Company: SCAG
Filing Date: 2025-11-12
Form Type: 20-F
Source: 0001213900-25-109190
Chunk: 121

Company: Scage Future
Filing Date: 2025-11-12
Form: 20-F
Item: Item 4A
Chunk 121
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 conditions, reasonable and supportable forecasts of future economic
conditions, in combination with assessing receivable collectability on an individual basis, and applying current situation adjustment.
If business or economic conditions change, estimates and assumptions may be adjusted as deemed appropriate. Historically, actual required
adjustments have not varied materially from estimated amounts. We conclude that there is no impact over the initial adoption of CECL
model, which should be treated as cumulative-effect adjustment on accumulated deficits as of July 1, 2023. Reversal of provision of allowance
of US$43,539 was recorded for the years ended June 30, 2025, and provision of allowance for expected credit losses of US$0.3 million
and US$38,943 for financial assets were recorded for the years ended June 30, 2024 and 2023, respectively.

Estimates for inventory provisions

Inventories, primarily consisting of raw materials, work in progress
and finished goods, are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling
prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventory is determined
using the weighted average cost method. Inventories are written down to estimated net realizable value, which could be impacted by certain
factors including historical usage, expected demand, anticipated sales price, new product development schedules, product obsolescence,
and other factors. If business or economic conditions change, estimates and assumptions may be adjusted as deemed appropriate. Historically,
actual required adjustments have not varied materially from estimated amounts. Inventory write-downs of US$0.3 million, US$0.9 million
and US$0.2 million were recorded for the years ended June 30, 2025, 2024 and 2023, respectively.

Valuation allowance of deferred tax assets

Deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income for the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment
date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

In general, deferred tax