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What changed in FGI Industries Ltd.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of FGI Industries Ltd.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+188 added−206 removedSource: 10-K (2026-04-10) vs 10-K (2025-03-31)

Top changes in FGI Industries Ltd.'s 2025 10-K

188 paragraphs added · 206 removed · 129 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIn Canada, we are a leading supplier to market leaders such as Yorkwest Plumbing, and have developed a strong presence in other commercial sales channels as well. Our numerous relationships tend to be quite stable and strong, built on years of mutual trust and understanding among tightly-knit groups of local professionals.
Biggest changeCommercial Our products are sold through numerous smaller-scale local distribution companies which in turn cater to professional plumbers, contractors and property developers. In Canada, we are a leading supplier to market leaders such as Yorkwest Plumbing, and have developed a strong presence in other commercial sales channels as well.
The primary drivers of such consistent and above-GDP growth rates 6 Table of Contents are the pace of household formation, home price appreciation, strong housing turnover and the continued aging of the U.S. housing stock in our primary geographic markets.
The primary drivers of such consistent and above-GDP growth rates are the pace of household formation, home price appreciation, strong housing turnover and the continued aging of the U.S. housing stock in our primary geographic markets.
Due to the market presence, store network and customer reach of these large home centers, we have developed decades-long relationships with our key retailer partners to distribute our products. Approximately 32% of our net sales in 2024 were to large retailers.
Due to the market presence, store network and customer reach of these large home centers, we have developed decades-long relationships with our key retailer partners to distribute our products. Approximately 34% of our net sales in 2025 were to large retailers.
Human Capital As of December 31, 2024, we employed approximately 420 employees, all of which are full-time, with no employees covered by collective bargaining agreements. We believe that our employee relations are good.
Human Capital As of December 31, 2025, we employed approximately 426 employees, all of which are full-time, with no employees covered by collective bargaining agreements. We believe that our employee relations are good.
Our sales through e-commerce channels and retailers represented about 11% of our net sales in 2024 up from less than 2% in 2010. Independent Dealers & Distributors We have historically sold our products through independent (or “mom and pop”) bath and kitchen product specialists. Independent dealers and distributors represented 9% of our net sales in 2024.
Our sales through e-commerce channels and retailers represented about 8% of our net sales in 2025 up from less than 2% in 2010. Independent Dealers & Distributors We have historically sold our products through independent (or “mom and pop”) bath and kitchen product specialists. Independent dealers and distributors represented 13% of our net sales in 2025.
Tangshan Huida Ceramic Group Co., Ltd (“Huida”) supplies the majority of our sanitaryware products. Huida accounted for approximately 69.6% of the total balance of our accounts payable as of December 31, 2024. No other supplier accounts for more than 10% of our accounts payable as of December 31, 2024.
Tangshan Huida Ceramic Group Co., Ltd (“Huida”) supplies the majority of our sanitaryware products. Huida accounted for approximately 83.3% of the total balance of our accounts payable as of December 31, 2025. No other supplier accounts for more than 10% of our accounts payable as of December 31, 2025.
The large wholesalers are similar in scale to many of our large retail partners, catering to national and local networks of professional contractors, plumbers, property developers and other significant “influencers” within the residential and non- residential construction markets.
The large wholesalers are similar in scale to many of our large retail partners, catering to national and local networks of professional contractors, plumbers, property developers and other significant “influencers” within the residential and non- residential construction markets. 7 Table of Contents In 2025, approximately 33% of our net sales were to our wholesale partners.
Our Shower Systems category includes a range of shower-related products such as shower walls, shower doors and shower basins. The majority of these products are sourced from third-party suppliers in China and are sold throughout the United States and Canada. These products are typically sold as private label or under our Craft + Main and Jetcoat brands. Other .
The majority of these products are sourced from third-party suppliers in China and are sold throughout the United States and Canada. These products are typically sold as private label or under our Craft + Main and Jetcoat brands. Other .
These brands have continued to grow and represent an increasing share of our total sales in recent years, while the majority of our products are sold under key customers’ private label brands, such as The Home Depot’s “Glacier Bay” brand and Ferguson’s “ProFlo” brand.
These brands have continued to grow and represent an increasing share of our total sales in recent years, while the majority of our products are sold under key customers’ private label brands, such as The Home Depot’s “Glacier Bay” brand and Ferguson’s “ProFlo” brand. 5 Table of Contents Our Products We offer a wide variety of products that fall into four categories: Sanitaryware, Bath Furniture, Shower Systems and Other.
Our Bath Furniture category primarily includes wood and wood-substitute furniture for bathrooms, including vanities, mirrors, laundry and medicine cabinets and other storage systems. The majority of these products are sourced from Southeast Asia and China and are sold principally in the United States and Canada. We typically sell our bath furniture products under the Foremost brand. Shower Systems .
The majority of these products are sourced from Southeast Asia and China and are sold principally in the United States and Canada. We typically sell our bath furniture products under the Foremost brand. Shower Systems . Our Shower Systems category includes a range of shower-related products such as shower walls, shower doors and shower basins.
According to the National Kitchen and Bath Association, the projected consumer spend for the U.S. bath and kitchen markets is estimated to be approximately $173 billion in 2024, of which approximately half is in product categories that we currently operate within.
While our sales are principally impacted by the growth of the R&R markets, we are selectively focusing on newbuild markets as well. 6 Table of Contents According to the National Kitchen and Bath Association, the projected consumer spend for the U.S. bath and kitchen markets is estimated to be approximately $228 billion in 2026, of which approximately half is in product categories that we currently operate within.
Our brand and category makeup of our net sales is as follows: 5 Table of Contents BRANDS MAIN PRODUCT CATEGORIES PRODUCT OFFERINGS Sanitaryware . Our Sanitaryware category includes a range of bath products, such as toilets, sinks, pedestals and toilet seats.
Our brand and category makeup of our net sales is as follows: BRANDS MAIN PRODUCT CATEGORIES PRODUCT OFFERINGS Sanitaryware . Our Sanitaryware category includes a range of bath products, such as toilets, sinks, pedestals and toilet seats. The majority of these products are sourced from third-party suppliers in China and are sold throughout the United States, Canada and Europe.
We see an enormous market potential in the Commercial channel and are continuously evaluating additional opportunities for market penetration. In 2024, approximately 13% of our net sales were to our commercial partners.
Our numerous relationships tend to be quite stable and strong, built on years of mutual trust and understanding among tightly-knit groups of local professionals. We see an enormous market potential in the Commercial channel and are continuously evaluating additional opportunities for market penetration. In 2025, approximately 12% of our net sales were to our commercial partners.
The majority of these products are sourced from third-party suppliers in China and are sold throughout the United States, Canada and Europe. Our main owned brands in this category include Foremost ® , which is retail-focused, and contrac ® , which is wholesale-focused. Bath Furniture .
Our main owned brands in this category include Foremost ® , which is retail-focused, and contrac ® , which is wholesale-focused. Bath Furniture . Our Bath Furniture category primarily includes wood and wood-substitute furniture for bathrooms, including vanities, mirrors, laundry and medicine cabinets and other storage systems.
Removed
Our Products We offer a wide variety of products that fall into four categories: Sanitaryware, Bath Furniture, Shower Systems and Other. As a result of the increased significance of shower systems in our product portfolio, the Company has created a standalone “Shower Systems” product category in 2023, as detailed below.
Removed
The “Other” category continues to comprise our kitchen cabinetry and other smaller offerings. The updates were applied retroactively to impacted product categories. Such changes had no impact on the Company's historical consolidated financial position, results of operations or cash flows.
Removed
While our sales are principally impacted by the growth of the R&R markets, we are selectively focusing on newbuild markets as well.
Removed
In 2024, approximately 36% of our net sales were to our wholesale partners. 7 Table of Contents Commercial Our products are sold through numerous smaller-scale local distribution companies which in turn cater to professional plumbers, contractors and property developers.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe extent of the impact of a pandemic similar to the COVID-19 pandemic on our business and financial results will depend on numerous evolving factors that we are not able to accurately predict and that all will vary by market, including the duration and scope of the pandemic, the emergence of new variants of the virus and the efficacy of vaccines against such variants, global economic conditions during and after the pandemic, including disruptions in the global supply chain, inflation and labor shortages, government actions that may be taken in the future, in response to the pandemic, and changes in customer behavior in response to the pandemic, some of which may be more than just temporary.
Biggest changeOur business could be adversely affected by the effects of a widespread outbreak of contagious diseases, similar to COVID-19, which impacted global, national and local economies, created a number of macroeconomic challenges that impacted our business, including volatility and uncertainty in business planning, disruptions in global supply chains, material, freight and labor inflation, shortages of and delays in obtaining certain materials and labor shortages. 18 Table of Contents The extent of the impact of a pandemic similar to the COVID-19 pandemic on our business and financial results will depend on numerous evolving factors that we are not able to accurately predict and that all will vary by market, including the duration and scope of the pandemic, the emergence of new variants of the virus and the efficacy of vaccines against such variants, global economic conditions during and after the pandemic, including disruptions in the global supply chain, inflation and labor shortages, government actions that may be taken in the future, in response to the pandemic, and changes in customer behavior in response to the pandemic, some of which may be more than just temporary.
Furthermore, if we or one of our suppliers were found to be in violation of applicable laws and regulations in China during such review, we or such supplier could be subject to administrative penalties, such as warnings, fines, or service suspension.
Furthermore, if we or one of our suppliers were found to be in violation of applicable laws and regulations in China during such review, we or such supplier could be subject to administrative penalties, such as warnings, fines, or service suspension.
INDEX TO RISK FACTORS Strategic Risks 13 Business and Operational Risks 15 Risks Related to Doing Business in China 19 Competitive Risks 21 Technology and Intellectual Property Risks 23 Litigation and Regulatory Risks 24 Risks Related to Our Securities 26 General Risk Factors 29 Strategic Risks Our BPC organic growth strategy is focused on capturing higher incremental gross margins by increasing our share of branded products, expanding into new product categories and creating new sales channels, all of which are impacted by a number of economic factors and other factors.
