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What changed in FGI Industries Ltd.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of FGI Industries Ltd.'s 2023 and 2024 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 2024 report.

+228 added−253 removedSource: 10-K (2025-03-31) vs 10-K (2024-03-26)

Top changes in FGI Industries Ltd.'s 2024 10-K

228 paragraphs added · 253 removed · 176 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeSuch changes had no impact on the Company's historical consolidated financial position, results of operations or cash flows. ​ We offer a wide variety of products that fall into four categories: Sanitaryware, Bath Furniture, Shower Systems and Other. Our brand and category makeup of our net sales is as follows: Sanitaryware .
Biggest changeThe “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.
Our team has identified and begun to execute on opportunities for operational improvement, growth and business expansion as a standalone company. Significant ownership and support from Foremost Foremost is a family-controlled and privately held holding company. As an approximate 72% owner of FGI’s ordinary shares, Foremost remains committed to supporting FGI’s strategic development and growth plans.
Our team has identified and begun to execute on opportunities for operational improvement, growth and business expansion as a standalone company. Significant ownership and support from Foremost Foremost is a family-controlled and privately held holding company. As an approximate 71% owner of FGI’s ordinary shares, Foremost remains committed to supporting FGI’s strategic development and growth plans.
On a fundamental level, our kitchen and bath products need to pass heavy quality control and regulatory standards, making it difficult for potential new entrants. 10 Table of Contents Experienced Management Team We have assembled an executive team with a deep base of management experience within industrial manufacturing companies.
On a fundamental level, our kitchen and bath products need to pass heavy quality control and regulatory standards, making it difficult for potential new entrants. 9 Table of Contents Experienced Management Team We have assembled an executive team with a deep base of management experience within industrial manufacturing companies.
While custom kitchen cabinetry currently represents less than 3% of our total sales, it is an area where we see significant long term organic growth, gross margin expansion and consolidation possibilities. The majority of our custom kitchen cabinetry and shower products are sourced from Southeast Asia.
While custom kitchen cabinetry currently represents less than 8% of our total sales, it is an area where we see significant long term organic growth, gross margin expansion and consolidation possibilities. The majority of our custom kitchen cabinetry and shower products are sourced from Southeast Asia.
The contents of our website are not incorporated by reference into this Annual Report on Form 10-K or any other document we file with the SEC, and any reference to our website is intended to be an inactive textual reference only.
The contents of our website are not incorporated by reference into this Annual Report on Form 10-K or any other document we file with the SEC, and any reference to our website is intended to be an inactive textual reference only. 12 Table of Contents
FGI and its subsidiaries are party to two shared services agreements with Foremost Groups Ltd., our largest shareholder, or its subsidiaries, pursuant to which the parties provide certain general and administrative services to one another in certain geographies. Competition We operate in a highly fragmented industry that is composed of numerous local, regional and national manufacturers.
FGI and its subsidiaries are party to two shared services agreements with Foremost Groups Ltd., our largest shareholder, or its subsidiaries, pursuant to which the parties provide certain general and administrative services to one another in certain geographies. 8 Table of Contents Competition We operate in a highly fragmented industry that is composed of numerous local, regional and national manufacturers.
We plan to continue to focus on building our branded-product footprint over the long term while increasing the share of brands as a percentage of our total sales. 7 Table of Contents ● Products : We have significant “whitespace” opportunities in several product categories within our core kitchen and bath markets.
We plan to continue to focus on building our branded-product footprint over the long term while increasing the share of brands as a percentage of our total sales. • Products : We have significant “whitespace” opportunities in several product categories within our core kitchen and bath markets.
Environmental responsibility is everyone’s task at FGI, to ensure that we as a company protect our employees, our customers and our planet for this generation and the ones that follow. 11 Table of Contents Seasonality Our business has been subject to seasonal influences, with higher sales typically realized during the second and third calendar quarters, corresponding with the peak season for R&R activity.
Environmental responsibility is everyone’s task at FGI, to ensure that we as a company protect our employees, our customers and our planet for this generation and the ones that follow. Seasonality Our business has been subject to seasonal influences, with higher sales typically realized during the second and third calendar quarters, corresponding with the peak season for R&R activity.
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.
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 costs of our products are subject to inflationary pressures and commodity price fluctuations. We have generally been able over time to recover the effects of inflation, commodity price and currency fluctuations through sales price increases.
The costs of our products are subject to 10 Table of Contents inflationary pressures and commodity price fluctuations. We have generally been able over time to recover the effects of inflation, commodity price and currency fluctuations through sales price increases.
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 2023 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 32% of our net sales in 2024 were to large retailers.
Human Capital As of December 31, 2023, we employed approximately 287 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, 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.
Our sales through e-commerce channels and retailers represented about 12% of our net sales in 2023 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 7% of our net sales in 2023.
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.
The information contained on, or accessible through, our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider any information contained in, or that can be accessed through, our website as part of this Annual Report on Form 10-K. 12 Table of Contents We are a Cayman Islands exempted company.
Our website address is www.fgi-industries.com. The information contained on, or accessible through, our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider any information contained in, or that can be accessed through, our website as part of this Annual Report on Form 10-K. We are a Cayman Islands exempted company.
Tangshan Huida Ceramic Group Co., Ltd (“Huida”) supplies the majority of our sanitaryware products. Huida accounted for approximately 71.4% of the total balance of our accounts payable as of December 31, 2023. No other supplier accounts for more than 10% of our accounts payable as of December 31, 2023.
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.
David Bruce, our Chief Executive Officer, Bob Kermelewicz, our Executive Vice President, United States, Jennifer Earl, our Executive Vice President, Canada and Norman Kroenke, our Executive Vice President, Europe each have over twenty years of industry experience. Our Executive Chairman John Chen has more than twelve years of investment management and financial experience.
David Bruce, our Chief Executive Officer, Jennifer Earl, our President, North America and Norman Kroenke, our Executive Vice President, Europe each have over twenty years of industry experience. Our Executive Chairman John Chen has more than twelve years of investment management and financial experience.
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. In 2023, approximately 34% of our net sales were to our wholesale partners.
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.
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the United States Securities and Exchange Commission, or the SEC, and all amendments to these filings, are available, free of charge, on our website at www.fgi-industries.com as soon as reasonably practicable following our filing of any of these reports with the SEC.
However, we do not currently rely upon the “controlled company” exemptions. 11 Table of Contents Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and other filings with the United States Securities and Exchange Commission, or the SEC, and all amendments to these filings, are available, free of charge, on our website at www.fgi-industries.com as soon as reasonably practicable following our filing of any of these reports with the SEC.
In support of our safety efforts, we identify, assess and investigate incidents and injury data, and each year set goals to improve key safety performance indicators. We train, promote, consult and communicate with our workforce in this process. In 2020, the COVID-19 pandemic highlighted the importance of employee welfare.
In support of our safety efforts, we identify, assess and investigate incidents and injury data, and each year set goals to improve key safety performance indicators. We train, promote, consult and communicate with our workforce in this process.
In 2023, approximately 13% of our net sales were to our commercial partners. 8 Table of Contents E-Commerce We sell a growing number of our products through the e-commerce channels of our retail partners as well as “e-commerce only” retailers such as Build.com and Wayfair.com, both of which are rapidly increasing market penetration in the home R&R space.
