{"url_path":"/sec/xch/10-k/2026/item-15","section_key":"item-15","section_title":"Item 15 CONTROLS AND PROCEDURES","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-04-27","source_url":"https://www.sec.gov/Archives/edgar/data/1979887/0001193125-26-182198-index.html","accession_number":"0001193125-26-182198","cik":"0001979887","ticker":"XCH","issuer_name":"XCHG Ltd","edgar_url":"https://www.sec.gov/Archives/edgar/data/1979887/0001193125-26-182198-index.html","primary_entity_key":"0001979887","primary_entity_name":"XCHG Ltd"},"word_count":1014,"has_tables":true,"body_markdown":"##  \n\n## ITEM 15. CONTROLS AND PROCEDURES\n\nDisclosure Controls and Procedures\n\nOur management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of December 31, 2025 and concluded that our disclosure controls and procedures were not effective as of December 31, 2025. The purpose of these controls and procedures is to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under the SEC rules, and that such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures.\n\nInternal Control over Financial Reporting\n\nIn the course of auditing our consolidated financial statements for the year ended December 31, 2025, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting as of December 31, 2025, in accordance with the standards established by the PCAOB. As defined in the standards established by the PCAOB, 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 basis.\n\nThe material weakness identified relates to the lack of sufficient competent financial reporting and accounting personnel with appropriate understanding of U.S. GAAP and financial reporting requirements set forth by the SEC to formalize, design, implement and operate key controls over financial reporting process in order to prepare, review and report financial information, and to address complex U.S. GAAP accounting issues and related disclosures, in accordance with U.S. GAAP and SEC financial reporting requirements.\n\n94\n\n \n\nTo remediate this identified material weakness, we have adopted and will adopt further measures to improve our internal control over financial reporting, as follows:\n\n•\nhire additional financial reporting and accounting staff with adequate experience and knowledge with U.S. GAAP and SEC reporting requirements to address complex U.S. GAAP technical accounting issues, strengthen the financial reporting function, and set up an internal control framework to prepare and review the consolidated financial statements and related disclosures in accordance with U.S. GAAP and SEC financial reporting requirements;\n\n•\nimplement regular U.S. GAAP and SEC financial reporting training programs for the financial reporting and accounting personnel to equip them with sufficient knowledge and practical experience of preparing financial statements under U.S. GAAP and SEC reporting requirements; and\n\n•\ndevelop and implement a comprehensive set of period-end financial reporting policies and procedures, especially for non-recurring and complex transactions to ensure consolidated financial statements and related disclosures are in compliance with U.S. GAAP and SEC reporting requirements.\n\nWe intend to remediate the material weaknesses in multiple phases and expect that we will incur certain costs for implementing our remediation measures. The implementation of these measures, however, may not fully remediate the material weaknesses identified in our internal control over financial reporting, and we cannot conclude that the material weaknesses has been fully remediated. See “Item 3. Key Information—3.D. Risk Factors—Risks Related to Our Business—If we fail to implement and maintain an effective system of internal controls over financial reporting, we may be unable to accurately or timely report our results of operations or prevent fraud, and investor confidence and the trading price of our ADSs may be materially and adversely affected.”\n\nDuring the year ended December 31, 2024, we identified two material weaknesses in its internal control over financial reporting. To remediate the material weakness related to the failure to establish formal policies and procedures on relevant general information technology controls (“GITCs”), we adopted the following measures to improve our internal control over financial reporting:\n\n•\nadd personnel and allocate resources as necessary to support the increasing complexity of our general information technology environment;\n\n•\nformalize policies and procedures on relevant GITCs;\n\n•\nenhance control over the authorization of accounts, and improve the segregation of duties in accounts across incompatible IT layers/functions; and\n\n•\nreassess and select SaaS service providers for the financial management system in different countries to improve the ability of the management to assess the effectiveness of the GITCs.\n\nThese enhancements have improved the Company’s control environment and mitigated the risks associated with the previously identified control deficiencies. We have continuously implemented and will continue to implement such measures, including in the preparation of our consolidated financial statements in the subsequent periods. We continue to monitor and evaluate the effectiveness of these measures and further enhance the internal control framework.\n\nManagement’s Annual Report on Internal Control over Financial Reporting\n\nOur management, including our CEO and CFO, is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).\n\nUnder the supervision and with the participation of our management, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025. In assessing the effectiveness of our internal control over financial reporting, our management used the framework established in Internal Control–Integrated Framework (2013) issued by The Committee of Sponsoring Organizations of the Treadway Commission.\n\nBased on our evaluation as of December 31, 2025, our management concluded that our internal control over financial reporting was not effective as of December 31, 2025.\n\nAttestation Report of the Registered Public Accounting Firm\n\nSince we are an “emerging growth company” as defined under the JOBS Act, we are exempt from the requirement to comply with the auditor attestation requirements that our independent registered public accounting firm attest to and report on the effectiveness of our internal control structure and procedures for financial reporting.\n\n95\n\n \n\nChanges in Internal Control over Financial Reporting\n\nOther than those remediation steps described above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.\n\n96"}