INDEX TO RISK FACTORS Strategic Risks 13 Business and Operational Risks 15 Risks Related to Doing Business in China 19 Competitive Risks 22 Technology and Intellectual Property Risks 23 Litigation and Regulatory Risks 24 Risks Related to Our Securities 26 General Risk Factors 29 Strategic Risks Our BPC organic growth strategy is focused on capturing higher incremental gross margins by increasing our share of branded products, expanding into new product categories and creating new sales channels, all of which are impacted by a number of economic factors and other factors.
However, because we conduct only limited operations in China with only 39 employees focused on these matters, we do not expect that such intervention or influence would result in a material change in our operations and/or the value of our securities, although in such circumstance, we might experience a disruption in our ability to develop and source product manufacturing within China, which could have a material adverse effect on our results of operations.
However, because we conduct only limited operations in China with only 44 employees focused on these matters, we do not expect that such intervention or influence would result in a material change in our operations and/or the value of our securities, although in such circumstance, we might experience a disruption in our ability to develop and source product manufacturing within China, which could have a material adverse effect on our results of operations.
The market price of our ordinary shares is likely to be highly volatile and may fluctuate substantially due to many factors, including: • our ability to maintain our strong brands and reputation and to develop innovative products; • our ability to maintain our competitive position in our industries; • risks associated with our reliance on information systems and technology; • product liability claims or other litigation; • quarterly variations in our results of operations or those of others in our industry; • changes in governmental regulations; 26 Table of Contents • changes in earnings estimates or recommendations by securities analysts; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
The market price of our ordinary shares is likely to be highly volatile and may fluctuate substantially due to many factors, including: • our ability to maintain our strong brands and reputation and to develop innovative products; • our ability to maintain our competitive position in our industries; • risks associated with our reliance on information systems and technology; • product liability claims or other litigation; • quarterly variations in our results of operations or those of others in our industry; • changes in governmental regulations; • changes in earnings estimates or recommendations by securities analysts; and • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
For more information on our material weaknesses and the status of our remediation efforts, see Item 9A - Controls and Procedures, which includes Management’s Report on Internal Controls Over Financial Reporting. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to the periodic reporting requirements of the Exchange Act.
For more information on our material weakness and the status of our remediation efforts, see Item 9A - Controls and Procedures, which includes Management’s Report on Internal Controls Over Financial Reporting. Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud. We are subject to the periodic reporting requirements of the Exchange Act.
We are subject to a wide variety of federal, state, local and foreign laws and regulations pertaining to: • securities matters; • taxation; • anti-bribery/anti-corruption; • employment matters; 24 Table of Contents • minimum wage requirements; • environment, health and safety matters; • the protection of employees and consumers; • product compliance; • competition practices; • trade, including duties and tariffs; • data privacy and the collection and storage of information, including regulation on data protection and oversight by the CAC in China; and • climate change and protection of the environment.
We are subject to a wide variety of federal, state, local and foreign laws and regulations pertaining to: • securities matters; • taxation; • anti-bribery/anti-corruption; • employment matters; • minimum wage requirements; • environment, health and safety matters; • the protection of employees and consumers; • product compliance; • competition practices; • trade, including duties and tariffs; • data privacy and the collection and storage of information, including regulation on data protection and oversight by the CAC in China; and • climate change and protection of the environment.
The failure to fully remediate the existing material weaknesses or the discovery of any future potential material weaknesses could result in future misstatements in our financial statements or in documents we file with the SEC and could have a negative impact on our business and the market for our ordinary shares.
The failure to fully remediate the existing material weakness or the discovery of any future potential material weakness could result in future misstatements in our financial statements or in documents we file with the SEC and could have a negative impact on our business and the market for our ordinary shares.
These breaches or intrusions could in the future lead to business interruption, production or operational downtime, product shipment delays, 23 Table of Contents exposure or loss of proprietary, confidential, personal or financial information, data corruption, an inability to report our financial results in a timely manner, damage to the reputation of our brands, damage to our relationships with our customers and suppliers, exposure to litigation, and increased costs associated with the remediation and mitigation of such attacks.
These breaches or intrusions could in the future lead to business interruption, production or operational downtime, product shipment delays, exposure or loss of proprietary, confidential, personal or financial information, data corruption, an inability to report our financial results in a timely manner, damage to the reputation of our brands, damage to our relationships with our customers and suppliers, exposure to litigation, and increased costs associated with the remediation and mitigation of such attacks.
For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be 28 Table of Contents contrary to public policy).
For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy).
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or “smaller reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to “emerging growth companies” or 27 Table of Contents “smaller reporting companies,” this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
In addition, emerging market economies in which we operate may be particularly vulnerable to the impact of rising interest rates, inflationary pressures, weaker oil and other commodity prices, and large external deficits. Risks in one country can limit our opportunities for portfolio growth and negatively affect our operations in another country or countries.
In addition, emerging market economies in which we operate may be particularly vulnerable to the impact of rising interest rates, inflationary pressures, weaker oil and other commodity prices, 17 Table of Contents and large external deficits. Risks in one country can limit our opportunities for portfolio growth and negatively affect our operations in another country or countries.
We compete for employees with a broad range of employers in many different industries, including large multinational firms, and we may fail in recruiting, developing, motivating and retaining them, particularly when there are low 17 Table of Contents unemployment levels. From time to time, we have been affected by a shortage of qualified personnel in certain geographic areas.
We compete for employees with a broad range of employers in many different industries, including large multinational firms, and we may fail in recruiting, developing, motivating and retaining them, particularly when there are low unemployment levels. From time to time, we have been affected by a shortage of qualified personnel in certain geographic areas.
Further, if a natural disaster occurs in a region from which we derive a significant portion of our revenue, end-user customers in that region may delay or forego purchases of our products, which may materially and adversely impact our operating results for a particular period. 16 Table of Contents There are risks associated with our international operations and global strategies.
Further, if a natural disaster occurs in a region from which we derive a significant portion of our revenue, end-user customers in that region may delay or forego purchases of our products, which may materially and adversely impact our operating results for a particular period. There are risks associated with our international operations and global strategies.
We are dependent on third-party suppliers for many of our products and components, and are largely dependent on one large supplier, Tangshan Huida Ceramic Group Co., Ltd, an entity formed and located in China (“Huida”), who accounted for approximately 70% and 71% of the total balance of our accounts payable as of December 31, 2024 and 2023, respectively, for the majority of our sanitaryware products, and our ability to offer a wide variety of products depends on our ability to obtain an adequate and timely supply of these products and components.
We are dependent on third-party suppliers for many of our products and components, and are largely dependent on one large supplier, Tangshan Huida Ceramic Group Co., Ltd, an entity formed and located in China (“Huida”), who accounted for approximately 83% and 70% of the total balance of our accounts payable as of December 31, 2025 and 2024, respectively, for the majority of our sanitaryware products, and our ability to offer a wide variety of products depends on our ability to obtain an adequate and timely supply of these products and components.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject us to administrative, civil and criminal fines and penalties, 25 Table of Contents collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.
We are subject to anti-corruption, anti-bribery, anti-money laundering, financial and economic sanctions and similar laws, and non-compliance with such laws can subject us to administrative, civil and criminal fines and penalties, collateral consequences, remedial measures and legal expenses, all of which could adversely affect our business, results of operations, financial condition and reputation.
For more information about our current legal proceedings, refer to the section of this Annual Report on Form 10-K entitled “Legal Proceedings.” Compliance with laws, government regulation and industry standards is costly, and our failure to comply could adversely affect our results of operations and financial position.
For more information about our current legal proceedings, refer to the section of this Annual Report on Form 10-K entitled “Legal Proceedings.” 24 Table of Contents Compliance with laws, government regulation and industry standards is costly, and our failure to comply could adversely affect our results of operations and financial position.
We designed our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported 29 Table of Contents within the time periods specified in the rules and forms of the SEC.
We designed our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
However, if we were selected for review, or one of our suppliers 19 Table of Contents was selected for review, we or such supplier may be required to suspend operations in China during such review. Cybersecurity review could also result in negative publicity with respect to our company or our suppliers and could divert managerial attention and financial resources.
However, if we were selected for review, or one of our suppliers was selected for review, we or such supplier may be required to suspend operations in China during such review. Cybersecurity review could also result in negative publicity with respect to our company or our suppliers and could divert managerial attention and financial resources.
Furthermore, an on-site inspection of our facilities by any of these regulators may be 20 Table of Contents limited or entirely prohibited. Such inspections, though permitted by our company and our affiliates, are subject to the unpredictability of the Chinese enforcement and other government agencies and may therefore be impossible to facilitate.
Furthermore, an on-site inspection of our facilities by any of these regulators may be limited or entirely prohibited. Such inspections, though permitted by our company and our affiliates, are subject to the unpredictability of the Chinese enforcement and other government agencies and may therefore be impossible to facilitate.
This significant concentration of share ownership and reliance for support may adversely affect the trading price for our securities because investors may perceive disadvantages in owning shares in companies with controlling shareholders. The price of our ordinary shares may be volatile.
This significant concentration of share ownership and reliance for support may adversely affect the trading price for our securities because investors may perceive disadvantages in owning shares in companies with controlling shareholders. 26 Table of Contents The price of our ordinary shares may be volatile.
See “— Risks Related to Doing Business In China” below. We are dependent on third-party manufacturers. We are reliant upon Foremost, our former parent company, and other third-party manufacturers to supply the majority of our products.
See “— Risks Related to Doing Business In China” below. 16 Table of Contents We are dependent on third-party manufacturers. We are reliant upon Foremost, our former parent company, and other third-party manufacturers to supply the majority of our products.
In each of 2024 and 2023, approximately 38% and 36%, respectively of our sales were made outside of the United States (principally in Canada and Europe) and transacted in currencies other than the U.S. dollar. In addition to our Canadian and European operations, we manufacture products and source products and components from China and parts of Southeast Asia.
In each of 2025 and 2024, approximately 38% of our sales were made outside of the United States (principally in Canada and Europe) and transacted in currencies other than the U.S. dollar. In addition to our Canadian and European operations, we manufacture products and source products and components from China and parts of Southeast Asia.
