Company: SCAG
Filing Date: 2025-11-12
Form Type: 20-F
Source: 0001213900-25-109190
Chunk: 122

Company: Scage Future
Filing Date: 2025-11-12
Form: 20-F
Item: Item 4A
Chunk 122
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assets represent future tax benefits to be received when certain expenses previously recognized in the consolidated statements of operations
become deductible expenses under applicable income tax laws, or loss or credit carryforwards are utilized. As we estimate the allowance
for deferred tax assets by considering if sufficient future taxable income will be generated to utilize the existing deferred tax assets,
it can be altered if we change our forecasts of future profitability.

Warranty reserve

We provided a manufacturer’s
standard warranty on all vehicles and components sold. We accrued a warranty reserve for the vehicles sold by us, which included our
best estimate of the future costs to be incurred in order to repair or replace items under warranties and recalls when identified. These
estimates were made based on actual claims incurred to date and an estimate of the nature, frequency and magnitude of future claims with
reference made to the past claim history. These estimates are inherently uncertain given our relatively short history of sales, and changes
to our historical or projected warranty experience may cause material changes to the warranty reserve in the future. Warranty expense
is recorded as a component of cost of sales in the consolidated statements of operations and comprehensive loss. Warranty reserve of
US$0.3 million, US$0.1 million and US$25,597 were recorded as of June 30, 2025, 2024 and 2023, respectively.

Impairment of long-lived assets

Our long-lived assets consist
primarily of property and equipment, and right-of-use assets related to operating leases.

We review long-lived assets
for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable.
When these events occur, we measure impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted
future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted
cash flow is less than the carrying amount of the assets, we would recognize an impairment loss, which is the excess of carrying amount
over the fair value of the assets, using the market approach.

An undiscounted cash flow
methodology requires the estimation of a wide range of factors including but not limited to: (i) forecasting future earnings and cash
flows, and (ii) determining the forecast horizon that appropriately reflect the lifespan of the assets group in support of future cash
generating activities. These estimations require significant judgment and include making assumptions such as sales growth rates, our
ability to