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Item 8. Financial Statements and Supplementary Data

2025-03-31 compared with 2024-03-26 · 403 added, 309 removed, 589 unchanged (55% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets as of December 31, 202 4 and 202 3

Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2023 and 2022

Consolidated Statements of Changes in Shareholders’ Equity (Parent’s Net Investment) for the years ended December 31, 2023 and 2022

Consolidated Statements of Operations and Comprehensive (Loss) Income for the years ended December 31, 202 4 and 202 3

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 202 4 and 202 3

Consolidated Statements of Cash Flows for the years ended December 31, 202 4 and 202 3

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of FGI Industries Ltd.

(the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of income and comprehensive income, changes in shareholders’ equity (parent’s net investment) and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive (loss) income, changes in shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

4 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit s in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

11 unchanged sentences

CONSOLIDATED BALANCE SHEETS

December 31, 2023

December 31, 2024 As of

December 31, 2023

CURRENT ASSETS

Cash $ 4,558,160 $ 7,777,241

Accounts receivable, net 20,293,555 16,195,543

9 unchanged sentences

Total other assets 18,929,113 17,719,769

Total assets $ 75,461,415 $ 65,744,930

LIABILITIES AND SHAREHOLDERS’ EQUITY

17 unchanged sentences

Accumulated other comprehensive loss ( 2,239,560 ) ( 1,111,499 )

( 1,111,499 )

( 1,396,319 )

FGI Industries Ltd.

3 unchanged sentences

Total liabilities and shareholders’ equity $ 75,461,415 $ 65,744,930

_________________________________________________

The accompanying notes are an integral part of these consolidated financial statements.

FGI INDUSTRIES LTD.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

For the Years Ended

COST OF REVENUES

Revenue $ 131,818,073 $ 117,241,604

Cost of revenue 96,390,733 85,164,322

Gross profit 35,427,340 32,077,282

Operating expenses

3 unchanged sentences

Total operating expenses 37,526,931 29,772,839

INCOME FROM OPERATIONS

(Loss) income from operations ( 2,099,591 ) 2,304,443

Other income (expenses)

1 unchanged sentence

Interest expense ( 1,246,742 ) ( 749,729 )

Other (expenses) income, net

Total other expenses, net

INCOME BEFORE INCOME TAXES

PROVISION FOR INCOME TAXES

Total provision for income taxes

Other income (expenses), net 1,054,443 ( 177,469 )

Total other income (expenses), net ( 182,507 ) ( 916,655 )

(Loss) income before income taxes ( 2,282,098 ) 1,387,788

Provision for (benefit of) income taxes

Current 963,542 711,518

Deferred ( 1,511,363 ) 96,706

Total (benefit of) provision for income taxes ( 547,821 ) 808,224

Net (loss) income ( 1,734,277 ) 579,564

net loss attributable to non-controlling shareholders ( 533,188 ) ( 154,040 )

Net income attributable to FGI Industries Ltd.

OTHER COMPREHENSIVE INCOME (LOSS)

Net (loss) income attributable to FGI Industries Ltd.

shareholders ( 1,201,089 ) 733,604

Other comprehensive (loss) income

Foreign currency translation adjustment ( 1,128,061 ) 284,820

COMPREHENSIVE INCOME

Comprehensive (loss) income ( 2,862,338 ) 864,384

comprehensive loss attributable to non-controlling shareholders ( 533,188 ) ( 154,040 )

Comprehensive income attributable to FGI Industries Ltd.

Comprehensive (loss) income attributable to FGI Industries Ltd.

shareholders $ ( 2,329,150 ) $ 1,018,424

Weighted average number of ordinary shares

EARNINGS PER SHARE

Basic 9,565,167 9,525,434

Diluted 9,565,167 9,821,112

(Loss) earnings per share

Basic $ ( 0.13 ) $ 0.08

Diluted $ ( 0.13 ) $ 0.07

_________________________________________________

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’

EQUITY (PARENT’S NET INVESTMENT)

Industries Ltd.

Preference Shares

Ordinary Shares

Preference Shares Ordinary Shares Additional

Capital Retained

Earnings Accumulated

Comprehensive

Loss Total FGI

Industries Ltd.

Shareholders'

Interests Total

Shareholders'

Shares Amount Shares Amount

Balance at January 1, 2023 — $ — 9,500,000 $ 950 $ 20,459,859 $ 3,679,920 $ ( 1,396,319 ) $ 22,744,410 $ — $ 22,744,410

Consummation of separation transaction upon completion of reorganization

( 7,549,010 )

Share-based compensation — — 47,607 5 417,973 — — 417,978 — 417,978

Issuance of ordinary shares upon Initial Public Offering (“IPO”), net

Long-lived assets acquisition from affiliate

Net income (loss) — — — — — 733,604 — 733,604 ( 154,040 ) 579,564

Foreign currency translation adjustments — — — — — — 284,820 284,820 — 284,820

Balance at December 31, 2023 — $ — 9,547,607 $ 955 $ 20,877,832 $ 4,413,524 $ ( 1,111,499 ) $ 24,180,812 $ ( 154,040 ) $ 24,026,772

( 1,396,319 )

Share-based compensation — — 16,307 1 401,215 — — 401,216 — 401,216

Net loss — — — — — ( 1,201,089 ) — ( 1,201,089 ) ( 533,188 ) ( 1,734,277 )

Foreign currency translation adjustments — — — — — — ( 1,128,061 ) ( 1,128,061 ) — ( 1,128,061 )

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31,

For the Years Ended

CASH FLOWS FROM OPERATING ACTIVITIES

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization

Net (loss) income $ ( 1,734,277 ) $ 579,564

Adjustments to reconcile net (loss) income to net cash used in operating activities

Depreciation 474,828 200,764

Amortization 2,701,615 1,816,738

Share-based compensation 401,216 417,978

Provision for credit losses 137,592 78,640

Reversal of defective return

( 1,696,263 )

Foreign exchange transaction loss

Deferred income tax expense

Provision for defective return 257,643 ( 851,554 )

Foreign exchange transaction (gain) loss ( 659,544 ) 185,317

Deferred income tax (benefit) expense ( 1,496,752 ) 96,707

Changes in operating assets and liabilities

Accounts receivable ( 4,928,997 ) ( 1,126,770 )

( 1,126,770 )

Inventories ( 4,034,016 ) 3,368,740

Prepayments and other current assets 1,284,680 ( 1,206,546 )

( 2,029,670 )

( 1,041,458 )

Prepayments and other receivables – related parties ( 3,960,942 ) ( 1,956,634 )

( 1,956,634 )

( 2,523,826 )

Other noncurrent assets ( 344,697 ) 883,108

( 1,187,589 )

Right-of-use assets

Income taxes ( 165,930 ) 155,769

Accounts payable 4,824,922 ( 194,362 )

( 17,290,882 )

Accounts payable - related parties 159,353 630,866

Operating lease liabilities ( 2,207,636 ) ( 1,324,641 )

( 1,324,641 )

( 1,396,218 )

Accrued expenses and other current liabilities 1,865,625 459,139

( 1,932,078 )

Net cash provided by operating activities

Net cash (used in) provided by operating activities ( 7,425,317 ) 2,212,823

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of property and equipment

Purchase of property and equipment ( 2,206,052 ) ( 840,387 )

( 1,064,223 )

Purchase of intangible assets ( 669,764 ) ( 925,351 )

Net cash used in investing activities ( 2,875,816 ) ( 1,765,738 )

( 1,063,823 )

CASH FLOWS FROM FINANCING ACTIVITIES

Net repayments of revolving credit facility

( 2,835,876 )

( 4,862,228 )

Net proceeds from issuance of ordinary shares in IPO

Excess payment over carrying value on long-lived assets acquisition from common-control affiliate

Net cash (used in) provided by financing activities

( 2,835,876 )

Net proceeds from (repayments of) revolving credit facility 7,543,192 ( 2,835,876 )

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 )

( 2,290,187 )

CASH, BEGINNING OF YEAR 7,777,241 10,067,428

3 unchanged sentences

Cash paid during the period for income taxes $ ( 1,112,640 ) $ ( 552,163 )

( 1,835,823 )

NON-CASH INVESTING AND FINANCING ACTIVITIES

New addition on right-of-use assets $ ( 158,082 ) $ ( 7,204,742 )

( 7,204,742 )

Acquisition of intangible asset partially through prior period advanced payment $ ( 1,241,664 ) $ —

_________________________________________________

11 unchanged sentences

The accompanying consolidated financial statements reflect the activities of FGI and each of the following entities, in each case, as contemplated after the Reorganization, as described below:

Name Background Ownership

FGI Industries Inc.

