Foxx Development appoints new accounting firm

Foxx Development Holdings Inc. (NASDAQ:FOXX), a computer communications equipment company with a market capitalization of $37.7 million and concerning financial metrics according to InvestingPro data, announced on Monday that Marcum LLP has resigned as its independent registered public accounting firm effective May 1, 2025. The resignation follows the acquisition of Marcum’s attest business by CBIZ (NYSE:CBZ) CPAs P.C. on November 1, 2024. The Audit Committee of Foxx Development accepted Marcum’s resignation and immediately appointed CBIZ CPAs P.C. as the new auditor.

Marcum’s reports for the fiscal years ending June 30, 2024, and 2023, did not contain any adverse opinion, except for an explanatory paragraph regarding substantial doubt about the company’s ability to continue as a going concern. This concern appears well-founded, as InvestingPro data reveals the company’s negative EBITDA of -$6.04 million and weak gross profit margins of 6.06% in the last twelve months. The company’s Altman Z-Score of 1.01 further indicates financial distress. During these fiscal years and the interim periods up to May 1, 2025, there were no disagreements or reportable events between the company and Marcum, except for identified material weaknesses in internal controls over financial reporting.

These weaknesses included limited segregation of duties, inadequate design and documentation of controls, inability to prepare financial statements in accordance with GAAP in a timely manner, inefficient oversight of governance regarding financial reporting, lack of controls over bank account access, and insufficient controls over identifying related party transactions.

Foxx Development Holdings Inc. has provided Marcum with the disclosure it is making in response to Item 304(a) of Regulation S-K and has requested Marcum to furnish a letter to the SEC stating whether it agrees with the statements made by the company in this report. Marcum’s letter to the SEC dated May 1, 2025, is attached as Exhibit 16.1 to this report.

The company’s filing indicates that neither Foxx Development Holdings Inc. nor anyone on its behalf consulted CBIZ regarding accounting principles or auditing matters before their appointment. The information in this article is based on a press release statement. The company’s stock has declined 54% over the past year, with InvestingPro analysis revealing 8 additional key insights about the company’s financial health and market performance. Subscribers can access detailed financial analysis, Fair Value estimates, and comprehensive financial health scores through the platform.

In other recent news, Foxx Development Holdings Inc. has announced plans to amend its corporate charter following a class action lawsuit. The lawsuit, initiated by Ximena Semensato, challenged a provision in the company’s Amended and Restated Certificate of Incorporation. Despite denying any wrongdoing, the Board of Directors of Foxx Development Holdings decided that amending the charter would be more beneficial for the company and its shareholders than continuing litigation. The proposed Second Amended and Restated Certificate of Incorporation will be presented for shareholder approval at the upcoming annual meeting. As part of the settlement, Foxx Development Holdings agreed to pay a mootness fee of $85,000 to the plaintiff’s counsel, covering attorneys’ fees and expenses. This legal resolution allows the company to concentrate on its core business activities without the distraction of ongoing litigation. The case was officially closed with a stipulated order, and the court approved the dismissal of the lawsuit. This amendment marks a significant corporate governance change for Foxx Development Holdings.

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