Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 144

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 5
Chunk 144
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, labor and subcontract costs, and those indirect costs related to application development performance, such as indirect
labor, supplies, and tools. Cost-based input method requires the Company to make estimates of revenues and costs to complete the construction.
In making such estimates, significant judgment is required to evaluate assumptions related to the costs to complete the application development,
including materials, labor, and other system costs. Our estimates are based upon the professional knowledge and experience of our engineers
and project managers to assess the contract’s schedule, performance, technical matters. We have adequate cost history and estimating
experience, and with respect to which management believes it can reasonably estimate total development costs. If the estimated costs are
greater than the related revenues, the Company recognizes the entire estimated loss in the period the loss becomes known and can be reasonably
estimated. Changes in estimates for application development services include but not limited to cost forecast changes and change orders.
The cumulative effect of changes in estimates is recorded in the period in which the revisions to estimates are identified and the amounts
can be reasonably estimated. To date, the Company has not incurred a material loss on any contracts. However, as a policy, provisions
for estimated losses on such engagements will be made during the period in which a loss becomes probable and can be reasonably estimated.
If contract modifications result in additional goods or services that are distinct from those transferred before the modification, they
are accounted for prospectively as if the Company entered into a new contract. If the goods or services in the modification are not distinct
from those in the original contract, sales and gross profit are adjusted using the cumulative catch-up method for revisions in estimated
total contract costs and contract values.

In certain application development
service arrangements, the Company sells and delivers IT equipment on standalone basis prior to the delivery of the services. In these
cases, the Company controls the IT equipment before they are transferred to the customer. We have the right to direct the suppliers and
control the goods or assets transferred to its customers. Thus, the Company considers it should recognize revenue as a principal in the
gross amount of consideration to which it is entitled in exchange for the IT equipment delivered. We assesse the sale of equipment is
separately identifiable from other promises in the contract and it is distinct performance obligation within the context of the contract.
Accordingly, the revenue from the related IT equipment based on its relative standalone selling price is recognized upon customer acceptance
after delivery.

(2) Revenue from consulting and technical support
services

Revenue from consulting and