Company: FGMCU
Filing Date: 2025-09-18
Form Type: S-4
Source: 0001104659-25-091249
Chunk: 403

Company: FG Merger II Corp.
Filing Date: 2025-09-18
Form: S-4
Chunk 403
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 and administrative expenses was primarily related to compensation and benefits for additional staff in IT, Legal, and Accounting, offset by BOXABL’s cost control initiatives. As we expand BOXABL’s production capacity, we generally expect these expenses to decrease on a per unit basis, though they may increase somewhat upon the consummation of the transactions contemplated by the BCA. We also incurred higher sales and marketing expenses in the three months ended June 30, 2025, offset by a slight decrease in research and development expenses. Sales and marketing expenses generally consist of advertising and promotions. Starting in 2024 and increasing in 2025, BOXABL undertook significant new advertising campaigns to refine the marketing of BOXABL’s products focused on generating sales activity, as well as advertising to customers, leading to a significant increase in sales and marketing expenses in the three months ended June 30, 2025 compared to prior year period. Research and development activity is essential to testing and developing BOXABL products and involves significant costs to obtain permits and approvals. These costs included test raw material used in production and researching industry standards and regulations. Research and development costs declined as BOXABL succeeded in obtaining state approvals under modular housing programs in several states. Following BOXABL obtaining California statewide approval for the Casita in all climate zones in January 2025, we expect to focus future research and development efforts on our Phase 2 Modular Building System and the Baby Box. Stock-based Compensation Expense BOXABL recognizes stock-based compensation expense based on fair value on the date of grant and recognized over the associated vesting periods. Vesting of RSU awards is generally subject to a 3-year service period and, as of October 18, 2024, also subject to a performance condition. Accordingly, stock-based compensation is recognized upon satisfaction of the service and performance condition. In the case of options, BOXABL uses the Black-Scholes pricing model to estimate the fair value of options on the date of grant that are then expensed on a straight-line basis over the vesting period. BOXABL accounts for forfeitures as they occur in the year of forfeiture and share-based compensation expense is adjusted accordingly. For the three months ended June 30, 2025 and 2024, BOXABL recaptured $613,000 and recognized $1.9 million in stock-based compensation, respectively. The decrease is attributable to employee forfeitures upon terminations in 2025, offset by the vesting of stock options under BOXABL’s Amended 2021 stock incentive plan. See “