● A New Jersey corporation

100 % owned by FGI

(formerly named Foremost Groups, Inc.)

(formerly named Foremost Groups, Inc.) • A New Jersey corporation

• Incorporated on January 5, 1988

• Sales and distribution in the United States

FGI Europe Investment Limited

● A British Virgin Islands holding company

100 % owned by FGI

FGI Europe Investment Limited • A British Virgin Islands holding company

• Incorporated on January 1, 2007

FGI International, Limited

● A Hong Kong company

100 % owned by FGI

FGI International, Limited • A Hong Kong company

• Incorporated on June 2, 2021

• Sales, sourcing and product development

100 % owned by FGI

FGI Canada Ltd.

• A Canadian company

100 % owned by FGI Industries, Inc.

• Incorporated on October 17, 1997

• Sales and distribution in Canada

100 % owned by FGI Industries Inc.

FGI Germany GmbH & Co.

● A German company

100 % owned by FGI Europe Investment Limited

KG • A German company

• Incorporated on January 24, 2013

• Sales and distribution in Germany

100 % owned by FGI Europe Investment Limited

FGI China, Ltd.

• A PRC limited liability company

100 % owned by FGI International, Limited

• Incorporated on August 19, 2021

• Sourcing and product development

FGI United Kingdom Ltd

● An UK company

100 % owned by FGI Europe Investment Limited

100 % owned by FGI International, Limited

FGI United Kingdom Ltd • An UK company

• Incorporated on December 10, 2021

• Sales and distribution in UK

FGI Australasia Pty Ltd

● An Australian company

100 % owned by FGI

100 % owned by FGI Europe Investment Limited

FGI Australasia Pty Ltd • An Australian company

• Incorporated on September 8, 2022

• Sales and distribution in Australia

Covered Bridge Cabinetry Manufacturing Co., Ltd

● A Cambodian company

100 % owned by FGI

Covered Bridge Cabinetry Manufacturing Co., Ltd • A Cambodian company

• Incorporated on April 21, 2022

• Manufacturing in Cambodia

Isla Porter LLC

● A New Jersey company

60 % owned by FGI Industries, Inc.

100 % owned by FGI

Isla Porter LLC • A New Jersey company

• Formed on June 2, 2023

• Sales and distribution in the United States

60 % owned by FGI Industries Inc.

FGI Industries India Private Limited • An Indian company

• Incorporated on June 11, 2024

• Sales and distribution in India

100 % owned by FGI

Reorganization

7 unchanged sentences

and (iv) Foremost contributed 100 % of the outstanding shares of stock of each of FGI Industries, FGI Europe Investment Limited (“FGI Europe”), which, directly and, through its wholly-owned German subsidiary, FGI Germany GmbH & Co., operates the K&B sales and distribution business in Europe, and FGI International, which, directly and through its wholly-owned Chinese subsidiary, FGI China, Ltd., operates the K&B sales and distribution business in the remainder of the world, K&B product development and sourcing of K&B products in China, to the Company (collectively, the “Reorganization”), such that, immediately following the Reorganization, (x) Foremost owns 100 % of the equity interests in each of the Company and FHI, (y) the Company owns 100 % of the equity interests in each of FGI Industries, FGI Europe and FGI International, which collectively, and through subsidiaries, operate the K&B business worldwide (the “K&B Business”), and (z) FHI owns 100 % of the equity interests in FKB.

Immediately before and as contemplated by the proposed Reorganization, each of the Companies, FGI Industries, FGI Europe and FGI International, and each of their respective subsidiaries was and is ultimately controlled by Foremost.

As such, the accompanying consolidated financial statements include the assets, liabilities, revenue, expenses and cash flows that are directly attributable to the K&B Business (excluded otherwise) before the Reorganization.

The consolidated financial statements are presented as if the Company had been in existence and the Reorganization had been in effect for the entirely of each of the periods presented.

However, such presentation may not necessarily reflect the results of operations, financial position and cash flows if the K&B Business had actually existed on a stand- alone basis during the years presented before the completion of the Reorganization.

On January 14, 2022, FGI Industries, a wholly-owned subsidiary of the Company, entered into a shared services agreement (the “FHI Shared Services Agreement”) with Foremost Home Industries, Inc., a newly-formed wholly-owned subsidiary of Foremost (“FHI”).

On January 14, 2022, FGI Industries, a wholly-owned subsidiary of the Company, entered into a shared services agreement (the “FHI Shared Services Agreement”) with Foremost Home Inc., a newly-formed wholly-owned subsidiary of Foremost (“FHI”).

Pursuant to the FHI Shared Services Agreement, FGI Industries provides FHI with general and administrative services, information technology systems services and human resources services, as well as warehouse space services and supply chain services in the United States.

2 unchanged sentences

For all other services provided, FHI will pay a service fee equal to the total costs incurred by FGI Industries for such service generally divided by the number of FHI employees relative to FGI Industries employees.

The FHI Shared Services Agreement will have an initial term of one year and will renew automatically unless cancelled by either party upon the giving of at least 60 days in advance of the expiration of the then-current term.

On January 1, 2023 the Company entered into an amended and restated shared services agreement (the “Worldwide Shared Services Agreement”) with Foremost Worldwide Co., Ltd.

(“Foremost Worldwide”) pursuant to which Foremost Worldwide will provide FGI Industries with general and administrative services, information technology system services and human resources services, in Taiwan.

The FHI Shared Services Agreement had an initial term of one year and renews automatically unless cancelled by either party upon the giving of at least 60 days notice in advance of the expiration of the then-current term.

On January 14, 2022, the Company entered into a shared services agreement (the “Worldwide Shared Services Agreement”) with Foremost Worldwide Co., Ltd.

(“Foremost Worldwide”) pursuant to which Foremost Worldwide provides FGI Industries with general and administrative services, information technology system services and human resources services, in Taiwan.

The terms of the Worldwide Services Agreement as between the service provider and recipient are substantially identical to those of the FHI Shared Services Agreement, including calculation of service fees and termination provisions, with Foremost Worldwide providing services and FGI Industries paying Foremost Worldwide for such services.

On January 1, 2023, the Worldwide Services Agreement was amended and restated to include additional digital online and related services.

The assets and liabilities have been stated at historical carrying amounts.

Only those assets and liabilities that are specifically identifiable to the K&B Business are included in the Company’s consolidated balance sheets.

The Company’s statements of income and comprehensive income consists all the revenues, costs and expenses of the K&B Business, including allocations to the selling and distribution expenses, general and administrative expenses, and research and development expenses, and which were incurred by FGI but related to the K&B Business prior to the Reorganization.

All revenues and cost of revenues attributable to selling of kitchen and bath products were allocated to the Company.

The Company’s consolidated statements of operations and comprehensive (loss) income consists all the revenue, costs and expenses of the K&B Business, including allocations to selling and distribution expenses, general and administrative expenses, and research and development expenses, and which were incurred by FGI but related to the K&B Business prior to the Reorganization.

All revenue and cost of revenue attributable to selling of K&B products were allocated to the Company.

Operating expenses were allocated to the Company based on employees and activities that are involved in the K&B Business.

Any expenses that were not directly attributable to any specific business were allocated to the Company based on the proportion of the number of employees of the K&B Business to the total number of employees of both the K&B Business and FHI.

The following table sets forth the revenues, cost of revenues and operating expenses that were irrelevant to the K&B Business allocated from FGI Industries to Foremost Home, Inc.

Since December 2023, the books and records of FHI have been completely separated from FGI Industries.

The following table sets forth the revenue, cost of revenue and operating expenses that were irrelevant to the K&B Business allocated from FGI Industries to Foremost Home, Inc.

for years ended December 31, 2024 and 2023, respectively.

For the Years Ended

Cost of revenues

( 27,735,284 )

Selling and distribution expenses

( 3,883,799 )

General and administrative expenses

Research and development expenses

Income from operations

The following table sets forth the revenues, cost of revenues and operating expenses that were directly related to the K&B Business allocated from Foremost Worldwide Co., Ltd., a wholly-owned subsidiary of Foremost, to FGI International for years ended December 31, 2023 and 2022, respectively.

For the Years Ended

Cost of revenues

( 22,853,884 )

Revenue $ — $ 991,919

Cost of revenue — ( 768,065 )

Gross profit — 223,854

Selling and distribution expenses — 45,979

2 unchanged sentences

Income from operations $ — $ 269,833

Since October 2022, the books and records of FGI International have been completely separated from Foremost Worldwide Co., Ltd., a wholly-owned subsidiary of Foremost.

