Company: SCAG
Filing Date: 2025-07-03
Form Type: 20-F
Source: 0001213900-25-061408
Chunk: 27

Company: Scage Future
Filing Date: 2025-07-03
Form: 20-F
Item: Item 1
Chunk 27
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 loss margin of 81.6% for the same years, respectively.

As mentioned in the analysis
of cost of revenues, we achieved gross profit for the fiscal year ended June 30, 2024, primarily due to (1) increase of sales
and (2) better cost control on the production of Q-trucks, partially offset by the increase in the provision for inventory reserves.
We expect that our gross margin will improve as the scale of economy of our business increases in accordance with the increase in our
vehicle and component sales.

Operating expenses

Our operating expenses increased
by 0.8% from US$6.4 million for the fiscal year ended June 30, 2023 to US$6.4 million for the fiscal year ended June 30,
2024, primarily due to the following reasons.

General and administrative expenses

Our general and administrative
expenses increased by 32.0% from US$2.9 million for the fiscal year ended June 30, 2023 to US$3.9 million for the fiscal
year ended June 30, 2024, primarily due to (1) an increase of US$0.7 million in professional service fees, such as operation
advisory fees and legal fees for listing; (2) an increase of US$0.3 million in bad debts expenses based on expected credit losses
assessment; and (3) an increase of US$0.1 million in travelling and lodging expenses in business development as a result of
business expansion; partially offset by a decrease of US$0.1 million in employee compensation as a result of personnel optimization.

Research and development expenses

Our research and development
expenses decreased by 26.1% from US$2.3 million for the fiscal year ended June 30, 2023 to US$1.7 million for the fiscal
year ended June 30, 2024, primarily attributable to (1) a decrease of US$0.5 million in employee compensation as a result
of personnel optimization; and (2) a decrease of US$0.3 million in material and testing fee for research purposes due to the
decrease of vehicle models in development; partially offset by a slight increase of US$0.3 million in other expenses related to R& D
function such as depreciation and amortization expenses, technical service fees and travelling and lodging expenses to enhance operation
efficiency related to R& D functions.

Selling and marketing expenses

Our