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1、2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm1/282F-1 1 ff12022_xiaoicorp.htm REGISTRATION STATEMENTAs filed with the Securities and Exchange Commission on Decembe
2、r 19,2022Registration No.333-UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549_FORM F-1REGISTRATION STATEMENTUNDERTHE SECURITIES ACT OF 1933_XIAO-I CORPORATION(Exact name of Registrant as specified in its charter)_Not Applicable(Translation of Registrants name into English)Cayman I
3、slands 7372 Not Applicable(State or other jurisdiction of incorporation or organization)(Primary Standard IndustrialClassification Code Number)(I.R.S.Employer Identification Number)7th floor,Building 398,No.1555 WestJinshajiang RdShanghai,China 201803Tel:+86 (Address,including zip code,a
4、nd telephone number,including area code,of Registrants principal executive offices)_GKL Corporate/Search,Inc.One Capitol Mall,Suite 660Sacramento,CA 95814Phone:(800)446-5455(Name,address,including zip code,and telephone number,including area code,of agent for service)_Copies to:Charlotte Westfall,Es
5、q.Fred A.Summer,Esq.Squire Patton Boggs(US)LLP 475 Sansome Street,16thFloor San Francisco,California94111 Phone:(415)954-0200 Francis Li,Esq.Squire Patton Boggs 29th Floor,Edinburgh Tower The Landmark,15 Queens Road Central Central,Hong KongPhone:+(852)2103 0368 Arila Zhou,Esq.Anna Jinhua Wang,Esq.R
6、obinson&Cole LLP 666 Third Avenue,20th FloorNew York,New York 10017 Phone:(212)451-2900_Approximate date of commencement of proposed sale to the public:as soon as practicable after the effective date of this registration statement.If any of the securities being registered on this Form are to be offe
7、red on a delayed or continuousbasis pursuant to Rule 415 under the Securities Act of 1933,check the following box.If this Form is filed to register additional securities for an offering pursuant toRule 462(b)under the Securities Act,check the following box and list the Securities Actregistration sta
8、tement number of the earlier effective registration statement for the same offering.If this Form is a post-effective amendment filed pursuant to Rule 462(c)under the Securities Act,check the following box and list the Securities Act registration statement number of the earliereffective registration
9、statement for the same offering.If this Form is a post-effective amendment filed pursuant to Rule 462(d)under the Securities Act,check the following box and list the Securities Act registration statement number of the earliereffective registration statement for the same offering.Indicate by check ma
10、rk whether the registrant is an emerging growth company as defined in Rule 405of the Securities Act of 1933.Emerging growth company If an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if the registrant has elected not to use the ext
11、ended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B)of the Securities Act.The term“new or revised financial accounting standard”refers to any update issued by theFinancial Accounting Standards Board to its Accounting Stan
12、dards Codification after April 5,2012.The Registrant hereby amends this Registration Statement on such date or dates as maybe necessary to delay its effective date until the Registrant shall file a furtheramendment which specifically states that this Registration Statement shall thereafterbecome eff
13、ective in accordance with Section 8(a)of the Securities Act of 1933,asamended,or until the Registration Statement shall become effective on such date asthe Securities and Exchange Commission,acting pursuant to such Section 8(a),maydetermine.2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001
14、222/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm2/282Table of ContentsThe information in this preliminary prospectus is not complete and may be changed.Xiao-I may not sell these securities until the registration statement fil
15、ed with theSecurities and Exchange Commission is effective.This preliminary prospectus is notan offer to sell these securities and Xiao-I is not soliciting offers to buy thesesecurities in any jurisdiction where the offer or sale is not permitted.SUBJECT TO COMPLETION PRELIMINARY PROSPECTUS,DATED DE
16、CEMBER 19,20226,000,000 American Depositary SharesXIAO-I CORPORATIONRepresenting 2,000,000 Ordinary SharesThis is an initial public offering,or the“offering,”of 6,000,000 American depositary shares,or ADSs(each,an“ADS”,collectively,“ADSs”),each represents one-third of an ordinary share,par value US$
17、0.00005 per share,of Xiao-I Corporation,a holding company incorporated in the CaymanIslands(“Xiao-I”or the“Company”)whose principal place of business is in Shanghai,China,ona firm commitment basis.Prior to this offering,there has been no public market for Xiao-Is ADSs or Ordinary Shares.Xiao-I expec
18、ts that the initial public offering price will be in the range of$to$per ADS.Itintends to list the ADSs on the Nasdaq Global Market under the symbol“XI.”However,there is noassurance that the offering will be closed and its ADSs will be trading on the Nasdaq Global market.This offering is contingent
19、upon the final approval from Nasdaq for the listing of Xiao-Is ADSs onNasdaq Global Market.Xiao-I will not proceed to consummate this offering if Nasdaq denies itslisting.Neither the United States Securities and Exchange Commission nor any other regulatorybody has approved or disapproved of these se
20、curities or passed upon the accuracy oradequacy of this prospectus.Any representation to the contrary is a criminaloffense._Xiao-I is an“emerging growth company”under applicable U.S.federal securities lawsand is eligible for reduced public company reporting requirements.See“RiskFactors”beginning on
21、page 39 for factors you should consider before investing inXiao-Is ADSs._Xiao-I is a holding company incorporated in the Cayman Islands.As a holding company with nomaterial operations of its own,Xiao-I conducts a substantial majority of its operations throughShanghai Xiao-i Robot Technology Co.,Ltd.
22、(“Shanghai Xiao-i”),a variable interest entity(the“VIE”),in the Peoples Republic of China,or“PRC”or“China.”Investors in Xiao-Is ADSsshould be aware that they may never hold equity interests in the VIE,but rather purchasing equityinterests solely in Xiao-I,the Cayman Islands holding company,which doe
23、s not own any of thebusiness in China conducted by the VIE and the VIEs subsidiaries(“the PRC operatingentities”).The ADSs offered in this offering represent shares of the Cayman Islands holdingcompany instead of shares of the VIE in China.Xiao-Is indirect wholly owned subsidiary,Zhizhen Artificial
24、Intelligent Technology(Shanghai)Co.Ltd.(“Zhizhen Technology”or“WFOE”)entered into a series of contractual arrangements thatestablish the VIE structure(the“VIE Agreements”).The VIE structure is used to provide investorswith exposure to foreign investment in China-based companies where Chinese law pro
25、hibits directforeign investment in the operating companies.Xiao-I has evaluated the guidance in FASB ASC 810 anddetermined that Xiao-I is the primary beneficiary of the VIE,for accounting purposes,based uponsuch contractual arrangements.ASC 810 requires a VIE to be consolidated if the company is sub
26、jectto a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIEsresidual returns.A VIE is an entity in which a company or its WFOE,through contractualarrangements,is fully and exclusively responsible for the management of the entity,absorbs allrisk of losses of the
27、entity(excluding non-controlling interests),receives the benefits of theentity that could be significant to the entity(excluding non-controlling interests),and has theexclusive right to exercise all voting rights of the entity,and therefore the company or its WFOEis the primary beneficiary of the en
28、tity for accounting purposes.Under ASC 810,a reporting entityhas a controlling financial interest in a VIE,and must consolidate that VIE,if the reportingentity has both of the following characteristics:(a)the power to direct the activities of the VIEthat most significantly affect the VIEs economic p
29、erformance;and(b)the obligation to absorblosses,or the right to receive benefits,that could potentially be significant to the VIE.Throughthe VIE Agreements,the Company is deemed the primary beneficiary of the VIE for accountingpurposes.The VIE has no assets that are collateral for or restricted sole
30、ly to settle itsobligations.The creditors of the VIE do not have recourse to the Companys general credit.Accordingly,under U.S.GAAP,the results of the PRC operating entities are consolidated in Xiao-Is financial statements.However,investors will not and may never hold equity interests in thePRC oper
31、ating entities.The VIE Agreements may not be effective in providing control over ShanghaiXiao-i.Uncertainties exist as to Xiao-Is ability to enforce the VIE Agreements,and the VIEAgreements have not been tested in a court of law.The Chinese regulatory authorities could disallowthis VIE structure,whi
32、ch would likely result in a material change in the PRC operating entitiesoperations and the value of Xiao-Is ADSs,including that it could cause the value of suchsecurities to significantly decline or become worthless.See“Prospectus Summary Our History andCorporate Structure”beginning on page 6 of th
33、is prospectus for a summary of the contractualarrangements and“Risk Factors Risks Relating to Our Corporate Structure”beginning on page 52of this prospectus for certain risks relating to the contractual arrangements.As of the date of this prospectus,no cash transfer or transfer of other assets by wa
34、y of dividendsor distributions have occurred among the Company,its subsidiaries,or the PRC operating entities.Xiao-I intends to keep any future earnings to finance the expansion of its business,and it does notanticipate that any cash dividends will be paid,or any funds will be transferred from one e
35、ntity toanother,in the foreseeable future.As such,Xiao-I has not installed any cash management policiesthat dictate how funds are transferred among the Company,its subsidiaries,or investors,or the PRCoperating entities.For further details,please refer to“Prospectus Summary Consolidation”beginning on
36、 page 18.Xiao-I is a holding company with no operations of its own.Xiao-I conducts its operations in Chinaprimarily through the PRC operating entities in China.As a result,although other means areavailable for it to obtain financing at the holding company level,Xiao-Is ability to pay2023/2/9https:/w
37、ww.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm3/282dividends and other distributions to its shareholders and to service any debt it may incur maydepend upon dividends and other dis
38、tributions paid by Xiao-Is PRC subsidiaries,which relies ondividends and other distributions paid by the PRC operating entities pursuant to the VIE Agreements.If any of these entities incurs debt on its own in the future,the instruments governing such debtmay restrict its ability to pay dividends an
39、d other distributions to Xiao-I.2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm4/282Table of ContentsIn addition,dividends and distributions from Xiao-Is PRC subsidi
40、aries and the VIE are subject toregulations and restrictions on dividends and payment to parties outside of China.Applicable PRClaw permits payment of dividends to Xiao-I by WFOE only out of net income,if any,determined inaccordance with PRC accounting standards and regulations.A PRC company is not
41、permitted todistribute any profits until any losses from prior fiscal years have been offset by general reservefund and profits(if general reserve fund is not enough).Profits retained from prior fiscal yearsmay be distributed together with distributable profits from the current fiscal year.In additi
42、on,registered share capital and capital reserve accounts are also restricted from withdrawal in thePRC,up to the amount of net assets held in each operating subsidiary.In contrast,there ispresently no foreign exchange control or restrictions on capital flows into and out of Hong Kong.Hence,Xiao-Is H
43、ong Kong subsidiary is able to transfer cash without any limitation to the CaymanIslands under normal circumstances.As a result of these PRC laws and regulations,the PRC operatingentities and WFOE are restricted in their ability to transfer a portion of their net assets to theCompany.Moreover,the tr
44、ansfer of funds among the PRC operating entities are subject to the Provisions ofthe Supreme Peoples Court on Several Issues Concerning the Application of Law in the Trial ofPrivate Lending Cases(2020 Second Amendment Revision,the“Provisions on Private Lending Cases”),which was implemented on Januar
