Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 26

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 26
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 materially and
adversely affect our operations and profitability.

Breakdown of any of our major IT and SaaS systems or failure
to keep up with technological developments would materially and adversely affect our business, results of operations and future prospects.

Our proprietary technology and technological
capabilities are critical to the development and maintenance of our IT and SaaS systems and infrastructure underlying our mobile applications
and platforms, which in turn is vital to our business operations and planned developments. We need to keep abreast of the fast evolving
IT developments, and continuously invest in significant resources, including financial and human capital resources to maintain, upgrade
and expand our IT and SaaS systems and infrastructure in tandem with our business growth and developments. However, research and development
activities are inherently uncertain, and investments in information technologies and development of proprietary technologies may not
always lead to commercialization or monetarization, or lead to increased business volume and/or profitability.

The fast evolving IT developments may also render
our existing systems and infrastructure and those that are newly developed and implemented obsolete before we are able to reap sufficient
benefits to recover their investment costs, and may lead to substantial impairments which would adversely affect our results of operations.
Any significant breakdown of our IT and SaaS systems and infrastructure may materially and adversely affect our business, results of
operations, reputation and business prospects, and may even subject us to potential claims or even litigations, particularly as parts
of our IT and SaaS systems and infrastructure are linked to or connected with IT and SaaS systems and infrastructure of our insurance
company partners, who are mostly sizeable and reputable financial institutions whom themselves are subject to stringent regulatory supervision.
As we rely on our IT, SaaS systems, mobile applications and infrastructure to facilitate and conduct our business, any prolonged breakdown
of systems and infrastructure could also materially impact our business and results of operations.

Misconduct of our in-house sales force and employees is difficult
to detect and deter and could harm our reputation or lead to regulatory sanctions or litigation costs.

We promote insurance products through our in-house
sales team and external referral sources. In addition, we engage external referral sources to deepen our market penetration and broaden
end consumer reach, including referral service providers who have access to auto insurance end consumers, such as automobile after-sales
service providers, external registered sales representatives. The activities and regulatory compliance of these sales and marketing force
associated with our insurance agency business are subject to the terms of the agreements we entered into with them and subject to applicable
PRC laws.