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Foxx Development Holdings Inc. (NASDAQ:FOXX), a $35 million market cap company specializing in computer communications equipment, has announced its decision to amend its corporate charter following a class action complaint filed in the Delaware Chancery Court. According to InvestingPro data, the company has faced significant challenges, with its stock down nearly 57% over the past year despite maintaining a stronger cash position than debt on its balance sheet. The lawsuit, initiated by plaintiff Ximena Semensato on November 22, 2024, challenged the waiver of the corporate opportunity doctrine in the company’s Amended and Restated Certificate of Incorporation.
Despite denying any wrongdoing, the Board of Directors of Foxx Development Holdings has determined that amending Article X of the Charter would be in the best interest of the company and its shareholders. The proposed Second Amended and Restated Certificate of Incorporation, which includes the amendment, will be presented to shareholders for approval at the upcoming annual meeting. This development comes as the company faces operational challenges, with InvestingPro analysis showing weak gross profit margins of 6% and negative EBITDA of -$6 million in the last twelve months.
Following the Board’s approval of the Amended Charter, Semensato voluntarily dismissed the action on March 3, 2025, which was subsequently approved by the court on March 4, 2025. To avoid further legal expenses and distraction, Foxx Development Holdings has agreed to pay a mootness fee of $85,000 to the plaintiff’s counsel. This fee encompasses attorneys’ fees, expenses, and a $500 service award to the plaintiff, settling any potential claims for such costs.
The resolution of this matter was deemed to be in the best interest of the company, although Foxx Development Holdings does not admit to the plaintiff’s allegations. The Delaware Chancery Court has not passed judgment on the mootness fee amount, and the case was officially closed with a stipulated order on March 13, 2025.
The information in this article is based on the recent SEC filing by Foxx Development Holdings Inc.
In other recent news, Foxx Development Holdings Inc. has agreed to amend its corporate charter following a class action lawsuit. The lawsuit, filed by Ximena Semensato, challenged a provision in the company’s Certificate of Incorporation related to the corporate opportunity doctrine. The case, heard in the Delaware Chancery Court, involved both the company and several individual defendants. Although Foxx Development Holdings and the defendants denied any wrongdoing, the Board of Directors decided to amend the charter to benefit the company and its shareholders. This amendment will be presented for stockholder approval at the next annual meeting. As part of the settlement, it is expected that the plaintiff will dismiss the lawsuit, pending court approval. This corporate governance change marks a significant development for Foxx Development Holdings as it continues to address legal complexities.
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