cameras, Google Voice Assistant, 2GB RAM, and 16GB expandable storage ⁵. For the fiscal year ended June 30, 2025, tablet product revenue was $509,843 ⁶, a decrease of 22.8% from $660,787 in the prior year ⁷. Mobile phone product revenue, which constituted 91% of total revenue, significantly increased by 2,224.9% to $59,696,955 ⁸ from $2,567,772 in the previous year ⁹.

New product categories include wearable products and smart home solutions. Wearable products, such as smartwatches, smart rings, smart glasses, trackers, and headsets, were launched in the first calendar quarter of 2025 through E-Commerce channels ¹⁰. The company partnered with an OEM in February 2024 to develop a 4G LTE kids smartwatch for major U.S. MNO and MVNO carriers ¹¹. Revenue from wearable products and others was $3,444,077 for the fiscal year ended June 30, 2025, a 100.0% increase from zero in the prior year ¹². Smart home solutions include "Leak Shield," a smart water leak detector launched in July 2025 through a partnership with APEC Water Systems ¹³. The company is also developing a solar-powered 4G LTE outdoor security camera and 4G LTE dashcams, jump starters, and trackers for the IoT in Automotive market, all expected to launch in the fourth calendar quarter of 2025 ¹⁴. App service commission revenue, a new stream for the fiscal year ended June 30, 2025, generated $2,166,477 ¹⁵, while other services contributed $101,814 ¹⁶.

For the fiscal year ended June 30, 2025, total revenues, net, increased by 1,941.8% to $65,919,166 ¹⁷ from $3,228,559 in the prior year ¹⁸. Cost of goods sold increased by 1,864.4% to $61,144,561 ¹⁹ from $3,112,616 ²⁰. Gross profit rose by 4,018.1% to $4,774,605 ²¹ from $115,943 ²², resulting in an overall gross profit percentage of 7.2% ²³, up from 3.6% ²⁴. Operating expenses increased by 346.1% to $14,472,539 ²⁵ from $3,244,413 ²⁶. The company reported a net loss of $9,020,136 ²⁷ for the year ended June 30, 2025, an increase of 162.9% from a net loss of $3,430,642 ²⁸ in the prior year. Basic and diluted loss per share was $1.47 ²⁹ for fiscal year 2025, compared to $1.04 ³⁰ for fiscal year 2024. As of June 30, 2025, cash and cash equivalents were $1,875,453 ³¹, total assets were $25,999,814 ³², and total liabilities were $31,364,497 ³³. The company had an accumulated deficit of $20,047,064 ³⁴ and net operating cash outflow of $6,560,121 ³⁵. Total long-term debt, including current maturities, was $97,161 ³⁶.

Year-over-year, revenue from tablet products decreased by $0.2 million ³⁷, or 22.8% ³⁸, while mobile phone product revenue surged by $57.1 million ³⁹, or 2,224.9% ⁴⁰. Wearable products and other revenues, a new category, contributed $3.4 million ⁴¹ in fiscal year 2025. App service commission revenue also debuted with $2.2 million ⁴², and other services added $0.1 million ⁴³. The gross profit percentage for tablets decreased from 23.5% to 14.1% ⁴⁴, while mobile phones saw an increase from (1.5)% to 3.5% ⁴⁵. Wearable products achieved a gross profit percentage of 11.7% ⁴⁶, and App service commission revenue had a 100.0% gross profit percentage ⁴⁷. Other services had a gross profit percentage of 52.9% ⁴⁸. Selling expenses increased by $4.1 million ⁴⁹, or 381.4% ⁵⁰, driven by higher commissions, payroll, consulting fees, sampling, testing, certification, stock-based compensation, warranty expenses, and advertising. General and administrative expenses increased by $5.0 million ⁵¹, or 240.4% ⁵², due to professional fees, salaries, credit losses, stock-based compensation, and other miscellaneous expenses. Research and development expenses increased by $2.1 million ⁵³, or 100.0% ⁵⁴, due to new hires and third-party development services.