E-Commerce We sell a growing number of our products through the e-commerce channels of our retail partners as well as “e-commerce only” retailers such as Build.com and Wayfair.com, both of which are rapidly increasing market penetration in the home R&R space.
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 .
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 .
Because Foremost holds approximately 72% of the voting power of our ordinary shares, we are considered a “controlled company” under the corporate governance rules of Nasdaq. However, we do not currently rely upon the “controlled company” exemptions.
Because Foremost holds approximately 71% of the voting power of our ordinary shares, we are considered a “controlled company” under the corporate governance rules of Nasdaq.
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.
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 .
Due to the highly-differentiated nature of our product categories and the scarcity of industry data, there is little reliable information on precise market shares for our product categories. 9 Table of Contents We believe that brand reputation is an important factor in consumer selection, and that competition in this industry is also based largely on product features and innovation, product quality, customer service, breadth of product offerings and price.
We believe that brand reputation is an important factor in consumer selection, and that competition in this industry is also based largely on product features and innovation, product quality, customer service, breadth of product offerings and price.
Our Products As a result of the increased significance of shower systems in our product portfolio in 2023, the Company has created a standalone “Shower Systems” product category, as detailed below. The “Other” category continues to comprise our kitchen cabinetry and other smaller offerings. The updates were applied retroactively to impacted product categories.
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.
Stable Technological and Industry Dynamics Our core bath and kitchen product markets are generally less prone to fast-paced technological innovation or “fast fashion” consumer trends.
These strengths were highlighted during the pandemic, as we believe that we remained among the most consistent and reliable suppliers in our industry despite the unprecedented challenges which were presented. Stable Technological and Industry Dynamics Our core bath and kitchen product markets are generally less prone to fast-paced technological innovation or “fast fashion” consumer trends.
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 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.
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 6 Table of Contents United States, Canada and Europe.
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 .
Commercial 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.
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.
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Major Developments in our Business Initial Public Offering On January 27, 2022, FGI closed an underwritten public offering of 2.5 million units (the “Units”) (consisting of (i) one ordinary share, par value $0.0001 (the “Ordinary Shares”) and, (ii) one warrant to purchase one Ordinary Share (the “Warrants”)) at a public offering price of $6.00 per unit and received net proceeds, after commissions and expenses, of approximately $12.4 million. 5 Table of Contents Reorganization Prior to our initial public offering, we completed the reorganization (the “Reorganization”) of our parent company, Foremost, and its affiliates, pursuant to which, among other actions, Foremost contributed all of its equity interests in FGI Industries, Inc., FGI Europe and FGI International, each a wholly-owned subsidiary of Foremost, to the newly formed FGI Industries Ltd.
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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.
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Foremost was established in 1987 and has become a global leader in kitchen and bath design, indoor and outdoor furniture, food service equipment, and manufacturing.
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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.
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Our business now operates separately from the rest of Foremost’s business units, and we and Foremost believe that operating as a standalone company will allow FGI to more effectively execute its long-term “BPC” growth strategy while focusing more efficiently on its own capital allocation priorities.
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Due to the highly-differentiated nature of our product categories and the scarcity of industry data, there is little reliable information on precise market shares for our product categories.
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As a standalone business, FGI is a top-tier company in many key product categories within the North American kitchen and bath products markets, with many additional expansion opportunities via existing and adjacent product, sales and geographic channels.
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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.
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The importance of these strengths has been highlighted during the outbreak and ongoing spread of the novel coronavirus (“COVID-19”) pandemic, as we believe that we have remained among the most consistent and reliable suppliers in our industry despite the unprecedented challenges which were presented.
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We reacted quickly to keep our employees safe through the implementation of policies and safety measures that adhered to best practices from the World Health Organization and the Centers for Disease Control.
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Despite the ongoing COVID-19 pandemic, we did not experience a material change to our daily operations as we quickly adjusted employee work schedules in alignment with the exigencies of both the pandemic and our business requirements.
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Prior to the Reorganization, FGI Industries, Inc., FGI Europe and FGI International operated as business units within Foremost for over thirty years. Foremost continues to be a significant holder of our ordinary shares and supports FGI via global sourcing and manufacturing arrangements.
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By leveraging Foremost’s long-standing experience in manufacturing and sourcing for certain of our product categories, we believe that FGI maintains a competitive advantage in supplying products that are of good design and high quality.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe continue to identify and implement actions to improve the effectiveness of our internal controls over financial reporting and disclosure controls and procedures, but there can be no assurance that such remediation efforts will be successful. We also expect to continue to incur or expend, substantial accounting and other expenses and significant management time and resources.
Biggest changeWe 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.
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.
However, because we conduct only limited operations in China with only 27 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 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.
Foremost holds ordinary shares that represent approximately 72% of all outstanding voting power, and, as such, may significantly influence the results of matters voted on by our shareholders and could effectively control many other major decisions regarding our operations, capital allocation priorities and corporate governance. In addition, we are reliant upon Foremost for manufacturing and other support. Mr.
Foremost holds ordinary shares that represent approximately 71% of all outstanding voting power, and, as such, may significantly influence the results of matters voted on by our shareholders and could effectively control many other major decisions regarding our operations, capital allocation priorities and corporate governance. In addition, we are reliant upon Foremost for manufacturing and other support. Mr.
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.
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.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the last business day of that year’s second fiscal quarter, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates equals or exceeds $700 million as of the last business day of that year’s second fiscal quarter.
We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the last business day of that year’s second fiscal quarter, or (2) our annual revenue exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates equals or exceeds $700 million as of the last business day of that year’s second fiscal quarter.
However, if we were selected for review, or one of our 20 Table of Contents 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.
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.
Such events could impair our ability to manage our business, could disrupt our supply of raw materials, and could affect production, transportation and delivery of products. For example, the U.S.-China trade relations remain uncertain, and if tensions continue to worsen, we may our supply chain, production and delivery of products could be negatively impacted.
Such events could impair our ability to manage our business, could disrupt our supply of raw materials, and could affect production, transportation and delivery of products. For example, the U.S.-China trade relations remain uncertain, and if tensions continue to worsen, our supply chain, production and delivery of products could be negatively impacted.
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.
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.
These attacks have led and could in the future lead to business interruption, production or operational downtime, product shipment delays, exposure or loss of proprietary confidential or financial information or the personal information of our employees, suppliers, customers or 24 Table of Contents consumers, 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 employees, suppliers, customers and consumers, exposure to litigation, and increased costs associated with the remediation and mitigation of such attacks.
These attacks have led and could in the future lead to business interruption, production or operational downtime, product shipment delays, exposure or loss of proprietary confidential or financial information or the personal information of our employees, suppliers, customers or consumers, 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 employees, suppliers, customers and consumers, exposure to litigation, and increased costs associated with the remediation and mitigation of such attacks.
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. ​ 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. 15 Table of Contents We are dependent on a few key third-party suppliers.
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.
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.
Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the 30 Table of Contents judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met.
Although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met.
Liang Chou Chen holds approximately 49.89% of the voting control of Foremost. The interests of Foremost, particularly with respect to change-in-control transactions and election of directors, may conflict with those of our company and/or our shareholders, and Foremost may not always act in the best interest of our company.
Liang Chou Chen holds approximately 49.91% of the voting control of Foremost. The interests of Foremost, particularly with respect to change-in-control transactions and election of directors, may conflict with those of our company and/or our shareholders, and Foremost may not always act in the best interest of our company.
