Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 142

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 5
Chunk 142
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 in a privately held entity, requires judgment to determine appropriate estimates and assumptions. Changes in these estimates
and assumptions could affect the calculation of the fair value of the investment and determination of whether any identified impairment
is other-than-temporary.

Revenue recognition

The Company adopted ASC Topic
606. Revenues for the years ended December 31, 2024, 2023 and 2022 were presented under ASC 606. There is no adjustment to the opening
balance of retained earnings at January 1, 2019 since there was no change to the timing and pattern of revenue recognition upon adoption
of ASC 606. Under ASC 606, revenue is recognized when control of promised goods or services is transferred to our customers in an amount
of consideration to which an entity expects to be entitled to in exchange for those goods or services and is recorded net of value-added
tax (“ VAT”). To achieve that core principle, the Group applies the following steps:

Step 1: Identify the contract
(s) with a customer

Step 2: Identify the performance
obligations in the contract

Step 3: Determine the transaction
price

Step 4: Allocate the transaction
price to the performance obligations in the contract

Step 5: Recognize revenue
when (or as) the entity satisfies a performance obligation

The Company derives its revenues
from five sources: (1) revenue from application development services, (2) revenue from consulting and technical support services, (3)
revenue from subscription services, (4) trading revenue. and (5) others revenue. All of our contracts with customer do not contain cancelable
and refund-type provisions.

(1) Revenue from application development service

Our application development
service contracts are primarily on a fixed-price basis, which require the Company to perform services including project planning, project
design, application development and system integration based on customers’ specific needs. These services also require significant
production and customization. Upon delivery of the services, customer acceptance is generally required. In the same contract, the Company
is generally required to provide post-contract customer support (“ PCS’) for a period from three months to three years (“ PCS
period”) after the customized application development services are delivered. The type of services for PCS clause is generally not
specified in the contracts or as stand-ready services on when-and-if-available basis. The unspecified PCS is stand-ready service on when-and-if-available
basis. It grants the customers on line and telephone access to technical support personnel during the