Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 130

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 5
Chunk 130
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 at each
reporting period, and the change in fair value is recognized as either income or expense. The Company recorded an unrealized loss of approximately
$71.0 million for the year ended December 31, 2023.

Income Tax Benefit

Income tax benefit was approximately
$0.1 million for the year ended December 31, 2023, compared to approximately $1.0 million for the year ended December 31, 2022. Under
the Income Tax Laws of the PRC, companies are generally subject to income tax at a rate of 25%. However, our major operating subsidiary
- Powerbridge Zhuhai was recognized as the “high-tech enterprise” status, which reduced its statutory income tax rate to 15%.
The rest of our subsidiaries in PRC are subject to an income tax rate of 25%. As of December 31, 2022, the Company had accrued (before
adjustment) total income tax liabilities of $550,602. According to PRC taxation regulation and administrative practice and procedures,
the statute of limitation on tax authority’s audit or examination of previously filed tax returns expires three years from the date
they were filed. The Company also obtained a written statement from the local tax authority that no additional taxes are due as of December
31, 2022. Based on these facts, the Company reversed the accrued tax liabilities in the total amount of $550,602 (or RMB3,798,484) relating
to the tax liabilities accrued for the period from fiscal 2016 to fiscal 2018, resulting in the decrease of accrued income tax liabilities
from $550,602 to $nil as of December 31, 2022.

Net Loss

As a result of the foregoing,
our net loss increased by $100.7 million, or 467.2%, from $21.5 million for the year ended December 31, 2022 to $122.2 million for the
year ended December 31, 2023. The increased net loss was the result of increased operation expenses, fair value loss on financial instruments
and financial assets and fair value loss on financial instruments and financial assets as discussed above.

Non-GAAP Financial Measures

The Company uses non-GAAP measures,
such as adjusted net loss in evaluating its operating results and for financial and operational decision-making purposes. The Company
believes that the non-GAAP financial measures help identify underlying trends in its business by excluding the impact of share-based
comp