BOXABL Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to FG Merger II Corp, prior to its consummation of the Business Combination with BOXABL Inc. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to FG Merger Investors II LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report as well as: · The unaudited interim consolidated financial statements of Legacy BOXABL as of and for the three and six months ended June 30, 2026 and June 30, 2025, which are included as Exhibit 99.1 hereto, and · Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy BOXABL for the three and six months ended June 30, 2026, which is included as Exhibit 99.2 hereto, Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance, or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Registration Statement on Form S-4 (as amended) and the definitive proxy statement/prospectus relating to the Mergers filed by FGMC with the SEC, under the section titled “Risk Factors”, under Cautionary Note Regarding Forward-Looking Statements and Risk Factors. The Company’s securities filings can be accessed on the EDGAR section of the U.S. Securities and Exchange Commission’s (“SEC”) website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview FG Merger II Corp. (the “Company”) was, prior to the consummation of the Mergers, a blank check company incorporated in Nevada on September 20, 2023. The Company was formed for the purpose of merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (“Business Combination”). As of June 30, 2026, the Company had not yet commenced any operations. All activity through June 30, 2026 relates to the Company’s formation and the initial public offering (“IPO”), which is described below. The Company did not reflect any operating revenues until after the completion of the Business Combination. Until the consummation of the Business Combination, discussed below, the Company generated non-operating income in the form of interest income from the proceeds derived from the IPO. The Company has selected December 31 as its fiscal year end. Corporate History Our IPO registration statement was declared effective on January 28, 2025. On January 30, 2025, we consummated our IPO of 8,000,000 units at $10.00 per unit (the “Units”). Each Unit consist of one share of common stock of the Company, par value $0.0001 per shares (“Public Shares”) and one right to receive one-tenth common share (“Public Right”). The Units were sold at a price of $10.00 per Unit, generating gross proceeds to the Company of $80,000,000. Simultaneously with the closing of the IPO, we consummated private placement ( “Private Placement”) in which i) FG Merger Investors II LLC (the “Sponsor”) and Ramnaraine Jaigobind purchased 223,300 and 25,000 private units ( the “Private Units”) respectively, at a price of $10.00 per Private Unit, generating total proceeds of $2,483,000 and ii) the Sponsor purchased an aggregate of 1,000,000 $15.00 exercise price warrants (the “$15 Private Warrants”) at a price of $0.10 per $15 Private Warrant, each exercisable to purchase one share of common stock at $15.00 per share, for an aggregate purchase price of $100,000. 21 Each Private Unit consisted of one common share and one right (“Private Unit Right”). Each whole Private Unit Right entitled the holder to convert the right to one-tenth share of common stock. Each $15 Private Warrant entitled the holder to purchase one share of Common Stock at an exercise price of $15.00 per each share, are exercisable for a period of 10 years from the date of the Business Combination, are non-redeemable, and may be exercised on a cashless basis. Additionally, $15 Private Warrants and the shares issuable upon the exercise of the $15 Private Warrants were not transferable, assignable, or salable until after the completion of the Business Combination, subject to certain limited exceptions. Following the closing of the IPO, and amount of $80,800,000 ($10.10 per Unit) from the net proceed of the sale of the Units in the IPO and the sale of Private Placement Securities were placed in a trust account (“Trust Account”) account (“Trust Account”) and invested in a money market fund, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below. Merger Agreement On August 4, 2025, FGMC entered into an Agreement and Plan of Merger, as amended on November 3, 2025, April 6, 2026, and May 6, 2026, with BOXABL Inc. and FG Merger Sub II Inc. (the “Merger Agreement”). On July 17, 2026, the parties consummated the transactions contemplated by the Merger Agreement (the “Mergers”), and FGMC was renamed “BOXABL Inc.” For a full description of the Merger Agreement, the Mergers, the related agreements entered into in connection with the Closing, and the consideration paid, see Note 1 and Note 8 to the financial statements included elsewhere in this Quarterly Report. Certain Related Agreements Lock-up Agreements At closing, BOXABL and FGMC entered into lock-up agreements with certain BOXABL stockholders (the “Company Lock-Up Agreements”) and with the sponsor (the “Sponsor Lock-Up Agreement”), restricting the transfer of certain shares for specified periods following the Closing Date. Forward Purchase Agreement On May 28, 2026, the Company entered into an OTC Equity Prepaid Forward Transaction (the “Forward Purchase Agreement”) with Atsion Opportunity Fund LLC, Series 2 (“Atsion”), pursuant to which Atsion intended, but was not obligated, to purchase and hold up to 3,000,000 shares of the Company’s