45、y 1,2021 to regulate the financing activities between naturalpersons,legal persons and unincorporated organizations.As advised by Xiao-Is PRC counsel,Jingtian&Gongcheng,the Provisions on Private Lending Cases does not prohibit using cash generatedfrom one PRC operating entity to fund another affilia
46、ted PRC operating entitys operations.Xiao-Ior the PRC operating entities have not been notified of any other restriction which could limit thePRC operating entities ability to transfer cash among each other.In the future,cash proceedsfrom overseas financing activities,including this offering,may be
47、transferred by Xiao-I to itswholly-owned subsidiary AI Plus Holding Limited(“AI Plus”),and then transferred to AI Plusswholly-owned subsidiary Xiao-i Technology Limited(Xiao-i Technology”),and then transferred toWFOE via capital contribution or shareholder loans,as the case may be.Cash proceeds may
48、flow toShanghai Xiao-i from WFOE pursuant to certain contractual arrangements between WFOE and ShanghaiXiao-i as permitted by the applicable PRC regulations.Under Cayman Islands law,a Cayman Islands company may pay a dividend on its shares out of eitherprofit or share premium amount,provided that in
49、 no circumstances may a dividend be paid out ofshare premium if this would result in the company being unable to pay its debts due in the ordinarycourse of business.If Xiao-I determines to pay dividends on any of its Ordinary Shares in thefuture,as a holding company,Xiao-I will rely on payments made
50、 from Shanghai Xiao-i to WFOE,pursuant to the VIE Agreements,and the distribution of such payments to Xiao-i Technology fromWFOE,and then to AI Plus from Xiao-i Technology,and then to Xiao-I from AI Plus as dividends,unless Xiao-I receives proceeds from future offerings.Xiao-I does not expect to pay
51、 dividends inthe foreseeable future.If,however,it declares dividends on its Ordinary Shares,the depositarywill pay you the cash dividends and other distributions it receives on Xiao-Is Ordinary Sharesafter deducting its fees and expenses in accordance with the terms set forth in the depositagreement
52、.See“Prospectus Summary Transfers of Cash to and from the VIE”on page 26 and“RiskFactors Risks Relating to Doing Business in China There are significant uncertainties underthe EIT Law relating to the withholding tax liabilities of our PRC subsidiary,and dividends payableby our PRC subsidiary to our
53、offshore subsidiaries may not qualify to enjoy certain treatybenefits”on page 66 of this prospectus.Additionally,Xiao-I is subject to certain legal and operational risks associated with theoperations of the PRC operating entities in China.PRC laws and regulations governing the PRCoperating entities
54、current business operations are sometimes vague and uncertain,and therefore,these risks may result in a material change in the PRC operating entities operations,significantdepreciation of the value of Xiao-Is ADSs,or a complete hindrance of its ability to offer orcontinue to offer its securities to
55、investors.Recently,the PRC government initiated a series ofregulatory actions and statements to regulate business operations in China with little advancenotice,including cracking down on illegal activities in the securities market,enhancingsupervision over China-based companies listed overseas using
56、 a variable interest entity structure,adopting new measures to extend the scope of cybersecurity reviews and expanding the efforts inanti-monopoly enforcement.It is highly uncertain what the potential impact such modified or newlaws and regulations will have on the daily business operations of Xiao-
57、Is subsidiaries and thePRC operating entities,Xiao-Is ability to accept foreign investments,and Xiao-Is listing on aU.S.stock exchange.The Standing Committee of the National Peoples Congress(the“SCNPC”)orPRC regulatory authorities may in the future promulgate laws,regulations,or implement rules that
58、require the Company,its subsidiaries,or the PRC operating entities to obtain regulatory approvalfrom Chinese authorities before listing in the U.S.In other words,although the Company iscurrently not required to obtain permission from any of the PRC federal or local government toobtain such permissio
59、n and has not received any denial to list on the U.S.exchange,its operationscould be adversely affected,directly or indirectly;its ability to offer,or continue to offer,securities to investors would be potentially hindered and the value of its securities mightsignificantly decline or be worthless,by
60、 existing or future laws and regulations relating to itsbusiness or industry or by intervene or interruption by PRC governmental authorities,if theCompany,or its subsidiaries or the PRC operating entities(i)do not receive or maintain suchpermissions or approvals,(ii)inadvertently conclude that such
61、permissions or approvals are notrequired,(iii)applicable laws,regulations,or interpretations change and the Company,or itssubsidiaries or the PRC operating entities are required to obtain such permissions or approvals inthe future,or(iv)any intervention or interruption by PRC governmental with littl
62、e advance notice.The PRC operating entities generated approximately 2.3%and 11.7%of their revenues from Hong Kongin fiscal year 2021 and 2020,respectively.Hong Kong is a special administrative region of the PRCand the basic policies of the PRC regarding Hong Kong are reflected in the Basic Law,namel
63、y,HongKongs constitutional document,which provides Hong Kong with a high degree of autonomy andexecutive,legislative and independent judicial powers,including that of final adjudication underthe principle of“one country,two systems”.Xiao-I cannot assure you that there will not be anychanges in the e
64、conomic,political and legal environment in Hong Kong.Xiao-I may be subject touncertainty about any future actions of the PRC government and is possible that most of the legaland operational risks associated with operating in the PRC may also apply to the PRC operatingentities operations in Hong Kong
65、 in the future.The PRC government may intervene or influence thePRC operating entities current and future operations in Hong Kong at any time and exert moreinfluence over the manner in which the PRC operating entities must conduct their businessactivities.Such government actions,if and when they occ
66、ur,could result in a material change intheir operations in Hong Kong.In Hong Kong,the collection of personal data,their use and disclosure,retention and granting ofaccess to and correction of personal data is governed by the Personal Data(Privacy)Ordinance(Chapter 486 of the Laws of Hong Kong).See“R
67、egulations in Hong Kong Personal data law in HongKong”for further details.The competition law in Hong Kong is primarily governed by theCompetition Ordinance(Chapter 619 of the Laws of Hong Kong),which prohibits three principal typesof anti-competitive conducts,namely(a)anti-competitive agreements or
68、 practices;(b)abuse ofmarket power;and(c)merger control of arrangements that could substantially reduce the level ofcompetition in telecommunication industry.The Merger Rule in the Competition Ordinance prohibits2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoic
69、orp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm5/282undertakings from directly or indirectly carrying out a merger that has,or is likely to have,theeffect of substantially reduce the level of competition in Hong Kong.This rule is only applicableto telec
70、ommunication carrier licensees.There is no general merger control regime in Hong Kong.See“Regulations in Hong Kong Competition law in Hong Kong”for further details.2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/19
71、35172/0001122/ff12022_xiaoicorp.htm6/282Table of ContentsAs of the date of this prospectus,the PRC operating entities business operations in Hong Kong,which are relatively insignificant as compared to their business as a whole,are only required tocomply with the Hong Kong laws and regulat
72、ions.The PRC government has recently initiated a seriesof regulatory actions and statements to regulate business operations in mainland China with littleadvance notice.Xiao-I does not expect such statements by the PRC government would have any specificimpact on the PRC operating entities business op
73、erations in Hong Kong.If there is any change inpolitical arrangements between mainland China and Hong Kong,it would affect the businessenvironment in Hong Kong generally.The PRC operating entities operations in China are governed by PRC laws and regulations.Xiao-IsPRC counsel,Jingtian&Gongcheng,has
74、advised Xiao-I that,as of the date of this prospectus,basedon their understanding of the current PRC laws,regulations and rules,Xiao-I,its subsidiaries,thePRC operating entities have received all requisite permissions and approvals from the PRC governmentauthorities for their business operations cur
75、rently conducted in China.Neither has Xiao-I nor its subsidiaries,nor the PRC operating entities received any denial ofpermissions for their business operations currently conducted in China.These permissions andapprovals include(without limitation)License for Value-added Telecommunications Services,
76、BusinessLicense,Record Registration Form for Foreign Trade Business Operators,Customs Declaration EntityRegistration Certificate.Xiao-Is PRC counsel,Jingtian&Gongcheng,has advised Xiao-I that,asof the date of this prospectus,based on their understanding of the current PRC laws,regulationsand rules,X
77、iao-I,its subsidiaries,the PRC operating entities are currently not required to obtainpermission from any of the PRC authorities to issue ADSs or Ordinary Shares to foreign investors.However,Xiao-I is subject to the risks of uncertainty of any future actions of the PRC governmentin this regard inclu
78、ding the risk that Xiao-I inadvertently concludes that the permissions orapprovals discussed here are not required,that applicable laws,regulations or interpretationschange such that Xiao-I is required to obtain approvals in the future,or that the PRC governmentcould disallow Xiao-Is holding company
79、 structure,which would likely result in a material changein its operations,including its ability to continue its existing holding company structure,carryon its current business,accept foreign investments,and offer or continue to offer securities toits investors.These adverse actions could cause the
80、value of Xiao-Is ADSs to significantlydecline or become worthless.Xiao-I may also be subject to penalties and sanctions imposed by thePRC regulatory agencies,including the CSRC,if it fails to comply with such rules and regulations,which would likely adversely affect the ability of Xiao-Is securities
81、 to be listed on a U.S.exchange,which would likely cause the value of Xiao-Is securities to significantly decline orbecome worthless.Permission from Cyberspace Administration of China.Shanghai Xiao-i has applied for a cybersecurityreview organized by the China Cybersecurity Review Technology and Cer
82、tification Center(the“Center”),which is authorized by the Cybersecurity Review Office of the Cyberspace Administrationof China(the“CAC”)to accept public consultation and cybersecurity review submissions,pursuantto the Cybersecurity Review Measures,which became effective on February 15,2022.On August
83、 25,2022,Shanghai Xiao-i received a written notice from the Cybersecurity Review Office,pursuant towhich cybersecurity review is not required for the offering.PRC Limitation on Overseas Listing and Share Issuances.The Regulations on Mergers and Acquisitionsof Domestic Companies by Foreign Investors,
84、or the M&A Rules,adopted by six PRC regulatory agenciesin 2006 and amended in 2009,requires an overseas special purpose vehicle formed for listingpurposes through acquisitions of PRC domestic companies and controlled by PRC companies orindividuals to obtain the approval of the CSRC prior to the list
85、ing and trading of such specialpurpose vehicles securities on an overseas stock exchange.On December 24,2021,the CSRC released the Administrative Provisions of the State Council Regardingthe Overseas Issuance and Listing of Securities by Domestic Enterprises(Draft for Comments)(the“Draft Administrat
86、ive Provisions”)and the Measures for the Overseas Issuance of Securities andListing Record-Filings by Domestic Enterprises(Draft for Comments)(the“Draft Filing Measures,”collectively with the Draft Administrative Provisions,the“Draft Rules Regarding OverseasListing”),both of which have a comment per
87、iod that expired on January 23,2022.As of the date ofthis prospectus,the Draft Rules Regarding Overseas Listing have not been formally adopted orreleased.The Draft Rules Regarding Overseas Listing lay out the filing regulation arrangement forboth direct and indirect overseas listing,and clarify the
88、determination criteria for indirectoverseas listing in overseas markets.Among other things,if a domestic enterprise intends toindirectly offer and list securities in an overseas market,the record-filing obligation is with amajor operating entity incorporated in the PRC and such filing obligation sha
