Company: FGMCU
Filing Date: 2025-12-30
Form Type: S-4/A
Source: 0001104659-25-124947
Chunk: 418

Company: FG Merger II Corp.
Filing Date: 2025-12-30
Form: S-4/A
Chunk 418
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 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 Company also determined to write down 68 Boxes that had been held in inventory for an extended time period and for which the Company determined that it was not cost effective to rework, resulting in an inventory write-down of $8.4 million.

As of September 30, 2025, BOXABL had 153 Casitas classified as finished goods in inventory and 220 Casitas classified as work-in-process in inventory.

Regulation

Our Boxes generally fall under different certification requirements depending on their intended use. BOXABL’s Casita can be configured for sale in various ways, including Park Model RV and/or Modular Home. BOXABL has obtained Modular Manufacturer Licensure and Certification for its studio Casita configuration in several States, including Nevada, California, New Mexico, and South Carolina. We had originally obtained approval for our Casita in Arizona in December 2023. However, the Arizona Department of Housing revoked this approval in May 2024 due to installation issues identified at one customer site in Arizona. We have assessed that these issues resulted from improper installation rather than our product and are in active discussions with officials in Arizona to resolve the matter.

The modular home units are classified as residential construction, referred to as “Modular” or “Factory-Built” units, depending on the definitions established in the Authority Having Jurisdiction (AHJ). In 2025, BOXABL Casitas were approved as a Modular home under the Residential Building Code by the Manufactured Housing Division.

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Most states require the approval of a third-party testing and inspection company, for modular homes, to conduct product testing and factory inspections on behalf of the AHJ. There are several independent third-party inspection Agencies who provide such service, including ICC-NTA, Twining Consulting (dba RADCO), PFS-TECO, NOAH, & MA Consulting & Engineering (MACE, LLC), to test and inspect our Casitas for compliance in the applicable jurisdictions.

Some states (including Oklahoma, Utah, Wyoming, Kansas, West Virginia, Vermont, Alaska, Oregon, Connecticut,