Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 34

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 34
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 we may lose sales and market share to our competitors.
On the other hand, we may also be exposed to increased inventory risks due to accumulated excess inventory of our products or raw materials,
parts and components for our products. Excess inventory levels may lead to increases in inventory holding costs, risks of inventory obsolescence
and write-down.

The average selling prices of our cryptocurrency
mining may decrease from time to time due to technological advancement and we may not be able to pass onto our suppliers such decreases,
which may in turn adversely affect our profitability.

The cryptocurrency mining
industry is characterized by quick launches of new products, continuous technological advancements and changing market trends and customer
preferences, all of which translate to a shorter life cycle and a gradual decrease in the average selling prices of products over time.
There are no assurances that we will be able to pass on any decrease in average selling prices of our products to our suppliers. In the
event that average selling prices of our products unusually or significantly decrease, and such decreases cannot be offset by a corresponding
decrease in the prices of the principal components of our products, our gross profit margins may be materially and adversely affected,
which in turn, may adversely affect our profitability.

Shortages in, or increases in the prices
of, the components of our cryptocurrency mining machines may adversely affect our business.

The components used for cryptocurrency
mining machines include printed circuit board, other electronic components, fans and aluminum casings. The use of our Bitcoin mining machines
also requires certain ancillary equipment and components such as controllers, power adaptors and connectors. The production of our current
cryptocurrency mining machines depends on obtaining adequate supplies of these components on a timely basis and at competitive prices.
We do not typically maintain large inventories of components, but rather we purchase them on a just-in-time basis to satisfy our quality
standards and meet our volume requirements. Given the long lead times that may be required to manufacture, assemble and deliver certain
components and products, problems could arise in planning production and managing inventory levels that could seriously interrupt our
operations, including the possibility of defective parts, an increase in component costs, delays in delivery schedules, and shortages
of components. Furthermore, we may have to turn to less reputable suppliers if we cannot source adequate components from our regular supplier.
Under such circumstances, the quality of the components may suffer and could cause performance issues in our cryptocurrency mining machines.

Shortages of components could
result in reduced production or delays in production, as well as an increase in production costs