{"url_path":"/sec/aixi/10-k/2026/item-10","section_key":"item-10","section_title":"Item 10 Additional Information.","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1935172/0001213900-26-057986-index.html","accession_number":"0001213900-26-057986","cik":"0001935172","ticker":"AIXI","issuer_name":"Xiao-I Corp","edgar_url":"https://www.sec.gov/Archives/edgar/data/1935172/0001213900-26-057986-index.html","primary_entity_key":"0001935172","primary_entity_name":"Xiao-I Corp"},"word_count":13491,"has_tables":true,"body_markdown":"Item 10. Additional Information.\n\n \n\n**A. Share Capital.**\n\n \n\nNot applicable.\n\n \n\n112\n\n \n\n \n\nB. Memorandum and Articles of Association.\n\n \n\nThe following are summaries of material provisions\nof our Memorandum and Articles of Association and of the Companies Act, insofar as they relate to the material terms of our Ordinary Shares.\n\n \n\n*Objects of Our Company*. Under our Memorandum\nand Articles of Association, the objects of our Company are unrestricted, and we are capable of exercising all the functions of a natural\nperson of full capacity irrespective of any question of corporate benefit, as provided by section 27(2) of the Companies Act.\n\n \n\n*Ordinary Shares*. Our Ordinary Shares are\nissued in registered form and are issued when registered in our register of members. We may not issue shares to bearer. Our shareholders\nwho are non-residents of the Cayman Islands may freely hold and vote their shares.\n\n \n\n*Dividends*. The holders of our Ordinary\nShares are entitled to such dividends as may be declared by our board of directors. Our Memorandum and Articles of Association provide\nthat dividends may be declared and paid out of the funds of our Company lawfully available therefor. Under the laws of the Cayman Islands,\nour Company may pay a dividend out of either profit or share premium account; provided that in no circumstances may a dividend be paid\nout of above premium if this would result in our Company being unable to pay its debts as they fall due in the ordinary course of business.\n\n \n\n*Voting Rights*. Voting at any meeting of\nshareholders is by show of hands unless a poll is demanded. A poll may be demanded by:\n\n \n\n●the chairperson of such meeting;\n\n \n\n●by at least three shareholders\npresent in person or by proxy for the time being entitled to vote at the meeting;\n\n \n\n●by shareholder(s) present in\nperson or by proxy representing not less than one-tenth of the total voting rights of all shareholders having the right to vote at the\nmeeting; and\n\n \n\n●by shareholder(s) present in\nperson or by proxy and holding shares in us conferring a right to vote at the meeting being shares on which an aggregate sum has been\npaid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.\n\n \n\nAn ordinary resolution to be passed at a meeting\nby the shareholders requires the affirmative vote of a simple majority of the votes attaching to the Ordinary Shares cast at a meeting,\nwhile a special resolution requires the affirmative vote of no less than two-thirds of the votes cast attaching to the issued and outstanding\nOrdinary Shares at a meeting. A special resolution will be required for important matters such as a change of name or making changes to\nour Memorandum and Articles of Association, a reduction of our share capital and the winding up of our Company. Our shareholders may,\namong other things, divide or combine their shares by ordinary resolution.\n\n \n\n*General Meetings of Shareholders*. As a\nCayman Islands exempted company, we are not obliged by the Companies Act to call shareholders’ annual general meetings. Our Memorandum\nand Articles of Association provide that we shall, if required by the Companies Act, in each year hold a general meeting as its annual\ngeneral meeting, and shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such\ntime and place as may be determined by our directors. General meetings, including annual general meetings, may be held at such times and\nin any location in the world as may be determined by the Board. A general meeting or any class meeting may also be held by means of such\ntelephone, electronic or other communication facilities as to permit all persons participating in the meeting to communicate with each\nother, and participation in such a meeting constitutes presence at such meeting.\n\n \n\n113\n\n \n\n \n\nShareholders’ general meetings may be convened\nby the chairperson of our board of directors or by a majority of our board of directors. Advance notice of at least ten clear days is\nrequired for the convening of our annual general shareholders’ meeting (if any) and any other general meeting of our shareholders.\nA quorum required for any general meeting of shareholders consists of, at the time when the meeting proceeds to business, two shareholders\nholding shares which carry in aggregate (or representing by proxy) not less than one-third of all votes attaching to issued and outstanding\nshares in our Company entitled to vote at such general meeting.\n\n \n\n*Transfer of Ordinary Shares*. Subject to\nthe restrictions set out below, any of our shareholders may transfer all or any of his or her Ordinary Shares by an instrument of transfer\nin the usual or common form or in a form prescribed by Nasdaq Global Market or any other form approved by our board of directors. Notwithstanding\nthe foregoing, Ordinary Shares may also be transferred in accordance with the applicable rules and regulations of Nasdaq Global Market.\n\n \n\nOur board of directors may, in its absolute discretion,\ndecline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our board of directors may\nalso decline to register any transfer of any ordinary share unless:\n\n \n\n●the instrument of transfer\nis lodged with us, accompanied by the certificate for the Ordinary Shares to which it relates and such other evidence as our board of\ndirectors may reasonably require to show the right of the transferor to make the transfer;\n\n \n\n●the instrument of transfer\nis in respect of only one class of Ordinary Shares;\n\n \n\n●the instrument of transfer\nis properly stamped, if required; in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share\nis to be transferred does not exceed four; and\n\n \n\n●a fee of such maximum sum as\nthe Nasdaq Global Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us\nin respect thereof.\n\n \n\nIf our directors refuse to register a transfer\nthey shall, within two months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee\nnotice of such refusal.\n\n \n\nThe registration of transfers may, after compliance\nwith any notice required in accordance with the rules of the Nasdaq Global Market, be suspended and the register closed at such times\nand for such periods as our board of directors may from time to time determine; provided, however, that the registration of transfers\nshall not be suspended nor the register closed for more than 30 days in any year as our board may determine. The period of 30 days may\nbe extended for a further period or periods not exceeding 30 days in respect of any year if approved by the shareholders by ordinary resolution.\n\n \n\n*Liquidation*. On the winding up of our Company,\nif the assets available for distribution amongst our shareholders shall be more than sufficient to repay the whole of the share capital\nat the commencement of the winding up, the surplus shall be distributed amongst our shareholders in proportion to the par value of the\nshares held by them at the commencement of the winding up, subject to a deduction from those shares in respect of which there are monies\ndue, of all monies payable to our Company for unpaid calls or otherwise. If our assets available for distribution are insufficient to\nrepay all of the paid-up capital, such the assets will be distributed so that, as nearly as may be, the losses are borne by our shareholders\nin proportion to the par value of the shares held by them.\n\n \n\n114\n\n \n\n \n\n*Calls on Shares and Forfeiture of Shares*.\nOur board of directors may from time to time make calls upon shareholders for any amounts unpaid on their shares in a notice served to\nsuch shareholders at least 14 days prior to the specified time and place of payment. The shares that have been called upon and remain\nunpaid are subject to forfeiture.\n\n \n\n*Redemption, Repurchase and Surrender of Shares*.\nWe may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders of these shares,\non such terms and in such manner, including out of capital, as may be determined by our board of directors. Our company may also repurchase\nany of our shares on such terms and in such manner as have been approved by our board of directors. Under the Companies Act, the redemption\nor repurchase of any share may be paid out of our Company’s profits, share premium or out of the proceeds of a new issue of shares\nmade for the purpose of such redemption or repurchase, or out of capital if our Company can, immediately following such payment, pay its\ndebts as they fall due in the ordinary course of business. In addition, under the Companies Act no such share may be redeemed or repurchased\n(a) unless it is fully paid up, (b) if such redemption or repurchase would result in there being no shares outstanding or (c) if the company\nhas commenced liquidation. In addition, our Company may accept the surrender of any fully paid share for no consideration.\n\n \n\n*Variations of Rights of Share*s. Whenever\nthe capital of our Company is divided into different classes the rights attached to any such class may, subject to any rights or restrictions\nfor the time being attached to any class, only be varied with the sanction of a resolution passed by a majority of two-thirds of the votes\ncast at a separate meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class\nissued with preferred or other rights shall not, unless otherwise expressly provided by the terms of issue of the shares of that class,\nbe deemed to be varied by the creation, allotment or issue of further shares ranking pari passu with such existing class of shares.