89、ll be completed withinthree working days after the overseas listing application is submitted.The required filingmaterials for an initial public offering and listing shall include but not limited to:regulatoryopinions,record-filing,approval and other documents issued by competent regulatory authoriti
90、es ofrelevant industries(if applicable);and security assessment opinion issued by relevant regulatoryauthorities(if applicable).If the CSRC or other regulatory agencies later promulgate new rules or explanations requiring thatXiao-I obtain their approvals for this offering and any follow-on offering
91、s,Xiao-I may be unable toobtain such approvals and it may face sanctions by the CSRC or other PRC regulatory agencies forfailure to seek such approvals which could significantly limit or completely hinder its ability tooffer or continue to offer securities to its investors and the securities current
92、ly being offeredmay substantially decline in value and be worthless.Both Xiao-I and Xiao-Is PRC counsel,Jingtian&Gongcheng believe the CSRCs approval is notrequired for the offering and trading of Xiao-Is ADSs on Nasdaq in the context of this offering,given that:(i)WFOE was incorporated as a wholly
93、foreign-owned enterprise by means of directinvestment rather than by merger or acquisition of equity interest or assets of a PRC domesticcompany owned by PRC companies or individuals as defined under the M&A Rules that are Xiao-Isbeneficial owners;(ii)the CSRC currently has not issued any definitive
94、 rule or interpretationconcerning whether offerings like this offering are subject to the M&A Rules;and(iii)no provisionin the M&A Rules clearly classifies contractual arrangements as a type of transaction subject to theM&A Rules.As of the date of this prospectus,no relevant laws or regulations in t
95、he PRC explicitlyrequire the Company,its subsidiaries or the PRC operating entities to seek approval from the CSRCor any other PRC governmental authorities for this offering,nor has the Company,any of itssubsidiaries or the PRC operating entities received any inquiry,notice,warning or sanctionsregar
96、ding Xiao-Is planned offering from the CSRC or any other PRC governmental authorities.However,since these statements and regulatory actions by the PRC government are newly published andofficial guidance and related implementation rules have not been issued,there remain someuncertainties as to how th
97、e rules will be interpreted or implemented in the context of an overseasoffering and the potential impact such modified or new laws and regulations will have on the dailybusiness operation of the PRC operating entities.Xiao-I and its PRC counsel,Jingtian&Gongchengcannot assure you that relevant PRC
98、government agencies,including the CSRC,would reach the sameconclusion as they do.As of the date hereof,Xiao-I,its subsidiaries and the PRC operatingentities have not received any inquiries,notices,warnings,sanctions,denials,or regulatoryobjections from the CSRC,CAC,nor any other PRC regulatory autho
99、rity.The PRC regulatoryauthorities may in the future promulgate laws,regulations or implementing rules that requires theCompany,its subsidiaries or the PRC operating entities to obtain regulatory approval from Chinese2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_x
100、iaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm7/282authorities before listing in the U.S.If it is determined that CSRC approval is required for thisoffering,Xiao-I may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek
101、CSRC approval for this offering.2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm8/282Table of ContentsFor more detailed information,see“Risk Factors Risks Relating to
102、 Doing Business in China Draft rules for China-based companies seeking for securities offerings in foreign stock markets wasreleased by the CSRC.While such rules have not yet come into effect,the Chinese government mayexert more oversight and control over overseas public offerings conducted by China
103、-based issuers,which could significantly limit or completely hinder Xiao-Is ability to offer or continue to offerXiao-Is ADSs to investors and could cause the value of its ADSs to significantly decline or becomeworthless”on page 64 of this prospectus.Pursuant to the Holding Foreign Companies Account
104、able Act(the“HFCAA”),if the Public CompanyAccounting Oversight Board(the“PCAOB”),is unable to inspect an issuers auditors for threeconsecutive years,the issuers securities are prohibited to trade on a U.S.stock exchange.ThePCAOB issued a Determination Report on December 16,2021(the“Determination Rep
105、ort”)which foundthat the PCAOB is unable to inspect or investigate completely registered public accounting firmsheadquartered in:(1)mainland China of the Peoples Republic of China because of a position takenby one or more authorities in mainland China;and(2)Hong Kong,a Special Administrative Region
106、anddependency of the PRC,because of a position taken by one or more authorities in Hong Kong.Furthermore,the Determination Report identified the specific registered public accounting firmswhich are subject to these determinations(“PCAOB Identified Firms”).On June 22,2021,United States Senate passed
107、the Accelerating Holding Foreign Companies Accountable Act(the“AHFCAA”),which,if enacted,would decrease the number of“non-inspection years”fromthree years to two years,and thus,would reduce the time before Xiao-Is securities may beprohibited from trading or delisted if the PCAOB determines that it c
108、annot inspect or investigatecompletely Xiao-Is auditor.Xiao-Is current auditor,Marcum Asia CPAs LLP(“Marcum Asia”),the independent registered publicaccounting firm that issues the audit report included elsewhere in this prospectus,as an auditor ofcompanies that are traded publicly in the United Stat
109、es and a firm registered with the PCAOB,issubject to laws in the U.S.pursuant to which the PCAOB conducts regular inspections to assess itscompliance with the applicable professional standards.Marcum Asia,whose audit report is includedin this prospectus,is headquartered in New York,New York,and,as o
110、f the date of this prospectus,was not included in the list of PCAOB Identified Firms in the Determination Report.On August 26,2022,the PCAOB announced that it had signed a Statement of Protocol(the“Protocol”)with the China Securities Regulatory Commission(the“CSRC”)and the Ministry ofFinance(“MOF”)o
111、f the Peoples Republic of China,governing inspections and investigations ofaudit firms based in mainland China and Hong Kong.Pursuant to the Protocol,the PCAOB conductedinspections on select registered public accounting firms subject to the Determination Report in HongKong between September and Nove
112、mber 2022.On December 15,2022,the PCAOB board announced that it has completed the inspections,determinedthat it had complete access to inspect or investigate completely registered public accounting firmsheadquartered in mainland China and Hong Kong,and voted to vacate the Determination Report.Notwit
113、hstanding the foregoing,Xiao-Is ability to retain an auditor subject to the PCAOBinspection and investigation,including but not limited to inspection of the audit working papersrelated to Xiao-I,may depend on the relevant positions of U.S.and Chinese regulators.MarcumAsias audit working papers relat
114、ed to Xiao-I are located in China.With respect to audits ofcompanies with operations in China,such as the Company,there are uncertainties about the abilityof its auditor to fully cooperate with a request by the PCAOB for audit working papers in Chinawithout the approval of Chinese authorities.If the
115、 PCAOB is unable to inspect or investigatecompletely the Companys auditor because of a position taken by an authority in a foreignjurisdiction,or the PCAOB re-evaluates its determination as a result of any obstruction with theimplementation of the Statement of Protocol,then such lack of inspection o
116、r re-evaluation couldcause trading in the Companys securities to be prohibited under the HFCAA,and ultimately resultin a determination by a securities exchange to delist the Companys securities.Accordingly,theHFCAA calls for additional and more stringent criteria to be applied to emerging market com
117、paniesupon assessing the qualification of their auditors,especially the non-U.S.auditors who are notinspected by the PCAOB.These developments could add uncertainties to Xiao-Is offering.See“Risk Factors Risks Relating to Doing Business in China The newly enacted Holding ForeignCompanies Accountable
118、Act and the Accelerating Holding Foreign Companies Accountable Act passed bythe U.S.Senate,all call for additional and more stringent criteria to be applied to emergingmarket companies upon assessing the qualification of their auditors,especially the non-U.S.auditors who are not inspected by the PCA
119、OB.These developments could add uncertainties to ouroffering and listing on the Nasdaq Global Market,and Nasdaq may determine to delist our securitiesif the PCAOB determines that it cannot inspect or fully investigate our auditor”on page 60 of thisprospectus.Investing in Xiao-Is ADSs involves a high
120、 degree of risk.See“Risk Factors”beginning on page 39 of this prospectus.Per ADS TotalInitial public offering price US$_ US$_Underwriting discounts and commissions(7%)for sales toinvestors introduced by the underwriter(1)US$_ US$_Proceeds,before expenses,to Xiao-I(2)US$_ US$_(1)See“Underwriting”begi
121、nning on page 190 for additional disclosure regarding underwritingcompensation payable by Xiao-I.(2)The total estimated expenses related to this offering are set forth in the section entitled“Underwriting Discounts,Commissions and Expenses.”The underwriters are selling 6,000,000 ADSs(or 6,900,000 AD
122、Ss if the underwriters exercisetheir option to purchase additional ADSs in full)in this Offering on a firm commitment basis.Xiao-I has granted the underwriters an option to purchase up to an additional 900,000 ADSs within45 days from the date this prospectus at the initial public offering price,less
123、 the underwritingdiscounts and commissions.The underwriters expect to deliver the ADSs against payment in U.S.dollars to the purchasers on orabout,2022.Guotai Junan InternationalProspectus dated,2022 2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps
124、:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm9/282Table of ContentsTABLE OF CONTENTS PagePROSPECTUS SUMMARY 4THE OFFERING 35RISK FACTORS 39CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS 83USE OF PROCEEDS 84DIVIDEND POLICY 85CAPITALIZATION 86EXCHANGE RA
125、TE INFORMATION 87DILUTION 88CORPORATE HISTORY AND STRUCTURE 90MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS 93INDUSTRY OVERVIEW 108BUSINESS 117PRC REGULATION 132MANAGEMENT 145BOARD OF DIRECTORS 147EXECUTIVE COMPENSATION 151PRINCIPAL SHAREHOLDERS 153RELATED PARTY
126、 TRANSACTIONS 156DESCRIPTION OF SHARE CAPITAL 159DESCRIPTION OF AMERICAN DEPOSITARY SHARES 169ORDINARY SHARES AND ADSs ELIGIBLE FOR FUTURE SALE 180TAXATION 182ENFORCEABILITY OF CIVIL LIABILITIES 188UNDERWRITING 190EXPENSES RELATING TO THIS OFFERING 199LEGAL MATTERS 200EXPERTS 200WHERE YOU CAN FIND A
127、DDITIONAL INFORMATION 200INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1You should rely only on the information contained in this prospectus or in anyrelated free-writing prospectus.Xiao-I has not authorized anyone to provide you withinformation different from that contained in this prospectus or in
128、any related free-writing prospectus.Xiao-I is offering to sell,and seeking offers to buy,the ADSsonly in jurisdictions where offers and sales are permitted.The information containedin this prospectus is current only as of the date of this prospectus,regardless ofthe time of delivery of this prospect
129、us or of any sale of the ADSs.Xiao-I has nottaken any action to permit a public offering of the ADSs outside the United States orto permit the possession or distribution of this prospectus or any filed free writingprospectus outside the United States.Persons outside the United States who come intopo
130、ssession of this prospectus or any filed free writing prospectus must informthemselves about and observe any restrictions relating to the offering of the ADSsand the distribution of this prospectus or any filed free writing prospectus outsidethe United States.This prospectus includes statistical and
131、 other industry and market data that Xiao-Iobtained from industry publications and research,surveys and studies conducted bythird parties.Industry publications and third-party research,surveys and studiesgenerally indicate that their information has been obtained from sources believed tobe reliable.