While we are a Cayman Islands exempted company headquartered in the United States and derive no revenue from China, we do have limited sourcing and product development operations in China. As of the date of this report, approximately 39 of our 420 employees are based in China. Moreover, suppliers of a majority of our product materials are based in China.
While we are a Cayman Islands exempted company headquartered in the United States and derive no revenue from China, we do have limited sourcing and product development operations in China. As of the date of this report, approximately 44 of our 426 employees are based in China. Moreover, suppliers of a majority of our product materials are based in China.
A significant adverse change in such relationships could adversely impact our results of operations and financial condition. Our sales are concentrated with ten significant customers who collectively represented 69% and 72% of our consolidated net sales for 2024 and 2023, respectively, and this concentration may continue to increase.
A significant adverse change in such relationships could adversely impact our results of operations and financial condition. Our sales are concentrated with ten significant customers who collectively represented 66% and 69% of our consolidated net sales for 2025 and 2024, respectively, and this concentration may continue to increase.
While we will comply with requests from these regulators, there is no guarantee that such requests will be honored by those entities that provide services to us or with which we associate, especially for any such entities that are located in China.
While we will comply with requests from these regulators, there is no guarantee that such requests will be honored by those entities that provide services to us or with which we associate, especially for any such 20 Table of Contents entities that are located in China.
General Risk Factors Management’s determination that material weaknesses exist in our internal controls over financial reporting could have a material adverse impact on our ability to produce timely and accurate financial statements and could negatively impact our business and the market for our ordinary shares .
General Risk Factors Management’s determination that a material weakness exists in our internal controls over financial reporting could have a material adverse impact on our ability to produce timely and accurate financial statements and could negatively impact our business and the market for our ordinary shares.
Based upon an evaluation conducted in connection with the preparation of FGI’s audited consolidated financial statements as of December 31, 2024, management concluded that our internal controls over financial reporting were not effective due to the material weaknesses in our internal controls over financial reporting.
Based upon an evaluation conducted in connection with the preparation of FGI’s audited consolidated financial statements as of December 31, 2025, management concluded that our internal controls over financial reporting were not effective due to the material weakness in our internal controls over financial reporting.
In addition, the rapid evolution and increased adoption of new technologies, such as artificial intelligence, may intensify our cybersecurity risks.
In addition, the rapid evolution and increased adoption of new technologies, such as AI, may intensify our cybersecurity risks.
We have entered into long-term agreements with certain significant suppliers to help ensure continued availability of our manufactured product supply and to establish firm pricing, but at times these contractual commitments may result in our paying above market prices for manufactured products during the term of the contract. Our top ten customers represent a large portion of our sales.
We have entered into long-term agreements with certain significant suppliers to help ensure continued availability of our manufactured product supply and to establish firm pricing, but at times these contractual commitments may result in our paying above market prices for manufactured products during the term of the contract.
We cannot predict whether investors would find our securities less 27 Table of Contents attractive in the event that we rely on these exemptions.
We cannot predict whether investors would find our securities less attractive in the event that we rely on these exemptions.
To the extent we alter our pricing as a result of such tariffs, it could reduce demand for our products or make our products less competitive than those of our competitors whose inputs are not subject to these tariffs, thereby decreasing our revenues and adversely impacting our results of operations.
Moreover, we would likely need to alter our pricing as a result of such tariffs, which could reduce demand for our products or make our products less competitive than those of our competitors whose inputs are not subject to these tariffs, thereby decreasing our revenues and adversely impacting our results of operations.
Although other retailers, dealers, distributors and homebuilders represent other channels of distribution for our products and services, we might not be able to quickly replace, if at all, the loss of all or a substantial portion of our sales, and any such loss would have a material adverse effect on our business, results of operations and financial position. 15 Table of Contents We are dependent on a few key third-party suppliers.
Although other retailers, dealers, distributors and homebuilders represent other channels of distribution for our products and services, we might not be able to quickly replace, if at all, the loss of all or a substantial portion of our sales, and any such loss would have a material adverse effect on our business, results of operations and financial position.
Our auditor, Marcum LLP, is a Registered Public Accounting Firm with the PCAOB and is based in New York, New York. Under the Holding Foreign Companies Accountable Act (the “HFCAA”), the PCAOB is permitted to inspect our independent public accounting firm.
Our auditor, CBIZ CPAs P.C., is a Registered Public Accounting Firm with the PCAOB and is based in New York, New York. Under the Holding Foreign Companies Accountable Act (the “HFCAA”), the PCAOB is permitted to inspect our independent public accounting firm.
We have been advised by Travers Thorp Alberga, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature.
In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States. 28 Table of Contents We have been advised by Travers Thorp Alberga, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature.
Furthermore, our existing indebtedness, which was approximately $14.5 million as of December 31, 2024, may adversely affect our financial flexibility and our competitive position in the future.
Furthermore, our existing indebtedness, which was approximately $11.9 million as of December 31, 2025, may adversely affect our financial flexibility and our competitive position in the future.
The long-term performance of our businesses relies on our ability to attract, develop and retain talented and diverse personnel. To be successful, we must invest significant resources to attract, develop and retain highly qualified, talented and diverse employees at all levels, who have the experience, knowledge and expertise to implement our strategic initiatives.
To be successful, we must invest significant resources to attract, develop and retain highly qualified, talented and diverse employees at all levels, who have the experience, knowledge and expertise to implement our strategic initiatives.
In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States.
In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law.
We operate in an industry that is subject to changing consumer trends, demands and preferences. The uncertainties associated with developing and introducing new products, such as gauging changing consumer preferences and successfully developing, manufacturing, marketing and selling new products, could lead to, among other things, rejection of a new product line, reduced demand and price reductions for our products.
The uncertainties associated with developing and introducing new products, such as gauging changing consumer preferences and successfully developing, manufacturing, marketing and selling new products, could lead to, among other things, rejection 22 Table of Contents of a new product line, reduced demand and price reductions for our products.
Such conditions or developments could have an adverse impact on our operations. In addition, we may be exposed to credit risks in some of those markets. Global or regional unrest, conflict, geopolitical disputes or catastrophic events could affect our operations and results of operations.
Such conditions or developments could have an adverse impact on our operations. In addition, we may be exposed to credit risks in some of those markets.
We believe that these material weaknesses set forth above did not have an effect on our financial results. We have been evaluating and have begun implementing certain practices and procedures to address the foregoing material weaknesses.
We believe that this material weakness set forth above did not have an effect on our financial results. We have been evaluating and have begun implementing certain practices and procedures to address the foregoing material weakness. To remediate the material weakness, management has initiated a series of corrective actions.
Our initiatives to invest in brand building, brand awareness and product innovation 21 Table of Contents may not be successful. The uncertainties associated with developing and introducing innovative and improved products, such as gauging changing consumer demands and preferences and successfully developing, manufacturing, marketing and selling these products, may impact the success of our product introductions.
The uncertainties associated with developing and introducing innovative and improved products, such as gauging changing consumer demands and preferences and successfully developing, manufacturing, marketing and selling these products, may impact the success of our product introductions.
We plan to continue the implementation of these and other remediation efforts to address the identified material weaknesses in the future. While we are actively identifying and implementing actions to improve the effectiveness of our internal controls over financial reporting and disclosure controls and procedures, there can be no assurance that our remediation efforts will be fully successful.
While we are actively identifying and implementing actions to improve the effectiveness of our internal controls over financial reporting and disclosure controls and procedures, there can be no assurance that our remediation efforts will be fully successful. We expect to continue to incur or expend substantial accounting and other expenses and significant management time and resources in these efforts.
If we inadvertently conclude that such approvals are not required, or applicable laws, regulations or interpretations change and we do not receive or maintain such approvals in the future, we may be subject to an investigation by regulators, fines or penalties or an order preventing us from offering securities in China in the future.
If we inadvertently conclude that such approvals are not required, or applicable laws, regulations or interpretations change and we do not receive or maintain such approvals in the future, we may be subject to an investigation by regulators, fines or penalties or an order preventing us from offering securities in China in the future. 21 Table of Contents Competitive Risks We could lose market share if we do not maintain our strong brands, develop innovative products or respond to changing purchasing practices and consumer preferences or if our reputation is damaged.
Additionally, the PRC Data Security Law took effect on September 1, 2021 and requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security.
Additionally, the PRC Data Security Law took effect on September 1, 2021 and requires data collection to be conducted in a legitimate and proper manner, and stipulates that, for the purpose of data protection, data processing activities must be conducted based on data classification and hierarchical protection system for data security. 19 Table of Contents We believe we are compliant with these regulations, to the extent they are applicable to us, and we do not believe our business will be materially affected by these measures.
Technology and Intellectual Property Risks We have been and may continue to be subject to cybersecurity attacks, which could adversely affect our results of operations and financial position. Global cybersecurity vulnerabilities, threats and more frequent, sophisticated and targeted attacks pose a risk to our information technology systems and to critical third-party information technology platforms we utilize.
Technology and Intellectual Property Risks We have been and may continue to be subject to cybersecurity attacks, which could adversely affect our results of operations and financial position.
In particular, The Home Depot represented approximately 17% and 18% of our consolidated net sales in 2024 and 2023, respectively. The Home Depot and other home center retailers can significantly affect the prices we receive for our products and the terms and conditions on which we do business with them.
A significant portion of our sales are to home center retailers, which can significantly affect the prices we receive for our products and the terms and conditions on which we do business with them.
Further, any claim or product recall could result in adverse publicity against us, which could decrease our credibility, harm our reputation, adversely affect our sales, or increase our costs. Defects in our products could also result in decreased orders or sales to our customers, which could have a material adverse effect on our business, financial condition or results of operations.
Further, any claim or product recall could result in adverse publicity against us, which could decrease our credibility, harm our reputation, adversely affect our sales, or increase our costs.
Unauthorized disclosure of confidential information provided to us by customers, employees or third parties could harm our business. We rely on the Internet and other electronic methods to transmit confidential information and store confidential information on our networks.
We rely on the Internet and other electronic methods to transmit confidential information and store confidential information on our networks.
We may be adversely affected if our information systems breakdown, fail, or are no longer supported or if our AI capabilities do not function as intended. In addition to the consequences that may occur from interruptions in our systems, global cybersecurity vulnerabilities, threats and more sophisticated and targeted attacks pose a risk to our information technology systems.
