FGI Industries Ltd.
For the period ended Mar 31, 2026. Filed May 15, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 15, 2026
FGI$7.36-0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001628280-25-052375
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-15.
0001628280-26-035563
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 84 previous paragraphs and 84 current paragraphs.
41 unchanged; 30 reworded; 12 added; 13 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
Reverse Share Split
Current report
Tariff Developments
Current report
Our business was significantly impacted by the changes in the U.S. tariff regime in 2025 and related responses from foreign jurisdictions. On February 20, 2026, the U.S. Supreme Court struck down certain tariffs imposed under the International Emergency Economic Powers Act (IEEPA). Following the Supreme Court decision, the U.S. Administration announced a new 10% global tariff under Section 122 of the Trade Act of 1974, subject to certain carveouts. These global tariffs were recently invalidated by a US Court of International Trade ruling, but the government has filed a notice of appeal. As of the filing date, it remains uncertain what impact these decisions will have on our future financial results, including the process and availability of obtaining refunds of amounts previously paid for the IEEPA tariffs or any fluctuations of the level of replacement tariffs imposed or the addition of any new tariffs through other means.
Current report
We derive the majority of our revenue from sales of sanitaryware, which accounted for 52.9% of our total revenue for the three months ended March 31, 2026, compared to 60.7% for the comparable period of 2025. Revenue generated from the sales of sanitaryware decreased by 20.0% to $16.1 million for the three months ended March 31, 2026 from $20.2 million for same period of 2025. Despite this decline, sanitaryware maintained its position as our largest product category. The stability in its share of total revenue reflects the ongoing resilience and steady demand for sanitaryware products, even as we continue to diversify our product portfolio and expand other categories in line with our long-term growth strategy.
Current report
Our second largest market is Canada. Our revenue generated in the Canadian market was $6.1 million for the three months ended March 31, 2026, compared to $8.2 million for the three months ended March 31, 2025, representing a 25.5% decrease. The decrease during the period was largely attributable to the decreased sales in sanitaryware as discussed above.
Current report
Gross profit was $8.2 million for the three months ended March 31, 2026, a decrease of 8.3% compared to the same period of 2025. Gross profit margin was 26.8% and 26.8% for the three months ended March 31, 2026 and March 31, 2025, respectively. Despite the decrease in gross profit, gross profit margin remained stable year-over-year.
Current report
We recorded an income tax expense of $24,678 for the three months ended March 31, 2026, compared to an income tax benefit of $0.7 million for the three months ended March 31, 2025. This is primarily attributable to the Company recording a valuation allowance against its deferred tax assets in the first quarter of 2026. While this accounting treatment is required under current standards, we remain focused on executing our strategic initiatives and are encouraged by the progress we are making, which we believe positions us well for potential future improvements in our operating results. Any sustained positive performance in future periods will be evaluated in accordance with applicable accounting guidance to determine the appropriate level of valuation allowance.
Current report
•Successful renewal of the Company’s credit facility with East West Bank, extending the maturity and maintaining access to committed financing.
Current report
The Credit Agreement contains financial covenants that require FGI Industries to maintain aggregate year to date EBITDA figures (defined as earnings before interest, taxes, depreciation and amortization) on a consolidated and unconsolidated basis, tested monthly, of up to $1.6 million and $1.4 million, respectively, as well as maintain certain limits on intercompany loans and affiliate transactions. As of March 31, 2026, FGI Industries was in compliance with these financial covenants.
Current report
The loan bears interest at a variable rate based on the Prime Rate (as quoted by the Wall Street Journal) plus a margin between 0% and 1.5% based on the Company’s trailing twelve month EBITDA (subject to a minimum rate of 4.500% per annum).
