Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 232

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 19
Chunk 232
---
 unspecified PCS is stand-ready service on when-and-if-available
basis. It grants the customers on line and telephone access to technical support personnel during the term of the service. Specified PCS
includes specified service term in the contract such as training.

The Group’s application
development service revenues are generated primarily from contracts with PRC government or related agencies and state-owned enterprises.
The contracts contain negotiated billing terms which generally include multiple payment phases throughout the contract term and a significant
portion (30% -50%) of contract amount usually is billed upon the completion of the related projects. Pursuant to the contract terms,
the Group has enforceable right on payments for the work performed.

The Group sometimes provides
a warranty for its application development service contracts. The warranty period is typically 12-36 months upon the completion of the
application development service. In accordance with ASC 606-10-25-19, the Group believes the warranty provision in the contracts generally
represents service-type warranty, which is a distinct performance obligation and the Group also provides the similar service on standalone
basis and customers can benefit from the related service-type warranty service. For the service warranty component, the customer simultaneously
receives and consumes the benefits provided by the Group performance over the warranty term, therefore, the service warranty is satisfied
over time. The revenue allocated to the service warranty is recognized over the warranty period.

F-15

X3 HOLDINGS CO., LTD.

Note 2 - Summary of significant accounting
policies(continued)

The Group assesses that application
development service, PCS or specific service and service-type warranty, if applicable, are distinct performance obligations in the application
development service contracts. The Group provides these services on standalone basis and customers are able to benefit from each of the
service on its own. In addition, the timing of delivery of these performance obligations can be separately identifiable in the contracts.
The transaction price is allocated to these identified performance obligations based on the relative standalone selling prices. The transaction
price allocated to PCS or unspecific service and service-type warranty, if applicable, on a straight-line method over the contractual
period. Revenue allocated to specified PCS is recognized as the related services are rendered. The transaction price allocated to application
development service is recognized over time as the Group’s performance creates or enhances the project controlled by the customer
and the control is transferred continuously to our customers. The Group uses an input method based on cost incurred as the Group believes
that this method most accurately reflects the Group’s progress toward satisfaction of the