\n\n \n\n*Issuance of Additional Share*s. Our Memorandum\nand Articles of Association authorizes our board of directors to issue additional Ordinary Shares from time to time as our board of directors\nshall determine, to the extent of available authorized but unissued shares.\n\n \n\nOur Memorandum and Articles of Association also\nauthorizes our board of directors to establish from time to time one or more series of preference shares and to determine, with respect\nto any series of preference shares, the terms and rights of that series, including, among other things:\n\n \n\n●the designation of the series;\n\n \n\n●the number of shares of the\nseries;\n\n \n\n●the dividend rights, dividend\nrates, conversion rights, voting rights; and\n\n \n\n●the rights and terms of redemption\nand liquidation preferences.\n\n \n\nOur board of directors may issue preference shares\nwithout action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders\nof Ordinary Shares. On December 13, 2023, we issued 3,700,000 preferred shares, each with a par value of US$0.00005 to ZunTian Holding\nLimited, one of our then existing shareholders. Each preferred share confers a voting right equivalent to 20 votes. Aside from the weighted\nvoting rights, these preferred shares do not carry any additional rights.\n\n \n\n*Inspection of Books and Record*s. Holders\nof our Ordinary Shares will have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or\nour corporate records. However, Memorandum and Articles of Association have provisions that give our shareholders the right to inspect\nour register of shareholders without charge, and to receive our annual audited financial statements.\n\n \n\n115\n\n \n\n \n\n*Anti-Takeover Provisions*. Some provisions\nof our Memorandum and Articles of Association may discourage, delay or prevent a change of control of our Company or management that shareholders\nmay consider favorable, including provisions that authorize our board of directors to issue preference shares in one or more series and\nto designate the price, rights, preferences, privileges and restrictions of such preference shares without any further vote or action\nby our shareholders. Further shareholders have no right under the Memorandum and Articles of Association to requisition and convene general\nmeetings of shareholders.\n\n \n\nHowever, under Cayman Islands law, our directors\nmay only exercise the rights and powers granted to them under our Memorandum and Articles of Association for a proper purpose and for\nwhat they believe in good faith to be in the best interests of our Company.\n\n \n\n*Exempted Company*. We are an exempted company\nwith limited liability under the Companies Act. The Companies Act distinguishes between ordinary resident companies and exempted companies.\nAny company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered\nas an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted\ncompany:\n\n \n\n●does not have to file an annual\nreturn of its shareholders with the Registrar of Companies;\n\n \n\n●is not required to open its\nregister of members for inspection;\n\n \n\n●does not have to hold an annual\ngeneral meeting;\n\n \n\n●may issue negotiable or bearer\nshares or shares with no par value;\n\n \n\n●may obtain an undertaking against\nthe imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);\n\n \n\n●may register by way of continuation\nin another jurisdiction and be deregistered in the Cayman Islands;\n\n \n\n●may register as a limited duration\ncompany; and\n\n \n\n●may register as a segregated\nportfolio company.\n\n \n\n“Limited\nliability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on that shareholder’s\nshares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agency relationship or an\nillegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).\n\n \n\n**Differences in Corporate Law**\n\n \n\nThe Companies Act is derived, to a large extent,\nfrom the older Companies Acts of England but does not follow recent English statutory enactments and accordingly there are significant\ndifferences between the Companies Act and the current Companies Act of England. In addition, the Companies Act differs from laws applicable\nto U.S. corporations and their shareholders. Set forth below is a summary of the significant differences between the provisions of the\nCompanies Act applicable to us and the laws applicable to companies incorporated in the United States and their shareholders.\n\n \n\n116\n\n \n\n \n\n*Mergers and Similar Arrangements*. The Companies\nAct permits mergers and consolidations between Cayman Islands companies and between Cayman Islands companies and non-Cayman Islands companies.\nFor these purposes, (a) “merger” means the merging of two or more constituent companies and the vesting of their undertaking,\nproperty and liabilities in one of such companies as the surviving company, and (b) a “consolidation” means the combination\nof two or more constituent companies into a consolidated company and the vesting of the undertaking, property and liabilities of such\ncompanies to the consolidated company. In order to effect such a merger or consolidation, the directors of each constituent company must\napprove a written plan of merger or consolidation, which must then be authorized by (a) a special resolution of the shareholders of each\nconstituent company, and (b) such other authorization, if any, as may be specified in such constituent company’s articles of association.\nThe plan must be filed with the Registrar of Companies of the Cayman Islands together with a declaration as to the solvency of the consolidated\nor surviving company, a list of the assets and liabilities of each constituent company and an undertaking that a copy of the certificate\nof merger or consolidation will be given to the members and creditors of each constituent company and that notification of the merger\nor consolidation will be published in the Cayman Islands Gazette. Court approval is not required for a merger or consolidation which is\neffected in compliance with these statutory procedures.\n\n \n\nA merger between a Cayman parent company and its\nCayman subsidiary or subsidiaries does not require authorization by a resolution of shareholders of that Cayman subsidiary if a copy of\nthe plan of merger is given to every member of that Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose,\na company is a “parent” of a subsidiary if it holds issued shares that together represent at least ninety percent (90)% of\nthe votes at a general meeting of the subsidiary. The consent of each holder of a fixed or floating security interest over a constituent\ncompany is required unless this requirement is waived by a court in the Cayman Islands.\n\n \n\nSave in certain limited circumstances, a shareholder\nof a Cayman constituent company who dissents from the merger or consolidation is entitled to payment of the fair value of his shares (which,\nif not agreed between the parties, will be determined by the Cayman Islands court) upon dissenting to the merger or consolidation, provided\nthe dissenting shareholder complies strictly with the procedures set out in the Companies Act. The exercise of dissenter rights will preclude\nthe exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares,\nsave for the right to seek relief on the grounds that the merger or consolidation is void or unlawful.\n\n \n\nSeparate from the statutory provisions relating\nto mergers and consolidations, the Companies Act also contains statutory provisions that facilitate the reconstruction and amalgamation\nof companies by way of schemes of arrangement, provided that the arrangement is approved by seventy-five per cent in value of the members\nor class of members, as the case may be, with whom the arrangement is to be made and a majority in number of each class of creditors with\nwhom the arrangement is to be made, and who must in addition represent seventy-five per cent in value of each such class of creditors,\nas the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The\nconvening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting\nshareholder has the right to express to the court the view that the transaction ought not to be approved, the court can be expected to\napprove the arrangement if it determines that:\n\n \n\n●the statutory provisions as\nto the required majority vote have been met;\n\n \n\n●the shareholders have been\nfairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote\ninterests adverse to those of the class;\n\n \n\n●the arrangement is such that\nmay be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and\n\n \n\n●the arrangement is not one\nthat would more properly be sanctioned under some other provision of the Companies Act.\n\n \n\nThe Companies Act also contains a statutory power\nof compulsory acquisition which may facilitate the “squeeze out” of a dissentient minority shareholder upon a tender offer.\nWhen a tender offer is made and accepted by holders of 90% of the shares affected within four months, the offeror may, within a two-month\nperiod commencing on the expiration of such four-month period, require the holders of the remaining shares to transfer such shares to\nthe offeror on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands but this is unlikely to succeed\nin the case of an offer which has been so approved unless there is evidence of fraud, bad faith or collusion.\n\n \n\n117\n\n \n\n \n\nIf an arrangement and reconstruction by way of\nscheme of arrangement is thus approved and sanctioned, or if a tender offer is made and accepted, in accordance with the foregoing statutory\nprocedures, a dissenting shareholder would have no rights comparable to appraisal rights, save that objectors to a takeover offer may\napply to the Grand Court of the Cayman Islands for various orders that the Grand Court of the Cayman Islands has a broad discretion to\nmake, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations, providing rights to receive payment\nin cash for the judicially determined value of the shares.