132、While Xiao-I believes these industry publications and third-partyresearch,surveys and studies are reliable,you are cautioned not to give undueweight to this information.Until,2022(the 25th day after the date of this prospectus),alldealers that buy,sell or trade ADSs,whether or not participating in t
133、hisoffering,may be required to deliver a prospectus.This is in addition tothe obligation of dealers to deliver a prospectus when acting asunderwriters and with respect to their unsold allotments or subscriptions.i2023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoi
134、corp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm10/282Table of ContentsABOUT THIS PROSPECTUSXiao-I and the underwriters have not authorized anyone to provide any information orto make any representations other than those contained in this prospectus or
135、in anyfree writing prospectuses prepared by Xiao-I or on its behalf or to which Xiao-I hasreferred you.Xiao-I takes no responsibility for,and can provide no assurance as tothe reliability of,any other information that others may give you.This prospectusis an offer to sell only the ADSs offered hereb
136、y,but only under circumstances and injurisdictions where it is lawful to do so.Xiao-I is not making an offer to sellthese securities in any jurisdiction where the offer or sale is not permitted orwhere the person making the offer or sale is not qualified to do so or to any personto whom it is not pe
137、rmitted to make such offer or sale.For the avoidance of doubt,no offer or invitation to subscribe for ADSs is made to the public in the CaymanIslands.The information contained in this prospectus is current only as of the dateon the front cover of the prospectus.Xiao-Is business,financial condition,r
138、esults of operations and prospects may have changed since that date.Conventions that apply to this ProspectusUnless otherwise indicated or the context requires otherwise,the reference in thisprospectus to:“Xiao-I”or the“Company”is to Xiao-I Corporation,an exempted companywith limited liability incor
139、porated under the laws of Cayman Islands;“AI Plus”is to AI Plus Holding Limited,organized under the law ofBritish Virgin Islands,as Xiao-Is intermediate holding company;“Xiao-i Technology”is to Xiao-i Technology Limited,organized under thelaw of Hong Kong,which is wholly owned by AI Plus;“WFOE”is to
140、 Zhizhen Artificial Technology(Shanghai)Company Limited(“Zhizhen Technology”),a limited liability company established andexisting under the laws of the PRC,which is wholly owned by Xiao-iTechnology;“Shanghai Xiao-i”or the“VIE”is to Shanghai Xiao-i Robot TechnologyCompany Limited,a company limited by
141、 shares established and existing underthe laws of the PRC;“the PRC operating entities”refers to the VIE,Shanghai Xiao-i,and itssubsidiaries;“Memorandum and Articles of Association”means the amended and restatedmemorandum of association(“Memorandum”)and the amended and restatedarticles of association
142、(“Articles of Association”)of Xiao-I;“China”or the“PRC”are to the Peoples Republic of China,includingthe special administrative regions of Hong Kong and Macau,and excludingTaiwan for the purposes of this prospectus only;the term“Chinese”has acorrelative meaning for the purpose of this prospectus;“ma
143、inland China”,“mainland of PRC”or“mainland PRC”are to themainland China of the PRC,excluding Taiwan,the special administrativeregions of Hong Kong and Macau for the purposes of this prospectus only;theterm“mainland Chinese”has a correlative meaning for the purpose of thisprospectus;“PRC government”,
144、“PRC regulatory authorities”,“PRC authorities”,“PRC governmental authorities”,“Chinese government”,“Chineseauthorities”or“Chinese governmental authorities”is to the government ofmainland China for the purposes of this prospectus only;and the similarwordings have a correlative meaning for the purpose
145、 of this prospectus;“PRC laws and regulations”,“PRC laws”,“laws of PRC”,“Chinese lawsand regulations”or“Chinese laws”are to the laws and regulations ofmainland China;and the similar wordings have a correlative meaning for thepurpose of this prospectus;“Ordinary Shares”are to the ordinary shares of t
146、he Company,par valueUS$0.00005 per share;“$,”“U.S.$,”“U.S.dollars,”“dollars”and“USD”are toU.S.dollars;“RMB”and“”are to Renminbi;12023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xi
147、aoicorp.htm11/282Table of Contents “Companies Act”is to the Companies Act(As Revised),Cap.22 of theCayman Islands.“ADSs”refer to Xiao-Is American depositary shares,each of whichrepresents one-third of an Ordinary Share.The PRC operating entities business is conducted in the PRC using RMB,the currenc
148、yof China.Xiao-Is consolidated financial statements are presented in United Statesdollars.In this prospectus,Xiao-I refers to assets,obligations,commitments,andliabilities in its consolidated financial statements in United States dollars.Thesedollar references are based on the exchange rate of RMB t
149、o United States dollars,determined as of a specific date or for a specific period.Changes in the exchangerate will affect the amount of Xiao-Is obligations and the value of its assets interms of United States dollars which may result in an increase or decrease in theamount of Xiao-Is obligations(exp
150、ressed in dollars)and the value of its assets,including accounts receivable(expressed in dollars).22023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm12/282Table of Cont
151、entsPRESENTATION OF FINANCIAL INFORMATIONThe consolidated financial statements included in this prospectus have been preparedin accordance with accounting principles generally accepted in the United States ofAmerica,or U.S.GAAP.The reporting currency is United States dollar.Unlessotherwise indicated
152、,all monetary amounts in this prospectus are in U.S.dollars.This prospectus contains translations of certain foreign currency amounts intoU.S.dollars for the convenience of the reader.Unless otherwise stated,alltranslations from Renminbi to U.S.dollars were made at RMB6.3726 to$1.00 onDecember 30,20
153、21,representing the noon buying rate in The City of New York forcable transfers of RMB as certified for customs purposes by the Federal ReserveBoard.Xiao-I makes no representation that the Renminbi or U.S.dollar amountsreferred to in this prospectus could have been or could be converted intoU.S.doll
154、ars or Renminbi,as the case may be,at any particular rate or at all.OnJune 1,2022,the noon buying rate in New York for cable transfers payable inRenminbi was RMB6.6858 to$1.00.Xiao-I has made rounding adjustments to some of thefigures included in this prospectus.Accordingly,numerical figures shown a
155、s totalsin some tables may not be an arithmetic aggregation of the figures that precededthem.32023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm13/282Table of ContentsP
156、ROSPECTUS SUMMARYThis summary highlights information contained elsewhere in this prospectus.Thissummary does not contain all the information you should consider before decidingwhether to buy Xiao-Is ADSs.You should read this entire prospectus carefully,including“Risk Factors,”“Business,”“Managements
157、 Discussion and Analysis ofFinancial Condition and Results of Operations”and Xiao-Is consolidated financialstatements,including the notes thereto,before making an investment decision.Thisprospectus contains information from an industry report commissioned by Xiao-I andprepared by Frost&Sullivan,an i
158、ndependent research firm,to provide informationregarding the PRC operating entities industry and their market position in China.Investors should note that Xiao-I,the ultimate Cayman Islands holdingcompany,does not own any substantive operations in the PRC and thebusinesses in the PRC described in th
159、is prospectus are operated throughthe PRC operating entities in China.Xiao-Is MissionXiao-Is mission is to leverage Shanghai Xiao-is advanced core artificialintelligence technology to make the world a better place.OverviewXiao-I is a holding company incorporated in the Cayman Islands.As a holdingcom
160、pany with no material operations of its own,Xiao-I conducts a substantialmajority of its operations through Shanghai Xiao-i,the VIE,in the PRC.Investorsin Xiao-Is ADSs or Ordinary Shares should be aware that they may never holdequity interests in the VIE,but rather purchasing equity interests solely
161、 in Xiao-I,the Cayman Islands holding company,which does not own any of the businesses inChina conducted by the PRC operating entities.The ADSs offered in this offeringrepresent shares of the Cayman Islands holding company instead of shares of the VIEin China.Shanghai Yingsi Software Technology Co.,
162、Ltd.(“Incesoft”)was founded in 2001.Incesoft established the Xiaoi robot brand(Chinese:小i机器人)and developed AItechnology used to support its consumer-to-consumer business model.In 2009,Incesoft transformed its business model from consumer-to-consumer to business-to-business.At the same time,founders
163、of Incesoft founded Shanghai Xiao-i,the VIE,which acquired the Xiaoi robot brand and Incesofts core AI technology.Followingthe acquisition,Incesoft was dissolved by de-registering with local companyregistrar in accordance with PRC law in 2012.Since 2009,Shanghai Xiao-i hasbecome a leading artificial
164、 intelligence(“AI”)company by building on its widetechnology commercialization,brand recognition and culture of innovation in China.Milestone Accomplishments over 20 Years History42023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archiv
165、es/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm14/282Table of ContentsSince its founding in 2001,Shanghai Xiao-i has developed a portfolio of cognitiveintelligence technologies for businesses based on its natural language processingand AI implementation.Leveraging its cutting-edge tec
166、hnologies,dedicatedservices,and long-standing customer base,it has become a leading customer servicesolution company in China according to Frost&Sullivan.It focuses on thedevelopment and promotion of cognitive intelligence technology and products withnatural language processing as the core,and it us
167、es cognitive intelligenceproducts and services to enable and promote industrial digitization and intelligentupgrading and transformation.Shanghai Xiao-i is a leading cognitive intelligence enterprise in China,integrating parts of perceptive intelligence like natural language processing andcomputer v
168、ision.It offers a wide range of business services in AI,coveringnatural language processing,computer vision,machine learning and cloud computing.It has multi-field data resources and multiple industry standards,a cutting-edgetalent team training system and strong experience in resource integration.I
169、tprimarily provides smart city,software business and architectural design AIservices to its customers.Shanghai Xiao-i has comprehensive business lines covering fundamental techplatform,conversation bot,cloud services,industry solutions and roboticssolutions.Shanghai Xiao-is cognitive intelligence ar
170、tificial intelligence(“CIAI”)platform products and services are marketed and sold primarily to customers in thefollowing industries:(1)Contact Center,(2)Finance,(3)Urban Public Service,(4)Construction,(5)Metaverse,(6)Manufacturing and(7)Smart Healthcare.52023/2/9https:/www.sec.gov/Archives/edgar/dat
171、a/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm15/282Table of ContentsXiao-Is History and Corporate StructureXiao-I was incorporated in the Cayman Islands on August 13,2018,with limitedliability under the Compa
172、nies Act.Upon incorporation,the authorized share capitalof the Company was US$50,000 divided into 1,000,000,000 shares,par value ofUS$0.00005 each,comprising of 1,000,000,000 Ordinary Shares of a par value ofUS$0.00005 each.The Company is a holding company.On August 30,2018,Xiao-I established its wh
173、olly-owned subsidiary AI Plus,underthe law of British Virgin Islands,as its intermediate holding company,which thenestablished its wholly-owned subsidiary,Xiao-i Technology under the law ofHong Kong,which in turn established a wholly-owned PRC subsidiary,ZhizhenTechnology or WFOE,on March 29,2019.Su
174、bsequently,Xiao-I,through WFOE,enteredinto a series of contractual arrangements with Shanghai Xiao-i and its shareholderswhereby Xiao-I was established as the primary beneficiary of Shanghai Xiao-i foraccounting purposes.Xiao-I has recognized the net assets of Shanghai Xiao-i athistorical cost with
175、no change in basis in the consolidated financial statementsupon the completion of this reorganization.As of the date of this prospectus,Al Plus,Xiao-i Technology and ZhizhenTechnology do not have any substantive business operations.As a result of Xiao-Is indirect ownership in Zhizhen Technology and
