{"url_path":"/sec/aixi/10-k/2026/item-12","section_key":"item-12","section_title":"Item 12 Description of Securities Other","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":3858,"has_tables":true,"body_markdown":"Item 12. Description of Securities Other\nthan Equity Securities.\n\n \n\nA. Debt Securities.\n\n \n\n*Convertible Loan I*\n\n \n\nOn June 17, 2024, the Company entered\ninto a Convertible Loan Agreement with an institutional investor (the “Investor I”) to issue and sell an aggregate principal\namount of $3,260,869.57 senior convertible notes (the “Convertible Loan I”) with an 8% Original Issue Discount. The Company\nanticipates using the proceeds for general working capital purposes.\n\n \n\nThe Company also entered into a placement\nagency agreement (the “PAA”) with FT Global Capital Inc. (“FT Global” or “Placement Agent”), to engage\nFT Global as its exclusive Placement Agent on a “best efforts” basis for the offering. The Company agreed to pay the Placement\nAgent an aggregate cash fee equal to 7.5% of the gross proceeds raised in the offering, and to reimburse the Placement Agent for expenses\nup to $90,000.\n\n \n\nMaterial Terms of the Convertible\nLoan I:\n\n \n\n \n●\nPre-Delivery Shares: The Company is also concurrently offering an additional ADS, at par, representing 333,334 of its ordinary shares (the “Pre-Delivery Shares”), to the Investor I. Each holder of Pre-Delivery Shares is not permitted to sell, assign or transfer such Pre-Delivery Shares except in connection with a conversion of the Convertible Loan I of such holder to facilitate T+1 delivery of Conversion ADSs upon any conversion of Convertible Loan I. At such time when no Convertible Loan I remain outstanding, the remaining Pre-Delivery ADSs will be deemed surrendered and cancelled by the holder on the date the holder ceases to hold any Convertible Loan I. The offering of the Pre-Delivery ADSs is to ensure the Company’s timely delivery of Conversion Shares represented by Conversion ADSs on a T+1 basis with respect to future conversions of the Convertible Loan I.\n\n \n\n \n●\nConversion at the Option of Holder: The Convertible Loan I will mature 360-days after the Issuance Date and will be convertible into the Group’s ADSs at a conversion price equal to $1.00 per ADS. Each holder of Convertible Loan I may convert all, or any part, of the outstanding principal of the Convertible Loan I, together with accrued and unpaid interest, any make-whole amount and any late charges thereon, at any time, at such holder’s option, into Conversion Shares represented by Conversion ADSs at the “Conversion Price” of $1.00 per ADS, subject to pro rata adjustment for any stock split, stock dividend, stock combination and/or similar transactions.\n\n \n\n \n●\nInterest Rate: the Convertible Loan I will bear interest at a rate of 6.0% per annum, which rate will increase to 15% in the event of occurrence and during the continuance of an event of default. Interest shall be payable on each interest date, which is the first calendar day of each calendar month with the first interest date being July 1, 2024. The Group may, at its option, pay interest on any interest date in cash or in a combination of cash interest and interest ADSs. The Interest Conversion Price shall be the lowest of (i) the applicable Conversion Price as in effect on the applicable Interest Date, (ii) 92% of the lowest VWAP of the ADSs during the ten 10 consecutive trading day period ending.\n\n \n\n \n●\nAlternate Conversion at Option of Holder: Each holder of Convertible Loan I may also convert all, or any part, of the outstanding principal of the Convertible Loan I, together with accrued and unpaid interest, any make-whole amount and any late charges thereon (subject to an additional 25% premium if an event of default then exists), at any time, at such holder’s option, into Conversion Shares represented by Conversion ADSs at the “Alternate Conversion Price” calculated the lower of:\n\n \n\n \n(i)\nthe Conversion Price then in effect; and\n\n \n\n \n(ii)\neither,\n\n \n\n \nx.\nif no event of default then exists, 92% of the lowest volume weighted average price of the Company’s ADSs during the ten (10) consecutive Trading Days ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice; or\n\n \n\n \ny.\nif an event of default then exists, the lowest of:\n\n \n\n \n(a)\n80% of the volume weighted average price of the Company’s ADSs as of the trading day immediately preceding the delivery or deemed delivery of the applicable notice of conversion or event of default (as applicable);\n\n \n\n \n(b)\n80% of the volume weighted average price of the Company’s ADSs as of the trading day the delivery or deemed delivery of the applicable notice of conversion (if any); and\n\n \n\n131\n\n \n\n \n\n \n(c)\n80% of the price computed as the quotient of (I) the sum of the volume weighted average price of the Company’s ADSs for each of the three (3) Trading Days with the lowest volume weighted average price of the Company’s ADSs during the 20 consecutive trading day period ending and including the trading day immediately preceding the delivery or deemed delivery of the applicable Conversion Notice, divided by (II) three (3)).