Current report
Cash Flows
Current report
Net cash used in operating activities was $0.3 million for the three months ended March 31, 2026, compared to $1.7 million used in the same period of 2025. The improvement in operating cash flow was primarily driven by favorable changes in working capital, including a $1.1 million decrease in inventories and a $0.6 million decrease in prepayments and other receivables from related parties, which provided cash inflows. Non-cash adjustments such as $0.5 million of amortization, $0.2 million of depreciation, and changes in provisions for credit losses and defective returns also contributed to narrowing the gap between net loss and operating cash flow. These inflows helped offset cash outflows from a $0.2 million increase in accounts receivable and a $0.8 million decrease in accounts payable. Overall, the Company’s operating cash flow for the quarter reflected improved management of working capital and cost control initiatives compared to the prior year period.
Removed paragraphs (13)
Previous report
Reverse Stock Split
Previous report
For the Three and Nine Months Ended September 30, 2025 and 2024
Previous report
We derive the majority of our revenue from sales of sanitaryware, which accounted for 64.0% and 61.2% of our total revenue for the three and nine months ended September 30, 2025, compared to 59.4% and 61.6% for the comparable periods of 2024. Revenue generated from the sales of sanitaryware increased by 7.0% to $22.9 million for the three months ended September 30, 2025 from $21.5 million for same period of 2024. For the nine months ended September 30, 2025, this revenue increased by 3.2% to $61.2 million from $59.3 million for the same period of 2024. Demand for sanitaryware remains subject to uncertainty given ongoing tariff considerations and broader trade conditions, despite easing of certain trade tensions between the U.S. and China.
Previous report
Our second largest market is Canada. Our revenue generated in the Canadian market was $9.1 million for the three months ended September 30, 2025, compared to $9.9 million for the three months ended September 30, 2024, representing a 8.0% decrease. For the nine months ended September 30, 2025, revenue from Canadian market decreased by 1.2% to $26.1 million, compared to $26.4 million for the same period in 2024. Revenue in the Canadian market remained largely stable for the nine months ended September 30, 2025, with third-quarter sales moderating as retailers slowed purchases following strong activity in the first half of this year. In the wholesale channel, after a slower start to the year, purchasing activity picked up in the third quarter.
Previous report
Gross profit was $9.5 million and $27.1 million for the three and nine months ended September 30, 2025, a decrease of 2.0% and an increase of 1.6% compared to the same periods of 2024, respectively. Gross profit margin was 26.5% and 27.1% for the three and nine months ended September 30, 2025, down 70 and 60 basis points from 25.8% and 27.7% for the three and nine months ended September 30, 2024, respectively.
Previous report
We recorded $1.8 million and $0.9 million of income tax provision for the three and nine months ended September 30, 2025, respectively, compared to an income tax provision of approximately $0.3 million and a minimal income tax benefit for the same periods in 2024. The Company assesses all available positive and negative evidence to evaluate the realizability of its deferred tax assets and whether or not a valuation allowance is necessary. The Company’s three-year cumulative loss position was significant negative evidence in assessing the need for a valuation allowance. The weight given to positive and negative evidence is commensurate with the extent such evidence may be objectively verified. Given the weight of objectively verifiable historical losses from operations, during the three months ended September 30, 2025, we recorded a $1.8 million valuation allowance on our deferred tax assets. This allowance significantly impacts the effective tax rate for the period. The Company may be able to reverse the valuation allowance when sufficient positive evidence exists to support the reversal of the valuation allowance.
Previous report
As discussed in Note 8, the Company was not in compliance with certain financial covenants related to its debt coverage ratio as of September 30, 2025. The Company is in discussions with its lenders regarding these covenant breaches.
Previous report
•Termination of the lease for one of its warehouse facilities in the first quarter of 2025, which resulted in a non-recurring lease exit cost. The facility had idle capacity, and the termination reduced the Company’s ongoing fixed overhead expenses.
Previous report
•In the event of a requirement for immediate loan repayment, the Company has sufficient accounts receivable available for factoring to meet such obligations.