Significant operational developments during the period include the consummation of a business combination on September 26, 2024, where Acri Capital Acquisition Corporation merged with and into Foxx Development Holdings Inc., and Old Foxx merged into a subsidiary, resulting in Foxx Development Holdings Inc. becoming a publicly traded company listed on Nasdaq under symbols "FOXX" and "FOXXW" ⁵⁵. The company also expanded its product offerings into wearables and smart home solutions, launching the C10 LTE tablet in 2024, MIRO phone line in 2019, first-generation wearable devices in Q1 2025, and "Leak Shield" smart water leak detector in July 2025 ⁵⁶. The first generation of its IoT cloud platform was launched in Q3 2024, leveraging AWS services, followed by a second generation in Q4 2024 with advanced technologies and scalability ⁵⁷. The company diversified its sales approach by launching products through TikTok Shop in March 2024 and other E-Commerce platforms in 2025, including BestBuy.com, Walmart.com, Amazon, Shein, Newegg, and Mercado Libre ⁵⁸. The company also expanded its physical presence to include various locations throughout the United States, such as San Francisco, CA, Dallas, TX, Atlanta, GA, Los Angeles, CA, Miami, FL, and New York, NY, and a Singapore office for supply chain management and R&D ⁵⁹.

Management anticipates a continued rise in General and Administrative expenses as the company persists in executing its business expansion plan and integrating IoT-enabled devices alongside its cloud platform to streamline operations in 2026 ⁶⁰. The company expects to enter the U.S. IoT markets and potentially the private label Mobile Virtual Network Operator (MVNO) market, with the aim of growing into a key player both domestically and globally ⁶¹. This expansion is supported by adding additional features and providing related services that enable Foxx-branded devices to have IoT and MVNO capabilities ⁶².

A major growth vector for Foxx is its IoT Cloud Platform. The company launched the first generation of its IoT cloud platform in the third calendar quarter of 2024, leveraging AWS cloud services and AWS IoT Core services for device management, user management, data management, and security management ⁶³. A second generation of the IoT cloud platform was launched in the fourth calendar quarter of 2024, designed to be more inclusive and compatible with all Foxx devices and potentially products from other brands, integrating advanced technologies and offering scalability to connect tens of millions of devices ⁶⁴. This platform provides full IoT PaaS capabilities, including device management, control and status management, user management, access and permission, and physical model management, supporting comprehensive IoT communication protocols. It also offers full IoT SaaS capabilities for integrating with different IoT verticals and provides front-end apps for end-users to manage and monitor their IoT devices ⁶⁵.

Another significant growth area is the expansion into Smart Home Solutions and IoT in Automotive. In the "Home Safety" category, the company launched "Leak Shield," a smart water leak detector, in July 2025 through a strategic technology partnership with APEC Water Systems ⁶⁶. For "Home Security," Foxx is developing a solar-powered 4G LTE outdoor security camera, expected to launch in the fourth calendar quarter of 2025 ⁶⁷. In "Home Care," the company plans to develop software applications that will integrate with its wearable products ⁶⁸. For IoT in Automotive, Foxx is developing a 4G LTE dashcam, a 4G LTE jump starter, and a 4G LTE tracker for commercial use, all expected to launch in the fourth calendar quarter of 2025 ⁶⁹. The company is also building a portfolio of IoT modules, including 4G LTE Cat 1 bis, Cat 4, Cat M, NB-IoT, Bluetooth, and Wi-Fi modules, which were launched in the first calendar quarter of 2025 ⁷⁰. Development of 5G, 5G Redcap, and 5G AI modules has begun, with a potential launch in the first half of 2026 ⁷¹.

Operationally, the company is focused on diversifying its suppliers and customers to mitigate concentration and reliance risk, having reached out to eighteen wholesale customers and connected with new suppliers ⁷². The company also plans to further expand its product offerings and has begun setting up a service team for its business-to-business (B2B) model in the artificial IoT department ⁷³. The company's build-to-order business model allows for effective inventory cost management and risk mitigation related to changes in customer demand ⁷⁴.

