Company: FGMCU
Filing Date: 2025-09-18
Form Type: S-4
Source: 0001104659-25-091249
Chunk: 137

Company: FG Merger II Corp.
Filing Date: 2025-09-18
Form: S-4
Chunk 137
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 materials and labor, and interest rates. All of these factors can have a negative impact on housing affordability. In a highly inflationary environment, we may be unable to raise the sales prices of our Casitas, Boxes or other products at or above the rate of inflation, which could reduce our profit margins. In addition, our cost of capital, labor and materials can increase, which could have an adverse impact on our business or financial results. For example, the current and continued macro-economic conditions of high inflation and steadily high interest rates during 2025 is one of the primary drivers behind the overall decrease in demand for new homes. Although we would anticipate that the impact of higher interest rates, and thus higher mortgage rates, would incentivize people seeking to purchase a home to consider purchasing our Casitas instead; we cannot predict such an outcome. In particular, we have little to no control over the cost of the land on which the Casita would be installed, and that could also create a barrier by increasing costs for potential customers. Conversely, deflation could cause an overall decrease in spending and borrowing capacity, which could lead to deterioration in economic conditions and employment levels. Deflation could also cause the value of our inventories to decline or reduce the value of existing homes. These, or other factors that increase the risk of significant deflation, could have a negative impact on our business or financial results. We have realized significant operating losses to date and we expect to incur losses in the future. We have operated at a loss since inception, and these losses are likely to continue. Our net loss for the six month periods ended June 30, 2025, and 2024 was $41.1 million and $33.9 million, respectively. Nevertheless, we expect to continue to see a net loss in connection with our results of operations as we continue to increase production, expand our manufacturing facilities, and develop our manufacturing processes. Until we achieve profitability, it will have to seek other sources of capital in order to continue operations. We have incurred much higher production costs during 2023, 2024 and 2025 than the expected costs once we fully ramp-up production. From October 2021, when we first began producing Casitas, through June 2025, our cost of goods sold were affected by various reasons, including the following:

| ● | Delays from permitting and regulatory issues, customer readiness and financing. |

| ● | Inefficiencies due to new machinery and newness of product and procedures which required significant training of the