Business Context and Reporting Period
This Form 20-F is a Shell Company Report filed by Scage Future (the "Company") following the consummation of a business combination on June 27, 2025. The transaction merged Scage International Limited (a provider of heavy-duty new energy vehicle trucks and e-fuel solutions in China) with Finnovate Acquisition Corp. (a SPAC). The Company's ADSs and warrants commenced trading on Nasdaq on June 30, 2025, under the symbols SCAG and SCAGW. The report covers the period through the closing of the combination, with financial data primarily reflecting Scage International's operations for the fiscal years ended June 30, 2024 and 2023, and the six months ended December 31, 2024.
Key Financial Metrics
Revenue and Profitability (Scage International)
- Revenue (Six Months Ended Dec 31, 2024): $7.15 million (up from $3.25 million in the prior period).
- Net Loss (Six Months Ended Dec 31, 2024): $4.01 million (up from $2.76 million in the prior period).
- Gross Profit/Loss: The Company reported a gross loss of $0.72 million for the six months ended Dec 31, 2024, compared to a gross profit of $0.64 million in the prior period. Gross margin turned negative (-10.1%) due to lower margins on component sales and increased warranty reserves.
- Operating Expenses: Total operating expenses were $3.19 million for the six months ended Dec 31, 2024, a decrease of 7.1% from the prior period.
Liquidity and Capitalization (Pro Forma as of Dec 31, 2024)
- Cash and Cash Equivalents: $75,230 (Pro Forma).
- Debt: Long-term borrowings of $2.0 million; Short-term borrowings of $7.4 million.
- Working Capital: The Company reported a working capital deficit of approximately $7.3 million as of December 31, 2024.
- Accumulated Deficit: $31.2 million as of December 31, 2024.
- Equity Financing: The Company raised $20.0 million via a Private Investment in Public Entity (PIPE) transaction in the six months ended December 31, 2024.
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased significantly (120% year-over-year for the six-month period) driven by bulk orders of Q-trucks and increased sales of NEV components (ART components and batteries).
- Margin Compression: Despite revenue growth, the Company shifted from gross profit to gross loss in the six months ended Dec 31, 2024. This was attributed to lower profit margins on component sales (which comprised the majority of sales) and increased reserves for estimated warranty costs.
- Expense Management: Operating expenses decreased slightly due to reduced selling and marketing expenses (down 56.9%) and lower R&D material fees, partially offset by increased professional service fees related to the business combination.
- Investing Activities: Significant cash outflow of $20.6 million in investing activities for the six months ended Dec 31, 2024, primarily due to the purchase of long-term investments ($20.0 million).
Guidance, Outlook, and Risks
Outlook and Strategy
Management plans to expand its heavy-duty commercial NEV portfolio, including the launch of new models in 2025 (all-electric port tractors, long-endurance hybrid power tractors). The Company intends to enhance customer acquisition through direct stores and sales partners and leverage its hydrogen production capabilities to assist customers with energy supply.
Material Risks and Contingencies
- Going Concern: The auditors have issued an explanatory paragraph regarding substantial doubt about the Company's ability to continue as a going concern. This is due to significant accumulated deficits, recurring losses, and negative operating cash flows. The Company's ability to continue depends on successful execution of its business plan and obtaining additional financing.
- Internal Controls: The Company identified material weaknesses in internal control over financial reporting, specifically regarding insufficient financial reporting personnel with U.S. GAAP experience and deficiencies in IT general controls. Remediation efforts are underway.
- Customer Concentration: The Company faces high concentration risk. For the six months ended Dec 31, 2024, one customer (Customer A) accounted for 72.37% of total revenues, and another (Customer B) accounted for 25.28%. Similarly, one supplier accounted for 68.94% of total purchases.
- Regulatory and Market Risks: Operations are heavily dependent on Chinese government policies, subsidies for NEVs, and the macroeconomic environment in China.
Investor Verification Checklist
- Going Concern Status: Verify the Company's ability to secure additional debt or equity financing to cover its working capital deficit and fund operations beyond the next 12 months.
- Customer Concentration: Assess the risk associated with reliance on a single customer for over 70% of revenue and a single supplier for nearly 70% of purchases.
- Internal Control Remediation: Monitor the progress of remediation efforts for the identified material weaknesses in internal controls over financial reporting.
- Margin Sustainability: Evaluate the sustainability of gross margins given the shift toward lower-margin component sales and the impact of warranty reserves.
- Debt Obligations: Review the terms of the $7.4 million in short-term borrowings and $2.0 million in long-term borrowings, noting that many are personally guaranteed by the CEO, Mr. Chao Gao.