Previous report
Pursuant to the Credit Agreement, FGI Industries is required to maintain (a) a debt coverage ratio (defined as earnings before interest, taxes, depreciation and amortization divided by current portion of long-term debt plus interest expense) of not less than 1.25 to 1, tested at the end of each fiscal quarter; (b) an effective tangible net worth (defined as total book net worth plus minority interest, less amounts due from officers, shareholders and affiliates, minus intangible assets and accumulated amortization, plus debt subordinated to East West Bank) of not less than $10,000,000, tested at the end of each fiscal quarter, on a consolidated basis; and (c) a total debt to tangible net worth ratio (defined as total liabilities divided by tangible net worth, which is defined as total book net worth plus minority interest, less loans to officers, shareholders, and affiliates minus intangible assets and accumulated amortization) not to exceed 4.0 to 1, tested at the end of each fiscal quarter, on a consolidated basis. As of September 30, 2025, FGI Industries was not in compliance with certain financial covenants related to its debt coverage ratio. As of the date of this quarterly report, FGI Industries has requested a waiver from the lender, which is being processed by the lender. In the absence of an executed waiver, the Company has classified the outstanding balance of the loan as a current liability on the unaudited condensed consolidated balance sheet as of September 30, 2025.
Previous report
The loan bears interest at a rate equal to, at the Company’s option, either (i) 0.25 percentage points less than the Prime Rate quoted by the Wall Street Journal or (ii) the SOFR Rate (as administered by CME Group Benchmark Administration Limited and displayed by Bloomberg LP) plus 2.20% per annum (in either case, subject to a minimum rate of 4.500% per annum). The interest rate as of September 30, 2025 and December 31, 2024 was 7.00% and 7.25%, resp ectively.
Previous report
Net cash used in operating activities was $1.7 million for the nine months ended September 30, 2025, compared to $8.0 million in the prior-year period. The improvement was primarily driven by favorable movements in liabilities, including a $3.3 million increase in accounts payable, which partially offset cash used for operating losses. These inflows helped mitigate the impact of the $4.1 million net loss, lease payments, and reductions in accrued expenses. Non-cash items such as $1.7 million of amortization, $0.5 million of depreciation, and $0.3 million of share-based compensation narrowed the gap between net loss and operating cash flow. Offsetting these factors were increases in operating assets, including $1.7 million in accounts receivable and $1.6 million in inventory, which used cash during the period.
Previous report
Beginning in the first quarter of 2025, we have revised the presentation of non-GAAP measures to provide more meaningful insight into the Company's performance. Historical comparative figures have been adjusted to reflect the current presentation format. These changes are intended to better align with how management evaluates results and makes operating decisions. Reconciliations to the most directly comparable GAAP measures are provided to support transparency and comparability.
Reworded paragraphs (30)
Previous wording
•Commitment to product innovation. We have a history of being an innovator in the kitchen and bath markets and developing “on-trend” products and bringing them to market ahead of the competition. We have developed deep marketing skills, leading design capabilities, and product development expertise. A recent example of our innovative product development includes the Jetcoat shower wall systems, which offer a stylized design option without the fuss of messy grout. We expect to continue to invest in research and development to drive product innovation in 2025.
Current wording
•Commitment to product innovation. We have a history of being an innovator in the kitchen and bath markets and developing “on-trend” products and bringing them to market ahead of the competition. We have developed deep marketing skills, leading design capabilities, and product development expertise. A recent example of our innovative product development includes the Jetcoat® shower wall systems, which offer a stylized design option without the fuss of messy grout. We expect to continue to invest in research and development to drive product innovation throughout 2026.
Previous wording
•Enhanced margin performance. Our focus on higher-margin products has continued to deliver results, with gross margins reaching 26.9% in 2024 and 27.4% in 2023, a significant rise from 19.5% in 2022. This positive trajectory in margins reflects our commitment to optimizing our product mix and operational efficiency despite recent headwinds from tariffs. Looking ahead, we anticipate gross margins to remain in line with the levels achieved in 2024 and 2023.
Current wording
•Enhanced margin performance. Our focus on higher-margin products has continued to deliver results, with gross margins reaching 26.8% for the three months ended March 31, 2026, 27.0% in 2025 and 26.9% in 2024, a significant rise from 19.5% in 2022. This positive trajectory in margins reflects our commitment to optimizing our product mix and operational efficiency despite recent headwinds from tariffs. Looking ahead, we anticipate gross margins to remain in line with the levels achieved in 2025 and 2024.
