Company: FGI
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001628280-25-052375
Chunk: 87

Company: FGI Industries Ltd.
Filing Date: 2025-11-14
Form: 10-Q
Item: Part I, Item 1
Chunk 87
---
 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.

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.

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.

Other Income (Expenses)

Other income (expenses) represents interest income and expenses, as well as non-recurring non-operating gains and losses. 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