Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 43

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 43
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iii) inadequate controls with respect to the
maintenance of sufficient documentation for, and the evaluation of the accounting implications of, significant and non-routine payment
transactions; and (iv) a lack of sufficient documented financial closing policies and procedures, specifically those related to period-end
expenses cut-off and accruals, as defined in the standards established by the Public Company Accounting Oversight Board of the United
States.

We have already taken some
steps and have continued to implement measures to remediate the material weakness identified, including but not limited to providing trainings
to staff, changing to a new and well-established accounting system, and continuing to monitor the internal control over financial reporting.
However, we cannot assure you that we will not identify additional material weaknesses or significant deficiencies in the future.

Due to the material weakness
in our internal controls over financial reporting, we conclude that our internal controls over financial reporting are ineffective and
therefore investors may lose confidence in our operating results, the price of the Ordinary Shares could decline and we may be subject
to litigation or regulatory enforcement actions. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley
Act, the Ordinary Shares may not be able to remain listed on the NASDAQ Capital Market.

We will likely not to pay dividends in the foreseeable future.

Dividend policy is subject
to the discretion of our Board and will depend on, among other things, our earnings, financial condition, capital requirements and other
factors. There is no assurance that our Board will declare dividends even if we are profitable. The payment of dividends by entities organized
in China is subject to limitations as described herein. Under Cayman Islands law, we may only pay dividends from profits of the Company,
or credits standing in the Company’s share premium account, and we must be solvent before and after the dividend payment in the
sense that we will be able to satisfy our liabilities as they become due in the ordinary course of business; and the realizable value
of assets of our Company will not be less than the sum of our total liabilities, other than deferred taxes as shown on our books of account,
and our capital. Pursuant to the Chinese enterprise income tax law, dividends payable by a foreign investment entity to its foreign investors
are subject to a withholding tax of 10%. Similarly, dividends payable by a foreign investment entity to its Hong Kong investor who owns
25% or more of the equity of the foreign investment entity is subject to a withholding tax of 5