Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 33

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 33
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 basis.

Our management concluded that our internal control
over financial reporting was not effective as of September 30, 2024 as we and our independent registered public accounting firm identified
one material weakness in our internal control over financial reporting. For more details, please see “ ITEM 15. CONTROLS AND PROCEDURES
- Management’s Annual Report on Internal Control over Financial Reporting.” Moreover, even if our management concludes that
our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own
independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our
controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition,
as we are a public company, our reporting obligations may place a significant strain on our management, operational and financial resources
and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

In addition, if we fail to maintain the adequacy
of our internal control over financial reporting, as these standards are modified, supplemented or amended from time to time, we may
not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section
404 of the Sarbanes-Oxley Act of 2002. Moreover, our internal control over financial reporting may not prevent or detect all errors and
fraud. A control system, no matter how well it is designed and operated, it cannot provide absolute assurance that misstatements due
to error or fraud will not occur or that all control issues and instances of fraud will be detected. If we fail to achieve and maintain
an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting
obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our
access to capital markets, harm our results of operations, and lead to a decline in the trading price of the ADSs. Additionally, ineffective
internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to
potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.

Our operations depend on the performance of the internet and
mobile internet infrastructure and telecommunications networks in China, which may not be able to support the demands associated with
our continued growth.

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