Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 214

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 19
Chunk 214
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 of $23,200(equivalent of RMB165,808) and share consideration
of RMB289,733were recorded in the account of “ Payable for asset acquisition” and “additional paid-in
capital”, respectively.

The Group accounted for the acquisition as an asset acquisition because
the Group did not acquire substantive process from Beautiful House.

On the date of asset acquisition, the Group determined the estimated
fair values using Level 3 inputs after review and consideration of relevant information, including contract value of apartment rental
agreements and estimates made by management. The apartment rental agreements with both landlords and tenants were valued using the multiperiod
excess earnings method and the trademarks were valued using the relief from royalty method. The fair value of apartment rental agreements
and trademarks was RMB289,591and RMB86,900, respectively.

The total consideration of RMB
495,039, after deducting the liabilities
of RMB
349,665
assumed in the asset acquisition, was allocated to identify assets on the basis of their relative fair value. The allocation
is as follows:

                                              RMB  
  Apartment rental agreements             649,733  
  Trademarks                              194,971  
  Liabilities assumed by the Group      ( 349,665  
                                          495,039  

In May 2021, the Group entered into an agreement to settle the outstanding
payables with the Sellers, pursuant to the agreement, the Group delivered18,637,585,000ordinary shares (after giving effects to share
subdivision in September 2024) to settle both cash consideration payable and share consideration payable. The Sellers are entitled to
trade the ordinary shares in open market. In addition, among the18,637,585,000shares delivered,5,778,645,800ordinary shares will oblige
the Group to make up the shortfall if the cash collected by the Sellers are lower than $0.004014per share. Additionally,2,086,074,900of the5,778,645,800ordinary shares are redeemable at a per share price of $0.004015if the Sellers do not trade in open market.

The5,778,645,800ordinary shares are subject to a make-whole cash-settled
provision, and2,086,074,900ordinary shares of which are also subject to redemption. The Group assessed the redemption terms and assessed
it is probable that the Group will redeem these ordinary shares. The5,