Regarding capital allocation, the company's research and development expenses amounted to approximately $2.2 million ⁷⁵ for the year ended June 30, 2025, with a significant portion directed towards new product development ⁷⁶. The company plans to file patents to safeguard its technical expertise and innovations ⁷⁷. As of June 30, 2025, the company had cash and cash equivalents of approximately $1.9 million ⁷⁸. The company has never declared or paid cash dividends and intends to retain all available funds and future earnings to fund business development and expansion ⁷⁹. A total of 1,454,019 shares of common stock were authorized for issuance under the 2024 Equity Incentive Plan ⁸⁰.

Management has flagged structural headwinds, including the U.S. Federal Communication Commission stopping new enrollments in the Affordable Connectivity Program (ACP) on February 7, 2024, and ceasing funding for enrolled customers starting April 30, 2024 ⁸¹. This change temporarily impacted demand for Foxx's products across all channels in fiscal year 2024, as new customers reduced sales teams and competitors lowered prices due to stockpiled products ⁸². However, the company plans to continue targeting end-users eligible for the Lifeline Program and expects to grow sales through diversified product offerings and E-Commerce channels ⁸³. The potential for further changes in trade policies, including new tariffs or changes to existing ones, introduces uncertainty regarding future costs, revenues, collectability of accounts receivable, carrying value of inventories, and overall financial performance ⁸⁴.

The company faces material risks related to its ability to continue as a going concern, as evidenced by a net cash outflow from operating activities of approximately $6.6 million ⁸⁵, a net loss of approximately $9.0 million ⁸⁶, and an accumulated deficit of approximately $20.0 million ⁸⁷ as of June 30, 2025. There is substantial doubt about the company's ability to generate sufficient funds to finance working capital requirements within the normal operating cycle, potentially necessitating additional financing from banks, financial institutions, private lenders, related parties, or equity financing ⁸⁸. The cessation of the Affordable Connectivity Program (ACP) on April 30, 2024, has negatively impacted product demand and increased competitive pricing pressures ⁸⁹. Furthermore, the potential for changes in U.S. trade policies, including new tariffs or modifications to existing ones, introduces uncertainty regarding future costs, revenues, and financial performance ⁹⁰. Operational risks include a lack of sufficient segregation of duties, inadequate design of controls, inability to prepare complete and accurate financial statements timely, inappropriate implementation of controls over related party transactions, and a lack of appropriate design of controls over the completeness and accuracy of App services revenue, which collectively constitute material weaknesses in internal control over financial reporting ⁹¹. The company also faces concentration risks, with three major customers accounting for 27%, 25%, and 25% ⁹² of total revenues, respectively, and one supplier accounting for 93% ⁹³ of total purchases for the year ended June 30, 2025.

Management's message to shareholders emphasizes a strategic shift towards diversification and innovation to drive future growth, particularly in the IoT and MVNO markets. Despite experiencing a significant net loss of $9,020,136 ⁹⁴ and a net operating cash outflow of $6,560,121 ⁹⁵ for the fiscal year ended June 30, 2025, management remains committed to expanding product offerings and establishing a service team for its B2B artificial IoT department. Key strategic priorities include expanding into the U.S. IoT and MVNO markets, leveraging the newly launched first and second-generation IoT cloud platforms, and developing new products in smart home solutions and IoT in automotive, such as the "Leak Shield" smart water leak detector and 4G LTE dashcams, jump starters, and trackers, all expected to launch in the fourth calendar quarter of 2025 ⁹⁶. Management also highlights the importance of diversifying suppliers and customers to mitigate concentration risks and growing sales through E-Commerce channels like TikTok Shop, BestBuy.com, Walmart.com, Amazon, Shein, Newegg, and Mercado Libre ⁹⁷.