\n\n \n\nThe Companies Act also contains statutory provisions\nwhich provide that a company may present a petition to the Grand Court of the Cayman Islands for the appointment of a restructuring officer\non the grounds that the company (a) is or is likely to become unable to pay its debts within the meaning of section 93 of the Companies\nAct; and (b) intends to present a compromise or arrangement to its creditors (or classes thereof) either, pursuant to the Companies Act,\nthe law of a foreign country or by way of a consensual restructuring. The petition may be presented by a company acting by its directors,\nwithout a resolution of its members or an express power in its articles of association. On hearing such a petition, the Cayman Islands\ncourt may, among other things, make an order appointing a restructuring officer or make any other order as the court thinks fit.\n\n \n\nShareholders’ Suits. Derivative actions\nhave been brought in the Cayman Islands courts, and the Cayman Islands courts have confirmed the availability for such actions. In most\ncases, we will be the proper plaintiff in any claim based on a breach of duty owed to us, and a claim against (for example) our officers\nor directors usually may not be brought by a shareholder. However, based both on Cayman Islands authorities and on English authorities,\nwhich would in all likelihood be of persuasive authority and be applied by a court in the Cayman Islands, exceptions to the foregoing\nprinciple apply in circumstances in which:\n\n \n\n●a company is acting, or proposing\nto act, illegally or beyond the scope of its authority;\n\n \n\n●the act complained of, although\nnot beyond the scope of the authority, could be effected if duly authorized by more than the number of votes which have actually been\nobtained; or\n\n \n\n●those who control the company\nare perpetrating a “fraud on the minority.”\n\n \n\nA shareholder may have a direct right of action\nagainst us where the individual rights of that shareholder have been infringed or are about to be infringed.\n\n \n\nIndemnification of Directors and Executive Officers\nand Limitation of Liability. Cayman Islands law does not limit the extent to which a company’s memorandum and articles of association\nmay provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts\nto be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our\nMemorandum and Articles of Association provide that that we shall indemnify our directors and officers, and their personal representatives,\nagainst all actions, proceedings, costs, charges, expenses, losses, damages or liabilities incurred or sustained by such persons, other\nthan by reason of such person’s dishonesty, willful default or fraud, in or about the conduct of our Company’s business or\naffairs (including as a result of any mistake of judgment) or in the execution or discharge of his duties, powers, authorities or discretions,\nincluding without prejudice to the generality of the foregoing, any costs, expenses, losses or liabilities incurred by such director or\nofficer in defending (whether successfully or otherwise) any civil proceedings concerning our Company or its affairs in any court whether\nin the Cayman Islands or elsewhere. This standard of conduct is generally the same as permitted under the Delaware General Corporation\nLaw for a Delaware corporation.\n\n \n\nIn addition, we have entered into indemnification\nagreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in\nour Memorandum and Articles of Association.\n\n \n\nInsofar as indemnification for liabilities arising\nunder the Securities Act may be permitted to our directors, officers or persons controlling us under the foregoing provisions, we have\nbeen informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is\ntherefore unenforceable.\n\n \n\n118\n\n \n\n \n\n*Directors’ Fiduciary Duties*. Under\nDelaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has\ntwo components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that\nan ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, and disclose\nto shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires that\na director acts in a manner he reasonably believes to be in the best interests of the corporation. He must not use his corporate position\nfor personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation\nand its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by the\nshareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faith and in the\nhonest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence\nof a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, the director must\nprove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.\n\n \n\nAs a matter of Cayman Islands law, a director\nof a Cayman Islands company is in the position of a fiduciary with respect to the company and therefore it is considered that he owes\nthe following duties to the company — a duty to act in good faith in the best interests of the company, a duty not to make a personal\nprofit based on his position as director (unless the company permits him to do so), a duty not to put himself in a position where the\ninterests of the company conflict with his personal interest or his duty to a third party and a duty to exercise powers for the purpose\nfor which such powers were intended. A director of a Cayman Islands company owes to the company a duty to act with skill and care. It\nwas previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably\nbe expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard\nwith regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.\n\n \n\n*Shareholder Action by Written Consent*.\nUnder the Delaware General Corporation Law, a corporation may eliminate the right of shareholders to act by written consent by amendment\nto its certificate of incorporation. Cayman Islands law permits us to eliminate the right of shareholders to act by written consent and\nour Memorandum and Articles of Association provide that any action required or permitted to be taken at any general meetings may be taken\nupon the vote of shareholders at a general meeting duly noticed and convened in accordance with our Memorandum and Articles of Association\nand may not be taken by written consent of the shareholders without a meeting.\n\n \n\n*Shareholder Proposals*. Under the Delaware\nGeneral Corporation Law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies\nwith the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized\nto do so in the governing documents, but shareholders may be precluded from calling special meetings.\n\n \n\nThe Companies Act does not provide shareholders\nwith any right to requisition a general meeting or to put any proposal before a general meeting. As an exempted Cayman Islands company,\nwe are not obliged by law to call shareholders’ annual general meetings.\n\n \n\n*Cumulative Voting*. Under the Delaware General\nCorporation Law, cumulative voting for elections of directors is not permitted unless the corporation’s certificate of incorporation\nspecifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors\nsince it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases\nthe shareholder’s voting power with respect to electing such director. There are no prohibitions in relation to cumulative voting\nunder the laws of the Cayman Islands but our Memorandum and Articles of Association do not provide for cumulative voting. As a result,\nour shareholders are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.\n\n \n\n*Removal of Directors*. Under the Delaware\nGeneral Corporation Law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority\nof the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Under our Memorandum and Articles\nof Association, subject to certain restrictions as contained therein, directors may be removed with or without cause, by an ordinary resolution\nof our shareholders. An appointment of a director may be on terms that the director shall automatically retire from office (unless he\nhas sooner vacated office) at the next or a subsequent annual general meeting or upon any specified event or after any specified period\nin a written agreement between the company and the director, if any; but no such term shall be implied in the absence of express provision.\nUnder our Memorandum and Articles of Association, a director’s office shall be vacated if the director (i) becomes bankrupt or has\na receiving order made against him or suspends payment or compounds with his creditors; (ii) is found to be or becomes of unsound mind\nor dies; (iii) resigns his office by notice in writing to the company; (iv) without special leave of absence from our board of directors,\nis absent from three consecutive meetings of the board and the board resolves that his office be vacated; (v) is prohibited by law from\nbeing a director or; (vi) is removed from office pursuant to the laws of the Cayman Islands or any other provisions of our Memorandum\nand Articles of Association.\n\n \n\n119\n\n \n\n \n\nTransactions with Interested Shareholders. The\nDelaware General Corporation Law contains a business combination statute applicable to Delaware corporations whereby, unless the corporation\nhas specifically elected not to be governed by such statute by amendment to its certificate of incorporation, it is prohibited from engaging\nin certain business combinations with an “interested shareholder” for three years following the date that such person becomes\nan interested shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the target’s\noutstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer to make a two-tiered\nbid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things, prior to\nthe date on which such shareholder becomes an interested shareholder, the board of directors approves either the business combination\nor the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware\ncorporation to negotiate the terms of any acquisition transaction with the target’s board of directors.