In addition to the consequences that 23 Table of Contents may occur from interruptions in our systems, global cybersecurity vulnerabilities, threats and more sophisticated and targeted attacks pose a risk to our information technology systems.
We expect to continue to incur or expend substantial accounting and other expenses and significant management time and resources in these efforts. It is possible that our future assessment, or the future assessment by our independent registered public accounting firm, may reveal additional material weaknesses in our internal controls.
It is possible that our future assessment, or the future assessment by our independent registered 29 Table of Contents public accounting firm, may reveal additional material weakness in our internal controls.
Further, regional conflicts, such as the Ukraine-Russia and Israel-Hamas conflicts, could escalate and expand, which in turn could have negative impacts on our operations, the global economy and financial markets. Such disruptions of regional or global economic activity can affect consumers’ purchasing power in the affected areas and, therefore, reduce demand for our products.
Further, regional conflicts, such as the hostilities in the Middle East and the war between Russia and Ukraine, could escalate and expand, which in turn could have negative impacts on trade routes, our operations, the global economy and financial markets.
We are in the process of introducing certain customer-facing tools powered by artificial intelligence (“AI”) to help promote our product offerings.
We are in the process of introducing certain customer-facing tools powered by artificial intelligence (“AI”) to help promote our product offerings. If these AI products do not work as intended, or if our competitors are better able to effectively integrate these new technologies into their offerings, our competitive position may suffer.
To the extent these tariffs increase our costs of goods sold, it could materially adversely impact our profitability, results of operations and financial condition.
Given our products are manufactured primarily in Asia, including China, Vietnam, Cambodia, and other Asian countries, additional tariffs are likely to increase our costs of goods sold and could materially adversely impact our profitability, results of operations and financial condition.
Products we sell into certain foreign markets could also become subject to similar retaliatory tariffs, making the products we sell uncompetitive compared to similar products not subjected to such import tariffs. We are still evaluating the potential impact of the recently-announced tariffs on our business and financial condition.
Products we sell into certain foreign markets could also become subject to similar retaliatory tariffs, making the products we sell uncompetitive compared to similar products not subjected to such import tariffs. 15 Table of Contents The recent enactment of tariffs by the government of the United States, along with the unpredictability of the tariff rates, poses a significant risk to our business operations and may materially increase our costs and reduce our margins.
Competitive Risks We could lose market share if we do not maintain our strong brands, develop innovative products or respond to changing purchasing practices and consumer preferences or if our reputation is damaged. Our competitive advantage is due, in part, to our ability to maintain our strong brands and to develop and introduce innovative new and improved products.
Our competitive advantage is due, in part, to our ability to maintain our strong brands and to develop and introduce innovative new and improved products. Our initiatives to invest in brand building, brand awareness and product innovation may not be successful.
Trade tensions between the United States and China, Canada, Mexico and other countries have been escalating in recent years. Recently, the U.S. presidential administration has announced new tariffs on imports from China, Canada and Mexico and may impose restrictions against other regions.
Trade tensions between the United States and China, Canada, Mexico and other countries have been escalating in recent years. In 2025, the U.S.government enacted significant changes to its tariff regime that increased rates on a substantial number of imports. Certain foreign jurisdictions have responded with reciprocal tariffs which resulted in corresponding actions by the U.S. government.
Removed
Our business could be adversely affected by the effects of a widespread outbreak of contagious diseases, similar to COVID-19, which impacted global, national and local economies, created a number of macroeconomic challenges that impacted our business, including volatility and uncertainty in business planning, disruptions in global supply chains, material, freight and labor inflation, shortages of and delays in obtaining certain materials and labor shortages.
Added
Certain of these tariffs have been paused or modified from time to time as trade discussions ensued. In February 2026, in response to the Supreme Court invalidating many of the existing tariffs, the administration instituted a 10% global tariff on all imports and has signaled it may seek higher tariffs.
Removed
In prior years, U.S. tariff impositions against Chinese exports have been followed by retaliatory Chinese tariffs on U.S. exports to China and this may recur in China as well as Canada and Mexico. Our products are manufactured primarily in Asia, and such countries may in the future be subject to these tariffs.
Added
The potential for additional tariff increases may continue to result in increased reciprocal tariffs or other restrictive trade measures by the U.S. or foreign jurisdictions.
Removed
There can be no assurances that we will not be adversely impacted by such tariffs or that we will be able to pass on any incremental costs to our customers. 18 Table of Contents Further changes in U.S. trade policies, tariffs, taxes, export restrictions or other trade barriers, or restrictions on raw materials or components may limit our ability to produce products, increase our manufacturing costs, decrease our profit margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase raw materials or components, which would have a material adverse effect on our business, results of operations and financial condition.
Added
We are continuing to analyze and enact strategies to moderate or minimize the effects of these trade actions, including evaluating the country of origin for sourcing product into the United States and diversifying our supply chain, negotiating with suppliers, and adjusting our pricing strategies.
Removed
We believe we are compliant with these regulations, to the extent they are applicable to us, and we do not believe our business will be materially affected by these measures.
Added
However, there can be no assurance that these measures will be successful, or that they will offset the negative impact of the tariffs on our business.
Removed
If these AI products do not work as intended, or if our competitors are better able to effectively integrate these new technologies into their offerings, our competitive position may suffer. 22 Table of Contents Changes in Cayman Islands or U.S. tax law could adversely affect our financial condition and results of operations.
Added
Given the uncertainty regarding scope and duration of the current and potential tariffs, as well as the potential for additional trade actions by the United States or other countries, the specific impact to our business, results of operations, cash flows, and financial condition is uncertain but could be material. Our top ten customers represent a large portion of our sales.
Removed
Material weaknesses in our internal control over financial reporting included (a) inadequate segregation of duties related to the initiation and recording of journal entries to the general ledger, (b) inadequate evidence of management review controls regarding the review and approval of certain account reconciliations, and (c) inadequate evidence and precision of management review controls regarding loan covenants and covenant calculations.
Added
We are dependent on a few key third-party suppliers.
Removed
To remediate the material weaknesses related to the review of journal entry and account reconciliation, we have implemented system controls designed to prevent significant unauthorized transactions from being posted without review and established sufficient compensating controls for effective account reconciliations.
Added
Global or regional unrest, conflict (such as the hostilities in the Middle East and the war between Russia and Ukraine), geopolitical disputes or catastrophic events could affect global trade routes, financial markets, global economic activity and our operations and results of operations.
Removed
Additionally, we have enhanced our management review controls, including more robust documentation requirements for the review and approval of journal entries. To address the material weakness related to debt covenant compliance, we have implemented an additional layer of review in the calculation and reporting process.
Added
Such disruptions of regional or global economic activity can affect consumers’ purchasing power in the affected areas and, therefore, reduce demand for our products. The long-term performance of our businesses relies on our ability to attract, develop and retain talented and diverse personnel.
Added
We operate in an industry that is subject to changing consumer trends, demands and preferences.
Added
In addition, we may be harmed if our proprietary or confidential information regarding our business is exposed through the unauthorized use of AI technologies or our systems infringe on intellectual property rights of others. Changes in Cayman Islands or U.S. tax law could adversely affect our financial condition and results of operations.
Added
Global cybersecurity vulnerabilities, threats and more frequent, sophisticated and targeted attacks pose a risk to our information technology systems and to critical third-party information technology platforms we utilize, which may be increasingly exacerbated by the proliferation of and advance in AI.
Added
We may be adversely affected if our information systems breakdown, fail, or are no longer supported or if our AI capabilities do not function as intended.
Added
Defects in our products could also result in decreased orders or sales to our customers, which could have a material adverse effect on our business, financial condition or results of operations. 25 Table of Contents Unauthorized disclosure of confidential information provided to us by customers, employees or third parties could harm our business.
Added
Specifically, this material weakness relates to insufficient precision in the design and operation of journal entry and account reconciliation review controls at a foreign subsidiary that was newly brought into scope and subject to a full-scope evaluation of internal controls over financial close and reporting for the first time during the year.
Added
These include adding dedicated in-house accounting personnel to enhance oversight of the financial close process, implementing more robust journal entry and account reconciliation review procedures with clearly defined documentation and approval requirements, and strengthening evidence retention practices.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also have constituted a cross-functional Cybersecurity Committee, comprised of the Director of IT, along with the Chairman, CFO, Management of Business Operations and Human Resources, which meets regularly to review enterprise-wide cybersecurity matters. Our Board of Directors oversees management's approach to managing cybersecurity risks.
Biggest changeWe also have constituted a cross-functional Cybersecurity Committee, comprised of the Director of IT, along with the Chairman, CFO, Management of Business Operations and Human Resources, which meets regularly to review enterprise-wide cybersecurity matters. 30 Table of Contents Our Board of Directors oversees management's approach to managing cybersecurity risks.
Risks identified by the Director of IT and other cybersecurity personnel are analyzed to determine the potential impact on us and the likelihood of occurrence. Such risks are continuously monitored to ensure 30 Table of Contents that the circumstances and severity of such risks have not changed.
Risks identified by the Director of IT and other cybersecurity personnel are analyzed to determine the potential impact on us and the likelihood of occurrence. Such risks are continuously monitored to ensure that the circumstances and severity of such risks have not changed.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our headquarters and a warehouse facility are located in East Hanover, New Jersey. We also operate production and warehouse facilities in Hobart, Indiana, Sacramento, California and Toronto, Canada.
Biggest changeITEM 2. PROPERTIES Our headquarters and a warehouse facility are located in East Hanover, New Jersey. We also operate production and warehouse facilities in Portage, Indiana, Sacramento, California and Toronto, Canada.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−2 removed1 unchanged
Biggest changeWe cannot predict the results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material impact on us due to diversion of management time and attention as well as the financial costs related to resolving such disputes.
Biggest changeWe cannot predict the results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material impact on us due to diversion of management time and attention as well as the financial costs related to resolving such disputes. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 31 Table of Contents PART II
Removed
Ayers Bath Litigation As previously disclosed, FGI Industries (formerly known as Foremost Groups, Inc.), our wholly-owned subsidiary, was involved in litigation arising from its efforts to protect an exclusivity agreement with sanitaryware manufacturer Tangshan Huida Ceramic Group Co., Ltd. (“Huida”) through the second quarter of 2024.