176、the variable interest entitycontractual arrangements,Xiao-I is regarded as the primary beneficiary of the VIEfor accounting purposes.Xiao-I treats the PRC entities as its consolidatedaffiliated entities under U.S.GAAP,and have consolidated the financial results ofthese entities in Xiao-Is consolidat
177、ed financial statements in accordance withU.S.GAAP.For more details and risks related to the variable interest entitystructure,please see“Risk Factors Risks Relating to Our Corporate Structure”on page 52 of this prospectus.The following diagram illustrates the corporate legal structure of Xiao-I as
178、of thedate of this prospectus.62023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm16/282Table of ContentsThe following diagram illustrates the ownership of the VIE,Shang
179、hai Xiao-i,as ofthe date of this prospectus.72023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm17/282Table of ContentsThe VIE AgreementsThe PRC government regulates the
180、 telecommunications and internet industry,including software industry,through strict business licensing requirements andother government regulations.These laws and regulations also include limitationson foreign ownership of PRC companies that engage in software business.Xiao-I,AIPlus and Zhizhen Tec
181、hnology,are considered as foreign invested enterprises.Tocomply with these regulations,the Company conducts the majority of its activitiesin PRC through the PRC operating entities.Uncertainties exist as to the Companysability to enforce the VIE Agreements,and the VIE Agreements have not been testedi
182、n a court of law.Zhizhen Technology has entered into the following contractual arrangements withShanghai Xiao-i and 61 of its shareholders,whom together hold 100%equity interestin Shanghai Xiao-i,that enable the Company to(i)have power to direct theactivities that most significantly affect the perfo
183、rmance of Shanghai Xiao-i andits subsidiaries,and(ii)receive the benefits of Shanghai Xiao-i and itssubsidiaries that could be significant to Shanghai Xiao-i and its subsidiaries.TheCompany,through its indirect wholly owned subsidiary,Zhizhen Technology,is fullyand exclusively responsible for the ma
184、nagement of Shanghai Xiao-i,absorbs all riskof losses of Shanghai Xiao-i(excluding non-controlling interests)and has theexclusive right to exercise all voting rights of Shanghai Xiao-is shareholders.In exchange,Shanghai Xiao-i pays service fees to Zhizhen Technology.The servicefees shall consist of
185、100%of the profit before tax of Shanghai Xiao-i,after thededuction of all costs,expenses,taxes and other fee required under PRC laws andregulations.Shanghai Xiao-i agrees not to accept the same or any similar servicesprovided by any third party and shall not establish cooperation relationshipssimila
186、r to that formed by the Exclusive Business Cooperation Agreement with anythird party,except with the prior written consent of Zhizhen Technology.Therefore,the Company,through its wholly owned subsidiaries AI Plus and ZhizhenTechnology,has been determined to be the primary beneficiary of Shanghai Xia
187、o-iand the VIEs subsidiaries for accounting purposes and has consolidated ShanghaiXiao-is and its subsidiaries assets,liabilities,results of operations,andcash flows in the accompanying consolidated financial statements.Exclusive Call Option AgreementPursuant to the Exclusive Call Option Agreement s
188、igned on March 29,2019 by andamong Zhizhen Technology,Shanghai Xiao-i and its shareholders,the shareholdersirrevocably granted Zhizhen Technology or any third party designated by ZhizhenTechnology an option to purchase all or part of their equity interests in ShanghaiXiao-i at any time at a price de
189、termined at Zhizhen Technologys discretion.According to the Exclusive Call Option Agreement,the purchase price to be paid bythe Company to each shareholder of Shanghai Xiao-i will be the minimum pricepermitted by applicable PRC Law at the time when such share transfer occurs.Without Zhizhen Technolo
190、gys prior written consent,the shareholders and ShanghaiXiao-i agreed not to,among other things:set encumbrance on,transfer all or partof,or dispose of the equity interests;amend the articles of association ofShanghai Xiao-i;change the registered capital of Shanghai Xiao-i or holdingstructure;change
191、Shanghai Xiao-is business activities;sell,assign,mortgage ordispose of any legal or beneficial rights to or in any of Shanghai Xiao-isassets,business,or revenue;incur,assume or guarantee any debts;enter into anymaterial contract;extend any loan or credit to any party,or provide any guaranteeor assum
192、e any obligation of any party;merge or consolidate with any third party oracquire or invest in any third party;or distribute dividends.The shareholders andShanghai Xiao-i agreed to manage business and handle financial and commercialaffairs prudently and in accordance with relevant laws and codes of
193、practice.Thisagreement will continue with full force and effect until the earlier of the date onwhich Zhizhen Technology has acquired all of the Equity Interests in Shanghai Xiao-i,or this Agreement is terminated by the mutual written consent.Exclusive Business Cooperation AgreementOn March 29,2019,
194、Zhizhen Technology entered into an Exclusive BusinessCooperation Agreement with Shanghai Xiao-i to enable Zhizhen Technology to engagein the development and operation of the Internet technology development inaccordance with applicable laws.Under this agreement,Shanghai Xiao-i appointedZhizhen Techno
195、logy to provide exclusive comprehensive business support,technicalservices,consulting services and other services to Shanghai Xiao-i,and ShanghaiXiao-i agreed to accept such services.The term of the Services provided by ZhizhenTechnology shall be 10 years from the effective date of March 29,2019,and
196、 will beautomatically extended after the expiration until when terminated in writing byZhizhen Technology.Additionally,Zhizhen Technology has the full and exclusiveright to manage and direct all cash flow and assets of Shanghai Xiao-i and todirect and administrate the financial affairs and daily ope
197、ration of Shanghai Xiao-i.In exchange,Shanghai Xiao-i pays service fees to Zhizhen Technology.Theservice fees shall consist of 100%of the profit before tax of Shanghai Xiao-i,after the deduction of all costs,82023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp
198、.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm18/282Table of Contentsexpenses,taxes and other fee required under PRC laws and regulations.If ShanghaiXiao-i is unable to pay the service fees due to the actual managing situation,withthe written consent of Z
199、hizhen Technology,the unpaid part of the service fees inthe previous fiscal year can be deferred to the end of the next year and settledtogether.Shanghai Xiao-i agrees not to accept the same or any similar servicesprovided by any third party and shall not establish cooperation relationshipssimilar t
200、o that formed by the Exclusive Business Cooperation Agreement with anythird party,except with the prior written consent of Zhizhen Technology.Duringthe validity term of this agreement,Zhizhen Technology will bear all the economicbenefits and risks arising from the business of Shanghai Xiao-i and its
201、subsidiaries.Zhizhen Technology will provide financial support to Shanghai Xiao-ior its subsidiaries in the event of a loss or serious operational difficulties.Power of Attorney AgreementOn March 29,2019,each shareholder of Shanghai Xiao-i,signed the Power ofAttorney Agreement to irrevocably entrust
202、 Zhizhen Technology or anyperson(s)designated by Zhizhen Technology to act as its attorney-in-fact toexercise any and all of its rights as a shareholder of Shanghai Xiao-i,including,but not limited to,the right to convene,attend and present the shareholdersmeetings,vote,sign and perform as a shareho
203、lder;transfer,pledge or dispose ofall the equity interest of Shanghai Xiao-i held by the shareholder;collect thedividend,and participate in litigation procedures.This agreement is effective andirrevocable until all of each shareholders equity interest in Shanghai Xiao-i hasbeen transferred to Shangh
204、ai Xiao-i or the person(s)designated by ZhizhenTechnology.Share Interest Pledge AgreementUnder the Share Interest Pledge Agreement signed on March 29,2019 by and amongZhizhen Technology and each shareholder of Shanghai Xiao-i,the shareholders ofShanghai Xiao-i have agreed to pledge 100%equity intere
205、st in Shanghai Xiao-i toZhizhen Technology to guarantee the performance obligations of Shanghai Xiao-iunder the Exclusive Business Cooperation Agreement,and the performance obligationsof each shareholder under the Exclusive Call Option Agreement.If Shanghai Xiao-ior its shareholders breach their con
206、tractual obligations under these agreements,Zhizhen Technology,as pledgee,will have the right to exercise the pledge.The shareholders also agreed that,without prior written consent of ZhizhenTechnology,they will not dispose of the pledged equity interests or create orallow any encumbrance on the ple
207、dged equity interests.The pledge of equityinterests in Shanghai Xiao-i has been registered with the relevant office of theState Administration for Market Regulation in accordance with the Civil Code of thePeoples Republic of China.Spousal Commitment LetterThe spouses of each individual shareholder o
208、f Shanghai Xiao-i have each signed aCommitment Letter.Under the Commitment Letter,the signing spouse unconditionallyand irrevocably has agreed to the execution by his or her spouse of the above-mentioned Exclusive Business Cooperation Agreement,Exclusive Call OptionAgreement,Power of Attorney Agreem
209、ent and Share Interest Pledge Agreement,andthat his or her spouse may perform,amend or terminate such agreements without hisor her consent.In addition,in the event that the spouse obtains any equityinterest in Shanghai Xiao-i held by his or her spouse for any reason,he or sheagrees to be bound by an
210、d sign any legal documents substantially similar to thecontractual arrangements entered into by his or her spouse,as may be amended fromtime to time.The VIE structure is used to provide investors with exposure to foreign investmentin China-based companies where Chinese law prohibits direct foreign i
211、nvestment inthe operating companies.Xiao-I has evaluated the guidance in FASB ASC 810 anddetermined that Xiao-I is the primary beneficiary of the VIE,for accountingpurposes,based upon such contractual arrangements.ASC 810 requires a VIE to beconsolidated if the company is subject to a majority of th
212、e risk of loss for theVIE or is entitled to receive a majority of the VIEs residual returns.A VIE isan entity in which a company,through contractual arrangements,is fully andexclusively responsible for the management of the entity,absorbs all risk oflosses of the entity(excluding non-controlling int
213、erests),receives the benefitsof the entity that could be significant to the entity(excluding non-controllinginterests),and has the exclusive right to exercise all voting rights of theentity,and therefore the company is the primary beneficiary of the entity foraccounting purposes.Under ASC 810,a repo
214、rting entity has a controlling financialinterest in a VIE,and must consolidate that VIE,if the reporting entity has bothof the following characteristics:(a)the power to direct the activities of the VIEthat most significantly affect the VIEs economic performance;and(b)theobligation to absorb losses,o
215、r the right to receive benefits,that couldpotentially be significant to the VIE.Through the VIE agreements,the Company isdeemed the92023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022
216、_xiaoicorp.htm19/282Table of Contentsprimary beneficiary of the VIE for accounting purposes.The VIE has no assets thatare collateral for or restricted solely to settle its obligations.The creditors ofVIE do not have recourse to the Companys general credit.Accordingly,underU.S.GAAP,the results of the
217、 PRC operating entities are consolidated in Xiao-Isfinancial statements.However,investors will not and may never hold equity interests in the PRCoperating entities.The VIE Agreements may not be effective in providing controlover Shanghai Xiao-i.Uncertainties exist as to Xiao-Is ability to enforce th
218、eVIE Agreements,and the VIE Agreements have not been tested in a court of law.Ifthe VIE or its shareholders fail to perform their respective obligations under thecontractual arrangements,Xiao-I may have to incur substantial costs and expendadditional resources to enforce such arrangements.The Chines
