Company: FGI
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001628280-25-040149
Chunk: 139

Company: FGI Industries Ltd.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 8
Chunk 139
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 and procedures were not effective.

Evaluation of the Effectiveness of Internal Control over Financial Reporting 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act) as of June 30, 2025. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of June 30, 2025 because of the material weaknesses in our internal control over financial reporting described below. 

Identified Material Weakness

During our assessment of internal control over financial reporting as of December 31, 2024, we identified the following material weaknesses:

•Inadequate segregation of duties related to the initiation and recording of journal entries to the general ledger.

•Inadequate evidence of management review controls regarding the review and approval of certain account reconciliations.

•Inadequate evidence and precision of management review controls regarding loan covenants and covenant calculations.

Management’s Remediation Initiatives

We continue to evaluate 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 redesigned our controls to detect unauthorized transactions posted without review and established sufficient compensating controls for effective account reconciliations. To address the material weakness related to the 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.

Changes in Internal Control over Financial Reporting

Other than as described above, there have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II- OTHER INFORMATION

Item 1.   Legal Proceedings.

We may be subject to legal proceedings and claims in the ordinary course of business. We cannot predict the results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material impact on us due to diversion of management time and attention as well as the financial costs related to resolving such disputes.

Item 1A.     Risk Factors.

Our Annual Report on Form 10-K for the year ended December 31, 2024,