Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 42

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 42
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 and procedures, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.

These inherent limitations
include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized
override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud
may occur and not be detected, which would likely cause investors to lose confidence in our reported financial information. This
could in turn limit our access to capital markets, harm our results of operations, and lead to a decline in the trading price of our Ordinary
Shares. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate
assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal
sanctions. We may also be required to restate our financial statements from prior periods.

If we fail to establish and maintain proper
internal financial reporting controls, our ability to produce accurate financial statements or comply with applicable regulations could
be impaired.

Pursuant to Section 404 of
the Sarbanes-Oxley Act, we are required to file a report by our management on our internal control over financial reporting, including
an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However,
while we remain an emerging growth company, we will not be required to include an attestation report on internal control over financial
reporting issued by our independent registered public accounting firm and due to a transition period established by rules of the SEC for
newly public companies, we are not required to include a report of management’s assessment regarding internal control over financial
reporting in this Annual Report. The presence of material weaknesses in internal control over financial reporting could result in financial
statement errors which, in turn, could lead to errors in our financial reports and/or delays in our financial reporting, which could require
us to restate our operating results. The material weakness identified consisted of (i) a lack of accounting staff and resources with appropriate
knowledge of U. S. GAAP and SEC reporting and compliance requirements; (ii) a lack of sufficient documented financial closing policies
and procedures, specifically those related to period-end expenses cut-off and accruals; (