Income tax liability is calculated based on a separate return basis as if the K&B Business had filed separate tax returns before the completion of the Reorganization.

5 unchanged sentences

As of December 31, 2024 , the Company had approximately $ 4.6 million in cash and cash equivalents, which primarily consists of cash on hand and bank deposits, which are unrestricted as to withdrawal and use.

As of the date of the report, FGI Industries is in the process of obtaining extension for Corporate Borrower Annual Statements, a U.S.

standalone reporting obligation, which will be due by April 30, 2024.

If the condition is not met, East West Bank has the right to close the line of credit, please refer to Note 8 – Short-term loans.

If the Company is unable to realize its assets within the normal operating cycle of a twelve (12) month period, the Company may have to consider supplementing its available sources of funds through the following sources:

13 unchanged sentences

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.

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.

1 unchanged sentence

Foreign currency translation and transaction

The functional currencies of the Company and its subsidiaries are the local currency of the country in which the subsidiaries operate, except for FGI International which is incorporated in Hong Kong while adopting the United States Dollar (“U.S.

The functional currencies of the Company and its subsidiaries are the local currency of the country in which the subsidiaries operate, except for FGI International, which is incorporated in Hong Kong and adopted the United States Dollar (“U.S.

Dollar” or “USD”) as its functional currency.

5 unchanged sentences

Translation adjustments arising from the use of different exchange rates from period to period are included as a separate component of accumulated other comprehensive income included in the consolidated statements of changes in shareholders’ equity.

Transaction gains and losses arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency in the consolidated statements of income and comprehensive income.

For the purpose of presenting the financial statements of subsidiaries using the Renminbi (“RMB”) as functional currency, the Company’s assets and liabilities are expressed in U.S.

Dollars at the exchange rate on the balance sheet

date, which was 7.1006 and 6.9653 as of December 31, 2023 and 2022, respectively;

shareholders’ equity accounts are translated at historical rates, and income and expense items are translated at the average exchange rate during the period, which was 7.0945 and 6.7164 the years ended December 31, 2023 and 2022, respectively.

For the purpose of presenting the financial statements of the subsidiary using the Canadian Dollar (“CAD”) as functional currency, the Company’s assets and liabilities are expressed in U.S.

For the purpose of presenting the financial statements of subsidiaries using the Renminbi (“RMB”) as their functional currency, the Company’s assets and liabilities are expressed in U.S.

Dollars at the exchange rate on the balance sheet date, which was 7.3094 and 7.1006 as of December 31, 2024 and 2023, respectively;

shareholders’ equity accounts are translated at historical rates, and income and expense items are translated at the average exchange rate during the period, which was 1.3541 and 1.2945 for the years ended December 31, 2023 and 2022, respectively.

For the purpose of presenting the financial statements of the subsidiary using the Euro (“EUR”) as functional currency, the Company’s assets and liabilities are expressed in U.S.

shareholders’ equity accounts are translated at historical rates, and income and expense items are translated at the average exchange rate during the period.

For the purpose of presenting the financial statements of the subsidiary using the Canadian Dollar (“CAD”) as its functional currency, the Company’s assets and liabilities are expressed in U.S.

Dollars at the exchange rate on the balance sheet date, which was 1.4384 and 1.3246 as of December 31, 2024 and 2023, respectively;

shareholders’ equity accounts are translated at historical rates, and income and expense items are translated at the average exchange rate during the period, which was 0.9527 and 0.9474 for the years ended December 31, 2023 and 2022, respectively.

shareholders’ equity accounts are translated at historical rates, and income and expense items are translated at the average exchange rate during the period.

For the purpose of presenting the financial statements of the subsidiary using the Euro (“EUR”) as its functional currency, the Company’s assets and liabilities are expressed in U.S.

Dollars at the exchange rate on the balance sheet date, which was 0.9600 and 0.9059 as of December 31, 2024 and 2023, respectively;

shareholders’ equity accounts are translated at historical rates, and income and expense items are translated at the average exchange rate during the period.

For the purpose of presenting the financial statements of the subsidiary using the Indian Rupee (“INR”) as its functional currency, the Company’s assets and liabilities are expressed in U.S.

Dollars at the exchange rate on the balance sheet date, which was 85.4912 as of December 31, 2024;

shareholders’ equity accounts are translated at historical rates, and income and expense items are translated at the average exchange rate during the period.

Reclassification

Certain prior year amounts have been reclassified to conform with the current year presentation, specifically the depreciation and amortization in the consolidated statements of cash flows.

These reclassifications have no effect on the consolidated balance sheets and the consolidated statements of operations and comprehensive (loss) income previously reported.

Cash consists of cash on hand and demand deposits placed with banks or other financial institutions that have original maturities of three months or less.

The Company did no t have any cash equivalents as of December 31, 2023 and 2022.

The Company did not have any cash equivalents as of December 31, 2024 and 2023.

Accounts receivable, net

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.

Management reviews its receivables on a regular basis to determine if the expected credit losses is adequate and adjusts the allowance when necessary.

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.

Delinquent account balances are written off against allowance for credit losses after management has determined that the likelihood of collection is not probable.

13 unchanged sentences

Estimated useful lives are as follows:

Leasehold Improvements

Lesser of lease term and

expected useful life

Machinery and equipment

Furniture and fixtures

Building 20 years

Leasehold Improvements Lesser of lease term and expected useful life

Machinery and equipment 3 – 5 years

Furniture and fixtures 3 – 5 years

Vehicles 5 years

Molds 3 – 5 years

Intangible assets, net

8 unchanged sentences

The Company determines if an arrangement is a lease at inception.

Operating leases are included in right-of-use assets (“ROU assets”), operating lease liabilities — current and operating lease liabilities — noncurrent on the consolidated balance sheets.

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.

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.

4 unchanged sentences

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.

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.

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.

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.

11 unchanged sentences

The Company recognized 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 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.

The Company generates 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 with the Company’s customers.

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.

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.

The Company’s customers’ payment terms generally range from 15 to 60 days of fulfilling its performance obligations and recognizing revenue.

7 unchanged sentences

The Company records receivables related to revenue when it has an unconditional right to invoice and receive payment.

The Company’s disaggregated revenues are summarized as follows:

The Company’s disaggregated revenue is summarized as follows:

For the Years Ended

Revenues by product line

Revenue by product line

Sanitaryware $ 81,109,955 $ 75,551,117

Bath Furniture 14,739,205 14,770,376

Shower System 25,521,977 19,997,197

Others 10,446,936 6,922,914

Total $ 131,818,073 $ 117,241,604

Total Revenue Total Assets

For the Years Ended

Revenues/ total assets by geographic location

December 31, As of

2024 2023 2024 2023

USD USD USD USD

Revenue/ total assets by geographic location

United States $ 82,378,167 $ 74,572,336 $ 47,935,433 $ 38,401,665

Canada 35,151,631 31,092,989 15,027,362 17,850,709

Europe 13,301,990 11,477,070 1,625,994 528,068

Rest of World 986,285 99,209 10,872,626 8,964,488

Total $ 131,818,073 $ 117,241,604 $ 75,461,415 $ 65,744,930

Shipping and Handling Costs

9 unchanged sentences

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.

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 basis.

The Company recognized share-based compensation of $ 401,216 and $ 417,978 for the years ended December 31, 2024 and 2023, respectively.

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.

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The Company believes that there is an increased potential for volatility in its effective tax rate because this threshold allows for changes in the income tax environment and, to a greater extent, the inherent complexities of income tax law in a substantial number of jurisdictions, which may affect the computation of its liability for uncertain tax positions.

The Company records interest and penalties on our uncertain tax positions in income tax expense.

As of December 31, 2023, the tax years ended December 31, 2020 through December 31, 2023 for FGI Industries, Inc.

remain open for statutory examination by tax authority.

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 in which the tax arises.

The Company records and penalties on its uncertain tax positions, which were insignificant for the years ended December 31, 2024 and 2023, in income tax expense.

As of December 31, 2024, the tax years ended December 31, 2021 through December 31, 2023 for FGI Industries remain open for statutory examination by tax authority.

The Company 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 in which the tax arises.

Non-controlling interests

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The non-controlling interests are presented in the consolidated balance sheets, separate from equity attributable to the shareholders of the Company.

Non-controlling interests in the results of operations of the Company are presented on the consolidated statements of income and comprehensive income as allocations of the net income or loss for the period between non-controlling shareholders and the shareholders of the Company.