Removed
In June 2024, the parties entered into a settlement agreement with a mutual release of all claims related to the litigation. The settlement amount of $180,000 is reflected in other income (expenses), net on our consolidated statements of operations and comprehensive (loss) income. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 31 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed4 unchanged
Biggest changeHolders; Shares Outstanding We had a total of 9,589,503 shares of our ordinary shares outstanding on March 26, 2025, held by approximately 23 shareholders of record. The actual number of shareholders is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in “street name” by brokers and other nominees.
Biggest changeHolders; Shares Outstanding We had a total of 1,927,326 shares of our ordinary shares outstanding on April 6, 2026, held by approximately 20 shareholders of record. The actual number of shareholders is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in “street name” by brokers and other nominees.
Securities Authorized for Issuance Under Equity Compensation Plan Reference is made to the information in Item 12 of this report under the caption “Equity Compensation Plans,” which is incorporated herein by this reference. Share Repurchases During the twelve months ended December 31, 2024, we did not repurchase any ordinary shares. ITEM 6. [RESERVED] 32 Table of Contents
Securities Authorized for Issuance Under Equity Compensation Plan Reference is made to the information in Item 12 of this report under the caption “Equity Compensation Plans,” which is incorporated herein by this reference. Share Repurchases During the twelve months ended December 31, 2025, we did not repurchase any ordinary shares. ITEM 6. [RESERVED] 32 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

52 edited+43 added−63 removed13 unchanged
Biggest changeFor the Years Ended December 31, Change 2024 2023 Amount Percentage USD USD USD % Revenue $ 131,818,073 $ 117,241,604 $ 14,576,469 12.4 Cost of revenue 96,390,733 85,164,322 11,226,411 13.2 Gross profit 35,427,340 32,077,282 3,350,058 10.4 Selling and distribution expenses 25,627,634 19,971,912 5,655,722 28.3 General and administrative expenses 10,199,914 8,424,083 1,775,831 21.1 Research and development expenses 1,699,383 1,376,844 322,539 23.4 (Loss) income from operations (2,099,591) 2,304,443 (4,404,034) (191.1) Operating margins (%) (1.6) 2.0 (360) bps Total other expenses, net (182,507) (916,655) 734,148 (80.1) (Benefit of) provision for income taxes (547,821) 808,224 (1,356,045) (167.8) Net (loss) income (1,734,277) 579,564 (2,313,841) (399.2) Net (loss) income attributable to FGI Industries Ltd. shareholders (1,201,089) 733,604 (1,934,693) (263.7) Adjusted (loss) income from operations (1) (1,613,635) 2,840,401 (4,454,036) (156.8) Adjusted operating margins (%) (1) (1.2) 2.4 (360) bps Adjusted net (loss) income attributable to FGI Industries Ltd. shareholders (1) $ (939,648) $ 1,731,512 $ (2,671,160) (154.3) _________________________________________________ (1) See “Non-GAAP Measures” below for more information on our use of these adjusted figures and a reconciliation of these financial measures to their closest U.S. generally accepted accounting principles (“GAAP”) comparators.
Biggest changeFor the Year Ended December 31, Change 2025 2024 Amount Percentage USD USD USD % Revenue $ 130,528,652 $ 131,818,073 $ (1,289,421) (1.0) Cost of revenue 95,277,560 96,390,733 (1,113,173) (1.2) Gross profit 35,251,092 35,427,340 (176,248) (0.5) Selling and distribution expenses 25,129,256 25,627,634 (498,378) (1.9) General and administrative expenses 11,106,563 10,199,914 906,649 8.9 Research and development expenses 1,417,329 1,699,383 (282,054) (16.6) Loss from operations (2,402,056) (2,099,591) (302,465) 14.4 Operating margins (%) (1.8) (1.6) (20) bps Total other expenses, net (1,936,958) (182,507) (1,754,451) 961.3 Provision for (benefit of) income taxes 2,786,392 (547,821) 3,334,213 (608.6) Net loss (7,125,406) (1,734,277) (5,391,129) 310.9 Net loss attributable to FGI Industries Ltd. shareholders (6,139,526) (1,201,089) (4,938,437) 411.2 Adjusted loss from operations (1) (2,382,150) (1,613,635) (768,515) 47.6 Adjusted operating margins (%) (1) (1.8) (1.2) (60) bps Adjusted net loss attributable to FGI Industries Ltd. shareholders (1) $ (2,555,789) $ (939,648) $ (1,616,140) 172.0 34 Table of Contents _________________________________________________ (1) See “Non-GAAP Measures” below for more information on our use of these adjusted figures and a reconciliation of these financial measures to their closest U.S. generally accepted accounting principles (“GAAP”) comparators.
The loan bears interest rate equal to, at the Company’s option, either (i) 0.25 percentage points less than the Prime Rate quoted by the Wall Street Journal or (ii) the SOFR Rate (as administered by CME Group Benchmark Administration Limited and displayed by Bloomberg LP) plus 2.20% per annum (in either case, subject to a minimum rate of 4.500% per annum) .
The loan bears interest at a rate equal to, at the Company’s option, either (i) 0.25 percentage points less than the Prime Rate quoted by the Wall Street Journal or (ii) the SOFR Rate (as administered by CME Group Benchmark Administration Limited and displayed by Bloomberg LP) plus 2.20% per annum (in either case, subject to a minimum rate of 4.500% per annum) .
Over the course of 30 years, we have built an industry-wide reputation for product innovation, quality, and excellent customer service. We are currently focused on the following product categories: sanitaryware (primarily toilets, sinks, pedestals and toilet seats), bath furniture (vanities, mirrors and cabinets), shower systems, customer kitchen cabinetry and other accessory items.
Over the course of 30 years, we have built an industry-wide reputation for product innovation, quality, and excellent customer service. We are currently focused on the following product categories: sanitaryware (primarily toilets, sinks, pedestals and toilet seats), bath furniture (vanities, mirrors and cabinets), shower systems, custom kitchen cabinetry and other accessory items.
Pursuant to the Canadian Revolver, FGI Canada Ltd. is required to maintain (a) a debt to tangible net worth ratio of no more than 3.00 to 1.00; and (b) a ratio of current assets to current liabilities of at least 1.25 to 1.00. The loan bears interest at a rate of Prime rate plus 0.50%.
Pursuant to the Canadian Revolver, FGI Canada is required to maintain (a) a debt to tangible net worth ratio of no more than 3.00 to 1.00; and (b) a ratio of current assets to current liabilities of at least 1.25 to 1.00. The loan bears interest at a rate of Prime rate plus 0.50%.
A recent example of our innovative product development includes the Jetcoat shower wall systems, which offer a stylized design option without the fuss of messy grout. We expect to continue to invest in research and development to drive product innovation in 2024. • “BPC” (Brands, Products, Channels) strategy to drive above-market organic growth.
A recent example of our innovative product development includes the Jetcoat ® shower wall systems, which offer a stylized design option without the fuss of messy grout. We expect to continue to invest in research and development to drive product innovation in 2026. • “BPC” (Brands, Products, Channels) strategy to drive above-market organic growth.
The facility matures at the discretion of HSBC Canada upon 60 days’ notice. FGI Canada Ltd. also has a revolving foreign exchange facility with RBC of up to a permitted maximum of USD3.0 million.
The facility matures at the discretion of RBC upon 60 days’ notice. FGI Canada also has a revolving foreign exchange facility with RBC of up to a permitted maximum of USD3.0 million.
The CTBC Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered in effect from time to time, plus 120 base points and handling fees, unless otherwise agreed to by the parties.
The CTBC Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered in effect 38 Table of Contents from time to time, plus 120 base points and handling fees, unless otherwise agreed to by the parties.
Results of Operations For the Years Ended December 31, 2024 and 2023 The following table summarizes the results of our operations for the years ended December 31, 2024 and 2023, respectively, and provides information regarding the dollar and percentage increase (decrease) during such periods.
Results of Operations For the Years Ended December 31, 2025 and 2024 The following table summarizes the results of our operations for the years ended December 31, 2025 and 2024, respectively, and provides information regarding the dollar and percentage increase (decrease) during such periods.
These non-GAAP financial measures are not prepared in accordance with GAAP. They are supplemental financial measures of our performance only, and should not be considered substitutes for net income, income from operations or any other measure derived in accordance with GAAP and may not be comparable to similarly titled measures reported by other entities.
They are supplemental financial measures of our performance only, and should not be considered substitutes for net income, income from operations or any other measure derived in accordance with GAAP and may not be comparable to similarly titled measures reported by other entities.
Consistent with our long-term strategic plan, we intend to drive value creation for our shareholders through a balanced focus on product innovation, organic growth, and efficient capital deployment. The following initiatives represent key strategic priorities for us: • Commitment to product innovation.
We intend to drive long-term value creation for our shareholders through a balanced focus on product innovation, organic growth, and efficient capital deployment. The following initiatives represent key strategic priorities for us: • Commitment to product innovation.
(“FGI Industries”), FGI Europe 33 Table of Contents Investment Limited, an entity formed in the British Virgin Islands, and FGI International, Limited, an entity formed under the laws of Hong Kong, each a wholly-owned subsidiary of Foremost, to the newly formed FGI Industries Ltd.
(“FGI Industries”), FGI Europe Investment Limited, an entity formed in the British Virgin Islands, and FGI International, Limited, an entity formed under the laws of Hong Kong, each a wholly-owned subsidiary of Foremost, to the newly formed FGI Industries Ltd.
The advances are available to purchase foreign exchange forward contracts from time to time up to six months, subject to an overall maximum aggregate USD Equivalent outstanding face value not exceeding USD3.0 million. 37 Table of Contents CTBC Credit Facility On January 25, 2024, FGI International entered into an omnibus credit line (the “CTBC Credit Line”) with CTBC Bank Co., Ltd.
