Company: XHG
Filing Date: 2025-09-09
Form Type: F-3
Source: 0001213900-25-086186
Chunk: 39

Company: XChange TEC.INC
Filing Date: 2025-09-09
Form: F-3
Chunk 39
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cai Limited, which is beneficially owned by the legal representative and executive director of one of our
subsidiaries, a related party (the “Equity Transfer”). As a result of the Equity Transfer, we no longer conduct any
operation through the variable interest entity. See “Item 4. Information on the Company—A. History and Development of
the Company” in our Form 20-F for FY 2024, which is incorporated herein by reference.

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Although we no longer conduct any operation through
the variable interest entity, there are uncertainties regarding the interpretation and application of current and future PRC laws, regulations,
and rules relating to the agreements that established the VIE structure for our operations in China, including potential future actions
by the PRC government, which may retroactively affect the enforceability and legality of our historical contractual arrangements with
the VIE entities and, consequently, significantly affect the historical financial condition and results of operations of the VIE entities,
and our ability to consolidate the results of the VIE entities into our consolidated financial statements for the periods prior to the
completion of the Equity Transfer. If the PRC government finds such agreements non-compliant with relevant PRC laws, regulations, and
rules, or if these laws, regulations, and rules or the interpretation thereof change in the future, and such changes may be retroactively
applied to our historical contractual arrangements, we could be subject to severe penalties and our control over the VIE entities may
be rendered ineffective, which could result in potential restatement of our historical financial statements. As a result, our shares and/or
ADSs may decline in value or become worthless.

Risks Related to Doing Business in the PRC

The PRC government may exert, at any time, substantial intervention and influence over the manner of our operations, and the rules and regulations to which we are subject, including the ways they are enforced, may change rapidly and with little advance notice to us or our shareholders. Any such actions by the Chinese government, including any decision to intervene or influence the operations of our subsidiaries in China or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause us to make material changes to our operations in China, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.

We are exposed to legal and operational risks
associated with our operations