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Share-based compensation | 3 Months Ended
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Mar. 31, 2026
Share-Based Payment Arrangement [Abstract] |
Share-based compensation | Share-based compensation 2021 Equity Plan and Employee Stock Purchase Plan On October 7, 2021, the board of directors adopted the 2021 Equity Incentive Plan (the “2021 Equity Plan”). The 2021 Equity Plan permits the grant of equity and equity-based incentive awards, including non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards. The purpose of the 2021 Equity Plan is to attract and retain the best available personnel for positions of responsibility within the Company, to provide additional incentives to them to align their interests with those of the Company’s shareholders and to thereby promote the Company’s long-term business success. On October 7, 2021, the board approved the adoption of the FGI Industries Ltd. Employee Stock Purchase Plan (the “ESPP”). The ESPP was approved by the Company’s shareholders on October 7, 2021, and became effective on the effective date of the Company’s consummation of the IPO of its ordinary shares. The ESPP offers eligible employees the opportunity to acquire a stock ownership interest in the Company through periodic payroll deductions that will be applied towards the purchase of ordinary shares at a discount from the then-current market price. As of March 31, 2026, no shares were issued under the ESPP. The board set the maximum aggregate number of ordinary shares reserved and available pursuant to the 2021 Equity Plan at 300,000 shares. The number of ordinary shares reserved for issuance under our 2021 Equity Plan will automatically increase on the first day of each year, commencing on January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to the lesser of (a) 4.5% of the total number of ordinary shares outstanding on December 31 of the immediately preceding calendar year, (b) 120,000 ordinary shares, or (c) such lesser number of shares as determined by the Board. The Equity Plan became effective on September 28, 2021. The Company believes the option or restricted share unit ("RSU") awards granted contain an explicit service condition and/or performance condition. Performance conditions are generally tied to a long-term return on invested capital ("ROIC"), or a combination of multiple short-term financial metrics such as revenue, adjusted net income and ROIC. Under ASC 718-10-55-76, if the vesting (or exercisability) of an award is based on the satisfaction of both a service and performance condition, the entity must initially determine which outcomes are probable and recognize the compensation cost over the longer of the explicit or implicit service period. The following table summarizes the Company's share option and RSU activity for the three months ended March 31, 2026:
| Share Options |  | RSUs
| Number of Options |  | Weighted Average Exercise Price |  | Weighted Average Grant Date Fair Value |  | Weighted Average Remaining Contractual Term |  | Average Intrinsic Value |  | Number of RSUs |  | Weighted Average Grant Date Fair Value
|  |  | USD |  | USD |  | Years |  | USD |  |  |  | USD
Beginning of period | 336,996 |  | $ | 6.32 |  |  | $ | 3.72 |  |  |  |  |  |  | 272,234 |  | $ | 8.34 |
Granted | — |  |  |  |  |  |  |  |  |  | — |  |
Canceled | (174,649) |  | $ | 4.05 |  |  | $ | 2.93 |  |  |  |  |  |  | (22,796) |  | $ | 10.40 |
Exercised or released | — |  |  |  |  |  |  |  |  |  | (6,583) |  | $ | 4.05 |
End of period | 162,347 |  | $ | 8.76 |  |  | $ | 4.56 |  |  | 7.23 |  | $ | 42,863 |  |  | 242,855 |  | $ | 8.38 |
Vested and exercisable | 114,742 |  | $ | 10.85 |  |  | $ | 5.45 |  |  | 6.62 |  | $ | — |  |  |  |  |
For the three months ended March 31, 2026 and 2025, the total fair value of options awarded was $0 and $511,200, respectively. The aggregate intrinsic value in the table above represents the difference between the exercise price of the awards and the fair value of the underlying Ordinary Shares at each reporting date, for those awards that had exercise price below the estimated fair value of the relevant Ordinary Shares. Fair value of options The Company used the Black-Scholes simplified method for the three months ended March 31, 2026 and 2025. The assumptions used to value the options granted to employees were as follows:
|  |  | March 2025 |  |  |  |
Risk-free interest rate (%) |  |  | 4.05 |  |  |  |  |
Expected volatility range (%) |  |  | 82.15 |  |  |  |  |
Fair market value per ordinary share as at grant dates |  |  | $ | 4.05 |  |  |  |  |
The table above gives retroactive effect to the Reverse Share Split of the Preference Shares and Ordinary Shares at a ratio of 1-for-5 that became effective July 31, 2025. See Note 9 “Shareholders' Equity” for details. The risk-free interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of grant for a term consistent with the contractual term of the awards. Expected volatility is estimated based on the volatility of ordinary shares of the Company. The expected exercise multiple is based on management’s estimation, which the Company believes is representative of the future. The Company has elected to recognize share-based compensation expense using a straight-line method for all the employee equity awards granted with graded vesting based on service conditions, provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant date fair value of the equity awards that are vested at that date. The following table sets forth the amount of share-based compensation expense included in each of the relevant financial statement line items:
|  |  | For the Three Months Ended March 31,
|  |  |  |  | 2026 |  | 2025
|  |  |  |  | USD |  | USD
Selling and distribution expenses |  |  |  |  | $ | 17,568 |  |  | $ | 29,754 |
General and administrative expenses |  |  |  |  | (133,962) |  |  | 46,552 |
Total share-based compensation expenses |  |  |  |  | $ | (116,394) |  |  | $ | 76,306 |
As of March 31, 2026, there was $139,885 in total unrecognized employee share-based compensation expense related to unvested options and RSUs, which may be adjusted for forfeitures occurring in the future. Total unrecognized compensation cost may be recognized over a weighted-average period of 1.69 years.

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