\n\n \n\n \n●\nRedemption Rights: In connection with a change of control of the Group, each holder may require the Group to redeem in cash all, or any portion, of the Convertible Loan I at a 25% redemption premium to the greater of (i) the face value of the Convertible Loan I to be redeemed, (ii) the equity value of the Conversion Shares represented by Conversion ADSs underlying such Convertible Loan I, and (iii) the equity value of the change of control consideration payable to the holder of the Conversion Shares represented by Conversion ADSs underlying such Convertible Loan I.\n\n \n\nThe Company assessed the Convertible\nLoan I under ASC 815, identifying there are two embedded features, including conversion feature and redemption feature, and concluded\nthat:\n\n \n\n \n●\nThe conversion feature satisfied the requirement of “fixed-for-fixed” criterion and is considered indexed to the Company’s own stock, the conversion feature eligible for a scope exception from derivative accounting in accordance with ASC815-10-15-74 and the Company would not bifurcate the conversion feature.\n\n \n \n \n\n \n●\nThe redemption feature requires cash settlement instead of settlement in shares, which is not eligible for a scope exception in accordance with ASC815-10-15-74, and the Group would bifurcate the redemption feature.\n\n \n\nConsidering the above, the redemption\nfeature is required to be bifurcated as a separate unit of liability account and measured at fair value. After the bifurcation, the Convertible\nLoans I was accounted for using amortized cost method. The Company engaged a third-party appraiser to make the valuation of fair value\nof derivative liability of redemption feature, which was amounting to $280,198 initially. The Company recognized the issuance costs of\nConvertible Loan I of $503,055 and the discount as a direct deduction from the face amount of the Convertible Loan I in accordance with\nASC835-30-45-1A. The debt issuance cost was amortized as interest expense using the effective interest method, over the term of the Convertible\nLoan I, with interest expenses of $171,914 for the year ended December 31, 2024.\n\n \n\nDuring 2024, the Investor I made a\nseries of conversions, and as of October 7, 2024, the Investor I have converted all of the Convertible Loan I or unsettled interest expense\ninto ADSs, representing 3,920,797 ordinary shares. All of the Pre-Delivery Shares in connection with Convertible Loan I was used for the\nconversion of Convertible Loan I or cancelled.\n\n \n\n*Convertible Loan II*\n\n \n\nOn October 30, 2024, the Company entered\ninto a Convertible Loan Agreement with another institutional investor (the “Investor II”) to issue and sell an aggregate principal\namount of $2,175,000 convertible notes (the “Convertible Loan II”) with an 8% Original Issue Discount equal to $160,000. The\nCompany anticipates using the proceeds for general working capital purposes.\n\n \n\nMaterial Terms of the Convertible\nLoan II:\n\n \n\n \n●\nPre-Delivery Shares: The Company is also concurrently offering an additional ADS, at par, representing 1,650,000 ordinary shares (the “Pre-Delivery Shares”), to the Investor II. The Investor II is not permitted to sell, assign or transfer such Pre-Delivery Shares except in connection with a conversion of the Convertible Loan II to facilitate T+1 delivery of Conversion ADSs. At such time when the Convertible Loan II is no longer outstanding, the Company may repurchase the Pre-Delivery Shares at the same price they are sold to the Investor II.\n\n \n\n \n●\nConversion at the Option of Holder: The Convertible Loan II will mature 12 months after the Purchase Price Date and will be convertible into the Company’s ADSs at a conversion price equal to the lower of (i) $6.0841 (the “Fixed Price”) or (ii) 85% multiplied by the lowest daily volume-weighted average price of the ADSs during the ten trading days preceding a conversion (the “Market Price”). The Conversion Price will be further reduced by $0.05 per ADS to cover any receipt issuance fees borne by the holder in connection with any Conversion.\n\n \n\n \n●\nInterest Rate: The Convertible Loan II will bear interest at a rate of 6.0% per annum which, (a) shall commence accruing on the date of issuance, (b) shall be computed on the basis of a 360-day year and twelve 30-day months and (c) shall be payable on the Maturity Date unless earlier converted. The interest rate will increase to 18% in the event of occurrence and during the continuance of an event of default.