Company: XHG
Filing Date: 2025-01-22
Form Type: 20-F
Source: 0001213900-25-005499
Chunk: 27

Company: XChange TEC.INC
Filing Date: 2025-01-22
Form: 20-F
Item: Item 3
Chunk 27
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 Misconduct of any of them could result in violation of law by us, regulatory sanctions, litigation or serious reputational
or financial harm. Misconduct could include:

  making misrepresentation when marketing or selling  

  hindering insurance applicants from making full and                                

  hiding or falsifying material information in relation  

  falsifying insurance agency business or fraudulently    

  otherwise not complying with laws and regulations or  

We have internal policies and procedures to deter
misconduct by our in-house sales force and external referral sources. We cannot assure you, therefore, that misconduct by any of our
in-house sales team or our external referral sources may not occur, whether unintentional or otherwise, which may negatively impact our
business, results of operations or financial condition. In addition, the general increase in misconduct in the industry could potentially
harm the reputation of the industry and have an adverse impact on our business.

We are subject to credit risks from our customers.

We typically grant credit period to our insurance
customers. While they are principally insurance companies that we only had relatively insignificant impairment of trade receivables in
the past three years, there is no assurance that commission and fee income receivable by us will not be subject to disputes with our
insurance customers. Given the background of our customers and the negotiating position they enjoy, in case of dispute we are typically
in a less favorable position to succeed in recovering the trade receivables in dispute and our financial position and results of operations
may be negatively impacted as a result. However, our credit risk assessment procedures may be subject to fraud or collusion to defraud
or other illegal activities, and there is a risk that end customers may fail to repay the insurance premium to us. We may not always
be able to detect or prevent such misconduct in a timely manner, and the precautions we take to prevent these activities may not be effective
in all cases. Failure to protect our operations from fraudulent activities by our customers could result in reputational and economic
damages to us and could materially and adversely affect our results of operations.

The development of new businesses and expansion into new markets
may expose us to new risks and challenges.

Alpha Mind introduced its SaaS platform in 2023.
We will continue developing new businesses and expanding into new markets within the scope permitted by regulatory authorities, which
may expose us to new risks and challenges, including, but not limited to:

  regulatory risks: we may face unfamiliar                                                
  regulatory environments when developing new businesses and expanding into new markets;