219、e regulatoryauthorities could disallow this VIE structure,which would likely result in amaterial change in the PRC operating entities operations and the value of Xiao-Is ADSs,including that it could cause the value of such securities tosignificantly decline or become worthless.See“Risk Factors Risks
220、 Relating toOur Corporate Structure”beginning on page 52 of this prospectus for certain risksrelating to the contractual arrangements.As of the date of this prospectus,no cash transfer or transfer of other assets byway of dividends or distributions have occurred among the Company,itssubsidiaries,or
221、the PRC operating entities.Xiao-I intends to keep any futureearnings to finance the expansion of its business,and it does not anticipate thatany cash dividends will be paid,or any funds will be transferred from one entityto another,in the foreseeable future.As such,Xiao-I has not installed any cashm
222、anagement policies that dictate how funds are transferred among the Company,itssubsidiaries,or investors,or the PRC operating entities.For further details,please refer to“Prospectus Summary Consolidation”,as well as the condensedconsolidating schedule and the consolidated financial statements includ
223、ed elsewherein this registration statement.Xiao-I is a holding company with no operations of its own.It conducts itsoperations in China primarily through the PRC operating entities in China.As aresult,although other means are available for Xiao-I to obtain financing at theholding company level,Xiao-
224、Is ability to pay dividends and other distributionsto its shareholders and to service any debt it may incur may depend upon dividendsand other distributions paid by Xiao-Is PRC subsidiaries,which relies ondividends and other distributions paid by the PRC operating entities pursuant tothe VIE Agreeme
225、nts.If any of these entities incurs debt on its own in the future,the instruments governing such debt may restrict its ability to pay dividends andother distributions to Xiao-I.In addition,dividends and distributions from Xiao-Is PRC subsidiaries and theVIE are subject to regulations and restriction
226、s on dividends and payment to partiesoutside of China.Applicable PRC law permits payment of dividends to Xiao-I by WFOEonly out of net income,if any,determined in accordance with PRC accountingstandards and regulations.A PRC company is not permitted to distribute any profitsuntil any losses from pri
227、or fiscal years have been offset by general reserve fundand profits(if general reserve fund is not enough).Profits retained from priorfiscal years may be distributed together with distributable profits from thecurrent fiscal year.In addition,registered share capital and capital reserveaccounts are a
228、lso restricted from withdrawal in the PRC,up to the amount of netassets held in each operating subsidiary.In contrast,there is presently noforeign exchange control or restrictions on capital flows into and out ofHong Kong.Hence,Xiao-Is Hong Kong subsidiary is able to transfer cash withoutany limitat
229、ion to the Cayman Islands under normal circumstances.As a result ofthese PRC laws and regulations,the PRC operating entities are restricted in theirability to transfer a portion of their net assets to the Company.Moreover,the transfer of funds among the PRC operating entities are subject to theProvi
230、sions on Private Lending Cases,which was implemented on January 1,2021 toregulate the financing activities between natural persons,legal persons andunincorporated organizations.As advised by Xiao-Is PRC counsel,Jingtian&Gongcheng,the Provisions on Private Lending Cases does not prohibit using cashge
231、nerated from one PRC operating entity to fund another affiliated PRC operatingentitys operations.Xiao-I,its subsidiaries or the PRC operating entities havenot been notified of any other restriction which could limit the PRC operatingentities ability to transfer cash among each other.In the future,ca
232、sh proceedsfrom overseas financing activities,including this offering,may be transferred byXiao-I to AI Plus,and then transferred to Xiao-i Technology,and then transferredto WFOE via capital contribution or shareholder loans,as the case may be.Cashproceeds may flow to Shanghai Xiao-i from WFOE pursu
233、ant to certain contractualarrangements between WFOE and Shanghai Xiao-i as permitted by the applicable PRCregulations.Under Cayman Islands law,a Cayman Islands company may pay a dividend on its sharesout of either profit or share premium amount,provided that in no circumstances maya dividend be paid
234、 out of share premium if this would result in the company beingunable to pay its debts due in the ordinary course of business.Xiao-I does notexpect to pay102023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/00
235、01122/ff12022_xiaoicorp.htm20/282Table of Contentsdividends in the foreseeable future.If,however,it declares dividends on itsOrdinary Shares,the depositary will pay you the cash dividends and otherdistributions it receives on Xiao-Is Ordinary Shares after deducting its fees andexpenses in
236、 accordance with the terms set forth in the deposit agreement.If itdetermines to pay dividends on any of its Ordinary Shares in the future,as aholding company,it will rely on payments made from Shanghai Xiao-i to WFOE,pursuant to the VIE Agreements between them,and the distribution of such paymentst
237、o Xiao-i Technology from WFOE,and then to AI Plus from Xiao-i Technology,andthen to Xiao-I from AI Plus as dividends,unless it receives proceeds from futureofferings.See“Prospectus Summary Transfers of Cash to and from the VIE”onpage 26 and“Risk Factors Risks Relating to Doing Business in China Ther
238、e aresignificant uncertainties under the EIT Law relating to the withholding taxliabilities of our PRC subsidiary,and dividends payable by our PRC subsidiary toour offshore subsidiaries may not qualify to enjoy certain treaty benefits”onpage 66 of this prospectus.Product and Technology OverviewOvera
239、ll Architecture of Shanghai Xiao-is Products and TechnologiesThe overall architecture of Shanghai Xiao-is products and technologies aredivided into three layers:(1)infrastructure,(2)aggregation empowerment platformand(3)domain application.Infrastructure LayerShanghai Xiao-is infrastructure layer pro
240、vides the informational support for itsproducts and technologies.Typically built with third-party products andtechnologies,it integrates the information into the infrastructure layer.Additional properties include:Compatibility with cloud native and private or third-party cloudplatforms;Ubiquitous pe
241、rception layer connection enabling integration with theInternet of Things,the Internet,5G,and dedicated networks;and Multidimensional data collection and integration,includingspatiotemporal,channels,and community.112023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xia
242、oicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm21/282Table of ContentsAggregation Empowerment Platform LayerAI Core Technology Platform Cognitive Intelligence ArtificialIntelligence(CIAI)Using proprietary intellectual property technologies,Shanghai X
243、iao-i hasindependently developed CIAI,its core technology platform.To date,it hasdeveloped and commercialized six core technologies based on CIAI:(1)naturallanguage processing,(2)speech processing,(3)computer vision,(4)machinelearning,(5)affective computing and(6)data intelligence and hyperautomatio
244、n.Natural Language Processing CIAIs multilingual,natural language processing capability extractsand analyzes information,mines text,constructs knowledge,andperforms knowledge representation and reasoning based on words,phrases,sentences,and text,providing solutions to the human-computer interaction
245、needs of diverse enterprises and professionalusers.Speech Processing The hybrid architecture of Time-Delay Neural Network+DeepFeedforward Sequential Memory Network+attention,in combination withShanghai Xiao-is vast corpus accumulation of more than ten years,has enabled it to train its intelligent vo
246、ice technology for end-to-end application across various scenarios in numerous fields.Based onthese technologies,it has built a variety of intelligent voicesolutions under the Aviation Industry Computer-Based TrainingCommittee framework,including intelligent Interactive Voice Responsenavigation,inte
247、lligent outbound call,intelligent agent assistance,intelligent voice quality inspection,and intelligent coaching.Computer Vision Shanghai Xiao-i offers various computer vision capabilities,including face recognition and analysis,multi-target tracking,humanposture and action recognition,and scene ana
248、lysis capabilities suchas semantic and instance segmentation.In terms of Optical CharacterRecognition(“OCR”),it has general OCR and customized OCR for alltypes of cards,invoice,receipts,tickets,and more.In terms ofconstruction drawing analysis,it applies various capabilitiesincluding pattern recogni
249、tion and computer vision to comprehensivelyanalyze and process Computer Aided Design(“CAD”)drawings,bringing to life standard review capability for construction drawings.Relating to engineering,it provides rapid122023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoi
250、corp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm22/282Table of Contentsengineering customization through its internally-developed deeplearning framework,which is a machine learning algorithm that usesmultiple layers to progressively extract higher-level
251、 features fromthe raw input.It also offers model distillation and pruning solutionsto meet clients model compression requirements.This highperformance framework is adaptable to various environments.Machine Learning Machine learning methods offered by Shanghai Xiao-i includeeverything from traditiona
252、l machine learning to the latest deeplearning,reinforcement learning(a machine learning training methodbased on rewarding desired behaviors and/or punishing undesired ones),active learning(a learning algorithm that interactively queries auser or some other information source to label new data points
253、 withthe desired outputs),transfer learning(reusing elements of a pre-trained model in a new machine learning model),and generativeadversarial networks(“GAN”)(a machine learning model in which twoneural networks compete with each other to become more accurate intheir predictions).These methods are a
254、pplied across multiple fieldssuch as natural language processing,speech recognition,visionrecognition and analysis,and in business scenarios such as precisionmarketing,personalized recommendation,and risk assessment incombination with massive data and distribution processing algorithmsto form an eff
255、icient human-computer collaborative learning system.Affective Computing Deep learning technology is used to recognize,understand,process,and simulate human emotions,so as to realize multi-dimensional andmultimodal affective computing capabilities such as text,voice andvision.Shanghai Xiao-i has buil
256、t affective computing,analysis,andinteractive processing capabilities that process real-time perception,intelligent planning,automatic simulation,and this technology hasbeen widely used in various practical business scenarios.Data Intelligence and Hyperautomation Large-scale machine learning technol
257、ogy mines,analyzes,andprocesses massive amounts of data,the assets of which arecomprehensively integrated to extract information contained therein.Business processes are automatically and quickly identified,reviewed,and executed in combination with innovative technologies such asprocess automation a
258、nd low code(which provides a developmentenvironment used to create application software through a graphicaluser interface).The results enable enterprises to delegate simpletasks with high repeatability,as well as complex tasks,to AI anddata enhancement,thereby improving the quality and efficiency of
259、business operations.Applications include data monitoring,dataanalysis,user profiling,business process automation,financingbusiness automation,financial business automation,supply chainbusiness automation,IT operation,and maintenance and integrationautomation.Shanghai Xiao-is Product PlatformsShangha
260、i Xiao-i has commercialized its six core technologies to create thefollowing product platforms:(1)Conversational AI,(2)Knowledge Fusion,(3)Intelligence Voice,(4)Hyperautomation,(5)Data Intelligence,(6)IntelligentConstruction Support,(7)Vision Analysis,(8)Intelligent Hardware Support,and(9)Metaverse.
