Company: XHG
Filing Date: 2025-09-09
Form Type: F-3
Source: 0001213900-25-086186
Chunk: 14

Company: XChange TEC.INC
Filing Date: 2025-09-09
Form: F-3
Chunk 14
---
 effect, we communicate and coordinate with insurance purchasers and insurance
companies to serve their respective needs. As we do not underwrite insurance policies, the insurance purchasers or policy holders do not
have any direct recourse with us for insurance claims as the insurance contract is entered into directly between the policy holders and
the insurance companies, we only play the role of facilitating the claim process.

<div align='center'>4</div>

We generate revenue from our insurance agency
business primarily through collecting commissions from insurance companies for successful sales of their insurance products, which are
typically based on a percentage of the premium paid by insurance policy purchasers. The commission rates are typically set by insurance
companies and vary for different product types, different insurance companies and different geographic regions in which the insurance
products are sold. The commission rates are also subject to adjustments by insurance companies from time to time based on their expectation
on profits, consumer demand for insurance products in the market, the availability and pricing of comparable products from other insurance
companies, regulatory requirements and governmental policies, and other factors that affect insurance companies at the relevant time.
In this connection, the average commission rates also varied between different cities in which we operate our insurance agency business,
and in 2023 and 2024, our by-city average commission rates ranged from 9% to 33% and 4% to 35%, respectively, while its overall average
commission rate was 14% and 10%, respectively.

On October 31, 2023, we entered into an equity
transfer agreement to sell all of our equity interest in Haoju (Shanghai) Artificial Intelligence Technology Co., Ltd. (“Haoju”),
a limited company incorporated under the laws of PRC, which was our indirect wholly-owned subsidiary prior to the disposition, to Wangxiancai
Limited for nominal consideration (the “Disposal”). The Disposal was made at nominal consideration because Haoju and its subsidiaries
were loss-making and had net liabilities and the possibility that it would generate cash flow in the future was minimal considering (i)
decreasing demand for long-term rental apartments in areas it operated due to population outflow from these areas; and (ii) increasing
operating costs as a percentage of revenue as it had incurred certain fixed costs and experienced decreasing revenue streams. The Disposed
Business had been incurring losses from operations. Our accumulated deficits amounted to RMB3,630.0 million and RMB3,856.8 million (US$549.6
million) as of