Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 170

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 15
Chunk 170
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 financial statements will not be prevented or detected on a timely basis.

The
material weakness identified relates to lack of sufficient accounting and financial reporting personnel with appropriate knowledge of
U. S. GAAP and SEC reporting requirements to (a) formalize and carry out key controls over financial reporting, (b) properly address complex
accounting issues and (c) prepare and review consolidated financial statements and related disclosures in accordance with U. S. GAAP and
SEC reporting requirements, and lack of a comprehensive accounting policy manual and closing procedure manual for its finance department
to convert its primary financial information prepared under accounting principles generally accepted in the PRC into U. S. GAAP.

We
established an audit committee in November 2019. We have also engaged an internal control consultant to help us establish and improve
our internal controls, hired additional accounting staff with appropriate understanding of U. S. GAAP and SEC reporting requirements,
trained the existing financial reporting personnel and engaged an independent third party consultant to assist in establishing processes
and oversight measures to comply with the requirements of Sarbanes-Oxley Act. We are in the process of implementing a number of measures
to address the material weakness that has been identified, including formalizing a set of comprehensive U. S. GAAP accounting manuals,
hiring more qualified internal auditors to strengthen our overall governance, providing relevant training to our accounting personnel
and upgrading our financial reporting system to streamline monthly and year-end closings and integrate financial and operating reporting
systems. We also plan to take other steps to strengthen our internal control over financial reporting, including enhancing our internal
audit function independently led by audit committee. However, we cannot assure you that we will remediate our material weakness in a
timely manner.

Because
of the material weakness identified above, our management has concluded that our internal control over financial reporting was not effective
as of September 30, 2024.

Attestation
report of the registered public accounting firm

Since
we are an “emerging growth company” as defined under the JOBS Act, we are exempt from the requirement to comply with the
auditor attestation requirements that our independent registered public accounting firm attest to and report on the effectiveness of
our internal control structure and procedures for financial reporting.

Changes
in Internal Control over Financial Reporting

There
were no changes in our internal control over financial reporting that occurred in FY 2024 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.