\n\n \n\nCayman Islands law has no comparable statute.\nAs a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute. However, although\nCayman Islands law does not regulate transactions between a company and its significant shareholders, it does provide that such transactions\nmust be entered into bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.\n\n \n\n*Dissolution; Winding up*. Under the Delaware\nGeneral Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must be approved by shareholders\nholding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved\nby a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate\nof incorporation a supermajority voting requirement in connection with dissolutions initiated by the board.\n\n \n\nUnder Cayman Islands law, a company may be wound\nup by either an order of the courts of the Cayman Islands or by a special resolution of its members or, if the company is unable to pay\nits debts, by an ordinary resolution of its members. The court has authority to order winding up in a number of specified circumstances\nincluding where it is, in the opinion of the court, just and equitable to do so.\n\n \n\n*Variation of Rights of Shares*. Under the\nDelaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding\nshares of such class, unless the certificate of incorporation provides otherwise. Under our Memorandum and Articles of Association, if\nour share capital is divided into more than one class of shares, the rights attached to any such class may only be materially adversely\nvaried with the sanction of a resolution passed by a majority of two-thirds of the votes cast at a separate meeting of the holders of\nthe shares of that class.\n\n \n\nAmendment of Governing Documents. Under the Delaware\nGeneral Corporation Law, a corporation’s governing documents may be amended with the approval of a majority of the outstanding shares\nentitled to vote, unless the certificate of incorporation provides otherwise. Under Cayman Islands law, our Memorandum and Articles of\nAssociation may only be amended with a special resolution of our shareholders.\n\n \n\n*Rights of Non-resident or Foreign Shareholders*.\nThere are no limitations imposed by our Memorandum and Articles of Association on the rights of non-resident or foreign shareholders to\nhold or exercise voting rights on our shares. In addition, there are no provisions in our Memorandum and Articles of Association governing\nthe ownership threshold above which shareholder ownership must be disclosed.\n\n \n\n*Anti-Money Laundering — Cayman Islands*.\nIn order to comply with legislation or regulations aimed at the prevention of money laundering, the Company may be required to adopt and\nmaintain anti-money laundering procedures, and may require subscribers to provide evidence to verify their identity. Where permitted,\nand subject to certain conditions, the Company may also delegate the maintenance of our anti-money laundering procedures (including the\nacquisition of due diligence information) to a suitable person.\n\n \n\n120\n\n \n\n \n\nThe Company reserves the right to request such\ninformation as is necessary to verify the identity of a subscriber. In the event of delay or failure on the part of the subscriber in\nproducing any information required for verification purposes, we may refuse to accept the application, in which case any funds received\nwill be returned without interest to the account from which they were originally debited.\n\n \n\nThe Company also reserves the right to refuse\nto make any redemption payment to a shareholder if directors or officers suspect or are advised that the payment of redemption proceeds\nto such shareholder might result in a breach of applicable anti-money laundering or other laws or regulations by any person in any relevant\njurisdiction, or if such refusal is considered necessary or appropriate to ensure compliance with any such laws or regulations in any\napplicable jurisdiction.\n\n \n\nC. Material Contracts.\n\n \n\nExcept as otherwise disclosed in this annual report\n(including the exhibits thereto), we are not currently, and have not been in the last two years, party to any material contract, other\nthan contracts entered into in the ordinary course of business and other than those described in “Item 4. Information on the Company”\nor elsewhere in this annual report.\n\n \n\nD. Exchange Controls.\n\n \n\n*Regulations on Foreign Currency Exchange*\n\n \n\nUnder the PRC Foreign Currency Administration\nRules promulgated on January 29, 1996 and last amended on August 5, 2008 and various regulations issued by SAFE and other relevant PRC\ngovernment authorities, payment of current account items in foreign currencies, such as trade and service payments, payment of interest\nand dividends can be made without prior approval from SAFE by following the appropriate procedural requirements. By contrast, the conversion\nof RMB into foreign currencies and remittance of the converted foreign currency outside the PRC for the purpose of capital account items,\nsuch as direct equity investments, loans and repatriation of investment, requires prior approval from SAFE or its local office.\n\n \n\nOn February 13, 2015, SAFE promulgated the Circular\non Simplifying and Improving the Foreign Currency Management Policy on Direct Investment, effective from June 1, 2015, which cancels the\nrequirement for obtaining approvals of foreign exchange registration of foreign direct investment and overseas direct investment from\nSAFE. The application for the registration of foreign exchange for the purpose of foreign direct investment and overseas direct investment\nmay be filed with qualified banks, which, under the supervision of SAFE, may review the application and process the registration.\n\n \n\nSAFE promulgated the Notice of the State Administration\nof Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested Enterprises, or SAFE\nCircular 19, effective in June 2015. According to SAFE Circular 19, the flow and use of the RMB capital converted from foreign currency-denominated\nregistered capital of a foreign-invested company is regulated such that RMB capital may not be used for the issuance of RMB entrusted\nloans, the repayment of inter-enterprise loans or the repayment of banks loans that have been transferred to a third party. Although SAFE\nCircular 19 allows RMB capital converted from foreign currency-denominated registered capital of a foreign-invested enterprise to be used\nfor equity investments within the PRC, it also reiterates the principle that RMB converted from the foreign currency-denominated capital\nof a foreign-invested company may not be directly or indirectly used for purposes beyond its business scope. SAFE promulgated the Notice\nof the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign Exchange Settlement Management Policy of Capital\nAccount, or SAFE Circular 16, effective in June 2016, which reiterates some of the rules set forth in SAFE Circular 19, but changes the\nprohibition against using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to\nissue RMB entrusted loans to a prohibition against using such capital to issue loans to non-associated enterprises. SAFE Circular 19 and\nSAFE Circular 16 may significantly limit our ability to transfer any foreign currency we hold to our PRC subsidiary, which may adversely\naffect our liquidity and our ability to fund and expand our business in the PRC. On October 23, 2019, SAFE issued Notice of the State\nAdministration of Foreign Exchange on Further Promoting the Facilitation of Cross-border Trade and Investment, or the Circular 28. Circular\n28 allows non-investment foreign-invested enterprises to use their capital funds to make equity investments in China, provided that such\ninvestments do not violate the Negative List and the target investment projects are genuine and in compliance with PRC laws. Since Circular\n28 was issued only recently, its interpretation and implementation in practice are still subject to substantial uncertainties.\n\n \n\nOn January 26, 2017, SAFE promulgated the Circular\non Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, or SAFE Circular\n3, which stipulates several capital control measures with respect to the outbound remittance of profits from domestic entities to offshore\nentities, including (i) banks must check whether the transaction is genuine by reviewing board resolutions regarding profit distribution,\noriginal copies of tax filing records and audited financial statements, and (ii) domestic entities must retain income to account for previous\nyears’ losses before remitting any profits. Moreover, pursuant to SAFE Circular 3, domestic entities must explain in detail the\nsources of capital and how the capital will be used, and provide board resolutions, contracts and other proof as a part of the registration\nprocedure for outbound investment.\n\n \n\n121\n\n \n\n \n\nIn light of the various requirements imposed by\nPRC regulations on loans to and direct investment in PRC entities by offshore holding companies, and the fact that the PRC government\nmay at its discretion restrict access to foreign currencies for current account transactions in the future, we cannot assure you that\nwe will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if\nat all, with respect to future loans to PRC subsidiaries or future capital contributions by us to our PRC subsidiary. As a result, uncertainties\nexist as to our ability to provide prompt financial support to our subsidiaries when needed. If we fail to complete such registrations\nor obtain such approvals, our ability to use our available funds to capitalize or otherwise fund our PRC operations may be negatively\naffected, which could materially and adversely affect our liquidity and our ability to fund and expand our business of our PRC subsidiary\nand consolidated affiliated entities.