\n\n \n\nThe Company assessed the Convertible\nLoan II under ASC 815, identifying there are only conversion feature and concluded that the conversion feature is not required to be bifurcated\nas a separate unit of liability account as it satisfied the requirement of “fixed-for-fixed” criterion and is considered indexed\nto the Company’s own stock. Therefore, the Company accounts for the instrument as a liability in its entirety.\n\n \n\nThe Company recognized the issuance\ncosts and the discount of Convertible Loan II of $175,000 as a direct deduction from the face amount of the Convertible Loan II in accordance\nwith ASC835-30-45-1A. The debt issuance cost was amortized as interest expense using the effective interest method, over the term of the\nConvertible Loan II, with interest expenses of $23,859 for the year ended December 31, 2024.\n\n \n\n132\n\n \n\n \n\nDuring 2024, the Investor II made a\nseries of conversions, pursuant to which the Group issued 1,360,345 ordinary shares with conversion prices ranging from US$1.26-US$1.63\nper share. The ending balance of Convertible Loan II was $216,756 as of December 31, 2024. Subsequently on January 14, 2025, the Investor\nII had converted the remaining balance of Convertible Loan II or unsettled interest expense into ADSs, pursuant to which the Group issued\n156,315 ordinary shares with conversion prices of US$1.50 per share.\n\n \n\n*Convertible Loan III*\n\n \n\nOn January 6, 2025, the Company entered\ninto a Convertible Loan Agreement with the Investor I and the Investor II to issue and sell an aggregate principal amount of $4,637,840\nconvertible notes (the “Convertible Loan III”) with an 8% Original Issue Discount equal to $342,840. The Company anticipates\nusing the proceeds for general working capital purposes.\n\n \n\nMaterial Terms of the Convertible\nLoan III:\n\n \n\n \n●\nConversion at the Option of Holder: The Convertible Loan III will mature 12 months after the Purchase Price Date (as defined in the applicable Note) and will be convertible into the Company’s ADSs at a conversion price equal to the lower of (i) $7.201 (the “Fixed Price”) or (ii) 85% multiplied by the lowest daily volume-weighted average price of the ADSs during the ten trading days preceding a conversion (the “Market Price”). The conversion price will be further reduced by $0.05 per ADS to cover any receipt issuance fees incurred by the holder in connection with any conversion (the “Conversion Price”).\n\n \n\n \n●\nInterest Rate: The Convertible Loan III will bear interest at a rate of 6.0% per annum, which will increase to 18% upon the occurrence and during the continuance of an event of default and upon written notice from the Investor. Each Note represents a general obligation of the Company and ranks pari passu with other obligations.\n\n \n\nThe Company assessed the Convertible\nLoan III under ASC 815, identifying there are only conversion feature and concluded that the conversion feature is not required to be\nbifurcated as a separate unit of liability account as it satisfied the requirement of “fixed-for-fixed” criterion and is considered\nindexed to the Company’s own stock. Therefore, the Company accounts for the instrument as a liability in its entirety.\n\n \n\nThe Company recognized the issuance\ncosts and the discount of Convertible Loan III of $342,840 as a direct deduction from the face amount of the Convertible Loan III in accordance\nwith ASC835-30-45-1A. The debt issuance cost was amortized as interest expense using the effective interest method, over the term of the\nConvertible Loan III, with interest expenses of $219,220 for the year ended December 31, 2025.\n\n \n\nDuring the year ended December 31,\n2025, Investor I and Investor II completed a series of conversions of Convertible Loan III, pursuant to which the Group issued an aggregate\nof 4,708,110 ordinary shares at a conversion price ranging from $0.53-$1.43 per share.\n\n* *\n\n*Convertible Loan IV*\n\n \n\nOn June 18, 2025, the Company entered\ninto a Convertible Loan Agreement with the Investor I and Investor II to issue and sell an aggregate principal amount of $6,128,000 convertible\nnotes (the “Convertible Loan III”) with an Original Issue Discount equal to $518,000. The Company anticipates using the proceeds\nfor general working capital purposes.\n\n \n\nMaterial Terms of the Convertible\nLoan IV:\n\n \n\n \n●\nConversion at the Option of Holder: The Convertible Loan IV will mature 12 months after the Purchase Price Date (as defined in the applicable Note) and will be convertible into the Company’s ADSs at a conversion price equal to the lower of (i) $3.04428 (the “Fixed Price”) or (ii) 85% multiplied by the lowest daily volume-weighted average price of the ADSs during the ten trading days preceding a conversion (the “Market Price”). The conversion price will be further reduced by $0.05 per ADS to cover any receipt issuance fees incurred by the holder in connection with any conversion (the “Conversion Price”).