Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 146

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 5
Chunk 146
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 indicated in the agreement. Since the Company provides no
financing to authorized distributors and offers no guarantees on their behalf, the services provided by the Company are considered to
represent a single performance obligation. The agreement price is fully allocated to the single performance obligation. The total authorization
fees are recognized ratably on a straight-line basis over the term of the cooperation agreements. Other revenues accounted for 0.3%
of our revenue for the year ended December 31, 2024.

Revenue includes reimbursements
of travel and out-of-pocket expense, with equivalent amounts of expense recorded in cost of revenue. We report revenues net of value added
tax (“ VAT”). Our subsidiaries in PRC are subject to a 3% to 13% value added tax (“ VAT”) and related surcharges
on the revenues earned from providing services and products.

Practical Expedient and Exemptions

We do not disclose the value
of unsatisfied performance obligations within one year by applying the right to invoice practical expedient provided by ASC 606-10-55-18.

Contract balance

The accounts receivable includes
both unbilled accounts receivable and billed accounts receivable. We record unbilled accounts receivable for revenue that has been recognized
in advance of billing the customer, which is common for application development service contracts. The unbilled accounts receivable represents
our right to consideration in exchange for the service that the Company has performed to the customer before payment is due and the unbilled
account receivable will be reclassified into billed accounts receivable when the Company has the right to invoice. Contract liabilities
are presented as deferred revenue on the consolidated balance sheet. Contract liabilities relate to payments received in advance of completion
of performance obligations under a contract. Contract liabilities are recognized as revenue upon the completion of performance obligations.
As of December 31, 2024 and 2023 the balance of deferred revenue amounted to approximately $1.9 million and $2.2 million, respectively.

Income taxes

We account for current income
taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized when temporary differences exist
between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period including