The advances are available to purchase foreign exchange forward contracts from time to time up to six months, subject to an overall maximum aggregate USD Equivalent outstanding face value not exceeding USD3.0 million. CTBC Credit Facility On January 25, 2024, FGI International entered into an omnibus credit line (the “CTBC Credit Line”) with CTBC Bank Co., Ltd. (“CTBC”).
(“CTBC”). Under the CTBC Credit Line, FGI International may borrow, from time to time, up to $2.3 million, with borrowings limited to 90% of FGI International’s export “open account” trade receivables.
Under the CTBC Credit Line, FGI International may borrow, from time to time, up to $2.5 million, with borrowings limited to 90% of FGI International’s export “open account” trade receivables.
Cash Flows The following table summarizes the key components of our cash flows for the years ended December 31, 2024, and 2023.
Cash Flows The following table summarizes the key components of our cash flows for the years ended December 31, 2025, and 2024.
Investing Activities Net cash used in investing activities was approximately $2.9 million and $1.8 million for the years ended December 31, 2024 and 2023, respectively, which was attributable to the purchases of property and equipment and intangible assets.
Investing Activities Net cash used in investing activities was approximately $1.0 million and $2.9 million for the years ended December 31, 2025 and 2024, respectively, which was attributable to the purchases of property and equipment and intangible assets.
We have continued to invest in our BPC strategy despite the market challenges, which is expected to drive improved organic growth in the longer term. We recently announced that we entered into a 5-year licensing agreement that will provide us access to an industry leading overflow toilet technology. We will continue to market this technology as FlushGuard Overflow Technology.
We have continued to invest in our BPC strategy despite the market challenges, which is expected to drive improved organic growth in the longer term. In 2025, we entered into a 5-year licensing agreement that will provide us access to an industry leading overflow toilet technology. We will continue to market this technology as FLUSH GUARD ® Overflow Technology.
While recent supply chain and inflation pressures have been a headwind, our durable partnerships with manufacturing and sourcing partners have helped to mitigate these challenges. We were incorporated in the Cayman Islands on May 26, 2021 in connection with a reorganization (the “Reorganization”) of our parent company, Foremost Groups Ltd.
While recent supply chain and inflation pressures have been a headwind, our durable partnerships with manufacturing and sourcing partners have helped to mitigate these challenges. 33 Table of Contents We were incorporated in the Cayman Islands on May 26, 2021 in connection with a reorganization and separation from our parent company, Foremost Groups Ltd.
Our revenue from sales of other products (custom kitchen cabinetry and other small offerings) increased by 50.9% to $10.4 million for the three months ended December 31, 2024, compared to $6.9 million for the year ended December 31, 2023.
Our revenue from sales of other products (custom kitchen cabinetry and other small offerings) increased by 28.4% to $13.4 million for the three months ended December 31, 2025, compared to $10.4 million for the year ended December 31, 2024.
RBC Bank Loan FGI Canada Ltd. has a line of credit agreement with Royal Bank of Canada (“RBC”), successor by amalgamation of HSBC Canada (the “Canadian Revolver”). The revolving line of credit with RBC allows for borrowing up to CAD7.5 million (USD5.2 million as of December 31, 2024).
(“FGI Canada”) has a line of credit agreement with Royal Bank of Canada (“RBC”), successor by amalgamation of HSBC Canada (the “Canadian Revolver”). The revolving line of credit with RBC allows for borrowing up to CAD7.5 million (USD5.5 million as of December 31, 2025).
We define Adjusted Operating Margins as Adjusted Operating Income divided by revenue. We use these non-GAAP measures, along with GAAP measures, to evaluate our business, measure our financial performance and profitability and our ability to manage expenses, after adjusting for certain one-time expenses, identify trends affecting our business and assist us in making strategic decisions.
We use these non-GAAP measures, along with GAAP measures, to evaluate our business, measure our financial performance and profitability and our ability to manage expenses, after adjusting for certain one-time expenses, identify trends affecting our business and assist us in making strategic decisions.
We believe these non-GAAP measures, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under GAAP, are useful to investors as they are widely used measures of performance and the adjustments we make to these non-GAAP measures provide investors further insight into our profitability and additional perspectives in comparing our performance over time on a consistent basis. 42 Table of Contents The following table reconciles GAAP income from operations to Adjusted Operating Income and Adjusted Operating Margins, as well as GAAP net income to Adjusted Net Income for the periods presented.
We believe these non-GAAP measures, when reviewed in conjunction with GAAP financial measures, and not in isolation or as substitutes for analysis of our results of operations under GAAP, are useful to investors as they are widely used measures of performance and the adjustments we make to these non-GAAP measures provide investors further insight into our profitability and additional perspectives in comparing our performance over time on a consistent basis.
Our capital expenditures amounted to approximately $2.9 million and $1.8 million for the years ended December 31, 2024 and 2023, respectively. We do not expect to incur significant capital expenditures in the immediate future.
Our capital expenditures amounted to approximately $1.0 million and $2.9 million for the years ended 39 Table of Contents December 31, 2025 and 2024, respectively. We do not expect to incur significant capital expenditures in the immediate future.
The CTBC Credit Line is unsecured and is fully guaranteed by the Company and partially guaranteed by Liang Chou Chen. Borrowings under this line of credit amounted to $2.3 million and $0 as of December 31, 2024 and 2023, respectively. On January 14, 2025, FGI International and CTBC agreed to increase the CTBC Credit Line to $3.0 million.
The CTBC Credit Line is unsecured and is fully guaranteed by the Company and partially guaranteed by Liang Chou Chen. Borrowings under this line of credit amounted to $2.1 million and $2.3 million as of December 31, 2025 and 2024, respectively.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits. Critical Accounting Policies The consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”).
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits. Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with U.S.
We define Adjusted Net Income as GAAP income before income taxes excluding the impact of certain non-recurring income and expenses, such as non-recurring compensation expenses related to our IPO, unusual litigation and business expansion expense, as well as income taxes at historical average effective rate and net income attributable to non-controlling shareholders.
We define Adjusted Net Income as GAAP income before income taxes excluding the impact of certain non-recurring income and expenses, such as IPO-related compensation, legal fees and business expansion expenses, income taxes at historical average effective rate, as well as net income attributable to non-controlling shareholders. We define Adjusted Operating Margins as adjusted income from operations divided by revenue.
Other income and expenses primarily include interest income and expenses, as well as miscellaneous non-operating income and expenses. Total other expenses, net decreased by approximately $0.7 million or 80.1%, to $0.2 million for the year ended December 31, 2024, from $0.9 million for the year ended December 31, 2023.
Other income and expenses primarily include interest income and expenses, as well as miscellaneous non-operating income and expenses. 36 Table of Contents Total other expenses, net increased by approximately $1.8 million to $1.9 million for the year ended December 31, 2025, from $0.2 million for the year ended December 31, 2024.
We define Adjusted Operating Income as GAAP income from operations excluding the impact of certain non-recurring income and expenses, including non-recurring compensation expenses related to our IPO, unusual litigation and business expansion expense.
We define Adjusted Operating Income as GAAP income from operations excluding the impact of certain non-recurring income and expenses, including IPO-related compensation (cash and share-based), legal fees and business expansion expenses.
Revenue categories by product are summarized as follow: 34 Table of Contents For the Years Ended December 31, Change 2024 Percentage 2023 Percentage Percentage USD % USD % % Sanitaryware $ 81,109,955 61.5 $ 75,551,117 64.4 7.4 Bath Furniture 14,739,205 11.2 14,770,376 12.6 (0.2) Shower System 25,521,977 19.4 19,997,197 17.1 27.6 Others 10,446,936 7.9 6,922,914 5.9 50.9 Total $ 131,818,073 100.0 $ 117,241,604 100.0 12.4 We derive the majority of our revenue from sales of sanitaryware, which accounted for 61.5% and 64.4% of our total revenue for the years ended December 31, 2024 and 2023, respectively.
Revenue categories by product are summarized as follow: For the Year Ended December 31, Change 2025 Percentage 2024 Percentage Percentage USD % USD % % Sanitaryware $ 80,331,947 61.5 $ 81,109,955 61.5 (1.0) Bath Furniture 14,204,305 10.9 14,739,205 11.2 (3.6) Shower System 22,581,882 17.3 25,521,977 19.4 (11.5) Others 13,410,518 10.3 10,446,936 7.9 28.4 Total $ 130,528,652 100.0 $ 131,818,073 100.0 (1.0) We derive the majority of our revenue from sales of sanitaryware, which accounted for 61.5% and 61.5% of our total revenue for the years ended December 31, 2025 and 2024, respectively.
Revenue generated from bath furniture sales decreased by 0.2% to $14.7 million for the year ended December 31, 2024 from $14.8 million for the year ended December 31, 2023. Revenue from shower systems made up approximately 19.4% and 17.1% of our total revenue for the years ended December 31, 2024 and 2023, respectively.
Revenue from shower systems made up approximately 17.3% and 19.4% of our total revenue for the years ended December 31, 2025 and 2024, respectively. Revenue from sales of shower systems decreased by 11.5% to $22.6 million for the year ended December 31, 2025 from $25.5 million for the year ended December 31, 2024.
Revenue categories by geographic location are summarized as follows: For the Years Ended December 31, Change 2024 Percentage 2023 Percentage Percentage USD % USD % % United States $ 82,378,167 62.5 $ 74,572,336 63.6 10.5 Canada 35,151,631 26.7 31,092,989 26.5 13.1 Europe 13,301,990 10.1 11,477,070 9.8 15.9 Rest of World 986,285 0.7 99,209 0.1 894.1 Total $ 131,818,073 100.0 $ 117,241,604 100.0 12.4 We generated the majority of our revenue in the United States market, which amounted to $82.4 million for the year ended December 31, 2024, and $74.6 million for the year ended December 31, 2023, representing a 10.5% increase.
Revenue categories by geographic location are summarized as follows: 35 Table of Contents For the Year Ended December 31, Change 2025 Percentage 2024 Percentage Percentage USD % USD % % United States $ 80,692,411 61.8 $ 82,378,167 62.5 (2.0) Canada 33,349,087 25.5 35,151,631 26.7 (5.1) Europe 14,210,646 10.9 13,301,990 10.1 6.8 Rest of World 2,276,508 1.8 986,285 0.7 130.8 Total $ 130,528,652 100.0 $ 131,818,073 100.0 (1.0) We generated the majority of our revenue in the United States market, which amounted to $80.7 million for the year ended December 31, 2025, and $82.4 million for the year ended December 31, 2024, representing a 2.0% decrease.
