Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 73

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 73
---

us. We also face regulatory uncertainties that could restrict our ability to adopt additional incentive plans for our directors, executive
officers and employees under PRC law.

Failure to make adequate contributions to
various mandatory social security plans as required by PRC regulations may subject us to penalties.

PRC laws and regulations require
us to pay several statutory social welfare benefits for our employees, including pensions, medical insurance, work-related injury insurance,
unemployment insurance, maternity insurance and housing provident fund contributions. Local governments usually implement localized requirements
as to mandatory social security plans considering differences in economic development in different regions. Our failure in making contributions
to various mandatory social security plans and in complying with applicable PRC labor-related laws may subject us to late payment penalties.
We may be required to make up the contributions for these plans as well as to pay late fees and fines. If we are subject to late fees
or fines in relation to the underpaid employee benefits, our financial condition and results of operations may be adversely affected.

Our current employment practices may be
restricted under the PRC Labor Contract Law and our labor costs may increase as a result.

The PRC Labor Contract Law
and its implementing rules impose requirements concerning contracts entered into between an employer and its employees and establishes
time limits for probationary periods and for how long an employee can be placed in a fixed-term labor contract. Because there is lack
of clarity with respect to the implementation and potential penalties and fines provided in the Labor Contract Law and tis implementing
rules, it is uncertain how it will impact our current employment policies and practices. We cannot assure you that our employment policies
and practices do not, or will not, violate the Labor Contract Law or its implementing rules and that we will not be subject to related
penalties, fines or legal fees. If we are subject to large penalties or fees related to the Labor Contract Law or its implementing rules,
our business, financial condition and results of operations may be materially and adversely affected. In addition, according to the Labor
Contract Law and its implementing rules, if we intend to enforce the non-compete provision with an employee in a labor contract or non-competition
agreement, we have to compensate the employee on a monthly basis during the term of the restriction period after the termination or ending
of the labor contract, which may cause extra expenses to us. Furthermore, the Labor Contract Law and its implementation rules require
certain terminations to be based upon seniority rather than merit, which significantly affects the cost of