Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 12

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 12
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 in a reduction in our net revenues or a claim for substantial damages against
us. In addition, a failure or inability to meet a contractual requirement could seriously damage our reputation and affect our ability
to attract new business.

The services we provide are
often critical to our customers’ businesses. We generally provide customer support after our customized application is delivered.
Certain of our customer contracts require us to comply with security obligations including but not limited to, maintaining system security,
ensuring our system is virus-free, maintaining business continuity procedures, and verifying the integrity of employees that work with
our customers by conducting background checks. Any failure in a customer’s system or breach of security relating to the services
we provide to the customer could damage our reputation or result in a claim for substantial damages against us. Any significant failure
of our systems could impede our ability to provide services to our customers, have a negative impact on our reputation, cause us to lose
customers, reduce our revenues and harm our business.

Unauthorized disclosure, destruction or
modification of data, through cybersecurity breaches, computer viruses or otherwise or disruption of our services could expose us to liability,
protracted and costly litigation and damage our reputation.

Our business involves the
collection, storage, processing and transmission of customers’ business data. An increasing number of organizations, including large
merchants and businesses, other large technology companies, financial institutions and governmental institutions, have disclosed breaches
of their information technology systems, some of which have involved sophisticated and highly targeted attacks, including on portions
of their websites or infrastructure. We could also be subject to breaches of security by hackers. Threats may derive from human error,
fraud or malice on the part of employees or third parties, or may result from accidental technological failure. Security concerns are
increased when we transmit information. Electronic transmissions can be subject to attacks, interceptions or losses. Also, computer viruses
and malware can be distributed and spread rapidly over the internet and could infiltrate our systems or those of our associated participants,
which can impact the confidentiality, integrity and availability of information, and the integrity and availability of our products, services
and systems, among other effects. Denial of services or other attacks could be launched against us for a variety of purposes, including
interfering with our services or creating a diversion for other malicious activities. These types of actions and attacks could disrupt
our delivery of products and services or make them unavailable, which could damage our reputation, force us to incur significant expenses
in remediating the resulting impacts