Company: SCAG
Filing Date: 2025-05-29
Form Type: 424B3
Source: 0001213900-25-048544
Chunk: 3

Company: Scage Future
Filing Date: 2025-05-29
Form: 424B3
Chunk 3
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 The significant increase was primarily due to the
increase in the sales of NEV components, partially offset by the decrease in the sales of NEVs. Scage International sold 24 sets of Artificial-intelligent
Robot Transportation (“ART”) components, 54 sets of NEV batteries and six Dragon II vehicles (previously marketed as “Dragon
King”) for the six months ended December 31, 2024, compared with 43 Q-trucks and one electric tractor truck for the six months ended
December 31, 2023.

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Cost of Revenues

Cost of revenues increased
significantly from approximately US$2.6 million in the six months ended December 31, 2023 to approximately US$7.9 million in the six months
ended December 31, 2024, primarily due to (1) the increase in manufacturing and purchase costs, which was basically in line with the increased
sales of NEV components, and (2) the increased reserves for estimated warranty costs for corresponding sales during the period, partially
offset by the decrease in inventory write-down as a result of the decrease in the overall inventory level as of December 31, 2024 as compared
to December 31, 2023.

Gross Loss/Profit and Gross Margin

As
a result of the foregoing, Scage International recorded gross loss of approximately US$0.7 million in the six months ended December 31,
2024 and gross profit of approximately US$0.6 million in the six months ended December 31, 2023, representing a gross margin of approximately
negative 10.1% and approximately 19.6% of the relevant periods, respectively.

Operating Expenses

Operating
expenses decreased by approximately 7.1% from approximately US$3.4 million in the six months ended December 31, 2023 to approximately
US$3.2 million in the six months ended December 31, 2024 for the following reasons.

Selling and marketing expenses. Selling and marketing expenses decreased by approximately 56.9% from approximately US$0.5 million in the six
months ended December 31, 2023 to approximately US$0.2 million in the six months ended December 31, 2024, primarily due to (1) a decrease
of US$0.2 million in marketing expenses for brand promotion and customer relationship development, and (2) a decrease of US$0