Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 66

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 66
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 restrict our ability to implement our acquisition strategy and
could adversely affect our business and prospects.

We may rely on dividends and other distributions
on equity paid by our PRC subsidiaries to fund any cash and financing requirements that we may have, and any limitation on the ability
of our PRC subsidiaries to make payments to us could have a material and adverse effect on our ability to conduct our business.

We are a Cayman Islands holding
company conducting our operations in China through our PRC subsidiaries, and therefore we rely on dividends and other distributions on
equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other
cash distributions to our shareholders and repay any debt that we may incur. The ability of our PRC subsidiaries to distribute dividends
is based upon their distributable earnings. Current PRC regulations permit our PRC subsidiaries to pay dividends to their respective shareholders
only out of their accumulated profits, if any, which is determined in accordance with the PRC accounting standards and regulations. In
addition, according to the PRC Company Law, each of our PRC subsidiaries, as a wholly foreign-owned enterprise in China, is required to
set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until the aggregate amount of such reserve
reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits
based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable
as cash dividends. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may also restrict
their ability to pay dividends or make other payments to us. Any limitation on the ability of our PRC subsidiaries to distribute dividends
or other payments to their respective shareholders could materially and adversely limit our ability to grow, make investments or acquisitions
that could be beneficial to our business, pay dividends or otherwise fund and conduct our business.

PRC regulation of loans and direct investment
by offshore holding companies to PRC entities may delay or prevent us from using the proceeds of the offerings to make loans or additional
capital contributions to our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand
our business.

In utilizing the proceeds
from the offerings or any future offerings, as an offshore holding company of our PRC subsidiary, we may make