Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 235

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 19
Chunk 235
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 to the authorized distributors within that defined territory.
The Group’s services under regional cooperation agreements include marketing support to advertise as well as utilization of the
Group’s trademark and copyrights for business promotion purpose. The term of cooperation agreements is typically one to two years.
The Group charges a fixed amount authorization fee which is non-refundable and to be paid upon execution of an authorization agreement.
For all the Group’s cooperation agreements, the amount of fee is fixed or determinable and no right of return provision indicated
in the agreement. Since the Group provides no financing to authorized distributors and offers no guarantees on their behalf, the services
provided by the Group are considered to represent a single performance obligation. The agreement price is fully allocated to the single
performance obligation. The total authorization fees are recognized ratably on a straight-line basis over the term of the cooperation
agreements. Other revenues accounted for0.3% of the Group’s revenue for the year ended December 31, 2024.

Revenue includes reimbursements
of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. The Group reports revenues net of
value added tax (“ VAT”). The Group’s subsidiaries in PRC are subject to a3% to13% value added tax (“ VAT”)
and related surcharges on the revenues earned from providing services or products.

F-17

X3 HOLDINGS CO., LTD.

Note 2 - Summary of significant accounting
policies(continued)

Practical Expedient and Exemptions

The Group does not disclose
the value of unsatisfied performance obligations within one year by applying the right to invoice practical expedient provided by ASC
606-10-55-18.

Contract balance

The accounts receivable includes
both unbilled accounts receivable and billed accounts receivable. The Group records unbilled accounts receivable for revenue that has
been recognized in advance of billing the customer, which is common for application development service contracts. The unbilled accounts
receivable represents the Group’s right to consideration in exchange for the service that the Group has performed to the customer
before payment is due and the unbilled account receivable will be reclassified into billed accounts receivable when the Group has the
right to invoice. Contract liabilities are presented as deferred revenue on the consolidated balance sheet. Contract liabilities relate
to payments received in advance of completion of performance obligations under a contract. Contract liabilities are recognized as revenue
upon the completion of performance obligations. As of December 31, 2024 and