FGI

MKT CAP $14.3MP/E —DIV YIELD —FCF YIELD 12.51%REV TTM $128.7M −5.3%NET INCOME −$4MNET CASH —52W 3.38 – 11.72SEC XBRL · TTM TO Invalid Date

How FGI rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

84%

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new sentences

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Length

+134

words, now 13,416

New in FY2025

Furthermore, our existing indebtedness, which was approximately $11.9 million as of December 31, 2025, may adversely affect our financial flexibility and our competitive position in the future.
In 2025, the U.S.government enacted significant changes to its tariff regime that increased rates on a substantial number of imports.
Certain foreign jurisdictions have responded with reciprocal tariffs which resulted in corresponding actions by the U.S. government.
Certain of these tariffs have been paused or modified from time to time as trade discussions ensued.
In February 2026, in response to the Supreme Court invalidating many of the existing tariffs, the administration instituted a 10% global tariff on all imports and has signaled it may seek higher tariffs.
The potential for additional tariff increases may continue to result in increased reciprocal tariffs or other restrictive trade measures by the U.S. or foreign jurisdictions.
Given our products are manufactured primarily in Asia, including China, Vietnam, Cambodia, and other Asian countries, additional tariffs are likely to increase our costs of goods sold and could materially adversely impact our profitability, results of operations and financial condition.
Moreover, we would 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.
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.
Our sales are concentrated with ten significant customers who collectively represented 66% and 69% of our consolidated net sales for 2025 and 2024, respectively, and this concentration may continue to increase.
A significant portion of our sales are to home center retailers, which can significantly affect the prices we receive for our products and the terms and conditions on which we do business with them.
We are dependent on third-party suppliers for many of our products and components, and are largely dependent on one large supplier, Tangshan Huida Ceramic Group Co., Ltd, an entity formed and located in China (“Huida”), who accounted for approximately 83% and 70% of the total balance of our accounts payable as of December 31, 2025 and 2024, respectively, for the majority of our sanitaryware products, and our ability to offer a wide variety of products depends on our ability to obtain an adequate and timely supply of these products and components.
In each of 2025 and 2024, approximately 38% of our sales were made outside of the United States (principally in Canada and Europe) and transacted in currencies other than the U.S. dollar.
Global or regional unrest, conflict (such as the hostilities in the Middle East and the war between Russia and Ukraine), geopolitical disputes or catastrophic events could affect global trade routes, financial markets, global economic activity and our operations and results of operations.
Further, regional conflicts, such as the hostilities in the Middle East and the war between Russia and Ukraine, could escalate and expand, which in turn could have negative impacts on trade routes, our operations, the global economy and financial markets.
As of the date of this report, approximately 44 of our 426 employees are based in China.
Our auditor, CBIZ CPAs P.C., is a Registered Public Accounting Firm with the PCAOB and is based in New York, New York.
However, because we conduct only limited operations in China with only 44 employees focused on these matters, we do not expect that such intervention or influence would result in a material change in our operations and/or the value of our securities, although in such circumstance, we might experience a disruption in our ability to develop and source product manufacturing within China, which could have a material adverse effect on our results of operations.
In addition, we may be harmed if our proprietary or confidential information regarding our business is exposed through the unauthorized use of AI technologies or our systems infringe on intellectual property rights of others.
Global cybersecurity vulnerabilities, threats and more frequent, sophisticated and targeted attacks pose a risk to our information technology systems and to critical third-party information technology platforms we utilize, which may be increasingly exacerbated by the proliferation of and advance in AI.
In addition, the rapid evolution and increased adoption of new technologies, such as AI, may intensify our cybersecurity risks.
General Risk Factors Management’s determination that a material weakness exists in our internal controls over financial reporting could have a material adverse impact on our ability to produce timely and accurate financial statements and could negatively impact our business and the market for our ordinary shares.
Based upon an evaluation conducted in connection with the preparation of FGI’s audited consolidated financial statements as of December 31, 2025, management concluded that our internal controls over financial reporting were not effective due to the material weakness in our internal controls over financial reporting.
Specifically, this material weakness relates to insufficient precision in the design and operation of journal entry and account reconciliation review controls at a foreign subsidiary that was newly brought into scope and subject to a full-scope evaluation of internal controls over financial close and reporting for the first time during the year.
We believe that this material weakness set forth above did not have an effect on our financial results.
We have been evaluating and have begun implementing certain practices and procedures to address the foregoing material weakness.
To remediate the material weakness, management has initiated a series of corrective actions.
These include adding dedicated in-house accounting personnel to enhance oversight of the financial close process, implementing more robust journal entry and account reconciliation review procedures with clearly defined documentation and approval requirements, and strengthening evidence retention practices.
Management believes that, once these measures are fully implemented and have operated for a sufficient period of time, the material weakness will be remediated.
Management will continue to monitor and test the operating effectiveness of the related controls on an ongoing basis.
It is possible that our future assessment, or the future assessment by our independent registered public accounting firm, may reveal additional material weakness in our internal controls.
The failure to fully remediate the existing material weakness or the discovery of any future potential material weakness could result in future misstatements in our financial statements or in documents we file with the SEC and could have a negative impact on our business and the market for our ordinary shares.
For more information on our material weakness and the status of our remediation efforts, see Item 9A - Controls and Procedures, which includes Management’s Report on Internal Controls Over Financial Reporting.

