Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 32

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 32
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 other resources from our business and operations
to defend against these claims, regardless of their merits.

We may be involved in legal proceedings arising from our operations.

We may be involved in legal and administrative
proceedings from time to time. As our business expands, we expect we will continue to face litigations and disputes in the ordinary course
of our business, which may result in claims for actual damages, freezing of our assets and diversion of our management’ attention,
as well as legal proceedings against our directors, officers or employees, and the probability and amount of liability, if any, may remain
unknown for long periods of time.

The outcome of any claims, investigations and
proceedings is inherently uncertain, and in any event defending against these claims could be both costly and time-consuming. Therefore,
our reserves for such matters may be inadequate, and any unfavorable final resolution of any such litigation or proceedings could have
a material adverse effect on our business, results of operations and financial condition. Moreover, even if we eventually prevail in
these matters, we could incur significant legal fees or suffer significant reputational harm, which could have a material adverse effect
on our prospects and future growth.

If we fail to maintain an effective system of internal controls
over financial reporting, we may not be able to accurately and timely report our financial results or prevent fraud, and investor confidence
and the market price of our ADSs may be materially and adversely affected.

We are a public company listed in the United
States subject to the Sarbanes-Oxley Act of 2002. Section 404 of the Sarbanes-Oxley Act of 2002 requires us to include a report of management
on our internal control over financial reporting in our annual report on Form 20-F. In addition, once we cease to be an “emerging
growth company” as such term is defined under the JOBS Act, our independent registered public accounting firm must attest to and
report on the effectiveness of our internal control over financial reporting. If we identify one or more material weaknesses in internal
control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective. As defined
in the standards established by the U. S. Public Company Accounting Oversight Board, a “material weakness” is a deficiency
or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of the annual or interim financial statements will not be prevented or detected on a timely