Company: FGI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001628280-25-052375
Chunk: 9

Company: FGI Industries Ltd.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 2
Chunk 9
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 Interest expense increased due to a higher average loan balance during the period.

Provision for Income Taxes

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.

Net Loss

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.

Liquidity and Capital Resources

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