\n\n \n\n*Regulations on Foreign Exchange Registration\nof Overseas Investment by PRC Residents*\n\n \n\nSAFE issued the Circular on Relevant Issues Relating\nto Domestic Resident’s Investment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37,\nwhich became effective in July 2014, to replace the Circular of the State Administration of Foreign Exchange on Issues Concerning the\nRegulation of Foreign Exchange in Equity Finance and Roundtrip Investments by Domestic Residents through Offshore Special Purpose Vehicles,\nto regulate foreign exchange matters in relation to the use of special purpose vehicles, or SPVs, by PRC residents or entities to seek\noffshore investment and financing or conduct round trip investment in China. SAFE Circular 37 defines a SPV as an offshore entity established\nor controlled, directly or indirectly, by PRC residents or entities for the purpose of seeking offshore financing or making offshore investment,\nusing legitimate onshore or offshore assets or interests, while “round trip investment” is defined as direct investment in\nChina by PRC residents or entities through SPVs, namely, establishing foreign-invested enterprises to obtain the ownership, control rights\nand management rights. SAFE Circular 37 stipulates that, prior to making contributions into an SPV, PRC residents or entities be required\nto complete foreign exchange registration with SAFE or its local branch. In addition, SAFE promulgated the Notice on Further Simplifying\nand Improving the Administration of the Foreign Exchange Concerning Direct Investment in February 2015 (which amended SAFE Circular 37),\nas amended in 2019, local banks will examine and handle foreign exchange registration for overseas direct investment, including the initial\nforeign exchange registration and amendment registration, under SAFE Circular 37 from June 1, 2015.\n\n \n\nPRC residents or entities who had contributed\nlegitimate onshore or offshore interests or assets to SPVs but had not obtained registration as required before the implementation of\nthe SAFE Circular 37 must register their ownership interests or control in the SPVs with qualified banks. An amendment to the registration\nis required if there is a material change with respect to the SPV registered, such as any change of basic information (including change\nof the PRC residents, name and operation term), increases or decreases in investment amount, transfers or exchanges of shares, and mergers\nor divisions. Failure to comply with the registration procedures set forth in SAFE Circular 37 and the subsequent notice, or making misrepresentation\non or failure to disclose controllers of the foreign-invested enterprise that is established through round-trip investment, may result\nin restrictions being imposed on the foreign exchange activities of the relevant foreign-invested enterprise, including payment of dividends\nand other distributions, such as proceeds from any reduction in capital, share transfer or liquidation, to its offshore parent or affiliate,\nand the capital inflow from the offshore parent, and may also subject relevant PRC residents or entities to penalties under PRC foreign\nexchange administration regulations.\n\n \n\nIf our shareholders who are PRC residents or entities\ndo not complete their registration with the local SAFE branches, our PRC subsidiary may be prohibited from distributing its profits and\nproceeds from any reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional\ncapital to our PRC subsidiary. Moreover, failure to comply with the SAFE registration described above could result in liability under\nPRC laws for evasion of applicable foreign exchange restrictions.\n\n \n\n122\n\n \n\n \n\nCurrently, most of our shareholders have completed\nCircular 37 Registration and are in compliance. Some of our beneficial owners, who are PRC residents, have not completed the Circular\n37 Registration. All our significant shareholders, directors and officers have completed Circular 37 Registration. We have asked our shareholders\nwho are Chinese residents to make the necessary applications and filings as required by Circular 37. We attempt to comply and attempt\nto ensure that our shareholders who are subject to these rules comply, with the relevant requirements. We cannot, however, provide any\nassurances that all of our and future shareholders who are Chinese residents will comply with our request to make or obtain any applicable\nregistration or comply with other requirements required by Circular 37 or other related rules. In addition, seven of our shareholders\ndid not register according to the registration procedures stipulated in Circular 37 Registration of the SAFE when they conducted their\nother external investment activities unrelated to us. As a result, these shareholders may be subject to penalties themselves, and WFOE\nmay be unable to open a new capital account with relevant banks within China according to their internal control policies and may be restricted\nfrom remitting funds or handling other foreign exchange businesses within China unless and until we remediate some of our shareholders’\nnon-compliance with Circular 37. However, WFOE has successfully opened a new capital account with Bank of Ningbo recently. Apart from\na small amount of the IPO proceeds reserved for overseas use, we were able to transfer the rest of the IPO proceeds from overseas to WFOE\nfor VIE’s product development and operations through both WFOE’s new capital account with Bank of Ningbo and WFOE’s\npre-existing capital account with Agricultural Bank of China where WFOE has reserved foreign exchange quota. So long as there are no changes\nto PRC laws and regulations, or internal control policies of Bank of Ningbo, we are not aware of any substantial obstacles for WFOE to\nreceive fund transfers from overseas in the near future. However, should there be any changes to PRC laws and regulations or internal\ncontrol policies of Bank of Ningbo in the future, WFOE then may be restricted from transferring funds from overseas to its capital account\nwith Bank of Ningbo as a result. We are trying to assist these shareholders with remedying their non-compliance with Circular 37, but\nwe are not sure when we will be able to accomplish it. See “Item 3. Key Information—D. Risk Factors —Risks relating\nto Our Corporate Structure— Some of our shareholders are not in compliance with the PRC’s regulations relating to offshore\ninvestment activities by PRC residents. As a result, these shareholders may be subject to penalties themselves, and WFOE may be unable\nto open a new capital account with relevant banks within China according to their internal control policies and may be restricted from\nremitting funds or handling other foreign exchange businesses within China unless and until we remediate the non-compliance,” and\n“Item 3. Key Information—D. Risk Factors —Risks relating to Doing Business in China—PRC regulation of loans to,\nand direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may delay us from\nusing our available funds to make loans to our PRC subsidiary and consolidated affiliated entities, or to make additional capital contributions\nto our PRC subsidiary, which could materially and adversely affect our liquidity and our ability to fund and expand the business of our\nPRC subsidiary and consolidated affiliated entities.”\n\n \n\n*Regulations on Dividend Distribution*\n\n \n\nDistribution of dividends of foreign investment enterprises are mainly\ngoverned by the Foreign Investment Enterprise Law, issued in 1986 and amended in 2000 and 2016 respectively, and the Implementation Rules\nunder the Foreign Investment Enterprise Law, issued in 1990 and amended in 2001 and 2014 respectively. Thus, dividends and distributions\nfrom WFOE and the VIE are subject to regulations and restrictions on dividends and payment to parties outside of China. These regulations\npermit payment of dividends to Xiao-I by WFOE only out of net income, if any, determined in accordance with PRC accounting standards and\nregulations. A PRC company is not permitted to distribute any profits until any losses from prior fiscal years have been offset by general\nreserve fund and profits (if general reserve fund is not enough). Profits retained from prior fiscal years may be distributed together\nwith distributable profits from the current fiscal year. In addition, a wholly foreign-owned enterprise is required to set aside at least\n10% of its accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such\nfund reaches 50% of its registered capital. As of December 31, 2024 and 2025, our PRC operating entities had restricted amount of\nUS$237,486 (RMB1,569,546) and US$237,486 (RMB1,569,546) the reserve fund, respectively.  Moreover, registered share capital and capital\nreserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each operating subsidiary. We\nhave not previously declared or paid cash dividends and we have no plan to declare or pay any dividends in the near future.\n\n \n\nE. Taxation.\n\n \n\nThe following summary of material Cayman Islands,\nPRC and U.S. federal income tax consequences of an investment in ADSs or Ordinary Shares is based upon laws and relevant interpretations\nthereof in effect as of the date of this annual report, all of which are subject to change. This summary does not deal with all possible\ntax consequences relating to an investment in ADSs or Ordinary Shares, such as the tax consequences under state, local and other tax laws.\n\n \n\nCayman Islands Taxation\n\n \n\nThe Cayman Islands currently levies no taxes on\nindividuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax\nor estate duty. There are no other taxes likely to be material to investors levied by the government of the Cayman Islands except for\nstamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands.\nThe Cayman Islands is a party to a double tax treaty entered with the United Kingdom in 2010 but is otherwise is not party to any double\ntax treaties which are applicable to any payments made to or by our Company. There are no exchange control regulations or currency restrictions\nin the Cayman Islands.\n\n \n\n123\n\n \n\n \n\nPayments of dividends and capital in respect of\nOrdinary Shares (including Ordinary Shares represented by the ADSs) will not be subject to taxation in the Cayman Islands and no withholding\nwill be required under Cayman Islands laws on the payment of a dividend or capital to any holder of Ordinary Shares (including Ordinary\nShares represented by the ADSs), nor will gains derived from the disposal of ADSs or Ordinary Shares be subject to Cayman Islands income\nor corporation tax.\n\n \n\nNo stamp duty is payable in the Cayman Islands\nin respect of the issue of our ADSs or Ordinary Shares or on an instrument of transfer in respect of our ADSs or Ordinary Shares except\nthose which hold interests in land in the Cayman Islands.\n\n \n\nPeople’s Republic of China Taxation\n\n \n\nUnder the PRC EIT Law and its implementation rules,\nan enterprise established outside the PRC with a “*de facto* management body” within the PRC is considered a resident\nenterprise and will be subject to the enterprise income tax at the rate of 25% on its global income. The implementation rules define the\nterm “*de facto* management body” as the body that exercises full and substantial control over and overall management\nof the business, production, personnel, accounts and properties of an enterprise. In April 2009, the SAT issued the Circular of the SAT\non Issues Relating to Identification of PRC-Controlled Overseas Registered Enterprises as Resident Enterprises in Accordance with the\nDe Facto Standards of Organizational Management (the “SAT Circular 82”), which provides certain specific criteria for determining\nwhether the “*de facto* management body” of a PRC-controlled enterprise that is incorporated offshore is located in China.\nAlthough this circular only applies to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled\nby PRC individuals or foreigners, the criteria set forth in the circular may reflect the SAT’s general position on how the “*de\nfacto* management body” test should be applied in determining the tax resident status of all offshore enterprises. According\nto SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group will be regarded as a\nPRC tax resident by virtue of having its “*de facto* management body” in the PRC only if all of the following conditions\nare met: (i) the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise’s\nfinancial and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise’s\nprimary assets, accounting books and records, company seals, and board and shareholder resolutions, are located or maintained in the PRC;\nand (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.\n\n \n\nFurther to SAT Circular 82, the SAT issued Announcement\nof the State Administration of Taxation on Printing and Distributing the Administrative Measures for Income Tax on Chinese-controlled\nResident Enterprises Incorporated Overseas (Trial Implementation) (the “SAT Bulletin 45”), which took effect in September\n2011, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45 provides for procedures and administration details\nof determination on resident status and administration on post-determination matters. Our company is a company incorporated outside the\nPRC. As a holding company, its key assets are its ownership interests in its subsidiaries, and its key assets are located, and its records\n(including the resolutions of its board of directors and the resolutions of its shareholders) are maintained, outside the PRC. For the\nsame reasons, we believe our other entities outside of China are not PRC resident enterprises either. As such, we do not believe that\nour Company meets all of the conditions above or is a PRC resident enterprise for PRC tax purposes. However, the tax resident status of\nan enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the\nterm “*de facto* management body.” There can be no assurance that the PRC government will ultimately take a view that\nis consistent with us. If the PRC tax authorities determine that our Cayman Islands holding company is a PRC resident enterprise for PRC\nenterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. For example, Xiao-I Corporation may be subject\nto enterprise income tax at a rate of 25% with respect to its worldwide taxable income. Also, a 10% withholding tax would be imposed on\ndividends we pay to our non-PRC enterprise shareholders (including our ADS holders) and with respect to gains derived by our non-PRC enterprise\nshareholders (including our ADS holders) from transferring our Ordinary Shares or ADSs and potentially a 20% of withholding tax would\nbe imposed on dividends we pay to our non-PRC individual shareholders (including our ADS holders) and with respect to gains derived by\nour non-PRC individual shareholders (including our ADS holders) from transferring our Ordinary Shares or ADSs. See “Risk Factors\n— Risks Relating to Doing Business in China — Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident\nenterprise,” which could result in unfavorable tax consequences to us and our shareholders or ADS holders and have a material adverse\neffect on our results of operations and the value of your investment.”\n\n \n\nThe SAT and the Ministry of Finance issued the\nNotice of Ministry of Finance and State Administration of Taxation on Several Issues relating to Treatment of Corporate Income Tax Pertaining\nto Restructured Business Operations of Enterprises (the “SAT Circular 59”) in April 2009, which took effect on January 1,\n2008. On October 17, 2017, the SAT issued the Announcement of the State Administration of Taxation on Issues Relating to Withholding at\nSource of Income Tax of Non-resident Enterprises, which took effect on December 1, 2017 and was amended on June 15, 2018 (the “SAT\nCircular 37”). By promulgating and implementing the SAT Circular 59 and the SAT Circular 37, the PRC tax authorities have enhanced\ntheir scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-PRC resident enterprise.\n\n \n\n124\n\n \n\n \n\nPursuant to the Arrangement between the Mainland\nChina and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income, or the Tax Arrangement,\nwhere a Hong Kong resident enterprise which is considered a non-PRC tax resident enterprise directly holds at least 25% of a PRC enterprise,\nthe withholding tax rate in respect of the payment of dividends by such PRC enterprise to such Hong Kong resident enterprise is reduced\nto 5% from a standard rate of 10%, subject to approval of the PRC local tax authority.\n\n \n\nPursuant to the Circular of the State Administration\nof Taxation on the Issues concerning the Application of the Dividend Clauses of Tax Agreements (“Circular 81”), a resident\nenterprise of the counter-party to such Tax Arrangement should meet all of the following conditions, among others, in order to enjoy the\nreduced withholding tax under the Tax Arrangement: (i) it must take the form of a company; (ii) it must directly own the required percentage\nof equity interests and voting rights in such PRC resident enterprise; and (iii) it should directly own such percentage of capital in\nthe PRC resident enterprise anytime in the 12 consecutive months prior to receiving the dividends. Furthermore, the Administrative Measures\nfor Non-Resident Enterprises to Enjoy Treatments under Tax Treaties, or the Administrative Measures, which took effect in November 2015,\nrequires that the non-resident taxpayer shall determine whether it may enjoy the treatments under relevant tax treaties and file the tax\nreturn or withholding declaration subject to further monitoring and oversight by the tax authorities. Accordingly, Xiao-I Corporation\nmay be able to enjoy the 5% withholding tax rate for the dividends it receives from WFOE, if it satisfies the conditions prescribed under\nCircular 81 and other relevant tax rules and regulations. However, according to Circular 81, if the relevant tax authorities consider\nthe transactions or arrangements we have are for the primary purpose of enjoying a favorable tax treatment, the relevant tax authorities\nmay adjust the favorable withholding tax in the future.\n\n \n\nNotwithstanding the foregoing, Shanghai Xiao-I\nand Guizhou Xiao-I enjoy preferential income tax rate of 15%, due to their treatment as “National High-Tech Enterprises”\nin China. Shanghai Xiao-I is eligible to enjoy such preferential income tax rate from 2020 to 2022 and renewed in 2023 to the extent\nit has taxable income under the EIT Law. Guizhou Xiao-i is eligible to enjoy such preferential tax rate from 2022 to 2024.\n\n \n\nUnited States Federal Income Taxation Considerations\n\n \n\nThe following is a summary of certain United States\nfederal income tax considerations generally applicable to the ownership and disposition of our ADSs or Ordinary Shares by a U.S. holder\n(as defined below) that acquired our ADSs in our initial public offering or otherwise and holds our ADSs or Ordinary Shares as “capital\nassets” (generally, property held for investment).