common stock prior to the closing of the Mergers. Immediately after entry into the Forward Purchase Agreement, the parties entered into a Novation Agreement dated May 28, 2026, pursuant to which one-half of the Forward Purchase Agreement was novated to FG Capital Partners, LLC (“FGCP”). On June 11, 2026, Atsion assigned and novated its remaining 50% interest in the Forward Purchase Agreement to Camac Fund, LP, pursuant to an Assignment and Novation Agreement among Atsion, Camac Fund, LP, FGMC, and BOXABL. The Forward Purchase Agreement provides that the seller is to be prepaid an aggregate cash amount equal to the number of shares set forth in a Pricing Date Notice multiplied by the per-share redemption price payable to redeeming shareholders in connection with the Mergers, funded directly from the Trust Account no later than the earlier of (a) one business day after the Closing Date or (b) the date any Trust Account assets are otherwise disbursed in connection with the Mergers. Following consummation of the business combination, the Forward Purchase Agreement is subject to cash settlement based principally on the daily volume-weighted average price of the underlying shares during the applicable valuation period, subject to the contractual settlement amount adjustments and other provisions of the Forward Purchase Agreement. Results of Operations Prior to the consummation of the Mergers, we had neither engaged in any operations nor generated any revenues. Our only activities through June 30, 2026 were organizational activities, including those necessary to identifying and working with the target company for a Business Combination. During the six months ended June 30, 2026, we generated non-operating income in the form of interest income on marketable securities. We incurred expenses primarily related to expenses in connection with completing a Business Combination, as well as expenses incurred as a result of being a public company (for legal, financial reporting, accounting and auditing compliance). For the three months ended June 30, 2026, the Company reported a net loss of $13,845,985, which consists of $490,166 in investment income earned in Trust Account, offset by $4,555,829 in general and administrative expenses and $102,935 income tax expense and $9,677,387 expense related to the valuation and change in fair value of the Forward Purchase Agreement. For the six months ended June 30, 2026, the Company reported a net loss of $13,558,223, which consists of $1,212,390 in investment income earned in Trust Account, offset by $4,829,127 in general and administrative expenses, $264,099 income tax expense and $9,677,387 expense related to the valuation and change in fair value of the Forward Purchase Agreement. The 2026 general and administrative expenses include legal and professional fees of $4,709,113 which were primarily related to the Mergers. For the three months ended June 30, 2025, the Company reported a net income of $582,035 which consists of $842,499 in investment income earned in Trust Account, offset by $83,539 in general and administrative expenses and $176,925 in income tax expense. For the six months ended June 30, 2025, the Company reported a net income of $897,385 which consists of $1,402,254 in investment income earned in Trust Account, offset by $210,395 in general and administrative expenses and $294,474 in income tax expense. 22 Liquidity and Capital Resources As of June 30, 2026, we held a cash balance of $86,887. Prior to the IPO, our liquidity needs were satisfied through the $25,000 proceeds received from the Sponsor for purchase of Founder Shares (as defined below), as well as $125,000 loan from Sponsor under a promissory note (“Promissory Notes”) which was fully repaid on April 1, 2025. On January 28, 2025, we issued an unsecured promissory note of $417,000 to the Sponsor. This promissory note bore interest at the rate of 12% per year and matured on January 30, 2026. On March 5, 2025, the company paid $257,000 in principal and $4,935 in interest. On April 1, 2025, the Company paid $160,000 in principal and $1,736 in interest. As of June 30, 2025, there was no outstanding balance under the promissory note. On January 30, 2025, we consummated our IPO of 8,000,000 Units. The Units were sold at $10.00 per Unit, generating gross proceeds to the Company of $80,000,000. Simultaneously with the closing of the IPO, we consummated the Private Placement of Private Units and $15 Private Warrants generating proceeds of $2,483,000 and $100,000 respectively. From the proceeds of the IPO, Private Placement and the promissory note dated January 28, 2025, the Company put 80,800,000 ($10.10 per Unit) in the Trust and retained approximately $2,200,000 for working capital and payment of expenses related to IPO. Pursuant to the Investment Management Trust Agreement between the Company and Continental Stock Transfer and Trust (“Trustee”) signed at IPO closing, we were allowed to withdraw up to $1,000,000 annually for working capital need from the investment income earned in the Trust Account. As of June 30, 2026, we had withdrawn $1,200,000 from the Trust Account. As of June 30, 2026, the Company reported accounts payable of $4,441,357. This primarily represented legal and professional fees incurred as a result of the Mergers and were settled at the close of the Business Combination. At the close of the Business Combination, the Combined Company received gross proceeds of approximately $47.2 million from the FGMC trust account, after giving effect to the actual redemption of 3,466,086 shares by FGMC’s public stockholders. Of that amount, approximately $31.1 million was applied to fund the Combined Company’s prepayment obligations under the Forward Purchase Agreement, as described in Note 8 to the financial statements included elsewhere in this Quarterly Report. A portion of the remainder was applied toward transaction costs and other closing obligations, resulting in a net increase of approximately $6.4 million in unrestricted cash. See Exhibits 99.1 and 99.2 hereto for further detail. Subsequent to the Closing, the Company received Optional Early Termination payments under the Forward Purchase Agreement totaling $1,652,170: $1,182,000 from FGCP (118,200 shares, effective July 20, 2026) and $470,170 from Camac Fund, LP (47,017 shares), together representing 165,217 Recycled Shares terminated at the then-current $10.00 Reference Price. Approximately 2,822,985 Recycled Shares remain outstanding under the Forward Purchase Agreement, which are subject to cash settlement based principally on the daily volume-weighted average price of the underlying shares during the applicable valuation period, subject to the contractual settlement amount adjustments and other provisions of the Forward Purchase Agreement. The Company has not otherwise initiated settlement of the Forward Purchase Agreement as of the date these financial statements were issued. Based on the Combined Company’s average monthly cash used in operating activities of approximately $2.6 million (calculated from operating cash outflow of $15.9 million for the six months ended June 30, 2026, divided by six months as reported in Exhibit 99.1 hereto), we anticipate that our existing liquidity, together with the net proceeds received from the Mergers and cash generated from sales of our products, will be sufficient to meet our cash needs for the next twelve months. However, our future capital requirements will depend on many factors, including our rate of revenue growth, the timing and extent of spending on sales and marketing efforts and product development, and the costs of ongoing compliance and activities following the Mergers. When addressing our long-term liquidity requirements, we consider the next five years, from 2026 through 2030. We expect that funding for the Company’s operations over the longer term will be driven primarily from the sales of the Company’s products, as well as future debt or equity capital raises and proceeds from the OTC Prepaid Forward financing agreements. Going Concern The financial statements discussed above reflect FGMC’s results as the Company’s predecessor registrant for the period ended June 30, 2026, and do not include the results of Legacy BOXABL, which was merged into the Company upon the Closing. Legacy BOXABL’s unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2026, filed as Exhibit 99.1 hereto, disclose that substantial doubt existed about Legacy BOXABL’s ability to continue as a going concern twelve months after the financial statements are available to be issued. As described in Exhibit 99.2, Legacy BOXABL’s management depicts the net proceeds received in connection with the Mergers, together with existing liquidity and cash generated from product sales. However, there can be no assurance management’s plans will be achieved. 23 Off-Balance Sheet Arrangement We have no obligations, assets, or liabilities, which would be considered off-balance sheet arrangements as of June 30, 2026. Contractual Obligations For a discussion of Legacy Boxabl’s material obligations and commitments that have been assumed by the Company following the Merger and consummation of the Business Combination, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Commitments and Contingencies” in Exhibit 99.2 hereto. Registration Rights The holders of the Founder Shares, the Private Units, the $15 Private Warrants (and their underlying securities) are entitled to registration rights pursuant to a registration rights agreement. We filed a registration statement on Form S-3 (File No. 333-297729) on July 27, 2026, registering for resale up to 3,310,288 shares of Class A common stock held by the selling securityholders named therein, including shares issuable upon conversion of rights and exercise of the $15 Private Warrants, in satisfaction of such registration rights. We will bear the expenses incurred in connection with the filing of this registration statement pursuant to such registration rights. Underwriting Agreement We granted the underwriters a 45-day option to purchase up to 1,200,000 additional Units to cover over-allotments at the IPO price. On February 5, 2025, the underwriters elected to terminate their over-allotment option to purchase 1,200,000 Units resulting in Sponsor forfeiting 300,000 Founder Shares. The underwriter is entitled to an underwriting discount equal to the lesser of (i) 750,000 (ii) an amount equal to $750,000 plus 1% of the gross proceeds from the sale of the Over-Allotment Units. At IPO closing, the underwriter was paid $750,000. The Underwriter also received 40,000 private units (“Underwriter Units”) at close of IPO for a nominal price of $100 The Underwriter Units are subject to registration rights under the Registration Rights Agreement, to which ThinkEquity LLC is a signatory. Additionally, the Underwriter has agreed to defer underwriting commissions equal to 3.5% of