FGI Industries Ltd.

Our Annual Report on Form 10-K for the year ended December 31, 2024, includes a detailed discussion of our risk factors. At the time of this filing, except as provided below, there have been no material changes to the risk factors that were included in the Form 10-K.

Our failure to meet the continued listing requirements of The Nasdaq Capital Market could result in a delisting of our ordinary shares.

On March 6, 2025, we received notice from Nasdaq that it had granted the Company a 180-day extension to regain compliance with the Nasdaq continued listing standards through September 1, 2025. We initially received notice from Nasdaq on September 6, 2024 that the closing bid price for our common stock had been below $1.00 per share for the previous 30 consecutive business days, and that we were therefore not in compliance with the minimum bid price requirement for continued inclusion on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (“Rule 5550(a)(2)”). Pursuant to the original notice, the Company had a 180-day period in which to regain compliance. We can regain compliance with the $1.00 minimum bid listing requirement if the closing bid price of our common stock is at least $1.00 per share for a minimum of ten (10) consecutive business days during the 180-day extension period.

If the Company does not regain compliance during this extension period, we expect Nasdaq will notify us that our common stock will be subject to delisting. We will have the right to appeal a determination to delist our common stock, and our common stock would remain listed on The Nasdaq Capital Market until the completion of the appeal process.

We completed a 1-for-5 reverse share split on July 31, 2025 in an effort to regain compliance with the Nasdaq ru. However, there can be no assurance that the Company will be successful in achieving or maintaining compliance with Rule 5550(a)(2) or other Nasdaq listing standards.

The commerce we conduct in the international marketplace and our reliance on overseas manufacturing makes us subject to tariffs, trade restrictions and other taxes when the raw materials or components we purchase, and the products we ship, cross international borders. Trade tensions between the United States and China, Canada, Mexico and other countries have been escalating in recent years. In 2025, the U.S. government announced the imposition of additional tariffs and reciprocal tariffs on most goods imported into the United States. Multiple nations, including China, responded with reciprocal tariffs and other trade actions, which triggered the U.S. government to increase the reciprocal tariffs on countries that retaliated against the U.S. enacted trade policy. While the U.S. and China have temporarily agreed to reduce their reciprocal tariffs during trade talks, a number of tariffs remain affecting multiple countries. Our products are manufactured primarily in Asia, including China, Vietnam, Cambodia, and other Asian countries impacted by reciprocal tariffs, which are likely to increase our costs of goods sold and could materially adversely impact our profitability, results of operations and financial condition. Moreover, we will likely need to alter our pricing as a result of such tariffs, which could reduce demand for our products or make our products less competitive than those of our competitors whose inputs are not subject to these tariffs, thereby decreasing our revenues and adversely impacting our results of operations. Products we sell into certain foreign markets could also become subject to similar retaliatory tariffs, making the products we sell uncompetitive compared to similar products not subjected to such import tariffs.

The recent enactment of tariffs by the government of the United States, along with the unpredictability of the tariff rates, poses a significant risk to our business operations and may materially increase our costs and reduce our margins. We are continuing to analyze and enact strategies to moderate or minimize the effects of these trade actions, including evaluating the country of origin for sourcing product into the United States and diversifying our supply chain, negotiating with suppliers, and adjusting our pricing strategies. However, there can be no assurance that these measures will be successful, or that they will offset the negative impact of the tariffs on our business. Given the uncertainty regarding scope and duration of the current and potential tariffs, as well as the potential for additional trade actions by the United States or other countries, the specific impact to our business, results of operations, cash flows, and financial condition is uncertain but could be material.

We may not be able to refinance or renew our indebtedness or be able to borrow under our Credit Agreement with East West Bank or other future credit facilities, which may have a material adverse effect on our financial condition.

The original maturity date for our Credit Agreement with East West Bank was December 21, 2024. Since that time, East West Bank has extended the maturity date on several occasions while the parties work on a renewal of the facility. The current maturity date is August 21, 2025. While we continue to work closely with East West Bank and believe we have sufficient accounts receivable available for factoring should the loan amounts become due, there can be no assurances that we will negotiate a renewal by such date or that the lender will extend the maturity date again. Moreover, there can be no assurances that we will be able to renew or refinance the Credit Agreement on substantially similar terms, or at all. In recent quarters, we have not been in compliance with the debt coverage ratio in the Credit Agreement, which may require a renewed facility to have different terms or borrowing limits, or there may be additional fees and expenses that we might have to pay, and we may have to agree to terms that could increase the cost of our debt structure. If we are unable to renew or refinance the Credit Agreement or other indebtedness on terms that are substantially similar to the terms currently available to us or obtain alternative or additional financing arrangements, or if such amounts became due, it could have a material adverse effect on our business, results of operations, cash flows, and financial condition.

There is substantial doubt about our ability to continue as a going concern due to pressure on our financial covenants arising from the current tariff environment.

The challenging consumer environment, in particular as a result of current tariff implementation in the United States, has adversely impacted and is expected to adversely impact our performance. These factors have placed pressure on our ability to meet the financial covenants in our credit agreements, including the Credit Agreement with East West Bank. Failure to satisfy the debt covenants under our loan facilities, without a timely cure, waiver or amendment, is considered an event of default. If an event of default occurs and is not cured or waived, the lender could elect to declare all amounts outstanding under such agreement immediately due and payable and exercise other remedies as set forth in such agreement. As of June 30, 2025, FGI Industries was not in compliance with certain financial covenants related to its debt coverage ratio in its Credit Agreement with East West Bank. As of the date of this quarterly report, FGI Industries has requested a waiver from the lender, which is being processed by the lender. However, it is possible that the lender could demand repayment of amounts owed or cease to lend to us. This and the other factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date of issuance of the condensed consolidated financial statements included in this Quarterly Report. Management has implemented plans which are disclosed in Note 2. As a result of these actions, management believes that the substantial doubt about the Company’s ability to continue as a going concern has been alleviated.

There is no assurance that we will successfully carry out our plan to generate liquidity as described in Note 2 to our unaudited consolidated financial statements included in this Quarterly Report. If our planned operational initiatives are not successful or if we are unable to obtain additional financing or renegotiate the terms of our existing credit facilities or identify and successfully execute on other business opportunities or strategic transactions, we may need to scale back or discontinue certain or all of our initiatives to reduce costs or ultimately seek bankruptcy protection.