Comprehensive income

Comprehensive income consists of two components:

Non-controlling interests in the results of operations of the Company are presented on the consolidated statements of operations and comprehensive (loss)

income as allocations of the net income or loss for the period between non-controlling shareholders and the shareholders of the Company.

Comprehensive income (loss)

Comprehensive income (loss) consists of two components:

net income and other comprehensive income.

Other comprehensive income refers to revenue, expenses, gains and losses that under US GAAP are recorded as an element of equity but are excluded from net income.

Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under U.S.

GAAP are recorded as an element of equity but are excluded from net income.

Other comprehensive income consists of a foreign currency translation adjustment resulting from the Company not using the U.S.

Dollar as its functional currencies.

Earnings per share

The Company computes earnings per share (“EPS”) in accordance with ASC 260 – Earnings per Share (“ASC 260”).

Earnings (loss) per share

The Company computes earnings (loss) per share (“EPS”) in accordance with ASC 260 – Earnings per Share (“ASC 260”).

ASC 260 requires companies to present basic and diluted EPS.

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The following table sets forth the computation of basic and diluted earnings per share for the year ended December 31, 2024 and 2023 :

For the Year Ended

Net income attributable to FGI Industries Ltd.

For the Years Ended

Net (loss) income attributable to FGI Industries Ltd.

shareholders $ ( 1,201,089 ) $ 733,604

Weighted-average number of ordinary shares outstanding — basic

9,565,167 9,525,434

Potentially dilutive shares from outstanding options/warrants — 295,678

Weighted-average number of ordinary shares outstanding — diluted

Earnings per share — basic

Earnings per share — diluted

Potential ordinary shares that have an anti-dilutive effect are excluded from the calculation of diluted EPS.

355,999 and 2,925,000 number of options and warrants, respectively, were excluded from diluted EPS because their effects were anti-dilutive.

9,565,167 9,821,112

Earnings (loss) per share — basic $ ( 0.13 ) $ 0.08

Earnings (loss) per share — diluted $ ( 0.13 ) $ 0.07

Segment reporting

ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments.

Recently issued accounting pronouncements

In June 2016, the FASB issued ASU 2016 13, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” amending the accounting for the impairment of financial instruments, including trade receivables.

Under previous guidance, credit losses were recognized when the applicable losses had a probable likelihood of occurring and this assessment was based on past events and current conditions.

The amended current guidance eliminates the “probable” threshold and requires an entity to use a broader range of information, including forecast information when estimating expected credit losses.

Generally, this should result in a more timely recognition of credit losses.

This guidance became effective for interim and annual periods beginning after December 15, 2019 with early adoption permitted for interim and annual periods beginning after December 15, 2018.

The requirements of the amended guidance should be applied using a modified retrospective approach except for debt securities, which require a prospective transition approach.

In November 2019, the FASB issued ASU 2019 10, which finalized the delay of such effective date to fiscal years beginning after December 15, 2023 for private and all other companies, including emerging growth companies.

As an emerging growth company, the Company adopted this guidance from January 1, 2023 , and the adoption of the standard did not have an impact on its financial position or results of operation.

Recently adopted accounting standards

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures,” which requires additional disclosures regarding an entity’s reportable segments, particularly regarding significant segment expenses, as well as information relating to the chief operating decision maker.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company adopted this standard on a retrospective basis for annual periods beginning January 1, 2024, and will adopt for interim periods within those annual periods beginning January 1, 2025.

The adoption of this guidance modified our disclosures, but did not have an impact on our financial position or results of operations.

Recently issued accounting standards

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures,” which requires additional income tax disclosures, particularly regarding the effective tax rate reconciliation and income taxes paid.

ASU 2023-09 is effective on a prospective or retrospective basis for annual period beginning after December 15, 2024, with early adoption permitted.

The Company plans to adopt this ASU for its annual period beginning January 1, 2025.

The adoption of this guidance will modify its disclosures, but will not have an impact on its financial position or results of operations.

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses,” which requires additional disclosure of the nature of expenses included in the income statement.

ASU 2024-03 is effective on a prospective or retrospective basis for annual periods beginning after December 15, 2026, and interim periods within those annual periods beginning after December 15, 2027.

Early adoption is permitted.

The Company plans to adopt this ASU for its annual period beginning January 1, 2027.

The adoption of this guidance will modify its disclosures, but will not have an impact on its financial position or results of operations.

The Company considers the applicability and impact of all ASUs.

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Accounts receivable, net consisted of the following:

December 31, 2023

December 31, 2024 As of

December 31, 2023

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Accrued defective return and discount ( 1,001,927 ) ( 744,284 )

( 1,595,838 )

Accounts receivable, net $ 20,293,555 $ 16,195,543

Movements of allowance for credit losses are as follows:

For the Year Ended

For the Years Ended

December 31, For the Year Ended

Beginning balance $ 244,879 $ 438,843

Provision 137,592 78,640

Write-off ( 190,650 ) ( 272,604 )

Ending balance $ 191,821 $ 244,879

Movements of accrued defective return and discount accounts are as follows:

For the Year Ended

For the Years Ended

December 31, For the Year Ended

Beginning balance $ 744,284 $ 1,595,838

( 1,696,263 )

Provision (recovery) 257,643 ( 851,554 )

Ending balance $ 1,001,927 $ 744,284

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Inventories, net consisted of the following:

December 31, 2023

December 31, 2024 As of

December 31, 2023

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Movements of inventory reserves are as follows:

For the Year Ended

For the Years Ended

December 31, For the Year Ended

Beginning balance $ 642,006 $ 663,530

Provision (recovery) 189,679 ( 21,524 )

Ending balance $ 831,685 $ 642,006

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Prepayments and other assets consisted of the following:

December 31, 2023

December 31, 2024 As of

December 31, 2023

Prepayments $ 1,806,555 $ 3,953,340

Others 284,852 664,411

Total prepayments and other assets $ 2,091,407 $ 4,617,751

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Property and equipment, net consist of the following:

December 31, 2023

December 31, 2024 As of

December 31, 2023

Building $ 946,066 $ 946,066

Leasehold Improvements 1,919,687 1,695,361

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Furniture and fixtures 274,994 259,449

Vehicles 147,912 147,912

Molds 26,377 26,377

Subtotal 6,864,203 4,688,604

accumulated depreciation ( 3,311,647 ) ( 2,778,113 )

( 2,778,113 )

( 3,687,511 )

Depreciation expenses for the years ended December 31, 2023 and 2022 amounted to $ 200,764 and $ 175,979 , respectively, which were included in general and administrative expenses on the consolidated statements of income and comprehensive income.

Prepayment for purchase of equipment and construction-in-progress 81,784 —

Total $ 3,634,340 $ 1,910,491

Depreciation expenses for the years ended December 31, 2024 and 2023 amounted to $ 474,828 and $ 200,764 , respectively, which were included in general and administrative expenses on the consolidated statements of operations and comprehensive (loss) income.

Note 7 — Leases

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As of December 31, 2024, the Company’s leases have remaining lease terms up to 10.2 years.

The Company also purchased an operating lease land from a common control affiliate for manufacturing purpose, which has remaining lease term up to 50 years and can be extended for another 50 years for $ 1 .

For the years ended December 31, 2023, and 2022, the total lease expenses was $ 2,581,542 and $ 1,239,353 respectively.

The Company also purchased an operating lease for land from a common control affiliate for manufacturing purposes, which has a remaining lease term up to 47.5 years and can be extended for another 50.0 years for $ 1 .

For the years ended December 31, 2024, and 2023, the total lease expenses were $ 2,763,970 and $ 2,581,542 respectively.

The table below presents the operating lease related assets and liabilities recorded on the Company’s consolidated balance sheets:

December 31, 2023

December 31, 2024 As of

December 31, 2023

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Information relating to the lease term and discount rate are as follows:

December 31, 2023

December 31, 2024 As of

December 31, 2023

Weighted-average remaining lease term

Operating leases

Operating leases 8.7 years 9.4 years

Weighted-average discount rate

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For the 12 months ending December 31,

2025 $ 2,575,464

2026 2,622,311

2027 2,613,448

2028 2,221,045

2029 1,339,891

Thereafter 5,258,220

Total lease payments 16,630,379

imputed interest ( 3,409,484 )

( 4,466,149 )

Present value of lease liabilities $ 13,220,895

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East West Bank loan

FGI Industries, Inc.

(formerly named Foremost Groups, Inc.) (“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 49.89 % of the voting control of Foremost.

On November 25, 2022, the line was extended, to a new maturity date of December 21, 2024 , and the current amount of maximum borrowings is $ 18,000,000 .