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).
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).
Such events could adversely affect our results of operations and financial position. ​ We rely on information systems and technologies, and a breakdown of these systems could adversely affect our results of operations and financial position. We rely on many information systems and technologies to process, transmit, store and manage information to support our business activities, including new AI capabilities.
We rely on information systems and technologies, and a breakdown of these systems could adversely affect our results of operations and financial position. We rely on many information systems and technologies to process, transmit, store and manage information to support our business activities, including new AI capabilities.
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.
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.
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.
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.
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 and approximately 71% and 86% of the total balance of our accounts payable as of December 31, 2023 and 2022, 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 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 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.
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.
In each of 2023 and 2022, approximately 36% 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 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.
Risks Related to Our Securities Foremost Groups Ltd. holds a significant majority of the voting power of our ordinary shares, approximately 72%, and will be able to exert significant control over us.
Risks Related to Our Securities Foremost Groups Ltd. holds a significant majority of the voting power of our ordinary shares, approximately 71%, and will be able to exert significant control over us.
Our initiatives to invest in brand building, brand awareness and product innovation 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.
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.
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.
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.
While we are not a China based 22 Table of Contents issuer, in such instance, we may still be unable to offer securities in China, which could limit the number of buyers of our securities and cause our securities to trade at a lower price than they would in the absence of the exercise of such oversight and control.
While we are not a China based issuer, in such instance, we may still be unable to offer securities in China, which could limit the number of buyers of our securities and cause our securities to trade at a lower price than they would in the absence of the exercise of such oversight and control.
Further, the growing e-commerce channel brings an increased number of competitors and greater pricing transparency for consumers, as well as conflicts between our existing distribution channels and a need for different 23 Table of Contents distribution methods. These factors could affect our results of operations and financial position.
Further, the growing e-commerce channel brings an increased number of competitors and greater pricing transparency for consumers, as well as conflicts between our existing distribution channels and a need for different distribution methods. These factors could affect our results of operations and financial position.
However, a significant portion of our revenues, expenses, assets, indebtedness and other liabilities are denominated in foreign currencies, particularly the Euro, the Chinese Renminbi and the Canadian dollar.
However, a significant portion of our revenue, expenses, assets, indebtedness and other liabilities are denominated in foreign currencies, particularly the Euro, the Chinese Renminbi and the Canadian dollar.
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. 18 Table of Contents 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. Global or regional unrest, conflict, geopolitical disputes or catastrophic events could affect our operations and results of operations.
Failure to remediate a material weakness 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 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.
In addition, we may experience delays, disruptions or quality control problems in our manufacturing operations, over which we have little to no control. 17 Table of Contents Natural disasters or other disruptions could have a material adverse effect on our business, financial condition or results of operations.
In addition, we may experience delays, disruptions or quality control problems in our manufacturing operations, over which we have little to no control. Natural disasters or other disruptions could have a material adverse effect on our business, financial condition or results of operations.
Broad market and industry factors may significantly affect the 28 Table of Contents market price of our ordinary shares, regardless of our actual operating performance. Due to these risks and the other risks described in this report, investors could lose their entire investment in our company.
Broad market and industry factors may significantly affect the market price of our ordinary shares, regardless of our actual operating performance. Due to these risks and the other risks described in this report, investors could lose their entire investment in our company.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise 29 Table of Contents would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
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 27 of our 287 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 39 of our 420 employees are based in China. Moreover, suppliers of a majority of our product materials are based in China.
In particular, The Home Depot represented approximately 18% and 22% of our consolidated net sales in 2023 and 2022, 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.
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.
Adverse changes or uncertainty involving the factors listed above or an economic contraction in the United States and worldwide could result in a decline in spending on residential R&R activity and a decline in demand for new home construction and could adversely impact our businesses by: causing consumers to delay or decrease homeownership; making consumers more price conscious resulting in a shift in demand to smaller, less expensive homes; making consumers more reluctant to make investments in their existing homes, including large kitchen and bath R&R projects; or making it more difficult or expensive to secure loans for major renovations, which could have a material adverse effect on our results of operations and financial position.
Adverse changes or uncertainty involving the factors listed above or an economic contraction in the United States and worldwide could result in a decline in spending on residential R&R activity and a decline in demand for new home construction and could adversely impact our businesses by: causing consumers to delay or decrease homeownership; making consumers more price conscious resulting in a shift in demand to smaller, less expensive homes; making consumers more reluctant to make investments in their existing homes, including large kitchen and bath R&R projects; or making it more difficult or expensive to secure loans for major renovations, which could have a material adverse effect on our results of operations and financial position. 13 Table of Contents Prolonged economic downturns may adversely impact our sales, earnings and liquidity.
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 .
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 .
Based upon an evaluation conducted in connection with the preparation of FGI’s audited consolidated financial statements as of December 31, 2023, management concluded that our internal controls over financial reporting were not effective due to the material weakness 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, 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.
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 over 72% and 76% of our consolidated net sales for 2023 and 2022, 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 69% and 72% of our consolidated net sales for 2024 and 2023, respectively, and this concentration may continue to increase.
Complying with varying jurisdictional requirements 26 Table of Contents could increase the costs and complexity of compliance, and violations of applicable data protection laws could result in significant penalties.
Complying with varying jurisdictional requirements could increase the costs and complexity of compliance, and violations of applicable data protection laws could result in significant penalties.
Concern over climate change has increased focus on the sustainability of practices and products in the markets we serve, and changes to laws and regulations regarding climate change mitigation may result in increased costs and disruption to operations.
Concern over climate change and other environmental and social topics has increased focus on the sustainability of practices and products in the markets we serve, and changes to laws and regulations regarding climate change mitigation may result in increased costs and disruption to operations.
UNRESOLVED STAFF COMMENTS We are a smaller reporting company as defined in Regulation S-K and are not required to provide the information under this item. 32 Table of Contents
UNRESOLVED STAFF COMMENTS We are a smaller reporting company as defined in Regulation S-K and are not required to provide the information under this item.
Future acquisitions could result in dilution to existing shareholders and to earnings per share. In addition, we may fail to identify significant liabilities or risks associated with a given acquisition that could adversely affect our future financial condition and operating results or result in us paying more for the acquired business or assets than they are worth.
In addition, we may fail to identify significant liabilities or risks associated with a given acquisition that could adversely affect our future financial condition and operating results or result in us paying more for the acquired business or assets than they are worth.
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. 19 Table of Contents Risks Related to Doing Business in China We have limited operations in China, but many of our products are sourced from China.
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.
INDEX TO RISK FACTORS Strategic Risks 3 Business and Operational Risks 3 Risks Related to Doing Business in China 4 Competitive Risks 23 Technology and Intellectual Property Risks 24 Litigation and Regulatory Risks 25 Risks Related to Our Securities 28 General Risk Factors 31 ​ 13 Table of Contents 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 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.
We cannot predict whether investors would find our securities less attractive in the event that we rely on these exemptions.
We cannot predict whether investors would find our securities less 27 Table of Contents attractive in the event that we rely on these exemptions.
Treasury Department, as well as the regulators in the Cayman Islands. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our securities. In recent years, many such changes have been made and changes are likely to continue to occur in the future.
Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our securities. In recent years, many such changes have been made and changes are likely to continue to occur in the future.
