Company: FGMCU
Filing Date: 2025-12-30
Form Type: S-4/A
Source: 0001104659-25-124947
Chunk: 606

Company: FG Merger II Corp.
Filing Date: 2025-12-30
Form: S-4/A
Chunk 606
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 obtain required zoning and land use permits to install and use the units at their site in Arizona. The State of Arizona ‘red tagged’ the units and the RV Park asserted claims against the Company, demanding that the Company immediately remove the units. The Company has denied all liability and is negotiating a resolution of the dispute with the RV Park. The Company also has an outstanding receivable from the RV Park in the amount of $270,000. The Company has not accrued a loss contingency for this matter, but has recorded a CECL credit loss allowance for the outstanding receivable. |

Other Matters The Company uncovered potential misconduct by a former employee related to a stock scheme, the impact of which is challenging to measure. The Company anticipates that judgment will be entered in its favor for a sum less than $1 million against the former employee, but the investigation and extent of damages is ongoing. After discovering the misconduct, the Company was named as a defendant in a lawsuit by a plaintiff that purchased fraudulent shares of the Company’s stock from the former employee of the Company, at a discounted price, incurring a loss of approximately $144 thousand. The Plaintiff claims that he purchased shares by writing a check to an entity that was controlled by the former employee and alleges negligence and violations of Nevada Revised Statute (NRS) 90.9570. The Company denied liability and the claim was recently settled. The settlement will require the Company to provide the plaintiff with 218,182 shares of the Company’s Preferred A-1 Stock.

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Separate from this claim, the Company has also entered into settlement agreements with various parties who may have been impacted by the former employee. This resulted in the recognition of $4.0 million of legal settlement expenses recorded in General and administrative expenses, settled with 5,049,673 shares of the Company’s Preferred A-1 Stock, during the nine months ended September 30, 2025. NOTE 14 — INCOME TAXES The Company has not recorded any income tax expense for the three and nine months ended September 30, 2025 and 2024. Deferred Tax Assets and Liabilities Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is required to be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Realization of deferred tax assets is dependent upon future