\n\n \n\n \n●\nInterest Rate: The Convertible Loan IV will bear interest at a rate of 6% per annum, which will increase to 18% upon the occurrence and during the continuance of an event of default and upon written notice from the Investor. Each Note represents a general obligation of the Company and ranks pari passu with other obligations.\n\n \n\n133\n\n \n\n \n\nThe Company assessed the Convertible\nLoan IV under ASC 815, identifying there are only conversion feature and concluded that the conversion feature is not required to be bifurcated\nas a separate unit of liability account as it satisfied the requirement of “fixed-for-fixed” criterion and is considered indexed\nto the Company’s own stock. Therefore, the Company accounts for the instrument as a liability in its entirety.\n\n \n\nThe Company recognized the issuance\ncosts and the discount of Convertible Loan IV of $518,000 as a direct deduction from the face amount of the Convertible Loan IV in accordance\nwith ASC835-30-45-1A. The debt issuance cost was amortized as interest expense using the effective interest method, over the term of the\nConvertible Loan IV, with interest expenses of $198,111 for the year ended December 31, 2025.\n\n \n\nDuring the year ended December 31,\n2025, Investor I and Investor II completed a series of conversions of Convertible Loan IV, pursuant to which the Group issued an aggregate\nof 13,624,755 ordinary shares at a conversion price ranging from $0.03-$1.96 per share. The ending balance of Convertible Loan IV was\n$5,111,080 as of December 31, 2025\n\n \n\nOn December 31, 2025, Investor I and\nInvestor II elected to convert a portion of Convertible Loan IV into 13,624,755 ordinary shares at a conversion price of US$0.03- US$1.96\nper share. The ending balance of Convertible Loan IV was $ 2,006,119 as of December 31, 2025.\n\n \n\n**B. Warrants and Rights.**\n\n \n\nNot applicable.\n\n \n\n**C. Other Securities.**\n\n \n\nNot applicable.\n\n \n\nD. American Depositary Shares.\n\n \n\nCitibank, N.A. has, as depositary, will register and deliver the ADSs.\nCitibank’s depositary offices are located at 388 Greenwich Street, New York, New York 10013. Each ADS represents three (3) Ordinary\nShares deposited with Citibank, N.A. — Hong Kong, located at 9/F Citi Tower, One Bay East, 83 Hoi Bun Road, Kwun Tong, Kowloon,\nHong Kong, as custodian for the depositary.\n\n \n\nThe depositary will hold the Ordinary Shares underlying\nyour ADSs. As an ADS holder, you will not be treated as one of Xiao-I’s shareholders and you will not have direct shareholder rights.\nYou will have the rights of an ADS holder as provided in the deposit agreement among Xiao-I, the depositary and holders and beneficial\nowners of ADSs from time to time.\n\n \n\nXiao-I does not expect to pay dividends in the\nforeseeable future. If, however, it declares dividends on its Ordinary Shares, the depositary will pay you the cash dividends and other\ndistributions it receives on Xiao-I’s Ordinary Shares after deducting its fees and expenses in accordance with the terms set forth\nin the deposit agreement.\n\n \n\n134\n\n \n\n \n\nYou may surrender your ADSs to the depositary\nin exchange for Ordinary Shares. The depositary will charge you fees for any exchange.\n\n \n\n**Fees and Charges**\n\n \n\nAs an ADS holder, you will be required to pay\nthe following fees under the terms of the deposit agreement:\n\n \n\n**Service**\n \n**Rate**\n\n(1) Issuance of ADSs (*e.g.*, an issuance upon a deposit of Shares, upon a change in the ADS(s)-to-Share(s) ratio, or for any other reason), excluding issuances as a result of distributions described in paragraph (4) below.\n \nUp to U.S. $5.00 per 100 ADSs (or fraction thereof) issued.\n\n(2) Cancellation of ADSs (*e.g.*, a cancellation of ADSs for Delivery of deposited Shares, upon a change in the ADS(s)-to-Share(s) ratio, or for any other reason).\n \nUp to U.S. $5.00 per 100 ADSs (or fraction thereof) cancelled.\n\n(3) Distribution of cash dividends or other cash distributions (*e.g.*, upon a sale of rights and other entitlements).\n \nUp to U.S. $5.00 per 100 ADSs (or fraction thereof) held.\n\n(4) Distribution of ADSs pursuant to (i) stock dividends or other free stock distributions, or (ii) an exercise of rights to purchase additional ADSs.\n \nUp to U.S. $5.00 per 100 ADSs (or fraction thereof) held.\n\n(5) Distribution of securities other than ADSs or rights to purchase additional ADSs (*e.g.*, spin-off shares).\n \nUp to U.S. $5.00 per 100 ADSs (or fraction thereof) held.\n\n(6) ADS Services.\n \nUp to U.S. $5.00 per 100 ADSs (or fraction thereof) held on the applicable record date(s) established by the Depositary.\n\n(7) Registration of ADS Transfers (*e.g.