Company: SCAG
Filing Date: 2025-11-12
Form Type: 20-F
Source: 0001213900-25-109190
Chunk: 51

Company: Scage Future
Filing Date: 2025-11-12
Form: 20-F
Item: Item 3
Chunk 51
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 obligations or being taxed under Circular 7 and the SAT Circular 37,
unless it can be justified that the transactions are of reasonable business purposes such as group restructuring or other allowed circumstances.
Practically, there has been no major transaction of similar nature challenged by the PRC tax authorities. However, given the increasingly
tightened tax administration in China, we cannot assure you that there is no tax reporting or settlement risk for such transactions.

The custodians or authorized users of Nanjing
Scage’s controlling non-tangible assets, including chops and seals, may fail to fulfill their responsibilities or misappropriate
or misuse these assets.

Under PRC laws, legal documents
for corporate transactions are executed using the chop or seal of the signing entity or with the signature of a legal representative
whose designation is registered and filed with the relevant branch of the State Administration for Market Regulation (the “ SAMR”).
Although Nanjing Scage usually utilizes chops to enter into contracts, the designated legal representatives of PRC Subsidiaries have
the apparent authority to enter into binding contracts on behalf of these entities without chops. In order to maintain the physical security
of Nanjing Scage’s chops, Nanjing Scage generally has them stored in secure locations accessible only to authorized employees.
Although Nanjing Scage monitors such authorized employees, the procedures may not be sufficient to prevent all instances of abuse or
negligence. There is a risk that Nanjing Scage’s employees could abuse their authority, for instance, by entering into a contract
not approved by Nanjing Scage, or seeking to gain control of any of the PRC Subsidiaries. If any employee obtains, misuses or misappropriates
corporate chops and seals or other controlling non-tangible assets for whatever reason, the business operations of the relevant
entities could be disrupted. Nanjing Scage may have to take corporate or legal action to seek the return of the chops, apply for new
chops with the relevant authorities, or otherwise seek legal redress for the violation of the representative’s fiduciary duties
against Nanjing Scage, which could involve significant time and resources to resolve and divert management attention from business operations.
In addition, the affected entity may not be able to recover corporate assets that are sold or transferred out of Nanjing Scage’s
control in the event of such a misappropriation if a transferee relies on the apparent authority of the representative and acts in good
faith.

Fluctuations in exchange rates could have