In addition, we could be adversely affected if any of our significant customers, suppliers or service providers experiences any similar events that disrupt their business operations or damage their reputation.
In addition, we could be adversely affected if any of our significant customers, suppliers or service providers experiences any similar events that disrupt their business operations or damage their reputation. Such events could adversely affect our results of operations and financial position.
Furthermore, our existing indebtedness, which was approximately $7.0 million as of December 31, 2023, may adversely affect our financial flexibility and our competitive position in the future.
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.
If we are unable to recognize and respond to such developments, or if our existing practices and procedures are not adequate to meet new regulatory requirements, we may miss corporate opportunities, become subject to regulatory scrutiny or third-party claims, or incur costs to revise operations to meet new standards.
If we are unable to recognize and respond to such developments, or if our existing practices and procedures are not adequate to meet new or changing regulatory requirements, market standards or investor expectations, some of which may be conflicting, we may miss corporate opportunities, become subject to regulatory scrutiny, litigation or third-party claims, or incur costs to revise operations to meet new standards.
Prolonged economic downturns may adversely impact our sales, earnings and liquidity. Our industry can fluctuate with economic cycles. During economic downturns, our industry could experience longer periods of recession and greater declines than the general economy.
Our industry can fluctuate with economic cycles. During economic downturns, our industry could experience longer periods of recession and greater declines than the general economy.
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. Furthermore, an on-site inspection of our facilities by any of these regulators may be limited or entirely prohibited.
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.
Under the Holding Foreign Companies Accountable Act (the “HFCAA”), the PCAOB is permitted to inspect our independent public accounting firm. If the PCAOB later determined that it cannot inspect or fully investigate our auditor for three consecutive years, trading in our securities may be prohibited under the HFCAA, and, as a result, Nasdaq may determine to delist our securities.
If the PCAOB later determined that it cannot inspect or fully investigate our auditor for three consecutive years, trading in our securities may be prohibited under the HFCAA, and, as a result, Nasdaq may determine to delist our securities. Moreover, in December 2022, the Accelerating Holding Foreign Companies Accountable Act was enacted and amended the HFCAA to require the U.S.
Our ability or the ability of our suppliers to operate in China may be impaired by changes in Chinese laws and regulations, including those relating to taxation, environmental regulation, restrictions on foreign investment, and other matters.
Risks Related to Doing Business in China We have limited operations in China, but many of our products are sourced from China. Our ability or the ability of our suppliers to operate in China may be impaired by changes in Chinese laws and regulations, including those relating to taxation, environmental regulation, restrictions on foreign investment, and other matters.
Litigation and Regulatory Risks We are currently involved in legal proceedings and may in the future be a party to additional claims and litigation, which could be costly and divert significant resources.
Litigation and Regulatory Risks We may be a party to claims and litigation, which could be costly and divert significant resources.
Accordingly, the Chinese government’s actions in the future, including any decision to intervene in or influence our operations or the operations of our suppliers at any time may cause our company or our suppliers to make changes to our or their operations. 21 Table of Contents Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of our operations in China.
Accordingly, the Chinese government’s actions in the future, including any decision to intervene in or influence our operations or the operations of our suppliers at any time may cause our company or our suppliers to make changes to our or their operations.
Additionally, these home center retailers may reduce the number of vendors from which they purchase and could make significant changes in their volume of purchases from us. 16 Table of Contents The loss of one or more key customers, a material reduction in products purchased by them, or our inability to maintain our competitive position in our industries could cause us to experience a decline in net sales, which could adversely affect our results of operations and financial position.
The loss of one or more key customers, a material reduction in products purchased by them, or our inability to maintain our competitive position in our industries could cause us to experience a decline in net sales, which could adversely affect our results of operations and financial position.
Although we are not currently considering any specific business combinations, we could pursue opportunities for growth through either acquisitions, mergers or internally developed projects as part of our “BPC” growth strategy.
Although we are not currently considering any specific business combinations, we could pursue opportunities for growth through either acquisitions, mergers or internally developed projects as part of our “BPC” growth strategy. We cannot assure you that we will be successful in integrating an acquired business or that an internally developed project will perform at the levels we anticipate.
Our policies and procedures designed to ensure compliance with these regulations may not be sufficient and our directors, officers, employees, representatives, consultants, agents, and business partners could engage in improper conduct for which we may be held responsible. 27 Table of Contents Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial condition and reputation.
Non-compliance with anti-corruption, anti-bribery, anti-money laundering or financial and economic sanctions laws could subject us to whistleblower complaints, adverse media coverage, investigations, and severe administrative, civil and criminal sanctions, collateral consequences, remedial measures and legal expenses, all of which could materially and adversely affect our business, results of operations, financial condition and reputation.
We believe that the material weakness set forth above did not have an effect on our financial results. We are evaluating and beginning to implement certain practices and procedures to address the foregoing material weaknesses with plans to complete the remediation of the foregoing deficiencies in the future.
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.
Increases in the cost of the materials we purchase have in the past and may in the future increase the prices for our products, including as a result of new tariffs.
We purchase substantial amounts of raw materials, component parts and finished goods from outside sources, including international sources, and our products are manufactured outside of the United States. Increases in the cost of the materials we purchase have in the past and may in the future increase the prices for our products, including as a result of new tariffs.
Changes in Cayman Islands or U.S. tax law could adversely affect our financial condition and results of operations. The rules dealing with Cayman Islands and U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S.
The rules dealing with Cayman Islands and U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department, as well as the regulators in the Cayman Islands.
Variability in the cost and availability of our raw materials, component parts and finished goods, including the imposition of tariffs, could affect our results of operations and financial position. We purchase substantial amounts of raw materials, component parts and finished goods from outside sources, including international sources, and our products are manufactured outside of the United States.
Business and Operational Risks Variability in the cost and availability of our raw materials, component parts and finished goods, including the imposition of tariffs, could affect our results of operations and financial position.
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 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.
From time to time, we may receive requests from certain U.S. agencies to investigate or inspect our operations or to otherwise provide information.
Regulatory bodies of the United States may be limited in their ability to conduct investigations or inspections of our operations in China. From time to time, we may receive requests from certain U.S. agencies to investigate or inspect our operations or to otherwise provide information.
These factors may affect not only the ultimate consumer of our products, but also may impact home centers, builders and our other primary customers.
These factors may affect not only the ultimate consumer of our products, but also may impact home centers, builders and our other primary customers. As a result, a worsening of economic conditions, could have a material adverse effect on our sales and earnings as well as our cash flow and liquidity.
Moreover, the standards by which ESG matters are measured are developing and evolving, and certain areas are subject to assumptions that could change over time.
Moreover, the standards by which ESG matters are measured are developing and evolving, and certain areas are subject to assumptions that could change over time. Stakeholder expectations are not uniform, and both opponents and proponents of various ESG-related matters have increased their activism and action to advocate for their positions.
As a result, a worsening of economic conditions, could have a material adverse effect on our sales and earnings as well as our cash flow and liquidity. 14 Table of Contents Our ability to grow and compete in the future will be adversely affected if adequate capital is not available to us or not available on terms favorable to us.
Our ability to grow and compete in the future will be adversely affected if adequate capital is not available to us or not available on terms favorable to us.
We could continue to pursue growth opportunities through either acquisitions, mergers or internally developed projects, which may be unsuccessful or may adversely affect our future financial condition and operating results.
