Company: SCAG
Filing Date: 2025-01-06
Form Type: 424B3
Source: 0001213900-25-001215
Chunk: 292

Company: Scage Future
Filing Date: 2025-01-06
Form: 424B3
Chunk 292
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 its analyses, methodologies and factors, without considering all analyses, methodologies and factors, could create a misleading or incomplete view of the processes underlying ValueScope’s analyses and opinions. Income Approach ValueScope reviewed and ultimately relied upon Scage International management’s forecasts provided for the fiscal years ending June 30, 2024 through June 30, 2027. ValueScope reviewed the projections and historical financial statements of comparable publicly traded companies in order to assess the reasonability of the forecast provided. ValueScope determined that Scage International management’s forecast was consistent with what a market participant developing their own independent forecast would utilize. The financial projections were used to determine the estimated net cash flow to be generated by Scage International over a four -yearperiod, which was then discounted to the present value, using an appropriate discount rate to arrive at the enterprise value. ValueScope’s discount rate was a weighted average cost of capital (WACC) that ValueScope derived for Scage International. Two components of the WACC calculation are the cost of equity capital and the cost of debt. Cost of Equity A firm’s cost of equity capital, K e, is the expected, or required, rate of return on the firm’s common stock. For its Initial Opinion, ValueScope reviewed the 2022 Pepperdine Private Capital Markets Reportto determine the cost of equity. The Pepperdine Report surveys investors on their required rates of return for varying investment types and company stages. Based on Scage International’s condition and prospects as of the June 30, 2023 valuation date, as well as the Initial Projections, ValueScope selected a required rate of return of 40.0%. For the Second Opinion, ValueScope reviewed the 2023 Pepperdine Private Capital Markets Reportto determine the cost of equity. Based on Scage International’s condition and prospects as of the Second Valuation Date, as well as the Second Projections, ValueScope selected a required rate of return of 30.0%. Cost of Debt For the Initial Opinion, ValueScope determined the cost of debt based on the Moody’s Baa rate as of the Initial Valuation Date plus 600 basis points, or 11.7%. For the Second Opinion, ValueScope determined the cost of debt based on the Moody’s Baa rate as of the Second Valuation Date plus 600 basis points, or 11.5%. 126

Conclusion—Weighted Average Cost of Capital The WACC calculation is a function of the cost of capital components and the capital structure of Scage