Previous wording
•Efficient capital deployment. We will continue to prioritize capital deployment in support of organic growth opportunities, while continuing to evaluate strategic M&A opportunities. With total liquidity of $14.2 million as of September 30, 2025, the Company believes it has sufficient financial flexibility to fund its organic growth strategy.
Current wording
•Efficient capital deployment. We will continue to prioritize capital deployment in support of organic growth opportunities, while continuing to evaluate strategic M&A opportunities. With total financial resources of $7.9 million as of March 31, 2026, the Company believes it has sufficient financial flexibility to fund its organic growth strategy.
Previous wording
We were incorporated in the Cayman Islands on May 26, 2021 in connection with a reorganization and separation our parent company, Foremost Groups Ltd. (“Foremost”), and its affiliates, pursuant to which, among other actions, Foremost contributed all of its equity interests in FGI Industries Inc. (“FGI Industries”), FGI Europe Investment Limited, an entity formed in the British Virgin Islands, and FGI International, Limited, an entity formed under the laws of Hong Kong, each a wholly-owned subsidiary of Foremost, to the newly formed FGI Industries Ltd. Foremost was established in 1987 and has become a global leader in kitchen and bath design, indoor and outdoor furniture, food service equipment, and manufacturing.
Current wording
We were incorporated in the Cayman Islands on May 26, 2021 in connection with a reorganization and separation from our parent company, Foremost Groups Ltd. (“Foremost”), and its affiliates, pursuant to which, among other actions, Foremost contributed all of its equity interests in FGI Industries Inc. (“FGI Industries”), FGI Europe Investment Limited, an entity formed in the British Virgin Islands, and FGI International, Limited, an entity formed under the laws of Hong Kong, each a wholly-owned subsidiary of Foremost, to the newly formed FGI Industries Ltd. Foremost was established in 1987 and has become a global leader in kitchen and bath design, indoor and outdoor furniture, food service equipment, and manufacturing.
Previous wording
On July 28, 2025, the Company filed an amendment (the “Amendment”) to the Company’s Amended and Restated Memorandum and Articles of Association with the Registrar of Companies in the Cayman Islands to effect a 1-for-5 reverse share split (the “Reverse Share Split”) of the Company’s ordinary shares, which was effected on July 31, 2025. Unless otherwise noted, the share and per share information in this Quarterly Report on Form 10-Q have been adjusted to give effect to the Reverse Stock Split.
Current wording
On July 28, 2025, the Company filed an amendment (the “Amendment”) to the Company’s Amended and Restated Memorandum and Articles of Association with the Registrar of Companies in the Cayman Islands to effect a 1-for-5 reverse share split (the “Reverse Share Split”) of the Company’s ordinary shares, which was effected on July 31, 2025. Unless otherwise noted, the share and per share information in this Quarterly Report on Form 10-Q have been adjusted to give effect to the Reverse Share Split.
Previous wording
The following table summarizes the results of our operations for the three and nine months ended September 30, 2025 and 2024 and provides information regarding the dollar and percentage increase (decrease) during such periods.
Current wording
The following table summarizes the results of our operations for the three months ended March 31, 2026 and 2025 and provides information regarding the dollar and percentage increase (decrease) during such periods.
Previous wording
For the nine months ended September 30, 2025, our revenue increased by $3.8 million, or 4.0%, to $100.1 million from $96.2 million for the same period last year. The increase in our revenue was primarily driven by increases in sales of sanitaryware, bath furniture and custom kitchen cabinetry. Revenue for the three months ended September 30, 2025 was $35.8 million, essentially consistent with the prior-year period.
Current wording
For the three months ended March 31, 2026, our revenue decreased by $2.7 million, or 8.2%, to $30.5 million from $33.2 million for the same period last year. The decrease in our revenue was primarily driven by decreases in sales of sanitaryware.
