Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 29

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 29
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 material adverse effect on our business and results of operations.

Further, our limited experiences
in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake will not
be successful. If we invest substantial time and resources to expand our international operations and are unable to do so successfully,
or in a timely manner, our business and results of operations will suffer.

Our international operations may subject
us to potential adverse tax consequences.

We plan to expand our international
operations and team to better support our growth into international markets. Our corporate structure and associated transfer pricing policies
contemplate future growth into the international markets, and consider the functions, risks and assets of the various entities involved
in the intercompany transactions. The amount of taxes we pay in different countries and jurisdictions may depend on the application
of the tax laws of the various countries and jurisdictions, including the United States, to our international business activities, changes
in tax rates, new or revised tax laws or interpretations of existing tax laws and policies and our ability to operate our business in
a manner consistent with our corporate structure and intercompany arrangements. The taxing authorities of the countries and jurisdictions
in which we operate may challenge our methodologies for pricing intercompany transactions pursuant to our intercompany arrangements or
disagree with our determinations as to the income and expenses attributable to specific jurisdictions. If such a challenge or disagreement
were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result
in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations. Our financial
statements could fail to reflect adequate reserves to cover such a contingency.

As we have participated in retail and distribution
of cryptocurrency mining machines, we’ve entered into certain customized servers purchase agreement. The demand of our cryptocurrency
mining machines is affected by the market of cryptocurrency. Substantial increases in the supply of mining machines connected to the certain
cryptocurrency network would lead to an increase in network capacity, which in turn would increase mining difficulty. This development
would negatively affect the economic returns of cryptocurrency mining activities, which would decrease the demand for and/or pricing of
our products.

The difficulty of cryptocurrency
mining, or the amount of computational resources required for a set amount of reward for recording a new block, directly affects the expected
economic returns for cryptocurrency miners, which in turn affects the demand for our cryptocurrency mining machines. Cryptocurrency mining
difficulty is a measure of how much computing power is