Company: SCAG
Filing Date: 2025-01-06
Form Type: 424B3
Source: 0001213900-25-001215
Chunk: 921

Company: Scage Future
Filing Date: 2025-01-06
Form: 424B3
Chunk 921
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 capital was projected to grow to 8.8% of revenue in FY2027. Scage’s projected working capital inputs are presented in Schedule B.3. Scage’s projected capital expenditures are presented in Schedule B.6. and Scage’s projected balance sheets are presented in Schedule B.5. Tax Rate Scage qualifies for China’s reduced corporate income tax rate of 15.0%. Additionally, Scage will benefit from China’s “super deduction,” which allows corporations to further reduce taxable income by 200.0% of the research & development (R&D) spend in the given year. 10 Scage’s tax calculations are presented in Schedule B.7. Weighted Average Cost of Capital In determining an indication of value utilizing the discounted cash flow model, we derived a weighted average cost of capital (WACC) for Scage. The WACC is intended to approximate the required rate of return of Scage’s operating assets. Two components of the WACC calculation are the firm’s cost of equity capital and the firm’s cost of debt. ____________ 10PricewaterhouseCoopers, Tax Summaries - China, June 28, 2023. Annex D-1-17

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. We reviewed the 2022 Pepperdine Private Capital Markets Report to 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’s condition and prospects as of the Valuation Date, as well as the projected financial statements, we selected a required rate of return of 40.0%. Cost of Debt We determined the cost of debt based on the Moody’s Baa rate as of the valuation date plus 600 basis points, or 11.7%. Conclusion—Weighted Average Cost of Capital The WACC calculation is a function of the cost of capital components and the capital structure of Scage and its industry. The equation used for the calculation of the WACC is presented as follows:

|       |     | Ko = |     | We * Ke + Wd * Kd * (1-Tm)                        |
| where |     |      |     |                                                   |
|       |     | Ko = |     | the weighted average cost of capital              |
|       |     | We = |     | the proportion of equity in the capital structure |