Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 18

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 18
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 interpretation and enforcement of PRC laws, rules
and regulations.

Due to intense competition for highly skilled
personnel, we may fail to attract and retain enough sufficiently trained personnel to support our operations; as a result, our ability
to generate new business may be negatively affected and our revenues could decline.

The software application and
technology service industry rely on skilled personnel, and our success depends to a significant extent on our ability to recruit, train,
develop and retain qualified personnel, especially experienced middle and senior level management. There is significant competition for
skilled personnel, especially experienced middle and senior level management, with the skills necessary to perform the services we offer
to our customers. Increased competition for these personnel, in the software application and technology service industry or otherwise,
could have an adverse effect on us. We have established certain programs to enhance our human capital and employee loyalty, however, a
significant increase in our attrition rate could decrease our operating efficiency and productivity and could lead to a decline in demand
for our services. Additionally, failure to recruit, train, develop and retain personnel with the qualifications necessary to fulfill the
needs of our existing and future customers or to assimilate new personnel successfully could have a material adverse effect on our business,
financial condition and results of operations. Failure to retain our key personnel on customer projects or find suitable replacements
for key personnel upon their departure may lead to termination of some of our customer contracts or cancellation of some of our projects,
which could materially and adversely affect our business.

Our profitability will suffer if we are
not able to maintain our resource utilization levels and continue to improve our productivity levels.

Our gross margin and profitability
are significantly impacted by our utilization levels of human resources as well as our ability to increase our productivity levels. We
have expanded our operations in recent years through organic growth, which has resulted in a significant increase in our headcount and
fixed overhead costs. We may face difficulties maintaining high levels of utilization. Although we try to use all commercially reasonable
efforts to accurately estimate service and resource requirements from our customers, we may overestimate or underestimate, which may result
in unexpected cost and strain or redundancy of our human capital and adversely impact our utilization levels. In addition, some of our
professionals are trained to work for specific customers or on specific projects and some of our sales are dedicated to specific customers
or specific projects. Our ability to continually increase our productivity levels depends significantly on our ability to recruit, train,
develop and retain high-performing professionals and project staffs appropriately