Previous wording
Our revenue from bath furniture sales accounted for 10.4% and 11.9% of our total revenue for the three and nine months ended September 30, 2025, compared to 11.5% and 11.7% for the comparable periods of 2024. Bath furniture sales decreased by 10.8% to $3.7 million for the three months ended September 30, 2025, compared to $4.2 million for the same period of 2024. For the nine months ended September 30, 2025, revenue from bath furniture sales increased by 5.9% to $12.0 million from $11.3 million for the same period of 2024. Our recently launched mid-tier product lines, launched to better address the current demand environment of trading down to lower priced offerings, is gaining traction.
Current wording
Our revenue from bath furniture sales accounted for 14.9% of our total revenue for the three months ended March 31, 2026, compared to 12.3% for the comparable period of 2025. Bath furniture sales increased by 10.9% to $4.5 million for the three months ended March 31, 2026, compared to $4.1 million for the same period of 2025. Our recently launched mid-tier product lines, launched to better address the current demand environment of trading down to lower priced offerings, is gaining traction.
Previous wording
Revenue from sales of shower systems made up approximately 16.4% and 16.8% of our total revenue for the three and nine months ended September 30, 2025, compared to 19.8% and 19.5% for the comparable periods of 2024. Revenue from sales of shower systems decreased by 17.8% to $5.9 million for the three months ended September 30, 2025, compared to $7.1 million for the comparable period of 2024. For the nine months ended September 30, 2025, revenue from sales of shower systems decreased by 10.7% to $16.8 million from $18.8 million for the same period of 2024. While shower system revenue dropped year-over-year this quarter, our recently launched programs have driven growth in recent periods and we anticipate them continuing to be a positive driver moving forward. Similar to sanitaryware, however, we expect demand to be uncertain due to the current environment as consumers await tariff clarity, which may offset the impact of these programs.
Current wording
Revenue from sales of shower systems made up approximately 21.2% of our total revenue for the three months ended March 31, 2026, compared to 17.1% for the comparable period of 2025. Revenue from sales of shower systems increased by 14.0% to $6.5 million for the three months ended March 31, 2026, compared to $5.7 million for the comparable period of 2025. These recently launched programs have driven growth, and we anticipate they will continue to be a positive driver moving forward. Similar to sanitaryware, however, we expect demand to remain uncertain due to the current environment, which may offset the impact of these programs.
Previous wording
For the nine months ended September 30, 2025, other revenue increased by 48.1% to $10.1 million from $6.8 million for the same period of 2024. Other revenue for the three months ended September 30, 2025 was $3.3 million, essentially consistent with the prior-year period. The increase was primarily driven by volume growth resulting from continued strength in sales of the Covered Bridge custom-kitchen cabinetry businesses.
Current wording
For the three months ended March 31, 2026, other revenue increased by 2.5% to $3.3 million from $3.3 million for the same period of 2025. The increase was primarily driven by volume growth resulting from continued strength in sales of the Covered Bridge custom-kitchen cabinetry businesses.
Previous wording
We consistently generated the majority of our revenue in the United States market, which amounted to $22.5 million and $22.2 million for the three months ended September 30, 2025 and September 30, 2024, respectively. For the nine months ended September 30, 2025, however, revenue from United States market increased by 3.0% to $61.6 million, compared to $59.8 million for the same period of 2024. Such revenue accounted for approximately 62% of our total revenue for the three and nine months ended September 30, 2025 and 2024, with minor period-to-period variation. The growth during the nine-month period was largely attributable to higher sales of bath furniture and kitchen cabinetry, as previously discussed, partially offset by a decrease due to tariff related uncertainties in the second quarter.
Current wording
We consistently generated the majority of our revenue in the United States market, which amounted to $19.9 million and $21.2 million for the three months ended March 31, 2026 and 2025, respectively. Such revenue accounted for approximately 65.3% and 63.7% of our total revenue for the three months ended March 31, 2026 and 2025. The decrease during the period was largely attributable to the decreased sales in sanitaryware as discussed above.
Previous wording
We also derive revenue from Europe, which consists primarily of sales in Germany. This amounted to $3.7 million and $10.4 million for the three and nine months ended September 30, 2025, compared to $3.4 million and $9.3 million for the three and nine months ended September 30, 2024, representing a 7.3% and 12.2% increase for the three-month and nine-month periods, respectively. We believe this growth reflects continued demand in the European market.