*, upon a registration of the transfer of registered ownership of ADSs, upon a transfer of ADSs into DTC and vice versa, or for any other reason).\n \nUp to U.S. $5.00 per 100 ADSs (or fraction thereof) transferred.\n\n(8) Conversion of ADSs of one series for ADSs of another series (*e.g.*, upon conversion of Partial Entitlement ADSs for Full Entitlement ADSs, or upon conversion of Restricted ADSs into freely transferable ADSs, and vice versa).\n \nUp to U.S. $5.00 per 100 ADSs (or fraction thereof) converted.\n\n \n\nAs an ADS holder, you will also be responsible\nto pay certain charges such as:\n\n \n\n●taxes (including applicable\ninterest and penalties) and other governmental charges;\n\n \n\n●the registration fees as may\nfrom time to time be in effect for the registration of Ordinary Shares on the share register and applicable to transfers of Ordinary\nShares to or from the name of the custodian, the depositary or any nominees upon the making of deposits and withdrawals, respectively;\n\n \n\n●certain cable, telex and facsimile\ntransmission and delivery expenses;\n\n \n\n●the fees, expenses, spreads,\ntaxes and other charges of the depositary and/or service providers (which may be a division, branch or affiliate of the depositary) in\nthe conversion of foreign currency;\n\n \n\n●the reasonable and customary\nout-of-pocket expenses incurred by the depositary in connection with compliance with exchange control regulations and other regulatory\nrequirements applicable to Ordinary Shares, ADSs and ADRs;\n\n \n\n●the fees, charges, costs and\nexpenses incurred by the depositary, the custodian, or any nominee in connection with the ADR program; and\n\n \n\n●the amounts payable to the\ndepositary by any party to the deposit agreement pursuant to any ancillary agreement to the deposit agreement in respect of the ADR program,\nthe ADSs and the ADRs.\n\n \n\n135\n\n \n\n \n\nADS fees and charges for (i) the issuance of ADSs,\nand (ii) the cancellation of ADSs are charged to the person for whom the ADSs are issued (in the case of ADS issuances) and to the person\nfor whom ADSs are cancelled (in the case of ADS cancellations). In the case of ADSs issued by the depositary into The Depository Trust\nCompany (“DTC”), the ADS issuance and cancellation fees and charges may be deducted from distributions made through DTC, and\nmay be charged to the DTC participant(s) receiving the ADSs being issued or the DTC participant(s) holding the ADSs being cancelled, as\nthe case may be, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s) to the account of the applicable beneficial\nowner(s) in accordance with the procedures and practices of the DTC participants as in effect at the time. ADS fees and charges in respect\nof distributions and the ADS service fee are charged to the holders as of the applicable ADS record date. In the case of distributions\nof cash, the amount of the applicable ADS fees and charges is deducted from the funds being distributed. In the case of (i) distributions\nother than cash and (ii) the ADS service fee, holders as of the ADS record date will be invoiced for the amount of the ADS fees and charges\nand such ADS fees and charges may be deducted from distributions made to holders of ADSs. For ADSs held through DTC, the ADS fees and\ncharges for distributions other than cash and the ADS service fee may be deducted from distributions made through DTC, and may be charged\nto the DTC participants in accordance with the procedures and practices prescribed by DTC and the DTC participants in turn charge the\namount of such ADS fees and charges to the beneficial owners for whom they hold ADSs. In the case of (i) registration of ADS transfers,\nthe ADS transfer fee will be payable by the ADS Holder whose ADSs are being transferred or by the person to whom the ADSs are transferred,\nand (ii) conversion of ADSs of one series for ADSs of another series, the ADS conversion fee will be payable by the Holder whose ADSs\nare converted or by the person to whom the converted ADSs are delivered.\n\n \n\nIn the event of refusal to pay the depositary\nfees, the depositary may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set\noff the amount of the depositary fees from any distribution to be made to the ADS holder. Note that the fees and charges you may be required\nto pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of such changes. The depositary\nmay reimburse us for certain expenses incurred by us in respect of the ADR program, by making available a portion of the ADS fees charged\nin respect of the ADR program or otherwise, upon such terms and conditions as we and the depositary agree from time to time.\n\n \n\n**Payments by Depositary**\n\n \n\nAs of the date of this annual report, we had not\nreceived any payments from Citibank, N.A., the current depositary bank for our ADR program.\n\n \n\n136\n\n \n\n \n\n**PART\nII**"}