\n\n \n\nThis summary does not address all aspects of United\nStates federal income taxation that may be important to particular investors in light of their individual circumstances, including investors\nsubject to special tax rules, for example, certain financial institutions, insurance companies, broker-dealers, traders in securities\nthat have elected the mark-to-market method of accounting for their securities, partnerships and their partners, regulated investment\ncompanies, real estate investment trusts, and tax-exempt organizations (including private foundations), investors who are not U.S. holders,\ninvestors who own directly, indirectly, or constructively 10% or more of our stock (by vote or value), investors that will hold their\nADSs or Ordinary Shares as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States\nfederal income tax purposes, investors required to accelerate the recognition of any item of gross income with respect to our ADSs or\nOrdinary Shares as a result of such income being recognized on an applicable financial statement, or investors that have a functional\ncurrency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized\nbelow.\n\n \n\nThis summary is based upon the provisions of the\nInternal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions in effect as of the\ndate hereof. Those authorities may be changed, possibly with retroactive effect, which could result in United States federal income tax\nconsequences different from those summarized below. This summary does not address all aspects of United States federal income taxes, such\nas consequences under the Medicare contribution tax or the alternative minimum tax, and does not deal with all tax considerations that\nmay be relevant to beneficial owners in light of their personal circumstances. Further, this summary does not address the consequences\nunder any United States federal tax laws other than United States federal income tax laws (such as U.S. federal gift or estate tax laws),\nand does not address the consequences under the tax laws of any state, local or non-U.S. jurisdiction. We will not seek a ruling from\nthe Internal Revenue Service (“IRS”) with respect to any of the United States federal income tax consequences discussed below\nand there can be no assurance that the IRS would not assert, or that a court would not sustain, positions contrary to those described\nin this summary.\n\n \n\n125\n\n \n\n \n\n**INVESTORS SHOULD CONSULT THEIR TAX ADVISORS\nABOUT THE APPLICATION OF THE UNITED STATES FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL, FOREIGN\nAND OTHER TAX CONSEQUENCES TO THEM OF THE OWNERSHIP AND DISPOSITION OF OUR ADSs OR ORDINARY SHARES AND THE POSSIBLE EFFECTS OF ANY CHANGES\nIN APPLICABLLE TAX LAWS.**\n\n \n\nGeneral\n\n \n\nFor purposes of this discussion, a “U.S.\nholder” is a beneficial owner of our ADSs or Ordinary Shares that is, for United States federal income tax purposes, (i) an individual\nwho is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal\nincome tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii)\nan estate the income of which is subject to United States federal income taxation regardless of its source, or (iv) a trust if (A) it\nis subject to the primary supervision of a United States court and one or more United States persons (as defined in the Code) are authorized\nto control all substantial decisions of the trust or (B) it has in effect a valid election under applicable Treasury regulations to be\ntreated as a United States person for U.S. federal income tax purposes.\n\n \n\nIf a partnership (or other entity or arrangement\ntreated as a partnership for United States federal income tax purposes) is a beneficial owner of our ADSs or Ordinary Shares, the tax\ntreatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership.\nPartnerships holding our ADSs or Ordinary Shares and partners in such partnerships are urged to consult their tax advisors as to the particular\nUnited States federal income tax consequences of an investment in our ADSs or Ordinary Shares.\n\n \n\nThe discussion below assumes that the representations\ncontained in the deposit agreement are true and that the obligations in the deposit agreement and any related agreement will be complied\nwith in accordance with their terms. Based on such assumptions, if you hold ADSs, you should generally be treated as the holder of the\nunderlying Ordinary Shares represented by those ADSs for United States federal income tax purposes.\n\n \n\nThe United States Treasury has expressed concerns\nthat intermediaries in the chain of ownership between the holder of an ADS and the issuer of the underlying Ordinary Shares may be taking\nactions that are inconsistent with the beneficial ownership of the underlying Ordinary Shares. Accordingly, the creditability of foreign\ntax credits by U.S. Holders of ADSs or the availability of the reduced tax rate for dividends received by certain non-corporate U.S. Holders\ncould be affected by actions taken by intermediaries in the chain of ownership between the holder of an ADS and the Company.\n\n \n\n**Passive Foreign Investment Company Considerations**\n\n \n\nA non-U.S. corporation, such as our Company, will\nbe classified as a passive foreign investment company, or PFIC, for any taxable year if either (i) 75% or more of its gross income consists\nof passive income or (ii) 50% or more of the average value of its assets (generally determined on a quarterly basis) consists of assets\nthat produce passive income or are held for the production of passive income. For purposes of these calculations, we will be treated as\nearning our proportionate share of the income and owning our proportionate share of the assets of any other corporation in which we own,\ndirectly or indirectly, 25% (by value) of the stock. Although the law in this regard is not entirely clear, we treat the VIE and its subsidiaries\nas being owned by us for U.S. federal income tax purposes because we control their management decisions and are entitled to all of the\neconomic benefits associated with them (excluding non-controlling interests). As a result, we consolidate their results of operations\nin our consolidated U.S. GAAP financial statements. If it were determined, however, that we are not the owner of the VIE and its subsidiaries\nfor U.S. federal income tax purposes, we may be treated as a PFIC for the current taxable year and any subsequent taxable year.\n\n \n\nAssuming that we are the owner of the VIE and\nits subsidiaries for U.S. federal income tax purposes, and based upon the manner in which we currently operate our business through the\nVIE, the expected composition of our income and assets and the value of our assets, we do not presently expect to be a PFIC for the current\ntaxable year or the foreseeable future. However, this is a factual determination that must be made annually after the close of each taxable\nyear, and the application of the PFIC rules is subject to uncertainty in several respects. The value of our assets for purposes of the\nPFIC determination generally will be determined by reference to the market price of our ADSs or Ordinary Shares, which could fluctuate\nsignificantly. In addition, our PFIC status will depend on the manner we operate our business. Furthermore, it is not entirely clear how\nthe contractual arrangements between us, the VIE and its nominal shareholders will be treated for purposes of the PFIC rules, and we may\nbe or become a PFIC if the VIE is not treated as owned by us. Because of these uncertainties, there can be no assurance that we will not\nbe a PFIC for the current taxable year in future taxable years.\n\n \n\n126\n\n \n\n \n\nThe discussion below under “— Dividends”\nand “— Sale or Other Disposition of ADSs or Ordinary Shares” is written on the basis that we will not be or become a\nPFIC for U.S. federal income tax purposes. If we are a PFIC for any taxable year during which a U.S. holder holds our ADSs or Ordinary\nShares, the PFIC rules discussed below under “— Passive Foreign Investment Company Rules” generally will apply to such\nU.S. holder for such taxable year, and unless the U.S. holder makes certain elections, will apply in future years even if we cease to\nbe a PFIC.\n\n \n\nDividends\n\n \n\nAny cash distributions (including the amount of\nany PRC tax withheld) paid on our Ordinary Shares or ADSs out of our current or accumulated earnings and profits, as determined under\nU.S. federal income tax principles, generally will be includible in the gross income of a U.S. holder as dividend income on the day actually\nor constructively received by the U.S. holder. Because we do not intend to determine our earnings and profits on the basis of U.S. federal\nincome tax principles, the full amount of any distribution we pay generally will be treated as a “dividend” for U.S. federal\nincome tax purposes. Dividends received on our Ordinary Shares or ADSs will not be eligible for the dividends received deduction generally\nallowed to corporations. Dividends received by individuals and certain other non-corporate U.S. holders may be subject to tax at the lower\ncapital gain tax rates applicable to “qualified dividend income,” provided that certain conditions are satisfied, including\nthat (1) our ADSs or Ordinary Shares, as applicable, on which the dividends are paid are readily tradable on an established securities\nmarket in the United States, or, in the event that we are deemed to be a PRC resident enterprise under the PRC Enterprise Income Tax Law,\nwe are eligible for the benefits of the United States-PRC income tax treaty (the “Treaty”), (2) we are neither a PFIC nor\ntreated as such with respect to such a U.S. holder for the taxable year in which the dividend was paid and the preceding taxable year,\nand (3) certain holding period requirements are met. Ordinary shares or ADSs will generally be considered for the purpose of clause (1)\nabove to be readily tradable on an established securities market in the United States if they are listed on Nasdaq, as our ADSs are expected\nto be, although there can be no assurance in this regard.\n\n \n\nIn the event that we are deemed to be a PRC resident\nenterprise under the PRC Enterprise Income Tax Law (see “— People’s Republic of China Taxation”), we may be eligible\nfor the benefits of the Treaty. If we are eligible for such benefits, dividends we pay on our Ordinary Shares or ADSs would be eligible\nfor the reduced rates of taxation described in the preceding paragraph.