Our failure to address these risks could cause us to incur additional costs and fail to realize the anticipated benefits of our acquisitions and could have a material adverse effect on our results of operations and financial position. 14 Table of Contents We could continue to pursue growth opportunities through either acquisitions, mergers or internally developed projects, which may be unsuccessful or may adversely affect our future financial condition and operating results.
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.
We are in the process of introducing certain customer-facing tools powered by artificial intelligence (“AI”) to help promote our product offerings.
Our future assessment, or the future assessment by our independent registered public accounting firm, may reveal additional material weaknesses in our internal controls.
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.
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. Our auditor, Marcum LLP, is a Registered Public Accounting Firm with the PCAOB and is based in New York, New York.
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.
Future foreign acquisitions may also increase our exposure to foreign currency risks and risks associated with interpretation and enforcement of foreign regulations. Our failure to address these risks could cause us to incur additional costs and fail to realize the anticipated benefits of our acquisitions and could have a material adverse effect on our results of operations and financial position.
Future foreign acquisitions may also increase our exposure to foreign currency risks and risks associated with interpretation and enforcement of foreign regulations.
We cannot assure you that we will be successful in integrating an acquired business or that an internally developed project 15 Table of Contents will perform at the levels we anticipate. We may pay for future acquisitions using cash, stock, the assumption of debt, or a combination of these.
We may pay for future acquisitions using cash, stock, the assumption of debt, or a combination of these. Future acquisitions could result in dilution to existing shareholders and to earnings per share.
Removed
Business and Operational Risks We recently began as a stand-alone business and have a limited operating history as a stand-alone business.
Added
Additionally, these home center retailers may reduce the number of vendors from which they purchase and could make significant changes in their volume of purchases from us.
Removed
The historical financial information we have included does not reflect, and the pro forma financial information included may not reflect, what our financial condition, results of operations or cash flows would have been had we been a stand-alone entity during the historical periods presented, or what our financial condition, results of operations or cash flows will be in the future as an independent entity.
Added
Navigating varying expectations of policymakers and other stakeholders has inherent costs, and any failure to successfully navigate such expectations may expose us to negative publicity, shareholder activism, and litigation or other engagement from stakeholders with opposing views, as well as the potential for civil investigations and enforcement by governmental authorities.
Removed
In addition, we have not made pro forma adjustments to reflect many significant changes that will occur in our cost structure, funding and operations as a result of our transition to becoming a public company, including changes in our employee base, potential increased costs associated with reduced economies of scale and increased costs associated with being a publicly traded, stand-alone company.
Added
Increases in tariffs, trade restrictions or taxes on our products could have an adverse impact on our operations. The commerce we conduct in the international marketplace and our reliance on overseas manufacturing makes us subject to tariffs, trade restrictions and other taxes when the raw materials or components we purchase, and the products we ship, cross international borders.
Removed
Moreover, in December 2022, the Accelerating Holding Foreign Companies Accountable Act was enacted and amended the HFCAA to require the U.S.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed6 unchanged
Biggest changeWe also have constituted a cross-functional Cybersecurity Committee, comprised of 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. The Board of Directors is charged with overseeing the Company’s risk management program, which includes cybersecurity matters.
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.
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.
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.
We use a risk-based approach to identify, assess, protect, detect, respond to and recover from cybersecurity threats, derived from COSO framework. Our information security program includes, among other aspects, vulnerability management, antivirus and malware protection, access control, and employee training.
We use a risk-based approach to identify, assess, protect, detect, respond to and recover from cybersecurity threats, derived from the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) framework. Our information security program includes, among other aspects, vulnerability management, antivirus and malware protection, access control, and employee training.
The Board of Directors routinely engages with relevant management on a range of cybersecurity-related topics, including the threat of environment and vulnerability assessments and policies and practices and receives updates on technology trends and regulatory developments from the Director of IT periodically.
The Board of Directors is charged with overseeing the Company’s risk management program, which includes cybersecurity matters. The Board of Directors routinely engages with relevant management on a range of cybersecurity-related topics, including the threat of environment and vulnerability assessments and policies and practices and receives updates on technology trends and regulatory developments from the Director of IT periodically.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+2 added−8 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. 33 Table of Contents Ayers Bath Litigation FGI Industries (formerly known as Foremost Groups, Inc.) (“FGI USA”), our wholly-owned subsidiary, is currently involved in litigation arising from its efforts to protect an exclusivity agreement with sanitaryware manufacturer Tangshan Huida Ceramic Group Co., Ltd.
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.
Removed
(“Huida”). In 2011, FGI USA filed a complaint against Ayers Bath (USA) Corporation (“Ayers Bath”) in the United States District Court for the Central District of California (the “District Court”) and succeeded in obtaining an injunction barring Ayers Bath from selling, distributing or offering for sale Huida parts and products in the United States and Canada.
Added
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
As a result, Ayers Bath ceased all business activity. Ayers Bath filed a voluntary chapter 7 petition in the United States Bankruptcy Court for the Central District of California (the “Bankruptcy Court”) on March 22, 2013.
Added
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
Removed
FGI USA filed a proof of claim in the Ayers Bath bankruptcy case for an amount not less than $5,265,000, which was deemed allowed, but due to Ayers Bath’s lack of assets, FGI USA only received a distribution of $7,757.24.
Removed
On January 9, 2014, FGI USA filed a complaint in the District Court against Tangshan Ayers, as Ayers Bath’s alter ego, to recover the balance of its damages.
Removed
The District Court ultimately referred the litigation to the Bankruptcy Court, whereby FGI USA filed a motion in Bankruptcy Court to add Tangshan Ayers as judgment debtor, thereby allowing FGI USA to recover its proof of claim. A hearing for the motion to add Tangshan Ayers as judgment debtor was held on June 7, 2021.
Removed
On September 22, 2021, the Bankruptcy Court issued a report and recommendation to the District Court recommending that it deny FGI USA’s motion to amend the judgment.
Removed
We filed an objection to the report in October 2021, which was overruled by the Bankruptcy Court in September 202 2 , but the District Court allowed FGI USA to amend its complaint, which was filed in June 2023. Huida moved to compel arbitration under the amended complaint in June 2023.
Removed
FGI USA opposed the motion to compel arbitration and in February 2024, the District Court denied that motion. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. ​ 34 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurities 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, 2023, we did not repurchase any ordinary shares. ITEM 6. [RESERVED] ​ ​ 35 Table of Contents
Biggest changeSecurities 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
Holders; Shares Outstanding We had a total of 9,547,607 shares of our ordinary shares outstanding on March 20, 2024, held by approximately 2 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.
Holders; 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.

Item 7. Management's Discussion & Analysis

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

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Biggest changeThe 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. ​ 41 Table of Contents C ash Flows The following table summarizes the key components of our cash flows for the years ended December 31, 2023, and 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ ​ 2023 ​ 2022 ​ USD USD Net cash provided by operating activities ​ $ 1,389,699 ​ $ 980,265 Net cash used in investing activities ​ (942,614) ​ (1,063,823) Net cash (used in) provided by financing activities ​ (2,835,876) ​ 7,010,567 Effect of exchange rate fluctuation on cash ​ 98,604 ​ (743,477) Net changes in cash ​ (2,290,187) ​ 6,183,532 Cash, beginning of period ​ 10,067,428 ​ 3,883,896 Cash, end of period ​ $ 7,777,241 ​ $ 10,067,428 ​ Operating Activities Net cash provided by operating activities was approximately $1.4 million for the year ended December 31, 2023 compared to $1.0 million for the year ended December 31, 2022.
