Company: FGMCU
Filing Date: 2025-12-30
Form Type: S-4/A
Source: 0001104659-25-124947
Chunk: 148

Company: FG Merger II Corp.
Filing Date: 2025-12-30
Form: S-4/A
Chunk 148
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 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 nine month periods ended September 30, 2025, and 2024 was $51.8 million and $42.9 million, respectively. Nevertheless, we expect to continue to see a net loss

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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 September 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 workforce. |

| ● | In order to catch up with its delivery obligation under the ADS sales contract, we hired additional outside labor and paid overtime and double-time shifts. |

| ● | We have implemented reductions in staff; however, we continue to experience elevated labor costs. |

| ● | Supply chain delivery issues which caused the purchase of several items of material from local vendors with a substantially higher price. |

| ● | We are still undertaking major research and development activities focusing on our Phase 2 Modular Building System and Baby Box. |

| ● | We have incurred significant expenses related to the sales and