\n\n \n\nDividends paid on our Ordinary Shares or ADSs,\nif any, generally will be treated as income from foreign sources and generally will constitute passive category income for U.S. foreign\ntax credit purposes. Depending on the U.S. holder’s individual facts and circumstances, a U.S. holder may be eligible, subject to\na number of complex limitations, to claim a foreign tax credit in respect of any non-refundable foreign withholding taxes imposed on dividends\nreceived on our Ordinary Shares or ADSs. A U.S. holder who does not elect to claim a foreign tax credit for foreign taxes withheld may\ninstead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such holder\nelects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex and their outcome depends\nin large part on the U.S. holder’s individual facts and circumstances. Accordingly, U.S. holders are urged to consult their tax\nadvisors regarding the availability of the foreign tax credit under their particular circumstances.\n\n \n\nSale or Other Disposition of Our ADSs\nor Ordinary Shares\n\n \n\nSubject to the PFIC rules discussed below, a U.S.\nholder generally will recognize capital gain or loss upon the sale or other disposition of our ADSs or Ordinary Shares in an amount equal\nto the difference between the amount realized upon the disposition and the U.S. holder’s adjusted tax basis in such ADSs or Ordinary\nShares. Any capital gain or loss will be long-term if the ADSs or Ordinary Shares have been held for more than one year and generally\nwill be United States source gain or loss for United States foreign tax credit purposes. Long-term capital gain of individuals and certain\nother non-corporate U.S. holders generally is eligible for a reduced rate of taxation. The deductibility of a capital loss may be subject\nto limitations.\n\n \n\nIn the event that we are treated as a PRC “resident\nenterprise” under the Enterprise Income Tax Law and gain from the disposition of the ADSs or Ordinary Shares is subject to tax in\nthe PRC, a U.S. holder that is eligible for the benefits of the income tax treaty between the United States and the PRC may elect to treat\nthe gain as PRC-source gain under the Treaty. If a U.S. holder is not eligible for the benefits of the income tax treaty or fails to make\nthe election to treat any such gain as PRC-source, then such U.S. holder may not be able to use the foreign tax credit arising from any\nPRC tax imposed on the disposition of the ADSs or Ordinary Shares unless such credit can be applied (subject to applicable limitations)\nagainst U.S. federal income tax due on other income derived from foreign sources in the same income category (generally, the passive category).\nU.S. holders are advised to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of\nour ADSs or Ordinary Shares, including the availability of the foreign tax credit under their particular circumstances and the election\nto treat any gain as PRC-source. The deductibility of a capital loss may be subject to limitations.\n\n \n\n127\n\n \n\n \n\nPassive Foreign Investment Company\nRules\n\n \n\nIf we are a PFIC for any taxable year during which\na U.S. holder holds our ADSs or Ordinary Shares, and unless the U.S. holder makes a mark-to-market election (as described below), the\nU.S. holder generally will be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC for subsequent\ntaxable years, on (i) any excess distribution that we make to the U.S. holder (which generally means any distribution paid during a taxable\nyear to a U.S. holder that is greater than 125% of the average annual distributions paid in the three preceding taxable years or, if shorter,\nthe U.S. holder’s holding period for the ADSs or Ordinary Shares), and (ii) any gain realized on the sale or other disposition,\nincluding, under certain circumstances, a pledge, of ADSs or Ordinary Shares. Under the PFIC rules:\n\n \n\n●such excess distribution and/or\ngain will be allocated ratably over the U.S. holder’s holding period for the ADSs or Ordinary Shares;\n\n \n\n●the amount allocated to the\ncurrent taxable year and any taxable years in the U.S. holder’s holding period prior to the first taxable year in which we are\na PFIC, or pre-PFIC year, will be taxable as ordinary income;\n\n \n\n●the amount allocated to each\nprior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for that year; and\n\n \n\n●an interest charge generally\napplicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.\n\n \n\nIf we are a PFIC for any taxable year during which\na U.S. holder holds our ADSs or Ordinary Shares and any of our non-United States subsidiaries, our consolidated VIE or any subsidiary\nof our consolidated VIE is also a PFIC, such U.S. holder would be treated as owning a proportionate amount (by value) of the shares of\nthe lower-tier PFIC for purposes of the application of these rules. U.S. holders are advised to consult their tax advisors regarding the\napplication of the PFIC rules to any of our subsidiaries, our consolidated VIE or any subsidiary of our consolidated VIE.\n\n \n\nAs an alternative to the foregoing rules, a U.S.\nholder of “marketable stock” in a PFIC may make a mark-to-market election with respect to such stock, provided that such stock\nis regularly traded on a qualified exchange or other market, as defined in applicable United States Treasury Regulations. We expect that\nour ADSs to be listed on Nasdaq and to be treated as marketable stock for this purposes. We anticipate that our ADSs should qualify as\nbeing regularly traded, but no assurances may be given in this regard. If a U.S. holder makes this election, the holder generally will\n(i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs or Ordinary\nShares held at the end of the taxable year over the adjusted tax basis of such ADSs or Ordinary Shares and (ii) deduct as an ordinary\nloss the excess, if any, of the adjusted tax basis of the ADSs or Ordinary Shares over the fair market value of such ADSs or Ordinary\nShares held at the end of the taxable year, but such deduction will only be allowed to the extent of the net amount previously included\nin income as a result of the mark-to-market election. The U.S. holder’s adjusted tax basis in the ADSs or Ordinary Shares would\nbe adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. holder makes a mark-to-market election\nin a year when we are classified as a PFIC and we subsequently cease to be classified as a PFIC, the holder will not be required to take\ninto account the gain or loss described above during any period that we are not classified as a PRC. If a U.S. holder makes a mark-to-market\nelection, any gain such U.S. holder recognizes upon the sale or other disposition of our ADSs or Ordinary Shares in a year when we are\na PFIC will be treated as ordinary income and any loss will be treated as ordinary loss, but such loss will only be treated as ordinary\nloss to the extent of the net amount previously included in income as a result of the mark-to-market election. If a U.S. holder makes\na mark-to-market election it will be effective for the taxable year for which the election is made and all subsequent taxable years unless\nthe ADSs are no longer regularly traded on a qualified exchange or the IRS consents to the revocation of the election.\n\n \n\nBecause a mark-to-market election cannot be made\nfor any lower-tier PFICs that a PFIC may own, a U.S. holder who makes a mark-to-market election with respect to our ADSs or Ordinary Shares\ngenerally will continue to be subject to the general PFIC rules with respect to such U.S. holder’s indirect interest in any investments\nheld by us that are treated as an equity interest in a PFIC for United States federal income tax purposes.\n\n \n\n128\n\n \n\n \n\nWe do not intend to provide information necessary\nfor U.S. holders to make qualified electing fund elections, which, if available, would result in tax treatment different from (and generally\nless adverse than) the general tax treatment for PFICs described above.\n\n \n\nIf a U.S. holder owns our ADSs or Ordinary Shares\nduring any taxable year that we are a PFIC, such holder would generally be required to file an annual IRS Form 8621. Each U.S. holder\nis advised to consult its tax advisors regarding the potential tax consequences to such holder if we are or become a PFIC, including the\npossibility of making a mark-to-market election.\n\n \n\nF. Dividends and Paying Agents.\n\n \n\nNot applicable.\n\n \n\n**G. Statement by Experts.**\n\n \n\nNot applicable.\n\n \n\n**H. Documents on Display.**\n\n \n\nWe are subject to the periodic reporting and other\ninformational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under the Exchange Act, we are required\nto file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F containing financial statements\naudited by an independent registered public accounting firm no later than 120 days after the close of each fiscal year, which is December 31\nof each year. The SEC also maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information\nregarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from\nthe rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors\nand principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the\nExchange Act.\n\n \n\nWe also make available on our website, free of\ncharge, our annual report and the text of our reports on Form 6-K, including any amendments to these reports, as well as some other SEC\nfilings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our website address is www.xiaoi.com.\nThe reference to our website is an inactive textual reference only, and information contained therein or connected thereto is not incorporated\ninto this annual report.\n\n \n\n**I. Subsidiary Information.**\n\n \n\nNot applicable.\n\n \n\n**J. Annual Report to Security Holders.**\n\n \n\nNot applicable."}