The Company's wholly-owned subsidiary, FGI Industries, has a line of credit agreement (the “Credit Agreement”) with East West Bank, which is collateralized by all assets of FGI Industries and personally guaranteed by Liang Chou Chen, who holds approximately 49.91 % of the voting control of Foremost.

The current amount of maximum borrowings is $ 18,000,000 and the Credit Agreement had a maturity date of December 21, 2024.

East West Bank has agreed to extend the maturity date to June 21, 2025 while efforts regarding a renewal of the facility are ongoing.

This is an assets-based line of credit, the borrowing limit is calculated based on certain percentage of accounts receivable and inventory balances.

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 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.

As of December 31, 2023 and 2022, FGI Industries was in compliance with these financial covenants.

As of the date of the report, FGI Industries is in the process of obtaining extension for Corporate Borrower Annual Statements, a U.S.

standalone reporting obligation, which will be due by April 30, 202 4 .

If the condition is not met , East West Bank has the right to close the line of credit .

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.

As of December 31, 2024, FGI Industries was in compliance with these financial covenants.

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 interest rate as of December 31, 2023 and December 31, 2022 was 8.25 % and 7.25 %, respectively.

The interest rate as of December 31, 2024 and 2023 was 7.25 % and 8.25 %, 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.

HSBC Canada Bank Loan / Foreign Exchange Facility

The outstanding balance of such loan was $ 9.6 million and $ 7.0 million as of December 31, 2024 and 2023, respectively.

RBC Bank Loan / Foreign Exchange Facility

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).

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 CAD 7.5

million (USD 5.2 million as of December 31, 2024).

This is an assets-based line of credit, the borrowing limit is calculated based on certain percentage of accounts receivable and inventory balances.

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The loan bears interest at a rate of Prime rate plus 0.50 %.

As of December 31, 2023 and 2022, FGI Canada Ltd.

was in compliance with these financial covenants.

Borrowings under this line of credit amounts to $ 0 as of December 31, 2023 and 2022.

The facility matures at the discretion of HSBC Canada upon 60 days notice.

As of December 31, 2024, FGI Canada Ltd.

was not in compliance with certain financial covenants in the Canadian Revolver related to its debt to tangible net worth ratio.

In December 2024, FGI Canada Ltd.

obtained a waiver from the lender acknowledging the non-compliance and FGI Canada Ltd.’s plan to remedy the default on or before March 31, 2025.

The Company has classified the outstanding balance of the loan as a current liability on the consolidated balance sheet as of December 31, 2024.

The Company has sufficient liquidity to repay the loan in full if immediate settlement were required.

Borrowings under this line of credit amounted to $ 2.6 million and $ 0 as of December 31, 2024 and 2023, respectively.

The facility matures at the discretion of RBC upon 60 days’ notice.

FGI Canada Ltd.

also has a revolving foreign exchange facility with HSBC Canada of up to a permitted maximum of US $ 3,000,000 .

The advances are available to purchase foreign exchange forward contacts from time to time up to six months , subject to an overall maximum aggregate USD Equivalent outstanding face value not exceeding $ 3,000,000 .

also has a revolving foreign exchange facility with RBC of up to a permitted maximum of USD 3.0 million.

The advances are available to purchase foreign exchange forward contracts from time to time up to six months, subject to an overall maximum aggregate USD Equivalent outstanding face value not exceeding USD 3.0 million.

CTBC Credit Facility

On January 25, 2024, FGI International entered into an omnibus credit line (the “CTBC Credit Line”) with CTBC Bank Co., Ltd.

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.

The CTBC Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered in effect from time to time, plus 120 base points and handling fees, unless otherwise agreed to by the parties.

The CTBC Credit Line is unsecured and is fully guaranteed by the Company and partially guaranteed by Liang Chou Chen.

Borrowings under this line of credit amounted to $ 2.3 million and $ 0 as of December 31, 2024 and 2023, respectively.

On January 14, 2025, FGI International and CTBC agreed to increase the CTBC Credit Line to $ 3.0 million.

Note 9 — Shareholders’ Equity

FGI was incorporated in the Cayman Islands on May 26, 2021 in connection with the planned Reorganization, as described in Note 1.

The Company was authorized to issue 50,000,000 ordinary shares with a par value of $ 0.001 per share.

The Company is authorized to issue 50,000,000 ordinary shares with a par value of $ 0.001 per share.

On January 27, 2022, the Company completed the Reorganization upon the consummation of the initial public offering (“IPO”).

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The Shares and Warrants were issued separately in the offering, and may be transferred separately immediately upon issuance.

The Units were

sold at a price of $ 6.00 per Unit.

The Warrants included in the units were immediately exercisable following the consummation of the offering, have an exercise price equal to the initial public offering price, and expire five years from the date of issuance.

The Units were sold at a price of $ 6.00 per Unit.

The Warr ants included in the units were immediately exercisable following the consummation of the offering, have an exercise price equal to the initial public offering price, and expire five years from the date of issuance.

For the purposes of covering any over-allotments in connection with the distribution and sale of the Units, the Company granted a 45 -day option to the underwriters to purchase (the “Over-allotment Option”), in the aggregate, up to 375,000 ordinary shares (the “Option Shares”) and Warrants to purchase up to 375,000 ordinary shares (the “Option Warrants”), which was exercisable in any combination of Option Shares and/or Option Warrants at the per Share purchase price and/or the per Warrant purchase price, respectively.

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As of the date of this report, 2,875,000 warrants were issued and outstanding;

and none of the warrants have been exercised.

and none of the warrants has been exercised.

The gross proceeds from the IPO were approximately $ 15.0 million with net proceeds of approximately $ 12.4 million, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by the Company.

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2021 Equity Plan and Employee Stock Purchase Plan

On October 7, 2021, the Board of directors adopted 2021 Equity Incentive Plan (the “2021 Equity Plan”).

On October 7, 2021, the board of directors adopted the 2021 Equity Incentive Plan (the “2021 Equity Plan”).

The 2021 Equity Plan permits the grant of equity and equity-based incentive awards, including non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards.

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Employee Stock Purchase Plan (the “ESPP”).

The ESPP was approved by the Company’s stockholders on October 7, 2021, and became effective on the effective date of the Company’s consummation of the IPO of its ordinary shares.

The ESPP was approved by the Company’s shareholders on October 7, 2021, and became effective on the effective date of the Company’s consummation of the IPO of its ordinary shares.

The ESPP offers eligible employees the opportunity to acquire a stock ownership interest in the Company through periodic payroll deductions that will be applied towards the purchase of ordinary shares at a discount from the then-current market price.

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Restricted shares units (“RSU”)

On January 27, 2022, the board of directors approved the issuance of 183,750 restricted share units (“RSUs”) to certain officers and employees under the 2021 Equity Plan as compensation awards.

The fair value for these RSUs was $ 716,625 based on the closing share price of $ 3.90 as at January 27, 2022.

In January 2022, the Company issued 183,750 restricted share units (“RSUs”) to certain officers and employees under the 2021 Equity Plan as compensation awards.

The fair value for these RSUs was $ 716,625 based on the closing share price of $ 3.90 as of January 27, 2022.

These awards will vest in three equal installments on each anniversary of the grant date over three years .

As of December 31, 2024, 122,500 of these granted RSUs were vested.

On April 13, 2022, the board of directors approved the issuance of 8,750 RSUs to an employee under the 2021 Equity Plan as compensation awards.

The fair value for these RSUs was $ 22,050 based on the closing share price of $ 2.52 as at April 13, 2022.

In April 2022, the Company issued 8,750 RSUs to an employee under the 2021 Equity Plan as compensation awards.

The fair value for these RSUs was $ 22,050 based on the closing share price of $ 2.52 as of April 13, 2022.

These awards will vest as to one-third of the shares on the one-year anniversary of the grant date.

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As of December 31, 2024, 7,778 of these granted RSUs were vested.

On May 11, 2022, the board of directors approved the issuance of 87,611 RSUs under the 2021 Equity Plan to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

In May 2022, the Company issued 87,611 RSUs under the 2021 Equity Plan to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

All these awards were subjected to performance conditions through December 31, 2024.

The grant date fair value for these RSUs was $ 198,000 based on the closing share price of $ 2.26 as of May 11, 2022.

If the maximum performance was met, the Company would have issued an additional 43,805 RSUs under these awards with a grant date fair value of $ 99,000 .

As of December 31, 2024, all RSUs were canceled and none of them were vested.

In May 2022, the Company issued 16,363 RSUs to its independent directors under the 2021 Equity Plan as compensation award.

All these awards are subjected to performance conditions through December 31, 2024 .