East West Bank Credit Facility The Company's wholly-owned subsidiary, FGI Industries, has a line of credit agreement (the “Credit Agreement”) with East West Bank, which is collateralized by all assets of FGI Industries and personally guaranteed by Liang Chou Chen, who holds approximately 49.91% of the voting control of Foremost.
The Company’s management is of the opinion that it has sufficient funds to meet the Company’s working capital requirements and debt obligations as they become due over the next twelve (12) months. 37 Table of Contents East West Bank Credit Facility The Company's wholly-owned subsidiary, FGI Industries, has a line of credit agreement (the “Credit Agreement”) with East West Bank, which is collateralized by all assets of FGI Industries and personally guaranteed by Liang Chou Chen, who holds approximately 49.91% of the voting control of Foremost.
For the Years Ended December 31, 2024 2023 USD USD Net cash (used in) provided by operating activities $ (7,425,317) $ 2,212,823 Net cash used in investing activities (2,875,816) (1,765,738) Net cash provided by (used in) financing activities 7,543,192 (2,835,876) Effect of exchange rate fluctuation on cash (461,140) 98,604 Net changes in cash (3,219,081) (2,290,187) Cash, beginning of year 7,777,241 10,067,428 Cash, end of year $ 4,558,160 $ 7,777,241 Operating Activities Net cash used in operating activities was approximately $7.4 million for the year ended December 31, 2024.
For the Year Ended December 31, 2025 2024 USD USD Net cash provided by (used in) operating activities $ 673,220 $ (7,425,317) Net cash used in investing activities (1,015,847) (2,875,816) Net cash (used in) provided by financing activities (2,633,539) 7,543,192 Effect of exchange rate fluctuation on cash 317,807 (461,140) Net changes in cash (2,658,359) (3,219,081) Cash, beginning of year 4,558,160 7,777,241 Cash, end of year $ 1,899,801 $ 4,558,160 Operating Activities Net cash provided by operating activities was approximately $0.7 million for the year ended December 31, 2025, compared to net cash used in operating activities of $7.4 million in the prior year.
The interest rate as of December 31, 2024 and 2023 w as 7.25% and 8.25%, resp ectively. Each sum of borrowings under the Credit Agreement is deemed due on demand and is classified as a short-term loan. The outstanding balance of such loan was $9.6 million and $7.0 million as of December 31, 2024 and 2023, respectively.
Each sum of borrowings under the Credit Agreement is classified as a short-term loan. The outstanding balance of such loan was $8.1 million and $9.6 million as of December 31, 2025 and 2024, respectively. RBC Bank Loan FGI Canada Ltd.
Financing Activities Net cash provided by financing activities was approximately $7.5 million for the year ended December 31, 2024 compared to net cash used in financing activities of $2.8 million for the year ended December 31, 2023. During 2023, we made net repayments on the revolving credit facility, resulting in an overall cash outflow in financing activities.
Financing Activities Net cash used in financing activities was approximately $2.6 million for the year ended December 31, 2025, compared to net cash provided by financing activities of $7.5 million in the prior year.
Research and development expenses primarily comprised personnel costs and product development expenditures. Our R&D activities remained stable and had a minimal impact on our overall consolidated results of operations. Other Income (Expenses) We incurred insignificant other income and expenses during the years ended December 31, 2024 and 2023.
The increase was primarily due to inflationary pressures and additional expenditures related to corporate support activities. Research and development expenses primarily comprised personnel costs and product development expenditures. Our R&D activities remained stable and had a minimal impact on our overall consolidated results of operations.
Non-GAAP Measures In addition to the measures presented in our consolidated financial statements, we use the following non-GAAP measures to evaluate our business, measure our performance, identify trends affecting our business and assist us in making strategic decisions. Our non-GAAP measures are: Adjusted Operating Income, Adjusted Operating Margins and Adjusted Net Income.
Actual results may differ from our estimates, resulting in adjustments to revenue in future periods. 40 Table of Contents Non-GAAP Measures In addition to the measures presented in our unaudited condensed consolidated financial statements, we use the following non-GAAP measures to evaluate our business, measure our performance, identify trends affecting our business and assist us in making strategic decisions.
The current amount of maximum borrowings is $18,000,000 and a maturity date of December 21, 2024. East West Bank has agreed to extend the maturity date to June 21, 2025 while efforts regarding a renewal of the facility are ongoing.
The current amount of maximum borrowings is $18,000,000 and the Credit Agreement had an original maturity date of December 21, 2024. East West Bank has agreed to extend the maturity date on several occasions, most recently through April 3, 2026 while the parties discuss a renewal of the facility.
With total liquidity of $15.6 million as of December 31, 2024, the Company believes it has sufficient financial flexibility to fund its organic growth strategy. • Deep manufacturing partners and customer relationships.
We will continue to prioritize capital deployment in support of organic growth opportunities, while continuing to evaluate strategic M&A opportunities. With total financial resources of $8.5 million as of December 31, 2025, the Company believes it has sufficient financial flexibility to fund its organic growth strategy. • Deep manufacturing partners and customer relationships.
This amounted to $13.3 million and $11.5 million for the years ended December 31, 2024 and 2023, respectively, representing a 15.9% increase. Gross Profit Gross profit was $35.4 million for the year ended December 31, 2024, reflecting a 10.4% increase compared to the prior year.
This amounted to $14.2 million and $13.3 million for the years ended December 31, 2025 and 2024, respectively, representing a 6.8% increase. Our warehouse business in Germany has been gaining traction in recent years. Gross Profit Gross profit was $35.3 million for the year ended December 31, 2025, reflecting a 0.5% decrease compared to the prior year.
For the Years Ended December 31, 2024 2023 USD USD (Loss) income from operations $ (2,099,591) $ 2,304,443 Adjustments: Non-recurring IPO-related share-based compensation 238,876 238,876 IPO and arbitration legal fee — 50,000 Business expansion expense 247,080 247,082 Adjusted Operating (Loss) Income $ (1,613,635) $ 2,840,401 Revenue $ 131,818,073 $ 117,241,604 Adjusted Operating Margins (%) (1.2) 2.4 For the Years Ended December 31, 2024 2023 USD USD (Loss) income before income taxes $ (2,282,098) $ 1,387,788 Adjustments: Non-recurring IPO-related share-based compensation 238,876 238,876 IPO and arbitration legal fee — 50,000 Business expansion expense 247,080 247,082 Adjusted (loss) income before income taxes (1,796,142) 1,923,746 Less: income taxes at 18% rate (323,306) 346,274 Less: net loss attributable to non-controlling shareholders (533,188) (154,040) Adjusted Net (Loss) Income $ (939,648) $ 1,731,512
For the Year Ended December 31, 2025 2024 USD USD Loss from operations $ (2,402,056) $ (2,099,591) Adjustments: Non-recurring IPO-related share-based compensation 19,906 238,876 Business expansion expense — 247,080 Adjusted Operating Loss $ (2,382,150) $ (1,613,635) Revenue $ 130,528,652 $ 131,818,073 Adjusted Operating Margins (%) (1.8) (1.2) For the Year Ended December 31, 2025 2024 USD USD Loss before income taxes $ (4,339,014) $ (2,282,098) Adjustments: Non-recurring IPO-related share-based compensation 19,906 238,876 Business expansion expense — 247,080 Adjusted loss before income taxes (4,319,108) (1,796,142) Less: income taxes at 18% rate (777,439) (323,306) Less: net loss attributable to non-controlling shareholders (985,880) (533,188) Adjusted Net Loss $ (2,555,789) $ (939,648) 41 Table of Contents
Use of estimates and assumptions The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenue and expenses during the periods presented.
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures.
Revenue Our revenue increased by $14.6 million, or 12.4%, to $131.8 million for the year ended December 31, 2024, from $117.2 million for the year ended December 31, 2023. The increase in our revenue was primarily driven by increases in sales of sanitaryware, shower system and custom kitchen cabinetry categories.
Revenue Our revenue decreased by $1.3 million, or 1.0%, to $130.5 million for the year ended December 31, 2025, from $131.8 million for the year ended December 31, 2024. The decrease in our revenue was driven by decreases in sales of sanitaryware, bath furniture and shower system, partially offset by an increase in sales of kitchen cabinetry and others.
Our focus on higher-margin products has continued to deliver results, with gross margins reaching 26.9% in 2024 and 27.4% in 2023, a significant rise from 19.5% in 2022. This positive trajectory reflects our commitment to optimizing our product mix and operational efficiency.
In addition, we continue to focus on our initiatives to expand geographically, with recently signed agreements providing entry into India, Eastern Europe and the UK. • Enhanced margin performance. Our focus on higher-margin products has continued to deliver results, with gross margins reaching 27.0% in 2025 and 26.9% in 2024, a significant rise from 19.5% in 2022.
Operating Expenses Selling and distribution expenses primarily consisted of personnel costs, marketing and promotion costs, commission, and freight and leasing charges. Our selling and distribution expenses increased by $5.7 million, or 28.3%, to $25.6 million for the year ended December 31, 2024, from $20.0 million for the year ended December 31, 2023.
Gross profit margin percentage stood at 27.0% for the year ended December 31, 2025, a 10-basis-point increase from 26.9% in 2024. Operating Expenses Selling and distribution expenses primarily consisted of personnel costs, marketing and promotion costs, commission, and freight and leasing charges.
Our revenue generated in the Canadian market was $35.2 million and $31.1 million for the years ended December 31, 2024 and 2023, respectively, representing a 13.1% increase.
Our revenue generated in the Canadian market was $33.3 million and $35.2 million for the years ended December 31, 2025 and 2024, respectively, representing a 5.1% decrease. This decline reflects a moderation in sales during the second half of the year, as retailers continued to slow purchases following strong activity in the first half.