Current wording
We also derive revenue from Europe, which consists primarily of sales in Germany. This amounted to $3.6 million for the three months ended March 31, 2026, compared to $3.1 million for the three months ended March 31, 2025, representing a 15.4% increase. We believe this growth reflects continued demand in the European market.
Previous wording
Selling and distribution expenses primarily consisted of personnel costs, marketing and promotion costs, commission, and freight and leasing charges. Our selling and distribution expenses decreased by $0.2 million, or 3.6%, to $6.1 million for the three months ended September 30, 2025, from $6.3 million for the three months ended September 30, 2024, and increased by $0.8 million, or 4.1%, to $19.4 million for the nine months ended September 30, 2025, from $18.7 million for the nine months ended September 30, 2024. The year-to-date increase primarily reflects higher marketing and personnel expenses, as well as a one-time warehouse lease termination cost. In the third quarter, however, selling and distribution expenses declined, reflecting our ongoing efforts to optimize operations and reduce overall operating expenses.
Current wording
Selling and distribution expenses primarily consisted of personnel costs, marketing and promotion costs, commission, and freight and leasing charges. Our selling and distribution expenses decreased by $0.9 million, or 13.2%, to $6.2 million for the three months ended March 31, 2026, from $7.2 million for the three months ended March 31, 2025. This decrease was largely attributable to actions taken to optimize our facility footprint and reduce ongoing overhead costs.
Previous wording
General and administrative expenses primarily consisted of personnel costs, professional service fees, depreciation, travel, and office supply expenses. Our general and administrative expenses increased by $0.1 million, or 5.6%, to $2.8 million for the three months ended September 30, 2025, from $2.6 million for the three months ended September 30, 2024, and increased by $0.8 million, or 10.5%, to $8.3 million for the nine months ended September 30, 2025, from $7.5 million for the nine months ended September 30, 2024. The increase was primarily due to inflationary pressures and additional expenditures related to corporate support activities.
Current wording
General and administrative expenses primarily consisted of personnel costs, professional service fees, depreciation, travel, and office supply expenses. Our general and administrative expenses decreased by $0.3 million, or 12.8%, to $2.4 million for the three months ended March 31, 2026, from $2.7 million for the three months ended March 31, 2025. The decline reflects our ongoing efforts to optimize operations and reduce overall operating expenses.
Previous wording
Research and development expenses mainly consisted of personnel costs and product development costs. Our research and development activities remained stable and are relatively immaterial to our unaudited condensed consolidated statements of operations and comprehensive loss.
Current wording
Research and development expenses mainly consisted of personnel costs and product development costs. Our research and development activities remained consistent during the period.
Previous wording
We incurred net loss of $1.9 million and $0.7 million for the three months ended September 30, 2025 and 2024, respectively, and net loss of $4.1 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively. These changes had resulted from the combination of the changes discussed above.
Current wording
We incurred net loss of $1.1 million and $0.8 million for the three months ended March 31, 2026 and 2025, respectively. These changes had resulted from the combination of the changes discussed above.
Previous wording
The Company's unaudited condensed consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue to operate in the normal course of business and will be able to realize its assets and discharge its liabilities as they become due. However, substantial doubt exists about the Company's ability to continue as a going concern. The Company has incurred net loss of $4.1 million and $1.7 million for the nine months ended September 30, 2025 and the year ended December 31, 2024, respectively. In addition, the Company had net cash used in operating activities of $1.7 million and net cash used in operating activities of $7.4 million for the same respective periods. As of September 30, 2025, the Company had approximately $1.9 million in cash and cash equivalents and had $14.1 million outstanding under its credit facilities, which were used primarily for working capital purposes.
Current wording
The Company's unaudited condensed consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue to operate in the normal course of business and will be able to realize its assets and discharge its liabilities as they become due. The Company has incurred net loss of $1.1 million and net cash used in operating activities of $0.3 million for the three months ended March 31, 2026. As of March 31, 2026, the Company had approximately $2.7 million in cash and had $13.1 million outstanding balance under its credit facilities, which were used primarily for working capital purposes.
