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

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 25
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seen damages, and materially and adversely affect our business, results of operations and financial condition.

We may fail to attract and retain an experienced management
team and qualified personnel.

Our continued success depends on our ability
to attract and retain an experienced management team and other employees with the requisite expertise and skills. Our ability to do so
is influenced by a variety of factors, including the structure of the compensation package that we formulate and the competitive market
position of our overall compensation package. Our management team and skilled employees may leave us or we may terminate their employment
at any time. We cannot assure you that we will be able to retain our management team and skilled employees or find suitable or comparable
replacements on a timely basis. Moreover, if any of our management team or skilled employees leaves us or joins a competitor, we may
lose end-customers. In addition, former employees may request certain compensation arising from their resignation or retirement, which
we typically negotiate on a case-by-case basis. However, if we are unable to reach a mutually acceptable resolution with such employees,
they may take other actions including, but not limited to, initiating legal proceedings. Such legal proceedings may require us to pay
damages, divert our management’s attention cause us to incur costs and harm our reputation. Each of these foregoing factors could
have a material adverse effect on our business, financial condition and results of operations.

Any significant disruption in services on our mobile applications,
websites or computer systems, including events beyond our control, could materially and adversely affect our business, financial condition
and results of operation.

Our business is highly dependent on the ability
of our information technology systems to timely process a large number of transactions across different markets and products at a time
when the volume of such transactions is growing rapidly. We are also increasingly relying on our mobile applications to facilitate the
business process of our insurance agency. Usability of our mobile applications as perceived by users can influence customer satisfaction.
The proper functioning and improvement of our mobile applications, our accounting, customer database, customer service and other data
processing systems is critical to our business and to our ability to compete effectively. We cannot assure you that our business activities
would not be materially disrupted in the event of a partial or complete failure of any of these primary information technology or communication
systems, which could be caused by, among other things, software malfunction, computer virus attacks or conversion errors due to system
upgrading. In addition, a prolonged failure of any of our information technology systems could damage our reputation and