Foxx Development Holdings Reports Revenue Growth, Net Loss in Latest Quarter

Foxx Development Holdings Inc. (formerly Acri Capital Merger Sub I Inc.) reported significant financial developments in its latest 10-Q filing for the quarter ending September 30, 2024. The company, which completed a business combination on September 26, 2024, generated revenues of $23.1 million for the quarter, a substantial increase from $0 in the same period of 2023. This revenue surge was primarily driven by sales from two new wholesale customers, which accounted for 88% of total sales.

Despite the revenue growth, Foxx reported a net loss of $2.3 million for the quarter, a 314.5% increase from the net loss of $546,831 in Q3 2023. The loss from operations also widened to $1.8 million, compared to a loss of $511,610 in the prior year. The increase in losses was attributed to higher selling expenses, which rose 483.4% to $1.2 million, and general and administrative expenses, which increased 216.9% to $961,247.

The company's total current assets surged to $47.6 million as of September 30, 2024, up from $4.3 million at the end of June 2024, largely due to increased cash reserves following the business combination and financing activities. Cash and cash equivalents reached $9.2 million, a significant rise from $587,448 at the end of the previous quarter. Total liabilities also increased to $49.1 million, up from $9.4 million, primarily due to a rise in accounts payable, which reached $19.3 million.

Foxx's cost of goods sold for the quarter was approximately $22.7 million, resulting in a gross profit of $398,176, reflecting a gross profit margin of 1.7%. The company’s accumulated deficit as of September 30, 2024, stood at approximately $13.3 million.

Strategically, Foxx has shifted its focus to technology innovation in the communications sector, with plans to expand its product offerings, including entering the U.S. IoT markets. The company has also adjusted its supplier and customer strategies to mitigate risks associated with reliance on limited partners. Following the business combination, Foxx's common stock began trading on the Nasdaq under the symbols "FOXX" and "FOXXW."

The company has raised concerns regarding its ability to continue as a going concern, as management has expressed substantial doubt about its financial sustainability within the next year. The financial statements were prepared under the assumption that the company will continue as a going concern, without adjustments for this uncertainty.