the gross proceeds of the IPO (subject to the Company’s right, to allocate up to 50% of such fee to another financial institution in Company’s sole discretion) until completion of the Mergers. The Mergers closed July 17, 2026 and ThinkEquity was paid $5,900,381 in aggregate transaction costs at Closing to settle this obligation. Financial Advisor Upon closing of the IPO, we paid $250,000 to our financial advisor and issued 25,000 private units (the “Advisor Units”). The Advisor Units are subject to registration rights and are included in the S-3 (File No. 333-297729); the financial advisor (EarlyBirdCapital, Inc.) and its affiliated designees are named as selling security holders therein. Investor Relations Consultant On August 5, 2025, BOXABL Inc. entered into an investor relations consulting agreement with MZHCI, LLC. Pursuant to that agreement, Boxabl became obligated to issue Class A common stock to MZHCI, LLC following completion of the Mergers. On August 13, 2026, Boxabl issued 31,579 shares of Class A common stock to MZHCI, LLC. Related Party Transactions The Company’s related party transactions, including the Founder Shares held by the Sponsor and other Initial Stockholders, the related lock-up provisions, the Promissory Notes issued to and repaid to the Sponsor, the Administrative Services Agreement (terminated in connection with the Closing), the Forward Purchase Agreement and related Novation Agreement with FG Capital Partners, and the Class B Common Stock held by Paolo Tiramani and Galiano Tiramani following the Business Combination, are described in Note 5 to the financial statements included elsewhere in this Quarterly Report. 24 Critical Accounting Policies The preparation of our financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe are reasonable, and actual results could differ from those estimates. We consider an accounting estimate to be critical if it requires us to make particularly difficult, subjective, or complex judgments about matters that are inherently uncertain, and if different estimates that we reasonably could have used, or changes in the accounting estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations. A description of our other significant accounting policies, including those discussed below, can be found in Note 2 to the financial statements included elsewhere in this Quarterly Report. Based on this definition, we have identified the following as our critical accounting estimates. Common Stock Subject to Possible Redemption We classify our common stock subject to possible redemption as temporary equity, at redemption value, based on management’s judgment that the redemption feature is conditioned on the occurrence of uncertain future events not solely within the Company’s control. This judgment determines whether the underlying shares are presented within temporary equity, as a liability, or within permanent stockholders’ equity, and a different conclusion regarding the Company’s control over redemption would have resulted in a materially different balance sheet presentation. In addition, once classified as temporary equity, the carrying value of the redeemable shares is remeasured each period to equal their redemption value, which is directly determined by the balance of the Trust Account. Because the Trust Account balance fluctuates with investment income earned, and (through the Closing Date) was itself sensitive to the level of stockholder redemptions, this remeasurement is a significant estimate that materially affects both temporary equity and, once additional paid-in capital is exhausted, accumulated deficit, in each reporting period presented. Income Taxes We are required to estimate our income tax expense on income earned within the Trust Account for each reporting period. This estimate requires judgment in applying the applicable federal statutory tax rate to trust investment income and in assessing whether any deferred tax assets or unrecognized tax benefits should be recorded. As of June 30, 2026, we estimated $264,099 of income tax expense on income earned in the Trust Account for the six months then ended. Because this estimate is based on trust investment income that is itself variable and depends on market conditions, a different assumption regarding the applicable rate or the character of trust earnings could result in a materially different income tax expense than currently estimated. Forward Purchase Agreement The Forward Purchase Agreement is a Level 3 derivative measured at fair value each period under ASC 815. The valuation requires significant judgment because it relies on unobservable inputs, the probability of consummation of the Business Combination, the expected closing date, the expected post-closing share price, projected volatility, and the risk-free rate, and because the instrument settles based on the volume-weighted average trading price of our common stock during the applicable valuation period. Reasonable changes in these inputs, particularly projected volatility or the expected post-closing share price, could result in a materially different fair value. Since inception on May 28, 2026, the recorded liability increased from approximately $8.6 million to approximately $9.7 million as of June 30, 2026, an increase of approximately $1.1 million, reflecting the change in fair value recognized in earnings during the period, as described in Note 2. 25 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.