Biggest changeFor 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.
The loan bears interest at 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 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) .
Pursuant to the Credit Agreement, FGI Industries is required to maintain (a) a debt coverage ratio (defined as earnings before interest, taxes, depreciation and amortization divided by current portion of long-term debt plus interest 40 Table of Contents expense) of not less than 1.25 to 1, tested at the end of each fiscal quarter; (b) an effective tangible net worth (defined as total book net worth plus minority interest, less amounts due from officers, shareholders and affiliates, minus intangible assets and accumulated amortization, plus debt subordinated to East West Bank) of not less than $10,000,000 on consolidated basis; and (c) a total debt to tangible net worth ratio (defined as total liabilities divided by tangible net worth, which is defined as total book net worth plus minority interest, less loans to officers, shareholders, and affiliates minus intangible assets and accumulated amortization) not to exceed 4.0 to 1, tested at the end of each fiscal quarter, on consolidated basis.
Pursuant to the Credit Agreement, FGI Industries is required to maintain (a) a debt coverage ratio (defined as earnings before interest, taxes, depreciation and amortization divided by current portion of long-term debt plus interest expense) of not less than 1.25 to 1, tested at the end of each fiscal quarter; (b) an effective tangible net worth (defined as total book net worth plus minority interest, less amounts due from officers, shareholders and affiliates, minus intangible assets and accumulated amortization, plus debt subordinated to East West Bank) of not less than $10,000,000, tested at the end of each fiscal quarter, on a consolidated basis; and (c) a total debt to tangible net worth ratio (defined as total liabilities divided by tangible net worth, which is defined as total book net worth plus minority interest, less loans to officers, shareholders, and affiliates minus intangible assets and accumulated amortization) not to exceed 4.0 to 1, tested at the end of each fiscal quarter, on a consolidated basis.
If, based upon all available evidence, both positive and negative, it is more likely than not (more than 50 percent likely) such deferred tax assets will not be realized, a valuation allowance is recorded. Significant weight is given to positive and negative evidence that is objectively verifiable.
If, based upon all available evidence, both positive and negative, it is more likely than not (i.e., more than 50 percent likely) that such deferred tax assets will not be realized, a valuation allowance is recorded. Significant weight is given to positive and negative evidence that is objectively verifiable.
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 revenues and expenses during the periods presented.
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.
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 Income from Operations, Adjusted Operating Margins and Adjusted Net Income.
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.
Fair Value Measurement The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by us. The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures.
Fair Value Measurement The accounting standard regarding fair value of financial instruments and related fair value measurements defines financial instruments and requires disclosure of the fair value of financial instruments held by the Company. The accounting standards define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures.
We have continued to invest in its 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 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. 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.
If the carrying amount of the ROU asset is not recoverable from its undiscounted cash flows, then we would recognize an impairment loss for the difference between the carrying amount and the current fair value.
If the carrying amount of an ROU asset is not recoverable from its undiscounted cash flows, then the Company would recognize an impairment loss for the difference between the carrying amount and the current fair value.
Income Taxes Deferred taxes are recognized based on the future tax consequences of differences between the carrying value of assets and liabilities and their respective tax basis. The future realization of deferred tax assets depends on the existence of sufficient taxable income in future periods.
Income Taxes Deferred taxes are recognized based on the future tax consequences of the differences between the carrying value of assets and liabilities and their respective tax bases. The future realization of deferred tax assets depends on the existence of sufficient taxable income in future periods.
The preparation of these consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
The preparation of these consolidated financial statements and accompanying notes requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.
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.
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.
(“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.
(“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.
We have developed strong manufacturing and sourcing partners over the last 30+ years, which we believe will continue to give us a competitive advantage in the markets we serve. We also have deep relationships with an established global customer base, offering end- 36 Table of Contents to-end solutions to support category growth.
We have developed strong manufacturing and sourcing partners over the last 30+ years, which we believe will continue to give us a competitive advantage in the markets we serve. We also have deep relationships with an established global customer base, offering end-to-end solutions to support category growth.
However, we may need additional cash resources in the 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.
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.
During the fourth quarter of 2023, we were 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, Australia, and the UK. ● Enhanced Margin Performance.
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.
This determination is made based upon known customer program and incentive offerings at the time of sale and expected sales volume forecasts as it relates to our volume- based incentives. This determination is updated on a monthly basis. Certain product sales include a right of return.
This determination is 40 Table of Contents made based upon known customer program and incentive offerings at the time of sale, and expected sales volume forecasts as it relates to the Company’s volume- based incentives. This determination is updated on a monthly basis. Certain product sales include a right of return.
Our lease terms may include options to extend or terminate the lease when there are relevant economic incentives present that make it reasonably certain that we will exercise that option. We account for any non- lease components separately from lease components. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
The Company’s lease terms may include options to extend or terminate the lease when there are relevant economic incentives present that make it reasonably certain that the Company will exercise that option. The Company accounts for any non- lease components separately from lease components. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
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 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 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”).
We record interest and penalties on our uncertain tax positions in income tax expense. 46 Table of Contents We record the tax effects of Foreign Derived Intangible Income (FDII) and Global Intangible Low- Taxed Income (GILTI) related to our foreign operations as a component of income tax expense in the period the tax arises.
The Company records interest and penalties on our uncertain tax positions in income tax expense. We record the tax effects of Foreign Derived Intangible Income (FDII) and Global Intangible Low- Taxed Income (GILTI) related to our foreign operations as a component of income tax expense in the period the tax arises.
We determine the incremental borrowing rate for each lease by using the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.
The Company determines the incremental borrowing rate for each lease by using the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date.
Our capital expenditures amounted to approximately $0.9 million and $1.1 million for the years ended December 31, 2023, and 2022, respectively. We do not expect to incur significant capital expenditures in the immediate future.
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.
As most of our leases do not provide an implicit rate, we generally uses our incremental borrowing rate on the commencement date of the lease as the discount rate in determining the present value of future lease payments.
As most of the Company’s leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate on the commencement date of the lease as the discount rate in determining the present value of future lease payments.
In accordance with ASC 718, we determine whether an award should be classified and accounted for as a liability award or an equity award. All of our share-based awards were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values.
In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an equity award. All the Company’s share- based awards were classified as equity awards and are recognized in the consolidated financial statements based on their grant date fair values.
Significant accounting estimates reflected in our consolidated financial statements include the useful lives of property and equipment, allowance for credit losses, inventory reserve, accrued defective return, provision for contingent liabilities, revenue recognition, deferred taxes and uncertain tax position. Actual results could differ from these estimates.
Significant accounting estimates reflected in the Company’s consolidated financial statements include the useful lives of property and equipment, allowance for credit losses, inventory reserve, accrued defective return, provision for contingent liabilities, revenue recognition, deferred taxes and uncertain tax position. Actual results could differ from these estimates. Accounts receivable Accounts receivables include trade accounts due from customers.
We include in revenue variable considerations only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved.
The Company includes in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved.
East West Bank Credit Facility Our wholly owned subsidiary, FGI Industries (formerly named Foremost Groups, Inc.), 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 49.89% of the voting control of Foremost.