The grant date fair value for these RSUs was $ 198,000 based on the closing share price of $ 2.26 as at May 11, 2022.

As of December 31, 2023, the performance condition was not met, and none of the RSUs were vested.

On May 17, 2022, the board of directors approved the issuance of 16,363 RSUs to its independent directors under the 2021 Equity Plan as compensation award.

All these awards are subjected to performance conditions and will vest on December 31, 2024.

The fair value for these RSUs was $ 36,000 based on the closing share price of $ 2.20 as at May 17, 2022.

As of December 31, 2023, none of these RSUs were vested.

On March 23, 2023, the board of directors approved the issuance of 96,635 RSUs under the 2021 Equity Plan to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

The fair value for these RSUs was $ 36,000 based on the closing share price of $ 2.20 as of May 17, 2022.

As of December 31, 2024 , all RSUs were canceled and none of them were vested.

In March 2023, the Company issued 96,635 RSUs under the 2021 Equity Plan to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

All these awards are subjected to performance conditions through December 31, 2025.

The grant date fair value for these RSUs was $ 201,000 based on the closing share price of $ 2.08 as at March 29, 2023.

The grant date fair value for these RSUs was $ 201,000 based on the closing share price of $ 2.08 as of March 29, 2023.

If the maximum performance is met, the Company will issue an additional 48,317 RSUs under these awards with a grant date fair value of $ 100,500 .

As of December 31, 2024, none of these RSUs were vested.

On March 23, 2023, the board of directors approved the issuance of 17,349 RSUs to its independent directors under the 2021 Equity Plan as compensation award.

In March 2023 , the Company issued 17,349 RSUs to its independent directors under the 2021 Equity Plan as compensation award.

All these awards are subjected to performance conditions through December 31, 2025.

The grant date fair value for these RSUs was $ 36,000 based on the closing share price of $ 2.08 as at March 29, 2023.

The grant date fair value for these RSUs was $ 36,000 based on the closing share price of $ 2.08 as of March 29, 2023 .

As of December 31, 2024 , 10,120 of these RSUs were vested.

In March 2024, the Company issued 413,354 RSUs under the 2021 Equity Plan to the Company’s directors, officers and employees.

All these awards are subjected to performance conditions through December 31, 2026.

The grant date fair value for these RSUs was $ 620,031 based on the closing share price of $ 1.50 as of March 22, 2024.

If the maximum performance is met, the Company will issue an additional 206,677 RSUs under these awards with a grant date fair value of $ 310,016 .

As of December 31, 2024 , none of these RSUs were vested.

In April 2024, the Company issued 13,333 RSUs under the 2021 Equity Plan to one of the Company’s employees.

This award was subject to performance obligations through December 31, 2024.

The grant date fair value for these RSUs was $ 20,000 based on the closing share price of $ 1.50 as of April 1, 2024.

If the maximum performance was met, the Company would have issued an additional 6,667 RSUs under these awards with a grant date fair value of $ 10,000 .

As of December 31, 2024 , all RSUs were canceled and none of them were vested.

The following is a summary of the restricted share granted:

Restricted shares grants

Restricted shares grants Shares

Non-vested as of January 1, 2023 296,474

Granted 113,984

Vested ( 66,111 )

Canceled ( 87,611 )

Non-vested as of December 31, 2023 256,736

Granted 426,687

Vested ( 74,287 )

Canceled ( 29,696 )

Non-vested as of December 31, 2024 579,440

The following is a summary of the status of restricted share at December 31, 2024:

Outstanding Restricted Share

Average Remaining

Fair Value per share

Outstanding Restricted Shares

Fair Value per share Number Average Remaining

Amortization Period (Years)

$ 3.90 61,250 0.08

$ 2.52 972 0.25

$ 2.08 96,635 1.25

$ 2.08 7,229 1.25

$ 1.50 413,354 2.25

Share options (“Options”)

On March 24, 2022, the board of directors approved the issuance of 98,747 share options under the 2021 Equity Plan with an exercise price per share of $ 3.07 and a contractual life of 10 years to the Company’s executive officers and directors to incentivize their performance and continue to align their interests with the Company’s shareholders.

In March 2022, the Company issued 98,747 share options under the 2021 Equity Plan with an exercise price per share of $ 3.07 and a contractual life of 10 years to the Company’s executive officers and directors to incentivize their performance and continue to align their interests with the Company’s shareholders.

The grant date fair value for these options was $ 141,401 determined using the Black-Scholes simplified method at the per option fair value of $ 1.43 .

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As of December 31, 2024, 90,518 of these granted options were vested.

On April 13, 2022, the board of directors approved the issuance of 97,371 share options under the 2021 Equity Plan with an exercise price per share of $ 2.52 and a contractual life of 10 years to the Company’s employees to incentivize their performance and continue to align their interests with the Company’s shareholders.

In April 2022, the Company issued 97,371 share options under the 2021 Equity Plan with an exercise price per share of $ 2.52 and a contractual life of 10 years to the Company’s employees to incentivize their performance and continue to align their interests with the Company’s shareholders.

The grant date fair value for these options was $ 114,972 determined using the Black-Scholes simplified method at the per option fair value of $ 1.18 .

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As of December 31, 2024, 86,552 of these granted options were vested.

On May 11, 2022, the board of directors approved the issuance of 159,881 share options under the 2021 Equity Plan with an exercise price per share of $ 2.26 and a contractual life of 10 years to Company officers to incentivize their

performance and continue to align their interests with the Company’s shareholders.

In May 2022, the Company issued 159,881 share options under the 2021 Equity Plan with an exercise price per share of $ 2.26 and a contractual life of 10 years to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

The fair value for these options was $ 171,462 determined using the Black-Scholes simplified method at the per option fair value of $ 1.07 .

The number of options granted were subject to performance conditions through December 31, 2022, which could have resulted in additional options awarded if maximum performance metrics were met.

The number of options granted were subject to performance conditions through December 31, 2022, which could result in additional options awarded if maximum performance metrics were met.

In addition to the performance criteria, the options vest as to one-third of the shares on the one-year anniversary of the grant date.

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As of December 31, 2024, 137,675 of these granted options were vested.

On March 23, 2023, the board of directors approved the issuance of 158,976 share options under the 2021 Equity Plan with an exercise price per share of $ 2.08 and a contractual life of 10 years to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

In March 2023, the Company issued 158,976 share options under the 2021 Equity Plan with an exercise price per share of $ 2.08 and a contractual life of 10 years to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

The grant date fair value for these options was $ 201,000 determined using the Black-Scholes simplified method at the per option fair value of $ 1.26 .

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As of December 31, 2024, all options were canceled and none of them were vested.

In April 2023, the Company issued 106,341 share options under the 2021 Equity Plan with an exercise price per share of $ 1.74 and a contractual life of 10 years to the Company’s employees to incentivize their performance and continue to align their interests with the Company’s shareholders.

The grant date fair value for these options was $ 112,423 determined using the Black-Scholes simplified method at the per option fair value of $ 1.06 .

All these options will vest as to one-third of the shares on the one -year anniversary of the grant date.

The remaining options will vest in a series of 24 successive equal monthly installments upon completion of each additional month of service.

As of December 31, 2024, 59,078 of these granted options were vested.

In March 2024, the Company issued 529,635 share options under the 2021 Equity Plan with an exercise price per share of $ 1.50 and a contractual life of 10 years to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

The grant date fair value for these options was $ 447,000 determined using the Black-Scholes simplified method at the per option fair value of $ 0.84 .

All these options are subjected to performance conditions through December 31, 2024, which could result in additional options awarded if maximum performance metrics are met.

In addition to the performance criteria, the options will vest as to one-third of the shares on the one-year anniversary of the grant date.

The remaining options will vest in a series of 24 successive equal monthly installments upon completion of each additional month of service, commencing on the grant date.

As of December 31, 2024 , none of these granted options were vested.

In April 2024, the Company issued 167,994 share options under the 2021 Equity Plan with an exercise price per share of $ 1.32 and a contractual life of 10 years to the Company’s employees to incentivize their performance and continue to align their interests with the Company’s shareholders.

The grant date fair value for these options was $ 126,163 determined using the Black-Scholes simplified method at the per option fair value of $ 0.75 .

All these options will vest as to one-third of the shares on the one-year anniversary of the grant date.

The remaining options will vest in a series of 24 successive equal monthly installments upon completion of each additional month of service.

As of December 31, 2024, none of these granted options were vested.

The options granted to employees are measured based on the grant date fair value of the equity instrument.