Previous wording
In response to the conditions that gave rise to the substantial doubt, the Company implemented a number of actions, including:
Current wording
In response to the conditions, the Company implemented a number of actions, including:
Previous wording
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 December 5, 2025 while efforts regarding a renewal of the facility are ongoing.
Current wording
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 real property owned by Mr. Liang Chou Chen, who holds approximately 49.91% of the voting control of Foremost, and guaranteed by certain affiliates, Mr. Chen and Ms. Han Ping Chen. The current amount of maximum borrowings is $18,000,000 and the maturity date is April 17, 2027. This is an assets-based line of credit, the borrowing limit is calculated based on certain percentage of accounts receivable and inventory balances.
Previous wording
Each sum of borrowings under the Credit Agreement is deemed due on demand and is classified as a short-term loan. The outstanding balance of such loan was $9.7 million and $9.6 million as of September 30, 2025 and December 31, 2024, respectively.
Current wording
Each sum of borrowings under the Credit Agreement is classified as a short-term loan. The outstanding balance of such loan was $9.2 million and $8.1 million as of March 31, 2026 and December 31, 2025, respectively.
Previous wording
FGI Canada Ltd. (“FGI Canada”) has a line of credit agreement with Royal Bank of Canada (“RBC”), successor by amalgamation of HSBC Canada (the “Canadian Revolver”). The revolving line of credit with RBC allows for borrowing up to CAD7.5 million (USD5.4 million as of September 30, 2025). 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 Canadian Revolver, FGI Canada is required to maintain (a) a debt to tangible net worth ratio of no more than 3.00 to 1.00; and (b) a ratio of current assets to current liabilities of at least 1.25 to 1.00. The loan bears interest at a rate of Prime rate plus 0.50%. As of September 30, 2025, FGI Canada was in compliance with these financial covenants.
Current wording
FGI Canada Ltd. (“FGI Canada”) has a line of credit agreement with Royal Bank of Canada (“RBC”), successor by amalgamation of HSBC Canada (the “Canadian Revolver”). The revolving line of credit with RBC allows for borrowing up to CAD7.5 million (USD5.5 million as of March 31, 2026). 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 Canadian Revolver, FGI Canada is required to maintain (a) a debt to tangible net worth ratio of no more than 3.00 to 1.00; and (b) a ratio of current assets to current liabilities of at least 1.25 to 1.00. The loan bears interest at a rate of Prime rate plus 0.50%. As of March 31, 2026, FGI Canada was in compliance with these financial covenants.
Previous wording
Borrowings under this line of credit amounted to $1.8 million and $2.6 million as of September 30, 2025 and December 31, 2024, respectively. The facility matures at the discretion of RBC upon 60 days’ notice.
Current wording
Borrowings under this line of credit amounted to $2.3 million and $1.7 million as of March 31, 2026 and December 31, 2025, respectively. The facility matures at the discretion of RBC upon 60 days’ notice.
Previous wording
On January 25, 2024, FGI International entered into an omnibus credit line (the “CTBC Credit Line”) with CTBC Bank Co., Ltd. (“CTBC”). Under the CTBC Credit Line, FGI International may borrow, from time to time, up to $2.3 million, with borrowings limited to 90% of FGI International’s export “open account” trade receivables. On January 14, 2025, FGI International and CTBC agreed to increase the CTBC Credit Line to $3.0 million. The CTBC Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered in effect from time to time, plus 120 base points and handling fees, unless otherwise agreed to by the parties. The CTBC Credit Line is unsecured and is fully guaranteed by the Company and partially guaranteed by Liang Chou Chen. Borrowings under this line of credit amounted to $2.6 million and $2.3 million as of September 30, 2025 and December 31, 2024, respectively.