The shift to net cash inflows in 2024 highlights our focus on enhancing liquidity and financial flexibility in response to evolving business needs and growth opportunities. 38 Table of Contents Commitments and Contingencies Capital Expenditures Our capital expenditures were incurred primarily in connection with the acquisition of property and equipment and intangible assets.
The transition from net cash inflows in 2024 to net outflows in 2025 underscores our commitment to prudent financial management and maintaining a balanced approach to liquidity and leverage as we continue to execute our strategic objectives. Commitments and Contingencies Capital Expenditures Our capital expenditures were incurred primarily in connection with the acquisition of property and equipment and intangible assets.
Despite the overall increase in revenue, the decline in sanitaryware’s share of total revenue suggests a diversification of our product mix, reflecting our strategic efforts to expand other product categories. Our revenue from bath furniture sales accounted for 11.2% and 12.6% of our total revenue for the years ended December 31, 2024 and 2023, respectively.
Our revenue from bath furniture sales accounted for 10.9% and 11.2% of our total revenue for the years ended December 31, 2025 and 2024, respectively. Revenue generated from bath furniture sales decreased by 3.6% to $14.2 million for the year ended December 31, 2025 from $14.7 million for the year ended December 31, 2024.
Revenue generated from the sales of sanitaryware increased by 7.4% to $81.1 million for the year ended December 31, 2024, from $75.6 million for the year ended December 31, 2023. This growth was primarily driven by higher sales volumes.
Revenue generated from the sales of sanitaryware decreased by 1.0% to $80.3 million for the year ended December 31, 2025, from $81.1 million for the year ended December 31, 2024. Despite this modest decline, sanitaryware maintained its position as our largest product category.
As of December 31, 2024, FGI Canada Ltd. was not in compliance with certain financial covenants in the Canadian Revolver related to its debt to tangible net worth ratio. In December 2024, FGI Canada Ltd. obtained a waiver from the lender acknowledging the non-compliance and FGI Canada Ltd.’s plan to remedy the default on or before March 31, 2025.
As of December 31, 2025, FGI Canada was not in compliance with certain covenants related to its debt to tangible net worth ratio. RBC agreed to waive its right to call the debt related to this noncompliance. Borrowings under this line of credit amounted to $1.7 million and $2.6 million as of December 31, 2025 and 2024, respectively.
Our general and administrative expenses increased by $1.8 million, or 21.1%, to $10.2 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023. The increase was driven by inflationary pressures and expenses related to newly formed subsidiaries and growth initiatives, supporting our continued expansion and operational growth.
General and administrative expenses primarily consisted of personnel costs, professional service fees, depreciation, travel, and office supply expenses. Our general and administrative expenses increased by $0.9 million, or 8.9%, to $11.1 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024.
In establishing the required allowance for expected credit losses, management considers historical collection experience, aging of the receivables, the economic environment, industry trend analysis, and the credit history and financial conditions of the customers. Management reviews its receivables on a regular basis to determine if the expected credit losses are adequate and adjusts the allowance when necessary.
Allowance for Credit Losses on Accounts Receivable We maintain an allowance for expected credit losses on accounts receivable based on a combination of historical collection experience, the aging of receivables, current economic conditions, industry trends, and the financial condition of our customers. Management regularly reviews the adequacy of the allowance, considering both quantitative and qualitative factors.
Looking ahead, we anticipate gross margins to remain in line with the levels achieved in 2024 and 2023. • Efficient capital deployment. We will continue to prioritize capital deployment in support of organic growth opportunities, while continuing to evaluate strategic M&A opportunities.
This positive trajectory in margins reflects our commitment to optimizing our product mix and operational efficiency despite recent headwinds from tariffs. Looking ahead, we anticipate gross margins to remain in line with the levels achieved in 2025 and 2024. • Efficient capital deployment.
Removed
We were recently awarded product placements at several large customers, including two of the largest commercial distributors in North America. In addition, we continue to focus on our initiatives to expand geographically, with recently signed agreements providing entry into India, Eastern Europe and the UK. • Enhanced margin performance.
Added
Consistent with our long-term strategic plan, we expect to continue to make significant investments across our business in order to continue to attract new customers, expand existing relationships, develop new products and manufacturing capabilities and expand into new jurisdictions, thereby prioritizing long-term growth over short-term profitability.
Removed
This discussion, and any financial information and results of operations discussed herein, refers to the assets, liabilities, revenue, expenses and cash flows that are directly attributable to the kitchen and bath business of Foremost before the completion of the Reorganization and are presented as if we had been in existence and the Reorganization had been in effect for the entirely of each of the periods presented.
Added
Reverse Share Split On July 28, 2025, the Company filed an amendment (the “Amendment”) to the Company’s Amended and Restated Memorandum and Articles of Association with the Registrar of Companies in the Cayman Islands to effect a 1-for-5 reverse share split (the “Reverse Share Split”) of the Company’s ordinary shares, which was effected on July 31, 2025.
Removed
Revenue from sales of shower systems increased by 27.6% to $25.5 million for the year ended December 31, 2024 from $20.0 million for the year ended December 31, 2023. Our strategic initiatives in the shower systems category continue driving significant revenue growth.
Added
Unless otherwise noted, the share and per share information in this Annual Report on Form 10-K have been adjusted to give effect to the Reverse Share Split. Tariff Developments Our business was significantly impacted by the changes in the U.S. tariff regime in 2025 and related responses from foreign jurisdictions. On February 20, 2026, the U.S.
Removed
This revenue accounted for 62.5% and 63.6% of our total revenue for the years ended December 31, 2024 and 2023, respectively. This growth was primarily driven by the expansion of our distribution network and the successful execution of marketing initiatives. Our second largest market is Canada.
Added
Supreme Court struck down certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Following the Supreme Court decision, the U.S. Administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, subject to certain carveouts.
Removed
The strong performance in Canada underscores the effectiveness of our regional growth strategy and highlights the market’s increasing contribution to our overall revenue. 35 Table of Contents We also derive our revenue from Europe, which consists primarily of sales in Germany.
Added
As of the filing date, it remains uncertain what impact these decisions will have on our future financial results, including the process and availability of obtaining refunds of amounts previously paid for the IEEPA tariffs or any fluctuations of the level of replacement tariffs imposed or the addition of any new tariffs through other means.
Removed
Gross profit margin percentage stood at 26.9% for the year ended December 31, 2024, a 50-basis-point decrease from 27.4% in 2023. This gross profit performance was driven by increased sales volume and a sustained focus on a higher-margin product mix.
Added
The stability in its share of total revenue reflects the ongoing resilience and steady demand for sanitaryware products, even as we continue to diversify our product portfolio and expand other categories in line with our long-term growth strategy.
Removed
The increase was driven by higher personnel costs, expanded marketing and promotional activities, and rising warehouse expenses, reflecting the impact of inflation and our continued investment in driving sales growth. General and administrative expenses primarily consisted of personnel costs, professional service fees, depreciation, travel, and office supply expenses.
Added
As part of our broader strategic focus on diversifying our product mix and expanding higher-growth categories, resources and sales efforts were increasingly allocated to other segments, which likely were factors in bath furniture sales during the period.
Removed
This decrease was primarily driven by proceeds from a settlement agreement and gains from foreign currency transactions, partially offset by higher interest expenses derived from our credit facilities.
Added
While shower system revenue dropped year-over-year in 2025, our recently launched programs have driven growth in recent quarters and we anticipate them continuing to be a positive driver moving forward, similar to our sanitaryware programs.
Removed
Provision for Income Taxes We recorded income tax benefit of $0.5 million for the year ended December 31, 2024, and provision for income tax of $0.8 million for the year ended December 31, 2023. Loss before income taxes resulted in a tax benefit for the year.
Added
This revenue accounted for 61.8% and 62.5% of our total revenue for the years ended December 31, 2025 and 2024, respectively. This modest decrease reflects our ability to minimize the broader effects of tariff-related disruptions through proactive supply chain management, pricing strategies, and close collaboration with our key customers.
Removed
Net (Loss) Income For the year ended December 31, 2024, we reported a net loss of $1.7 million, compared to a net income of $0.6 million in 2023, reflecting a $2.3 million decrease. This change was driven by a combination of factors discussed above. While these factors impacted short-term profitability, they position us for long-term growth and operational strength.
Added
As a result, despite the significant headwinds from trade policies, our U.S. business demonstrated relative resilience and continued to represent a stable 61.8% of total revenue, underscoring the effectiveness of our efforts to manage external challenges and maintain our market position. Our second largest market is Canada.
Removed
Liquidity and Capital Resources Our principal sources of liquidity are cash generated from operating activities and cash borrowed under credit facilities, which we believe provides sufficient liquidity to support our financing needs. As of December 31, 2024, we had cash and working capital of $4.6 million and $10.4 million, respectively.
Added
While the wholesale channel showed signs of improvement in the third quarter, this momentum was not sufficient to offset the overall softness in demand during the latter part of the year.
Removed
As of December 31, 2024, we had approximately $14.5 million outstanding in the aggregate under our credit facilities discussed below for working capital replenishment. We believe our revenue and operations will continue to grow and the current working capital is sufficient to support our operations and debt obligations well into the foreseeable future.
Added
Despite these headwinds, Canada remained our second largest market, accounting for 25.5% of total revenue, and we continue to closely monitor market dynamics and adjust our strategies to support long-term growth in the region. We also derive our revenue from Europe, which consists primarily of sales in Germany.
Removed
However, we may need additional cash resources in the 36 Table of Contents future if we experience changes in business conditions or other developments, such as rising interest rates, inflation and increased costs, and may also need additional cash resources in the future if we wish to pursue opportunities for investment, acquisition, strategic cooperation or other similar actions.
Added
Our selling and distribution expenses decreased by $0.5 million, or 1.9%, to $25.1 million for the year ended December 31, 2025, from $25.6 million for the year ended December 31, 2024. This reduction is a result of our continued focus on operational efficiency and cost management initiatives.
Removed
For example, from time to time we may provide loans or other operational support to Foremost to assist Foremost in capital expenditures or other efforts related to the manufacturing services that Foremost provides to us, which could limit the assets available for other corporate purposes or require additional resources.
Added
Other Income (Expenses) We incurred insignificant other income and expenses during the years ended December 31, 2025 and 2024.

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