Gone since FY2024

Furthermore, our existing indebtedness, which was approximately $14.5 million as of December 31, 2024, may adversely affect our financial flexibility and our competitive position in the future.
Our sales are concentrated with ten significant customers who collectively represented 69% and 72% of our consolidated net sales for 2024 and 2023, respectively, and this concentration may continue to increase.
In particular, The Home Depot represented approximately 17% and 18% of our consolidated net sales in 2024 and 2023, respectively.
The Home Depot and other home center retailers can significantly affect the prices we receive for our products and the terms and conditions on which we do business with them.
We are dependent on third-party suppliers for many of our products and components, and are largely dependent on one large supplier, Tangshan Huida Ceramic Group Co., Ltd, an entity formed and located in China (“Huida”), who accounted for approximately 70% and 71% of the total balance of our accounts payable as of December 31, 2024 and 2023, respectively, for the majority of our sanitaryware products, and our ability to offer a wide variety of products depends on our ability to obtain an adequate and timely supply of these products and components.
In each of 2024 and 2023, approximately 38% and 36%, respectively of our sales were made outside of the United States (principally in Canada and Europe) and transacted in currencies other than the U.S. dollar.
Global or regional unrest, conflict, geopolitical disputes or catastrophic events could affect our operations and results of operations.
Further, regional conflicts, such as the Ukraine-Russia and Israel-Hamas conflicts, could escalate and expand, which in turn could have negative impacts on our operations, the global economy and financial markets.
Recently, the U.S. presidential administration has announced new tariffs on imports from China, Canada and Mexico and may impose restrictions against other regions.
In prior years, U.S. tariff impositions against Chinese exports have been followed by retaliatory Chinese tariffs on U.S. exports to China and this may recur in China as well as Canada and Mexico.
Our products are manufactured primarily in Asia, and such countries may in the future be subject to these tariffs.
To the extent these tariffs increase our costs of goods sold, it could materially adversely impact our profitability, results of operations and financial condition.
To the extent we alter our pricing as a result of such tariffs, it 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.
We are still evaluating the potential impact of the recently-announced tariffs on our business and financial condition.
There can be no assurances that we will not be adversely impacted by such tariffs or that we will be able to pass on any incremental costs to our customers.
Further changes in U.S. trade policies, tariffs, taxes, export restrictions or other trade barriers, or restrictions on raw materials or components may limit our ability to produce products, increase our manufacturing costs, decrease our profit margins, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase raw materials or components, which would have a material adverse effect on our business, results of operations and financial condition.
As of the date of this report, approximately 39 of our 420 employees are based in China.
Our auditor, Marcum LLP, is a Registered Public Accounting Firm with the PCAOB and is based in New York, New York.
However, because we conduct only limited operations in China with only 39 employees focused on these matters, we do not expect that such intervention or influence would result in a material change in our operations and/or the value of our securities, although in such circumstance, we might experience a disruption in our ability to develop and source product manufacturing within China, which could have a material adverse effect on our results of operations.
Global cybersecurity vulnerabilities, threats and more frequent, sophisticated and targeted attacks pose a risk to our information technology systems and to critical third-party information technology platforms we utilize.
In addition, the rapid evolution and increased adoption of new technologies, such as artificial intelligence, may intensify our cybersecurity risks.
General Risk Factors Management’s determination that material weaknesses exist in our internal controls over financial reporting could have a material adverse impact on our ability to produce timely and accurate financial statements and could negatively impact our business and the market for our ordinary shares .
Based upon an evaluation conducted in connection with the preparation of FGI’s audited consolidated financial statements as of December 31, 2024, management concluded that our internal controls over financial reporting were not effective due to the material weaknesses in our internal controls over financial reporting.
Material weaknesses in our internal control over financial reporting included (a) inadequate segregation of duties related to the initiation and recording of journal entries to the general ledger, (b) inadequate evidence of management review controls regarding the review and approval of certain account reconciliations, and (c) inadequate evidence and precision of management review controls regarding loan covenants and covenant calculations.
We believe that these material weaknesses set forth above did not have an effect on our financial results.
We have been evaluating and have begun implementing certain practices and procedures to address the foregoing material weaknesses.
To remediate the material weaknesses related to the review of journal entry and account reconciliation, we have implemented system controls designed to prevent significant unauthorized transactions from being posted without review and established sufficient compensating controls for effective account reconciliations.
Additionally, we have enhanced our management review controls, including more robust documentation requirements for the review and approval of journal entries.
To address the material weakness related to debt covenant compliance, we have implemented an additional layer of review in the calculation and reporting process.
We plan to continue the implementation of these and other remediation efforts to address the identified material weaknesses in the future.
It is possible that our future assessment, or the future assessment by our independent registered public accounting firm, may reveal additional material weaknesses in our internal controls.
The failure to fully remediate the existing material weaknesses or the discovery of any future potential material weaknesses could result in future misstatements in our financial statements or in documents we file with the SEC and could have a negative impact on our business and the market for our ordinary shares.
For more information on our material weaknesses and the status of our remediation efforts, see Item 9A - Controls and Procedures, which includes Management’s Report on Internal Controls Over Financial Reporting.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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