Company: XTKG
Filing Date: 2025-04-25
Form Type: 20-F
Source: 0001213900-25-035626
Chunk: 21

Company: X3 Holdings Co., Ltd.
Filing Date: 2025-04-25
Form: 20-F
Item: Item 3
Chunk 21
---
 time to time face claims from third parties claiming ownership of,
or demanding release of, the open-source software or derivative works that we developed using such software, which could include our proprietary
source code, or otherwise seeking to enforce the terms of the applicable open-source license. These claims could result in litigations
and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated services
unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research
and development resources, and we may not be able to complete it successfully. In addition to the risks related to license requirements,
use of certain open-source software can lead to greater risks than use of third-party commercial software, as open source licensors generally
do not provide warranties or controls on the origin of software. Any of these risks could be difficult to eliminate or manage, and if
not addressed, could have a negative effect on our business, results of operations and financial condition.

We may be liable to our customers for damages
caused by unauthorized disclosure of sensitive and confidential information, whether through our employees or otherwise.

We are typically required
to manage, utilize and store sensitive or confidential customer data in connection with the services that we provide. Under the terms
of our customer contracts, we are required to keep such information strictly confidential. We use system and network security technologies
and other methods to protect sensitive and confidential customer data. We also require our employees and subcontractors to enter into
confidentiality agreements to limit access to and distribution of our customers’ sensitive and confidential information as well
as our own trade secrets. We can give no assurance that the steps taken by us in this regard will be adequate to protect our customers’
confidential information. If our customers’ proprietary rights are misappropriated by our employees or our subcontractors or their
employees, in violation of any applicable confidentiality agreements or otherwise, our customers may consider us liable for those acts
and seek damages and compensation from us. Any such acts could cause us to lose existing and future business and damage our reputation
in the market. In addition, we currently do not have any insurance coverage for mismanagement or misappropriation of such information
by our subcontractors or employees. Any litigations with respect to unauthorized disclosure of sensitive and confidential information
might result in substantial costs and diversion of resources and management attention.

We may not be able to prevent others from
unauthorized use of our intellectual property, which could