Company: SCAG
Filing Date: 2025-11-12
Form Type: 20-F
Source: 0001213900-25-109190
Chunk: 21

Company: Scage Future
Filing Date: 2025-11-12
Form: 20-F
Item: Item 3
Chunk 21
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36.1% of our total operating
expenses in the same periods, respectively. Given the rapid technological changes in the industry, we need to invest significant resources
in research and development to lead technological advances in order to remain competitive in the market. Therefore, we expect that our
research and development expenses will continue to be significant. Furthermore, research and development activities are inherently uncertain,
and we cannot assure you that we will continue to achieve technological breakthroughs and successfully commercialize such breakthroughs.
As a result, our significant expenditures on research and development may not generate corresponding benefits. If our research and development
efforts fail to keep up with the latest technological developments, we would suffer a decline in our competitive position.

In addition to our in-house expertise,
we also rely on certain technologies of our suppliers to enhance the performance of our vehicles. We plan to upgrade our existing models
and introduce new models in collaboration with relevant vehicle manufacturers in order to equip our vehicles with the latest technologies,
which could involve substantial costs and lower our return on investment for existing models. We cannot assure you that we will be able
to equip vehicles that we collaborated in developing with the latest technologies. Even if we are able to keep pace with technological
advancement and develop new models, prior models that we collaborated in developing could become obsolete more quickly than expected,
potentially reducing our return on investment.

We are subject to various environmental,
safety and other laws and regulations relevant to our business that could impose substantial costs upon us and cause delays in selling
our products.

We are subject to multiple
environmental, safety and other laws and regulations related to our business, especially the sale of our vehicles, such as laws and regulations
related to the use of hazardous materials in the manufacturing process and the operation of our collaborating manufacturing plant. Such
laws and regulations govern the use, storage, discharge and disposal of hazardous materials during the manufacturing process. We are
responsible for obtaining and/or periodically renewing the sale, construction, environmental protection, waste disposal permits and other
relevant permits for selling our products. We cannot assure you that we will be able to obtain or renew such permits in a timely manner.

In addition, from time to
time, the government of the PRC issues new regulations, which may require additional actions on our part to comply for continuing our
normal operations. For example, if any of our other existing or future constructions fails to comply with applicable regulations or maintain
the relevant permits, we could be subject to substantial liability for clean-up efforts,