Company: FGI
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001628280-25-025588
Chunk: 122

Company: FGI Industries Ltd.
Filing Date: 2025-05-14
Form: 10-Q
Item: Part II, Item 8
Chunk 122
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corporated on December 10, 2021•Sales and distribution in UK100% owned by FGI Europe Investment LimitedFGI Australasia Pty Ltd(“FGI UK”)•An Australian company•Incorporated on September 8, 2022•Sales and distribution in Australia100% owned by FGICovered Bridge Cabinetry Manufacturing Co., Ltd(“CBM”)•A Cambodian company•Incorporated on April 21, 2022•Manufacturing in Cambodia100% owned by FGIIsla Porter LLC(“Isla Porter”)•A New Jersey company•Formed on June 2, 2023•Sales and distribution in the United States60% owned by FGI Industries Inc.FGI Industries India Private Limited(“FGI India”)•An Indian company•Incorporated on June 11, 2024•Sales and distribution in India100% owned by FGI

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Table of Contents

Note 2 — Summary of significant accounting policies

LiquidityThe 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 $0.8 million and $1.7 million for the three months ended March 31, 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 $7.4 million for the same respective periods. As of March 31, 2025, the Company had approximately $1.2 million in cash and cash equivalents and had $13.2 million outstanding under its credit facilities, which were used primarily for working capital purposes.As discussed in Note 8, the Company was not in compliance with certain financial covenants related to its debt coverage ratio as of March 31, 2025. The Company is in discussions with its lenders regarding these covenant breaches.Additionally, the Company has been facing adverse impacts from elevated tariff costs on imported goods. These increased costs have put pressure on gross margins and have contributed to the overall liquidity challenges.In response to the conditions that gave rise to the substantial doubt, the Company implemented a number of actions, including:•Termination of the lease for one