261、Conversational AI Platform Its conversational AI platform makes full use of deep learning,dataenhancement,and active learning technologies,employing flexible anddiverse dialog management and context processing mechanisms,anddriven by a powerful learning system,the results of which achieve in-depth s
262、cenario dialog processing,intent recognition,and complexlogic reasoning in combination with structured knowledge and semanticanalysis capabilities.Additionally,the platform realizes thebusiness value of conversational AI in a variety of applicationscenarios,including intelligent customer service,sma
263、rt marketing,intelligent hardware,intelligent assistant,agent assistance,andintelligent human-computer training.132023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm23/2
264、82Table of Contents Knowledge Fusion Platform The knowledge fusion platform integrates various types of knowledgesuch as Question&Answer(“Q&A”),documents,multimedia,information forms,business processes,knowledge graphs,andmultimodal to assist enterprises in improving knowledge managementcapabilities
265、,building intelligent service cores,supportingintelligent knowledge management,retrieval,recommendation,application assistance,cognitive reasoning,and other capabilities.It helps enterprise-level intelligent applications,improves workefficiency,optimizes user experience,and reduces enterpriseoperati
266、ng costs.Intelligent Voice Platform Shanghai Xiao-is intelligent voice platform(“IVP”)uses naturallanguage processing(“NLP”),automatic speech recognition,voiceprint recognition,and text-to-speech technologies with human-computer interaction as its core,in combination with various businessscenarios,t
267、o comprehensively create or enhance business capabilitiessuch as intelligent speech solutions,thereby realizing the macroprocesses of intelligent IVP,intelligent outbound calls,speechanalysis,agent assistance,and human-computer interaction.Hyperautomation Platform The hyperautomation platform innova
268、tively uses low code technology incombination with agents to realize and expand vast capabilities of thetraditional low code platform and Robotic Process Automation.Itintegrates technologies such as OCR,NLP,and visualized data miningand analysis,enables users to realize business and processautomatio
269、n,combines capabilities of knowledge base and imitationlearning,and enables realization of business and process intelligencewith intelligent planning capabilities.Data Intelligence Platform The data intelligence platform comprehensively integrates dataassets,manages the entire life cycle of data,and
270、 realizes the entirecycles of data integration,processing,transformation,analysis,andmining through What You See Is What You Get(a system in which editingsoftware allows content to be edited in a form that resembles itsappearance when printed or displayed as a finished product)with thesupport of com
271、ponent-based data visualization technology.It alsohelps clients extract valuable information contained in data,andprovides assistance in business and process automation,businessprediction,decision support,among others,and improves theefficiency of data-driven business intelligence and businessintell
272、igence services.Intelligent Construction Support Platform Shanghai Xiao-is intelligent construction support platform offersmany capabilities such as parsing,reconstruction,visualization,andmulti-dimensional analysis of construction drawings.Combined with avariety of construction application scenario
273、s,the platform canrealize intelligent construction drawings review,design assistance,online collaborative design,among other applications.It enables theconstruction industry to reduce the cost of drawing review,improveper-capita energy efficiency,empowers the construction industry valuechain,and fac
274、ilitates the transformation and upgrading ofintelligence and automation.Vision Analysis Platform The vision analysis platform uses a variety of computer vision-related technologies to apply OCR,detection,video,and imageanalysis,helps clients extract and mine valuable informationcontained in images,a
275、nd realizes business automation,industrialdefect detection,monitoring analysis,and other innovativeapplications encountered in specific business scenarios.Intelligent Hardware Support Platform The intelligent hardware support platform provides the framework ofsignal collection,processing,analysis,pr
276、ediction,and more.Thisframework can be combined with various sensors to quickly processsignal,select and adapt appropriate machine learning algorithms forbusiness modeling according to the intelligent requirements of varioustypes of hardware,make full use of various machine learningcapabilities to m
277、ake the equipment be more intelligent.142023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm24/282Table of Contents Metaverse Platform Shanghai Xiao-i developed the first
278、 virtual digital human in 2016 andreleased it for the first time at the Guiyang Digital Expo in 2017.Itcontinues to innovate and develop more advanced and smarter digitalhuman products.Digital human with multimodal emotional interactioncapabilities can be widely used in various business scenariosinc
279、luding film and television production,media,games,financialservices,culture,tourism,education,healthcare,and retail.Domain Application LayerFor more than 20 years,Shanghai Xiao-i has applied its aggregation platform toform a number of mature application fields designed to address the business needso
280、f various fields,including(1)AI+Contact Center,(2)AI+Finance,(3)AI+Urban Public Service,(4)AI+Construction,(5)AI+Metaverse,(6)AI+Manufacturing and(7)AI+Smart Healthcare.Its technologies are based,in significant part,upon its proprietary intellectualproperty portfolio.As of December 1,2022,Shanghai X
281、iao-i has applied for 554patents,281 of which have been granted and it has obtained 225 registeredtrademarks and 130 computer software copyrights.In June 2020,it passed thenational intellectual property management system certification and obtained thecertificate.This certificate represents that the
282、companys intellectual propertymanagement system conforms to the GB/T 29490-2013 standard,which is the firstnational standard for enterprise intellectual property management jointly draftedand formulated by China National Intellectual Property Administration and the ChinaNational Institute of Standar
283、dization,and jointly approved by the GeneralAdministration of Quality Supervision,Inspection and Quarantine of the PRC andStandardization Administration of the PRC.It continues to develop and improve itsintellectual property portfolio through its in-depth Research and Development(“R&D”)department.As
284、 of December 1,2022,it has 277 R&D personnel,accountingfor about 62.5%of its personnel,including 189 with Bachelors degrees,23 withMasters degrees and 5 with Doctorates.Its primary services are softwareservices.Software services refer to the sales of software products correspondingto the Companys ob
285、tained patents or software copyrights to customers for meetingthe needs of different customers in different industries for artificialintelligence:(1)Contact Center:Shanghai Xiao-i leverages contact center AI solutionsto improve customer experience and operational efficiency.It offers AI-based platfo
286、rms,software tools and services that leverage voice-basedassistants to facilitate strong interactions and engagement in differentindustries,including both small and medium enterprises and largeenterprises.(2)Architectural Design AI services Shanghai Xiao-i provides professionalarchitectural drawing
287、review solutions.By using computer vision,naturallanguage processing technology and its unique map,image morphologyprocessing,pattern recognition,image segmentation,image targetdetection,path planning,OCR and many other independent research anddevelopment technologies,combined with the rich professi
288、onal experiencein architectural design,it has launched AI products for blueprint reviewto achieve automation and intelligence,enabling the architecture industryto reduce the cost of reviewing blueprints,improving the efficiency,andcross-institution collaborative drawing review.(3)Smart City Shanghai
289、 Xiao-i uses natural language processing,dataintelligence and other technologies to build a cognitive brain for smartcity public services,and continuously improves the level of urbanintelligence from social service efficiency and public experience.Itprovides solutions such as smart city service hotl
290、ine,smart publicservice and smart legal services.The PRC operating entities generate revenue primarily from the(i)sale of softwareproducts and service,(ii)maintenance and support(“M&S”)service,and(iii)saleof cloud platform products.For the years ended December 31,2020 and 2021,and forthe six months
291、ended June 30,2021 and 2022,their total revenue wasUS$13.86 million,US$32.52 million,US$8.9 million,and US$12.9 million,respectively.1.Their software products sold to customers comprising customized softwareproducts for specific needs.The revenue from sales of software productsincreased by 109.9%fro
292、m US$11.50 million for the year ended December 31,2020 to US$24.14 million for the year ended December 31,2021,primarilydue to two major contracts signed in 2021,providing smart graphic reviewsoftware products amounted to US$11.88 million and technical servicesamounted to US$1.51 million,respectivel
293、y.The revenue from sales ofsoftware products increased by 57.8%from US$4.88 million for the sixmonths ended June 30,152023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm
294、25/282Table of Contents2021 to US$7.69 million for the six months ended June 30,2022,primarilydue to two major contracts providing technical services amounted toUS$3.37 million and software products sales amounted to US$1.19 million,respectively.2.They provide M&S services for software products cont
295、racts which consist offuture software updates,upgrades,and enhancements as well as technicalproduct support services,and the provision of updates and upgrades on awhen-and-if-available basis.The revenue from sales of M&S serviceincreased by 43.1%from US$1.94 million for the year ended December 31,20
296、20 to US$2.78 million for the year ended December 31,2021,primarilydue to more residence service provided to customers in 2021.The revenuefrom sales of M&S service increased by 4.6%from US$1.43 million for thesix months ended June 30,2021 to US$1.50 million for the six months endedJune 30,2022,prima
297、rily due to a slight increase of price per serviceprovided to customers in 2022.3.Their cloud platform products,which is a newly established revenue streamin 2021,consist of standardized software products uploaded to their cloudplatform.The revenue from sales of cloud platform products increased fro