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.
Operating leases are included in right-of-use assets (“ROU assets”), accrued expenses and operating lease liabilities — noncurrent on the consolidated balance sheets. ROU assets represent our right to use an underlying asset for the duration of the lease term while lease liabilities represent our obligation to make lease payments in exchange for the right to use an underlying asset.
Operating leases are included in operating lease right-of-use assets, net (“ROU assets”), operating lease liabilities — current and operating lease liabilities — noncurrent on the consolidated balance sheets. 39 Table of Contents ROU assets represent our right to use an underlying asset for the duration of the lease term while lease liabilities represent the Company’s obligation to make lease payments in exchange for the right to use an underlying asset.
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, 2023, we had cash and working capital of $7.8 million and $18.1 million, respectively.
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.
Our customers’ payment terms generally range from 15 to 60 days of fulfilling its performance obligations and recognizing revenue. We provide customer programs and incentive offerings, including co-operative marketing arrangements and volume-based incentives. These customer programs and incentives are considered variable considerations.
The Company’s customers’ payment terms generally range from 15 to 60 days of fulfilling its performance obligations and recognizing revenue. The Company provides customer programs and incentive offerings, including co-operative marketing arrangements and volume-based incentives. These customer programs and incentives are considered variable consideration.
With total liquidity of $ 24.4 million at December 31, 2023, the Company believes it has sufficient financial flexibility to fund its organic growth strategy. ● Deep manufacturing partners and customer relationships.
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 review our ROU assets as events occur or circumstances change that would indicate the carrying amount of the ROU assets are not recoverable and exceed their fair values.
The Company reviews its ROU assets as material events occur or circumstances change that would indicate the carrying amount of the ROU assets are not recoverable and exceed their fair values.
As of December 31, 2023 and 2022, FGI Industries was in compliance with these financial covenants.
As of December 31, 2024, FGI Industries was in compliance with these financial covenants.
The interest rate as of December 31, 2023 and December 31, 2022 was 8.25% and 7.25%, respectively. 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 $6,959,175 and $9,795,052 as of December 31, 2023 and 2022, respectively.
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.
We generate revenues from sales of kitchen and bath products and recognizes revenue as control of its products is transferred to its customers, which is generally at the time of shipment or upon delivery based on the contractual terms 45 Table of Contents with our customers.
The Company generates revenue from sales of kitchen and bath products, and recognizes revenue as control of its products is transferred to its customers, which is generally at the time of shipment or upon delivery based on the contractual terms with the Company’s customers.
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 $2.4 million, or 13.9%, to $20.0 million for the year ended December 31, 2023, from $17.5 million for the year ended December 31, 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.
Our company, with the assistance of an independent third-party valuation firm, determines the fair value of the stock options granted to employees. The Black Scholes Model is applied in determining the estimated fair value of the options granted to employees and non-employees. The Company recognized share-based compensation $417,978 and $383,572 in 2023 and 2022, respectively.
The Company, with the assistance of an independent third-party valuation firm, determines the fair value of the stock options granted to employees. The Black Scholes Model is applied in determining the estimated fair value of the options granted to employees and non-employees.
Investing Activities Net cash used in investing activities was approximately $0.9 million and $1.1 million for the years ended December 31, 2023 and 2022, respectively. We purchased property and equipment of $0.8 million and intangible assets of $0.1 million in 2023, as compared to purchase of property and equipment of $1.1 million in 2022.
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.
CTBC Bank Credit Line Subsequent to the year end, FGI International e ntered into an omnibus credit line (the “Credit Line”) with CTBC Bank Co., Ltd. (“CTBC”). Under the 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.
(“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.
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 U.S.
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 have elected to recognize share-based compensation using the straight-line method for all share- based awards granted over the requisite service period, which is the vesting period. We account for forfeitures as they occur in accordance with ASU No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting.
The Company has elected to recognize share-based compensation using the straight-line method for all share-based awards granted over the requisite service period, which is the vesting period. The Company accounts for forfeitures as they occur in accordance with ASC 718.
Revenues from sales of Shower Systems decreased by 7.4% to $20.0 million for the year ended December 31, 2023 from $21.6 million for the year ended December 31, 2022. Shower systems make up approximately 17.1% and 13.3% of our total revenue for 2023 and 2022, 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.
We define Adjusted Income from Operations as GAAP income from operations excluding the impact of certain non-recurring expenses, including expenses related to COVID-19 protocols.
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 estimate future product returns at the time of sale based on historical experience and record a corresponding reduction in accounts receivable. We record receivables related to revenue when it has an unconditional right to invoice and receive payment. Share-based compensation We account for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”).
The Company estimates future product returns at the time of sale based on historical experience and records a corresponding reduction in accounts receivable. Share-based compensation The Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”).
Revenue categories by geographic location are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, ​ Change ​ ​ 2023 ​ Percentage ​ 2022 ​ Percentage ​ Percentage ​ USD % USD % % United States $ 74,572,336 63.6 $ 103,255,662 63.8 (27.8) Canada ​ 31,092,989 26.5 ​ 41,025,288 25.4 (24.2) Europe ​ ​ 11,477,070 ​ 9.8 ​ ​ 16,844,015 ​ 10.4 ​ (31.9) Rest of World ​ 99,209 0.1 ​ 593,578 0.4 (83.3) Total ​ $ 117,241,604 100.0 ​ $ 161,718,543 100.0 (27.5) ​ We generated the majority of our revenues in the United States market, which amounted to $74.6 million for the year ended December 31, 2023, and $103.3 million for the year ended December 31, 2022, representing a 27.8% decrease.
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 product are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended December 31, Change ​ 2023 ​ Percentage ​ 2022 ​ Percentage ​ Percentage ​ USD % USD % % Sanitaryware ​ $ 75,551,117 64.4 $ 104,806,342 64.8 (27.9) Bath Furniture ​ 14,770,376 12.6 ​ 29,519,728 18.3 (50.0) Shower System ​ ​ 19,997,197 ​ 17.1 ​ ​ 21,586,888 ​ 13.3 ​ (7.4) Other ​ 6,922,914 5.9 ​ 5,805,585 3.6 19.2 Total ​ $ 117,241,604 100.0 ​ $ 161,718,543 100.0 (27.5) ​ We derive the majority of our revenues from sales of sanitaryware, which accounted for 64.4% and 64.8% of our total revenues for the years ended December 31, 2023 and 2022, respectively.
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.
Financing Activities Net cash used in financing activities was approximately $2.8 million for the year ended December 31, 2023, which represented the net repayments of revolving credit facility.
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.
Provision for Income Taxes We recorded income tax expense of $0.8 million for the year ended December 31, 2023, and $0.9 million for the year ended December 31, 2022. The decrease resulted from the decrease in our reported income before taxes of $2.8 million, or 54.7%.
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.
Revenue recognition We recognize revenue in accordance with Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customer. Revenues are recognized when control of the promised goods or performance obligations for services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for the goods or services.
Revenue is recognized when control of the promised goods or performance obligations for services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services.
HSBC Canada Bank Loan FGI Canada Ltd. has a line of credit agreement with HSBC Canada (the “Canadian Revolver”). The revolving line of credit with HSBC Canada allows for borrowing up to CAD $7,500,000 (US $5,662,087 as of the December 31, 2023 exchange rate).
