Company: FGMCU
Filing Date: 2025-09-18
Form Type: S-4
Source: 0001104659-25-091249
Chunk: 386

Company: FG Merger II Corp.
Filing Date: 2025-09-18
Form: S-4
Chunk 386
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720 square feet of floor space, and was our first production facility producing Casita Boxes. On June 13, 2022, we entered into a seventy-three-month lease for 132,960 square feet of additional floor space in Factory Building 3 that enabled production efficiencies. For example, Factory Building 3 supports Factory Building 1 with warehousing. On May 2, 2023 we amended the Factory Building 1 lease agreement, expanding the leased space for purposes of establishing Factory Building 2. The term of the lease agreement for Factory Building 2 is forty-eight months, adding 114,613 square feet of floor space to the leased premises.

We have allocated funds from our capital-raising activities for research and development expenditure relating to the planning for expansion into additional production facilities that will enable us to increase capacity and reach more customers in other geographic areas more efficiently. BOXABL is currently evaluating available sites in central regions of the United States for expansion. The progression of any such expansion would be based on demand for our products and other market conditions.

Inventory

We manufactured 140 Casitas during 2024, as compared to 260 Casitas during 2023 as we better aligned production levels with sales, to avoid excess inventory holding costs. Inventory was elevated in 2023 due to delays in delivery to Arizona caused by issues that needed to be addressed pursuant to the Arizona Department of Housing, which were resolved in December 2023. In the meantime, BOXABL targeted sales to customers in states where there was no state modular program as well as sales of Park Model RV Casitas. Nevertheless, these new sales activities faced significant delays due to the time needed to prepare sites for the installation of the Casitas, arranging funding for the project costs by the purchaser, and other preparatory steps that need to be taken in order to fulfill the delivery and installation of these Boxes. As a result, our management team undertook a strategic realignment, including better aligning manufacturing activity with the timing of sales and deliveries. Furthermore, following our obtaining modular approval for its Casita in all climate zones in California, we decided to rework certain of our existing Boxes to meet the California modular specification so that these Boxes are able to be sold in California. As a result, in the second quarter of 2025, approximately $7.1 million of inventory was reclassified from Finished Goods to Work-in-Process on the consolidated balance sheet. During the three months ended June 30, 2025, following an inventory slow movement analysis, the