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The following table summarizes the Company’s employee share option activities:

Options Weighted

Price Weighted

Value Weighted

USD USD Years USD

Share options outstanding at December 31, 2023 462,340 $ 2.37 $ 1.20 9.35 $ —

Granted 697,629 1.46 0.82 10.00 —

Share options outstanding at December 31, 2024 1,159,969 1.82 0.96 8.56 —

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The assumptions used to value the options granted to employees were as follows:

April 2024 March 2024

April 2023 March 2023

Risk-free interest rate (%) 4.54 4.21 3.50 3.65

Expected volatility range (%) 55.32 55.11 63.39 63.36

40.30 - 45.67

Fair market value per ordinary share as at grant dates $ 1.32 $ 1.50 $ 1.74 $ 2.08

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The following table sets forth the amount of share-based compensation expense included in each of the relevant financial statement line items:

For the Year Ended

For the Years Ended

Selling and distribution expenses $ 190,864 $ 124,994

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Outside United States 3,018,662 2,069,739

Total pre-tax income

Provision for income taxes

Total provision for income taxes

Total pre-tax (loss) income $ ( 2,282,098 ) $ 1,387,788

Provision for (benefit of) income taxes

Federal $ 2,809 $ 27,451

State 46,915 13,555

Foreign 913,818 670,512

963,542 711,518

Federal ( 941,331 ) 24,622

State ( 435,241 ) 92,271

Foreign ( 134,791 ) ( 20,187 )

( 1,511,363 ) 96,706

Total (benefit of) provision for income taxes $ ( 547,821 ) $ 808,224

Reconciliations between taxes at the U.S.

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Federal statutory rate 21.0 21.0

(Decrease) increase in tax rate resulting from:

Increase (decrease) in tax rate resulting from:

State and local income taxes, net of federal benefit 13.4 ( 0.5 )

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Deferred adjustments — 16.8

Others 4.1 2.7

Effective tax rate 24.0 58.2

The following is a summary of the components of the net deferred tax assets and liabilities recognized in the consolidated balance sheets:

December 31, 2023

December 31, 2024 As of

December 31, 2023

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Net operating loss – state 328,861 27,337

Other 186,554 66,063

Total deferred tax assets 3,917,270 2,687,540

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Deferred tax liabilities

Fixed assets 1,416,178 1,728,364

Intangibles ( 164,493 ) ( 209,657 )

Total deferred tax liabilities 1,251,685 1,518,707

Deferred tax assets, net of deferred tax liabilities $ 2,665,585 $ 1,168,833

The deferred tax assets related to the Company’s net operating losses of $ 1,836,077 (Federal $ 1,476,655 and States $ 359,422 ) and $ 3,174,799 (Federal $ 1,975,734 and States $ 1,199,065 ) as of December 31, 2023 and 2022, respectively.

The deferred tax assets related to the Company’s net operating losses of $ 10,056,026 (Federal $ 4,649,994 and States $ 5,406,032 ) and $ 1,836,077 (Federal $ 1,476,655 and States $ 359,422 ) as of December 31, 2024 and December 31, 2023, respectively.

The Federal Net Operating losses have no expiration date.

The States Net Operating losses have either 20 years or no expiration date.

The Company had no material unrecognized tax benefits at December 31, 2023, 2022.

The Company has no t taken any tax positions for which it is reasonably possible that unrecognized tax benefits will significantly increase within the next 12 months.

The Company had no material unrecognized tax benefits at December 31, 2024 or December 31, 2023.

The Company has not taken any tax positions for which it is reasonably possible that unrecognized tax benefits will significantly increase within the next 12 months.

Inflation Reduction Act of 2022

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Note 12 — Related party transactions and balances

Sales/ Purchase from a related party – consisted of the following:

For the Year Ended December 31,

Name of Related Party

Focal Capital Holding Limited

An entity under common control

Sales to a related party

Name of Related Party Relationship Nature of

Transactions For the Years Ended

Foremost Worldwide Co., Ltd.

An entity under common control

FURNITURE (CAMBODIA) CO., LTD

An entity under common control

Foremost Australasia Pty Ltd

An entity under common control

RIZHAO FOREMOST WOODWORK MANUFACTURING CO.

An entity under common control

For the Year Ended December 31,

Name of Related Party

An entity under common control Sales $ 799,967 $ —

$ 799,967 $ —

Purchases from related parties

Name of Related Party Relationship Nature of

Transactions For the Years Ended

Focal Capital Holding Limited An entity under common control Purchases $ 6,157,455 $ 7,003,714

Foremost Worldwide Co., Ltd.

An entity under common control

The ending balance of such transactions as of December 31, 2023 and December 31, 2022, are listed of the following:

An entity under common control Purchases 8,385,673 2,308,468

Rizhao Foremost Woodwork Manufacturing Co., Ltd.

An entity under common control Purchases 330,722 16,026

Furniture (Cambodia) Co., Ltd.

An entity under common control Purchases 125,208 575,061

Foremost Australasia Pty Ltd An entity under common control Purchases — 409,777

$ 14,999,058 $ 10,313,046

The ending balances of such transactions as of December 31, 2024 and 2023 are listed of the following:

Prepayments — related parties

Name of Related Party

Name of Related Party As of

Focal Capital Holding Limited $ 9,975,298 $ 6,658,498

Rizhao Foremost Woodwork Manufacturing Co., Ltd.

$ 9,975,298 $ 6,667,679

Accounts Payables — related parties

Name of Related Party

Name of Related Party As of

Foremost Worldwide Co., Ltd.

$ 718,605 $ 735,308

Rizhao Foremost Woodwork Manufacturing Co., Ltd.

Furniture (Cambodia) Co., Ltd.

$ 119,667 $ —

$ 894,661 $ 735,308

Shared Service and Miscellaneous expenses – related party

FGI Industries, Inc.

is party to the FHI Shared Services Agreement with FHI.

FGI Industries is party to the FHI Shared Services Agreement with FHI.

Total amounts provided to FHI under the FHI Share Services Agreement for the years ended December 31, 2024 and 2023 were $ 761,672 and $ 821,864 , respectively, which were booked under selling and distribution expenses and administration expenses.

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Total amounts provided from Foremost Worldwide under the Worldwide Shared Services Agreement for the years ended December 31, 2024 and 2023 were $ 287,993 and $ 304,103 , respectively.

The ending balance as of December 31, 2023 and December 31, 2022, are listed of the following :

Name of Related Party

Other Receivables (Payables) — related parties

Name of Related Party Relationship Nature of

Transactions As of

Foremost Home Inc.

An entity under common control

Shared services and Miscellaneous

(“FHI”) An entity under common control Shared services and Miscellaneous expenses 2,654,286 1,183,612

Foremost Worldwide Co., Ltd.

An entity under common control

Shared services and Miscellaneous

Property purchase — related party

In July 2022, FGI entered into a property purchase agreement with a common control related party to purchase a building and sub-lease the land use right with an initial term of 50 years in amount of $ 1,963,521 .

As building and sub-lease the land use right were recorded at historic cost in amount of $ 946,066 and $ 519,450 , respectively.

The excess payment over carrying value $ 498,005 was recorded under shareholders equity statement.

An entity under common control Shared services and Miscellaneous expenses ( 340,901 ) ( 251,008 )

Furniture (Cambodia) Co., Ltd.

An entity under common control Shared services and Miscellaneous expenses ( 291,710 ) —

$ 2,021,675 $ 932,604

Loan guarantee by a related party

Liang Chou Chen holds approximately 49.89 % of the voting control of Foremost, the Company’s majority shareholder and guarantor of the loan obtained by FGI Industries from East West Bank under the Credit Agreement.

Liang Chou Chen holds approximately 49.91 % of the voting control of Foremost, the Company’s majority shareholder and is a guarantor of the loans under the Credit Agreement and under the CTBC Credit Line.

See Note 8 for details.

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Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash.

The Canadian Deposit Insurance Corporation pays compensation up to a limit of CAD 0.1 million (approximately USD 0.1 million) if the bank with which an individual/a company holds its eligible deposit fails.

As of December 31, 2023, cash balance of CAD 5.8 million (USD 4.4 million) was maintained at financial institutions in Canada, of which CAD 5.7 million (USD 4.3 million) was subject to credit risk.

The Taiwan Central Deposit Insurance Corporation pays compensation up to a limit of NTD 3.0 million (approximately USD 0.1 million) if the bank with which an individual/a company holds its eligible deposit fails.

As of December 31, 2023, an aggregated cash balance of USD 2.8 million, consisted from four bank accounts, was maintained at financial institutions in Taiwan, of which USD 2.5 million was subject to credit risk.