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).
Accounts receivable Accounts receivables include trade accounts due from customers. In establishing the required allowance for 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.
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.
During 2024, we expect gross margins to remain consistent with those generated during fiscal year 2023, with operating margin improvement driven by volume leverage. ● Efficient capital deployment. We will continue to prioritize capital deployment in support of organic growth opportunities, while continuing to evaluate strategic M&A opportunities.
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.
The increase in Other was primarily driven by strong volume growth of custom kitchen cabinetry sales to our expanding network of kitchen cabinetry dealers in the United States. Revenue benefited from continued dealer growth and new product launches.
This growth was primarily driven by a significant increase in sales volume for custom kitchen cabinetry, supported by the expansion of our network of kitchen cabinetry dealers in the United States. Additionally, revenue benefited from continued dealer acquisitions and the successful introduction of new product offerings, which further strengthened our market presence and customer reach.
We believe our revenues 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.
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.
Management reviews its receivables on a regular basis to determine if the expected credit losses is adequate and adjusts the allowance when necessary. Delinquent account balances are written off against allowance for credit losses after management has determined that the likelihood of collection is not probable. Inventories, net Inventories are stated at the lower of cost and net realizable value.
Delinquent account balances are written off against allowance for credit losses after management has determined that the likelihood of collection is not probable. Leases The Company determines if an arrangement is a lease at inception.
Net Income Our net income decreased by $3.1 million, or 84.3%, to $0.6 million for the year ended December 31, 2023, from $3.7 million for the year ended December 31, 2022. This decrease was a result of the combination of the changes discussed above.
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.
Our research and development activities remained stable and are relatively immaterial to our consolidated statements of income. 39 Table of Contents Other Income (Expenses) We incurred insignificant other income and expenses during the years ended December 31, 2023 and 2022. Other income and expenses primarily include interest income and expenses, as well as miscellaneous non-operating income and expenses.
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.
We define Adjusted Net Income as GAAP net income excluding the tax-effected impact of certain non-recurring expenses and income such as expenses related to COVID-19 protocols, unusual litigation fees and non-recurring compensation expenses related to our IPO. We define Adjusted Operating Margins as adjusted income from operations divided by revenue. We use these non-GAAP measures, along 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.
Our revenues generated in the Canadian market were $31.1 million and $41.0 million for the years ended December 31, 2023 and 2022, respectively, representing a 24.2% decrease. The decrease was primarily driven by volume weakness in both retail and wholesale markets. We also derive a small portion of our revenue from Europe, which consists primarily of sales in Germany.
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.
Other expenses, net increased by approximately $0.4 million or 66.2%, to $0.9 million for the year ended December 31, 2023, from $0.6 million for the year ended December 31, 2022. This increase was the result of higher interest expenses due to increases in applicable interest rates.
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.
This amounted to $11.5 million and $16.8 million for the years ended December 31, 2023 and 2022, respectively, representing a 31.9% decrease. The decrease was attributable to decreased demand that was impacted by global supply chain interruptions and inflation issues.
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.
Revenues generated from the sales of sanitaryware decreased by 27.9% to $75.6 million for the year ended December 31, 2023, from $104.8 million for the year ended December 31, 2022. The revenue decline was due to ongoing inventory de-stocking, primarily in the pro channel, and more muted demand trends.
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.
We also generate revenues from sales of Other products (custom kitchen cabinetry and others), which, in the aggregate, accounted for 5.9% and 3.6% of our total revenues for the years ended December 31 ,2023 and 2022.
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.
We remain on track to launch our new kitchen cabinetry initiative in the first half of 2024. ​ 38 Table of Contents We derive our revenues primarily from the United States, Canada and Europe.
We derive our revenue primarily from the United States, Canada and Europe.
Our revenues from bath furniture sales decreased by 50.0% to $14.8 million for the year ended December 31, 2023 from $29.5 million for the year ended December 31, 2022.
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.
These revenues accounted for 63.6% and 63.8% of our total revenues for 2023 and 2022, respectively. The decreased in the U.S. market was primarily driven by volume weakness in the bath furniture as customers' de-stocking to adjust inventory level. Our second largest market is Canada.
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.
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 $0.6 million, or 7.6%, to $8.4 million for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
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.
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We generated gross margin of 29.2% in fourth quarter of 2023, up from 23.7% in the same period last year owing to the ongoing mix shift to higher margin products. For the full year 2023, gross margin was 27.4%, up nearly 800 basis points from the 19.5% gross margin generated in the prior year.
Added
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.
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Recent Trends Due to changing market conditions, we are experiencing, and may continue to experience, lower market demand for certain of our products, particularly in our bath furniture category, as weak demand as customer destock and inventory corrections have had a negative impact on our net sales.
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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.
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As previously noted, we also began experiencing supply chain disruptions and inflationary pressures, which affected operating margins beginning in late 2022. However, we adopted several productivity and pricing measures to offset these headwinds and began to see resumed margin expansion in the second half of 2023.
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For 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.
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While the demand environment remains uneven with multiple industry forecasters predicting modest declines in home improvement spend in 2024, we expect to generate above-market growth.
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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.
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Results of Operations For the Years Ended December 31, 2023 and 2022 The following table summarizes the results of our operations for the years ended December 31, 2023 and 2022, respectively, and provides information regarding the dollar and percentage increase (decrease) during such periods. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ ​ 2023 ​ 2022 ​ Amount ​ Percentage ​ USD USD USD % Revenues ​ $ 117,241,604 $ 161,718,543 $ (44,476,939) (27.5) Cost of revenues ​ 85,164,322 ​ 130,209,538 ​ (45,045,216) (34.6) Gross profit ​ 32,077,282 ​ 31,509,005 ​ 568,277 1.8 Selling and distribution expenses ​ 19,971,912 ​ 17,533,028 ​ 2,438,884 13.9 General and administrative expenses ​ 8,424,083 ​ 7,830,023 ​ 594,060 7.6 Research and development expenses ​ 1,376,844 ​ 1,053,976 ​ 322,868 30.6 Income from operations ​ 2,304,443 ​ 5,091,978 ​ (2,787,535) (54.7) Operating margins ​ 2.0 % 3.1 % (110) bps — Total other expenses, net ​ (916,655) ​ (551,428) ​ (365,227) 66.2 Provision for income taxes ​ 808,224 ​ 860,630 ​ (52,406) (6.1) Net income ​ ​ 579,564 ​ ​ 3,679,920 ​ ​ (3,100,356) (84.3) Net income attributable to FGI Industries Ltd.
Added
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.
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Shareholders ​ ​ 733,604 ​ ​ 3,679,920 ​ ​ (2,946,316) (80.1) Adjusted income from operations (1) ​ ​ 2,840,401 ​ ​ 5,693,972 ​ ​ (2,853,571) (50.1) Adjusted operating margins (1) ​ 2.4 % 3.5 % (110) bps — Adjusted net income (1) ​ $ 1,014,226 ​ $ 4,173,555 ​ $ (3,159,329) (75.7) (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 GAAP comparators. 37 Table of Contents Revenues Our revenues decreased by $44.5 million, or 27.5%, to $117.2 million for the year ended December 31, 2023, from $161.7 million for the year ended December 31, 2022.
Added
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.
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The decrease in our revenues was primarily by declines in sanitaryware and bath furniture categories.

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