Current wording
On January 25, 2024, FGI International entered into an omnibus credit line (the “CTBC Credit Line”) with CTBC Bank Co., Ltd. (“CTBC”). Under the CTBC Credit Line, FGI International may borrow, from time to time, up to $2.5 million, with borrowings limited to 90% of FGI International’s export “open account” trade receivables. The CTBC Credit Line will bear interest at a rate of “Base Rate”, which is based on monthly or quarterly Taipei Interbank Offered Rate 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 $1.6 million and $2.1 million as of March 31, 2026 and December 31, 2025, respectively.
Previous wording
The following table summarizes the key components of our cash flows for the nine months ended September 30, 2025 and 2024.
Current wording
The following table summarizes the key components of our cash flows for the three months ended March 31, 2026 and 2025.
Previous wording
Net cash used in investing activities totaled $0.9 million for the nine months ended September 30, 2025, compared to $2.0 million in the prior-year period, primarily attributable to reduced spending on property, equipment, and intangible assets.
Current wording
Net cash used in investing activities totaled $0.1 million for the three months ended March 31, 2026, compared to $0.5 million in the same period of 2025. The decrease was primarily attributable to reduced capital expenditures.
Previous wording
Net cash used in financing activities was $0.4 million for the nine months ended September 30, 2025, due to net repayments under the Company’s revolving credit facilities. In contrast, the prior-year period generated $5.5 million in cash from financing activities arising from net borrowings under the same facilities.
Current wording
Net cash provided by financing activities was $1.3 million for the three months ended March 31, 2026, primarily due to net proceeds from the Company’s revolving credit facilities. In contrast, the same period in 2025 incurred $1.3 million in cash used in financing activities, reflecting net repayment under these facilities.
Previous wording
Our capital expenditures were incurred primarily in connection with the acquisition of property and equipment. Our capital expenditures amounted to $0.9 million and $2.0 million for the nine months ended September 30, 2025 and 2024, respectively. We do not expect to incur significant capital expenditures in the immediate future.
Current wording
Our capital expenditures were incurred primarily in connection with the acquisition of property and equipment. Our capital expenditures amounted to $0.1 million and $0.5 million for the three months ended March 31, 2026 and 2025, respectively. We do not expect to incur significant capital expenditures in the immediate future.
Previous wording
A discussion of our critical accounting policies and significant accounting estimates is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Form 10-K. The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenue and expenses during the applicable reporting period. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in different policies or estimates being reported for the nine months ended September 30, 2025.
Current wording
A discussion of our critical accounting policies and significant accounting estimates is included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K. The preparation of the unaudited condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of some assets and liabilities and, in some instances, the reported amounts of revenue and expenses during the applicable reporting period. Actual results could differ materially from these estimates. Changes in estimates are recorded in results of operations in the period that the events or circumstances giving rise to such changes occur. Within the context of these critical accounting estimates, we are not currently aware of any reasonably likely events or circumstances that would result in different policies or estimates being reported for the three months ended March 31, 2026.
Previous wording
We define Adjusted Income from Operations as GAAP income from operations excluding the impact of certain non-recurring expenses, including IPO-related compensation (cash and stock-based), legal fees and business expansion expenses. We define Adjusted Net Income as GAAP income before income taxes excluding the impact of certain non-recurring expenses and income, such as IPO-related compensation, legal fees and business expansion expenses, income taxes at historical average effective rate, as well as net income attributable to non-controlling shareholders. We define Adjusted Operating Margins as adjusted income from operations divided by revenue.
Current wording
We define Adjusted Operating Income as GAAP income from operations excluding the impact of certain non-recurring income and expenses. We define Adjusted Net Income as GAAP income before income taxes excluding the impact of certain non-recurring income and expenses, such as income taxes at historical average effective rate, as well as net income attributable to non-controlling shareholders. We define Adjusted Operating Margins as adjusted income from operations divided by revenue.
Previous wording
The following table reconciles Income from Operations to Adjusted Income from Operations and Adjusted Operating Margins, as well as Net income to Adjusted Net Income for the periods presented.
Current wording
The following table reconciles GAAP income from operations to Adjusted Operating Income and Adjusted Operating Margins, as well as GAAP net income to Adjusted Net Income for the periods presented.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the Three Months Ended March 31, 2026 and 2025