298、mnil for the year ended December 31,2020 to US$5.53 million for the yearended December 31,2021.The revenue from sales of cloud platform productsincreased by 44.5%from US$2.53 million for the six months ended June 30,2021 to US$3.65 million for the six months ended June 30,2022,primarilydue to increa
299、sed number of customers attracted by the flexibility andmobility of cloud platform products.They sell their products and services to end customers through their salesecosystem.Sales to customers in Mainland China accounted for approximately 88.3%and 97.7%of their total revenue in the fiscal years 20
300、20 and 2021,and 96.1%and99.3%for the six months ended June 30,2021 and 2022,respectively.Sales to customers in Hong Kong,Macao,Taiwan and other countries accounted forapproximately 11.7%and 2.3%of their total revenue in the fiscal years 2020 and2021,and 3.9%and 0.7%for the six months ended June 30,2
301、021 and 2022,respectively.Shanghai Xiao-is Competitive AdvantagesShanghai Xiao-i believes it has the following competitive advantages and theydistinguish Shanghai Xiao-i from its competitors:Its Pioneer Position in AI Technology and Focus on Research and Development(“R&D”)It believes that it pioneer
302、ed the industrys first cognitive intelligenceand narrow artificial intelligence technology and have built on itsculture of innovation.Since its establishment in 2001,Shanghai Xiao-i has focused on developingcognitive intelligence technologies based on its natural languageprocessing and“AI”implementa
303、tion in businesses,enjoying a privilegedreputation in the“AI”industry.As a leading AI technology andindustrialization service platform in China,through years of operation,it has established cooperation with many leading companies amongst variousindustry verticals according to Frost&Sullivan.Its indu
304、stry leadershipis built on its pioneering research to commercialize AI technology.Its first-mover advantage in natural language processing has made it apioneer in formulating AI industry standards and creating more than 500patents granted or pending.To protect its technology,in June 2012,Shanghai Xi
305、ao-i sued Apple Computer Trading(Shanghai)Co.,Ltd.,asubsidiary of Apple,Inc.,for patent infringement and received theSupreme Peoples Court Supreme Court Administrative Judgment,a finaljudgement,confirming the validity of Shanghai Xiao-is patent in June2020,but did not make a ruling on whether Apple
306、infringed its patent.Specifically,according to the Patent Administration(Patent)RetrialAdministrative Judgment issued by the Supreme Peoples Court of China(2017)ZGFXZ No.34),in the retrial case of Shanghai Xiao-i and AppleComputer Trading(Shanghai)Co.,Ltd.and the China National IntellectualProperty
307、Administration,the Supreme Peoples Court determined that theinvention patent named“A Chatbot System(Patent No.:200410053749.9)”held by Shanghai Xiao-i is a valid patent.On August 3,2020,afterobtaining the final judgment confirming the validity of its patent,Shanghai Xiao-i filed another infringement
308、 lawsuit against Apple ComputerTrading(Shanghai)Co.,Ltd.,Apple,Inc.,and Apple Computer Trading(Shanghai)Co.,Ltd.(together,“Apple”),demanding Apple to stop theinfringement and compensate for the losses.As of the date of thisprospectus,the case is still pending.See“Legal Proceedings on page 131for det
309、ails.”162023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm26/282Table of Contents Shanghai Xiao-i is a pioneer in AI+with over 20 years of development andinnovation wit
310、h 4 R&D centers,280+engineers,50+external experts,and10+university partners.Advantages of Shanghai Xiao-is Products and Services It develops and commercializes Metaverse-related offerings,includingVirtual Humans,Artificial Reality(“AR”)and Virtual Reality(“VR”).It helps its clients with their digita
311、l transformation using its cognitiveintelligence and AI technologies.It enables its customers to reap economies of scale by providing one-stopshop service from its extensive network of service hubs in their vicinity.Its deep-rooted attention to quality assurance in its product and serviceofferings p
312、uts it ahead of its competitors.It has a proven monetization model based on product differentiation,revenue source diversification,and customer loyalty.Its products and services meet the needs of different customers and itmaintains frequent client engagement for continuous business developmentand cu
313、stomer loyalty cultivation.While its customer contracts vary,they generally represent multi-yearengagements,giving it visibility into future revenue.It has mastersimilar commercial arrangements in place with many of its customers,retaining customers over the long term.Shanghai Xiao-is Robust Ecosyst
314、em of Partnerships It has various regional sales teams,including Shanghai,Beijing and HongKong.It maintains good relationships with suppliers that have a good record ofperformance.Its products cover large and medium-sized contact centers,financialinstitutions,communication operators,government servi
315、ces,industrialmanufacturing,healthcare,and other customer groups.It builds strong and long-standing customer relationships with largeenterprises in China.Its client list includes nearly all the industrygiants in the banking and telecom industries in China.Shanghai Xiao-is Visionary and Seasoned Mana
316、gement Its CEO Mr.Hui Yuan is a recognized AI industry Key Opinion Leader anddomain expert.Shanghai Xiao-is team has deep technical expertise and proven trackrecord of constant innovation.Shanghai Xiao-i has proven ability to attract and retain highly qualifiedtalent.Shanghai Xiao-is Growth Strategy
317、It intends to further grow its business by pursuing the following strategies:Continue to improve cognitive technology capability.It has setup a technology research institute to conduct in-depth communication ontechnological innovation with experts and scholars from top universities,such as Duke Univ
318、ersity,Hong Kong University of science and technologyand Columbia University.It has also carried out in-depth cooperation withwell-known domestic universities to jointly develop the latest andcutting-edge technologies.Further develop and create long-term sustainablecommercialization opportunities th
319、rough technology innovation,application combination innovation,and AI productdiversification.For example,its commercialization in the field ofintelligent drawing review has met the needs of the construction industryfor drawing review through its artificial intelligence technology.172023/2/9https:/ww
320、w.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm27/282Table of Contents Further strengthen the leading position in the metaverse relatedproducts.It began to design and produce a virtu
321、al human in 2016.Itsfirst mover advantage in the metaverse will help it continue to succeed inthis field.Expand its customer base and make full use of existing customersthrough market segmentation and personalization.It willgradually expand its target customers from the previous major customers tosm
322、all and medium-sized customers,to provide services for a wider range ofcustomer groups.Increase hardware products.As a company mainly engaged insoftware sales and services,it will increase integrated software andhardware products in the future.Further expand its global footprint strategically.The go
323、al ofthe company is to become a global artificial intelligence enterprise.After the completion of this offering,it is committed tointernationalizing its products and services and providing high-qualityproducts and services to customers around the world.ConsolidationXiao-I conducts substantially all
324、of its business in China through Shanghai Xiao-i,the VIE,due to PRC legal restrictions of foreign ownership in certain sectors.Substantially all of Xiao-Is revenues,costs and net income in China are directlyor indirectly generated through the VIE.Xiao-I,through its indirect wholly ownedsubsidiary,Zh
325、izhen Technology,has signed various agreements with the VIE andshareholders of the VIE to allow the transfer of economic benefits from the VIE toZhizhen Technology and to direct the activities of the VIE.Total assets andliabilities presented on Xiao-Is consolidated balance sheets and revenue,expense
326、,net income presented on consolidated statement of operations andcomprehensive income as well as the cash flow from operating,investing andfinancing activities presented on the consolidated statement of cash flows are thefinancial position,operation and cash flow of the PRC operating entities(exclud
327、ing non-controlling interests).The Company has not provided any financialsupport to the PRC operating entities for the fiscal years ended at December 31,2020,2021 and for the six months ended June 30,2022,and the variable interestentities accounted for an aggregate of 100%,100%,and 95%of the Company
328、s totalassets and total liabilities,respectively.As of December 31,2020,2021 and June30,2022,$697,798 and$1,254,528 and$1,472,555 of cash,cash equivalents andrestricted cash were denominated in RMB,respectively.Xiao-I and its directly and indirectly wholly owned subsidiaries,AI Plus,Xiao-iTechnology
329、 and Zhizhen Technology do not have any substantial assets or liabilitiesor result of operations.The following table sets forth the assets,liabilities,results of operations and changes in cash,cash equivalents of the PRC operatingentities,which were included in the Companys consolidated balance shee
330、ts andstatements of comprehensive income and statements of cash flows with intercompanytransactions eliminated:As of December 31,2020Condensed Consolidating Scheduleof Financial Position Parent VIE and its consolidatedsubsidiaries WFOE Other Subsidiaries EliminationAdjustments ConsolidatedTotal (in
331、U.S.dollars)Assets Current assets:Cash and cash equivalents 1,105 365,756 4 366,865Restricted cash 460,164 460,164Accounts receivable,net 8,052,564 8,052,564Amounts due from related parties 23,072 23,072Inventories,net 273,364 273,364Contract costs 1,067,289 1,067,289Prepaid expenses and other curre
332、ntassets,net 4 1,848,404 1,848,408Total current assets 1,109 12,090,613 4 12,091,726 182023/2/9https:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htmhttps:/www.sec.gov/Archives/edgar/data/1935172/0001122/ff12022_xiaoicorp.htm28/282Table of Contents As of D
333、ecember 31,2020Condensed Consolidating Scheduleof Financial Position Parent VIE and itsconsolidatedsubsidiaries WFOE Other Subsidiaries EliminationAdjustments ConsolidatedTotal (in U.S.dollars)Non-current assets:Property and equipment,net 236,499 236,499 Intangible assets,net 886,479 886,479 Long-term investment 482,463 482,463 Right of use assets 2,250,351 2,250,351 Deferred tax assets,net 5,320,