The European Banking Authority pays compensation up to a limit of EUR 0.1 million (approximately USD 0.1 million) if the bank with which an individual/a company holds its eligible deposit fails.

As of December 31, 2023, cash balance of EUR 0.2 million (USD 0.2 million) was maintained at financial institutions in Europe, of which EUR 0.1 million (USD 0.1 million) was subject to credit risk.

As of December 31, 2023, cash balance of USD 28,871 was maintained at financial institutions in Kingdom of Cambodia, of which USD 28,871 was subject to credit risk.

The Canadian Deposit Insurance Corporation pays compensation up to a limit of CAD100,000 (approximately USD69,522) if the bank with which an individual/a company holds its eligible deposit fails.

As of December 31, 2024, a cash balance of CAD 1,937,962 (USD 1,347,304 ) was maintained at financial institutions in Canada, of which CAD 1,837,962 (USD 1,276,880 ) was subject to credit risk.

The Taiwan Central Deposit Insurance Corporation pays compensation up to a limit of New Taiwan Dollar 3,000,000 (approximately USD91,500) if the bank with which an individual/a company holds its eligible deposit fails.

As of December 31, 2024, an aggregated cash balance of USD 2,548,188 was maintained at financial institutions in Taiwan, of which USD 2,260,205 was subject to credit risk.

The European Banking Authority pays compensation up to a limit of EUR100,000 (approximately USD104,167) if the bank with which an individual/a company holds its eligible deposit fails.

As of December 31, 2024, cash balance of EUR 132,650 (USD 138,178 ) was maintained at financial institutions in Europe, of which EUR 11,182 (USD 11,647 ) was subject to credit risk.

As of December 31, 2024, cash balance of USD 143,567 was maintained at financial institutions in Kingdom of Cambodia, all of which was subject to credit risk.

The Reserve Bank of India pays compensation up to a limit of INR500,000 (approximately USD5,849) if the bank with which an individual/a company holds its eligible deposit fails.

As of December 31, 2024, cash balance of INR 1,714,244 (USD 20,052 ) was maintained at financial institutions in India, of which INR 1,214,244 (USD 14,203 ) was subject to credit risk.

While management believes that these financial institutions are of high credit quality, it also continually monitors their credit worthiness.

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Customer concentration risk

For the year ended December 31, 2023, three customers accounted for 17.6 %, 16.4 % and 10.4 % of the Company’s total revenues, respectively.

For the year ended December 31, 2022, two customers accounted for 22.2 % and 22.1 % of the Company’s total revenues, respectively.

No other customer accounts for more than 10% of the Company’s revenue for the years ended December 31, 2023 and 2022.

As of December 31, 2023, four customers accounted for 27.2 %, 19.0 %, 12.0 % and 11.1 % of the total balance of accounts receivable, respectively.

For the year ended December 31, 2024, two customers accounted for 17.9 % and 16.7 % of the Company’s total revenue, respectively.

For the year ended December 31, 2023, three customers accounted for 17.6 %, 16.4 % and 10.4 % of the Company’s total revenue, respectively.

No other customer accounted for more than 10% of the Company’s revenue for the years ended December 31, 2024 and 2023.

As of December 31, 2024, two customers accounted for 29.4 % and 11.4 % of the total balance of accounts receivable, respectively.

No other customer accounts for more than 10% of the Company’s accounts receivable as of December 31, 2023, and 2022.

As of December 31, 2023, four customers accounted for 27.2 %, 19.0 %, 12.0 % and 11.1 % of the total balance of accounts receivable, respectively.

No other customer accounted for more than 10% of the Company’s accounts receivable as of December 31, 2024 and 2023.

Vendor concentration risk

For the year ended December 31, 2024, Tangshan Huida Ceramic Group Co., Ltd (“Huida”) accounted for 55.5 % of the Company’s total purchases.

For the year ended December 31, 2022, Huida accounted for 51.8 % of the Company’s total purchases.

No other supplier accounts for more than 10% of the Company’s total purchases for the years ended December 31, 2023 and 2022.

For the year ended December 31, 2023, Huida accounted for 54.7 % of the Company’s total purchases, respectively.

No other supplier accounted for more than 10% of the Company’s total purchases for the years ended December 31, 2024 and 2023.

As of December 31, 2024, Huida accounted for 69.6 % of the total balance of accounts payable.

As of December 31, 2023, Huida accounted for 71.4 % of the total balance of accounts payable.

No other supplier accounts for more than 10% of the Company’s accounts payable as of December 31, 2023 and 2022.

No other supplier accounted for more than 10% of the Company’s accounts payable as of December 31, 2024 and 2023.

Note 14 — Commitments and contingencies

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These proceedings may seek remedies relating to matters including environmental, tax, intellectual property, acquisitions or divestitures, product liability, property damage, personal injury, privacy, employment, labor and pension, government contract issues and commercial or contractual disputes.

Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including management assessment of the merits of the particular claims, the Company does not believe it is reasonably possible that any asserted or unasserted legal claims or proceedings, individually or in aggregate, will have a material adverse effect on our results of operations, or financial condition.

Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on present information, including management’s assessment of the merits of the particular claims, the Company does not believe it is reasonably possible that any asserted or unasserted legal claims or proceedings, individually or in aggregate, will have a material adverse effect on its results of operations or financial condition.

Note 15 — Segment information

The Company follows ASC 280, Segment Reporting, which requires that companies disclose segment data based on how management makes decisions about allocating resources to each segment and evaluating their performances.

The Company follows ASC 280, “Segment Reporting” and adopted ASU 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures”.

The Company has one reporting segment.

The Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company and hence the Company has only one reportable segment.

Note 16 — Subsequent events

On January 25, 2024 , FGI International entered into an omnibus credit line (the “Credit Line”) with CTBC Bank Co., Ltd.

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.

The Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered in effect from time to time, plus 120 base points and handling fees, unless otherwise agreed to by the parties.

The Credit Line is unsecured and is fully guaranteed by the Company and partially guaranteed by Liang Chou Chen.

On March 20, 2024, the board of directors approved the issuance of 529,635 share options under the 2021 Equity Plan with an exercise price per share of $ 1.50 and a contractual life of 10 years to Company officers to incentivize their performance and continue to align their interests with the Company’s shareholders.

The grant date fair value for these options was $ 447,000 determined using the Black-Scholes simplified method at the per option fair value of $ 0.84 .

All these options are subjected to performance conditions through December 31, 2024, which could result in additional options awarded if maximum performance metrics are met.

In addition to the performance criteria, the options will vest as to one -third of the shares on the one-year anniversary of the grant date.

The remaining options will vest in a series of 24 successive equal monthly installments upon completion of each additional month of service, commencing on the grant date.

On March 20, 2024, the board of directors approved the issuance of 411,548 RSUs under the 2021 Equity Plan to the Company’s directors, officers and employees.

All these awards are subjected to performance conditions through December 31, 2026.

The grant date fair value for these RSUs was $ 617,322 based on the closing share price of $ 1.50 as at March 2 2 , 202 4 .

If the maximum performance is met, the Company will issue an additional 205,774 RSUs under these awards with a grant date fair value of $ 308,661 .

The Company’s chief operating decision maker has been identified as the chief executive officer, who reviews consolidated results when making decisions about allocating resources and assessing performance of the Company, and hence the Company has only one reportable segment which derives its revenue from the supply of bath and kitchen products.

The accounting policies of the kitchen and bath segment are the same as those described in the summary of significant accounting policies.

The measure of segment net income (loss) is reported on the consolidated statements of operations and comprehensive (loss) income as net income (loss).

The measure of segment total assets is reported on the consolidated balance sheets as total assets.

The Company's segment revenue, segment expenses, segment net income (loss), and a reconciliation of the total reportable segment's net income (loss) to the consolidated net income (loss) are as follows:

Kitchen and Bath Segment

For the Years Ended

Revenue $ 131,818,073 $ 117,241,604

Cost of revenue 96,390,733 85,164,322

Selling and distribution expenses 25,627,634 19,971,912

General and administrative expenses 10,199,914 8,424,083

Research and development expenses 1,699,383 1,376,844

Other segment items (1)

182,507 916,655

(Benefit of) provision for income taxes ( 547,821 ) 808,224

Segment net (loss) income ( 1,734,277 ) 579,564

Reconciliation of profit or loss

Adjustments and reconciling items — —

Consolidated net (loss) income $ ( 1,734,277 ) $ 579,564

(1) Other segment items included interest income, interest expense and non-recurring other income and expenses.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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 8. Financial Statements and Supplementary Data