What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-26 compared with 2023-04-17 · 33 added, 39 removed, 130 unchanged (36% of the section changed)

5 unchanged sentences

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act, as of the end of the period covered by this Annual Report on Form 10-K.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2022, our disclosure controls and procedures were ineffective and listed in below.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2023, our disclosure controls and procedures were not effective.

Management’s Report on Internal Control Over Financial Reporting

9 unchanged sentences

This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

Identified Material Weakness

A material weakness in internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.

Management identified the following material weaknesses during its assessment of internal controls over financial reporting as of December 31, 2022:

● weaknesses in IT security environment, controls and procedures including lack of formal IT policies and procedures;

● lack of sufficient documentation of our existing financial processes, risk assessment and internal controls activities and assessment of effectiveness of internal controls;

and inadequate segregation of duties for certain functions due to limited staffs and resources .

Accordingly, the Company concluded that these material weaknesses resulted as there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

As a result of the material weaknesses described above, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control—Integrated Framework issued by COSO.

The following material weakness was noted:

We noted that there is an inadequate segregation of duties related to certain accounting functions due to the size of the Company’s subsidiaries.

In addition, the Company lacks evidence of management review controls activity taking place, such as but not limited to, the review and approval of journal entries and account reconciliations.

Management’s Remediation Initiatives

We are determining the initiatives to undertake in order to remediate the identified material weaknesses and other deficiencies and enhance our internal controls.

We anticipate that these initiatives will be at least partially, if not fully, implemented by the end of fiscal year 2023.

Changes in internal controls over financial reporting

There were no significant changes in our internal controls over financial reporting that occurred during the period covered by this Report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting:

As of December 31, 2023, and through the date of this filing we are in the process of implementing segregation of duties and are determining further initiatives to undertake in order to remediate this remaining material weakness and anticipate that these initiatives will be implemented by the end of fiscal year 2024.

Remediation of Previously Reported Material Weaknesses

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, our management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2022, due to a weakness in our IT security environment, and controls and procedures including a lack of formal IT policies and procedures.

We have taken remediation steps to address this material weakness by strengthening IT securities and controls.

During the year ended December 31, 2023, we have developed and implemented formal IT policies and procedures, which ensured a structure approach to managing and safeguarding our IT environment.

We have also formed our cybersecurity committee and conducted regular cybersecurity training to foster a culture of security awareness throughout our organization.

As a result, management has concluded that the identified material weakness

related to the Company’s IT environment, policies and procedures has been considered remediated as of December 31, 2023.

This annual report does not include an attestation report of the Company’s registered independent public accounting firm regarding internal control over financial reporting.

1 unchanged sentence

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other than as described above, there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION

27 unchanged sentences

and Foremost Groups Ltd.

(incorporated by reference from Exhibit 4.3 to the Company’s Annual Report on Form 10-K filed on April 17, 2023).

Warrant Agent Agreement, dated as of January 27, 2022, between FGI Industries Ltd.

3 unchanged sentences

Form of Warrant (included in Exhibit 4.4, as Exhibit A to the Warrant Agent Agreement).

Description of Company Securities.

(incorporated by reference from Exhibit 4.6 to the Company’s

Description of Company Securities (incorporated by reference from Exhibit 4.6 to the Company ’ s

Annual Report on Form 10-K filed on March 31, 2022).

Agreement for Co-operations, dated October 20, 2000, by and between FGI Industries, Inc.

and Tangshan Huida Ceramic Group Co., Ltd.

(incorporated by reference to Exhibit 10.1 to the Company’s Amendment No.

1 to Registration Statement on Form S-1, filed on October 4, 2021).

Shared Services Agreement, dated January 14, 2022, by and between FGI Industries, Inc.

3 unchanged sentences

and Foremost Worldwide Co., Ltd.

(incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K filed on April 17, 2023).

Amended and Restated Global Sourcing and Purchase Agreement, dated January 1, 2023, by and between FGI Industries Ltd.

and Foremost Worldwide Co., Ltd.

(incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K filed on April 17, 2023).

Sales and Purchase Agreement, dated January 14, 2022, by and between FGI International, Ltd.

7 unchanged sentences

FGI Industries Ltd.

Annual Management Incentive Plan (incorporated by reference to Exhibit 10.13

to the Company’s Quarterly Report on Form 10-Q, filed on May 13, 2022).

Annual Management Incentive Plan (incorporated by reference to Exhibit 10.13 to the Company ’ s Quarterly Report on Form 10-Q, filed on May 13, 2022).

FGI Industries Ltd.

9 unchanged sentences

Form of Performance Based Stock Unit Award (incorporated by reference to Exhibit 10.1 to the Company ’ s Quarterly Report on Form 10-Q filed on August 15, 2022).

Form of Performance Based Stock Option Award (incorporated by reference to Exhibit 10.1 to the

Company’s Quarterly Report on Form 10-Q filed on November 14, 2022).

Form of Performance Based Stock Option Award (incorporated by reference to Exhibit 10.1 to the Company ’ s Quarterly Report on Form 10-Q filed on November 14, 2022).

Form of Director Retainer Agreement (incorporated by reference to Exhibit 10.10 to the Company’s Amendment No.

2 unchanged sentences

and David Bruce.

(incorporated by reference from Exhibit 10.12 to the Company ’ s Annual Report on Form

10-K filed on March 31, 2022).

(incorporated by reference from Exhibit 10.12 to the Company ’ s Annual Report on Form 10-K filed on March 31, 2022).

Employment Agreement, dated January 24, 2022, by and between FGI Industries Ltd.

and Perry Lin.

(incorporated by reference from Exhibit 10.13 to the Company ’ s Annual Report on Form 10-K

filed on March 31, 2022).

(incorporated by reference from Exhibit 10.13 to the Company ’ s Annual Report on Form 10-K filed on March 31, 2022).

Form of Indemnification Agreement by and between FGI Industries Ltd.

2 unchanged sentences

Business Loan Agreement, by and between East West Bank and FGI Industries, Inc.

(f/k/a Foremost Groups, Inc.), dated October 31, 2022 but effective November 25, 2022

(Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on

December 1, 2022).

Facility Letter by and between HSBC Bank Canada and FGI Canada Ltd., dated December 2, 2021.

(f/k/a Foremost Groups, Inc.), effective November 25, 2022 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 1, 2022).

Facility Letter by and between HSBC Bank Canada and FGI Canada Ltd., dated December 2, 2021 (incorporated by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K filed April 17, 2023).

General Agreement for Omnibus Credit Lines, by and between CTBC Bank Co., Ltd.

and FGI International, Limited

Subsidiaries of Registrant.

4 unchanged sentences

Rule 1350 Certifications.

FGI Industries Compensation Recovery Policy, effective November 30, 2023.

XBRL Instance – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

11 unchanged sentences

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

April 17, 2023

March 26, 2024

FGI Industries Ltd.

6 unchanged sentences

Chief Executive Officer and Director

April 17, 2023

March 26, 2024

(Principal Executive Officer)

1 unchanged sentence

Chief Financial Officer

April 17, 2023

March 26, 2024

(Principal Financial and Accounting Officer)

1 unchanged sentence

Executive Chairman and Director

April 17, 2023

March 26, 2024

/s/ Todd Heysse

April 17, 2023

March 26, 2024

/s/ Kellie Zesch Weir

April 17, 2023

March 26, 2024

Kellie Zesch Weir

/s/ Jae Chung

April 17, 2023

March 26, 2024

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures