Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 68

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 68
---
 our ability to use the proceeds we receive
from the offerings and to capitalize or otherwise fund our PRC operations may be negatively affected, which could adversely and materially
affect our liquidity and our ability to fund and expand our business.

Governmental control of currency conversion
may limit our ability to use our revenues effectively and the ability of our PRC subsidiary to obtain financing.

The PRC government imposes
control on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. We receive
a majority of our revenues in Renminbi, which currently is not a freely convertible currency. Restrictions on currency conversion imposed
by the PRC government may limit our ability to use revenues generated in Renminbi to fund our expenditures denominated in foreign currencies
or our business activities outside China. Under China’s existing foreign exchange regulations, Renminbi may be freely converted
into foreign currency for payments relating to current account transactions, which include among other things dividend payments and payments
for the import of goods and services, by complying with certain procedural requirements. Our PRC subsidiary is able to pay dividends in
foreign currencies to us without prior approval from SAFE, by complying with certain procedural requirements. Our PRC subsidiary may also
retain foreign currency in their respective current account bank accounts for use in payment of international current account transactions.
However, we cannot assure you that the PRC government will not take measures in the future to restrict access to foreign currencies for
current account transactions.

Conversion of Renminbi into
foreign currencies, and of foreign currencies into Renminbi, for payments relating to capital account transactions, which principally
includes investments and loans, generally requires the approval of SAFE and other relevant PRC governmental authorities. Restrictions
on the convertibility of the Renminbi for capital account transactions could affect the ability of our PRC subsidiary to make investments
overseas or to obtain foreign currency through debt or equity financing, including by means of loans or capital contributions from us.

We may be classified as a “resident
enterprise” for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our
non-PRC shareholders.

The Enterprise Income Tax
Law provides that enterprises established outside of China whose “de facto management bodies” are located in China are considered
PRC tax resident enterprises and will generally be subject to the uniform 25% PRC enterprise income tax rate on their global income. In
addition, a tax circular issued by the