{"url_path":"/sec/aixi/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Major Shareholders and Related Party","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":7516,"has_tables":true,"body_markdown":"Item 7. Major Shareholders and Related Party\nTransactions.\n\n \n\nA. Major Shareholders.\n\n \n\nThe following table sets forth information with\nrespect to the beneficial ownership, of our ordinary shares as of the date of May 1, 2026 by:\n\n \n\n●each\nmember of our board of directors and each of our executive officers\n\n \n\n●our directors and executive\nofficers as a group; and\n\n \n\n●each\nperson, or group of affiliated persons, known by us to own beneficially 5% or more of our outstanding ordinary shares.\n\n \n\nThe number of ordinary shares beneficially owned\nby each entity, person, board member or executive officer is determined in accordance with the rules of the SEC, and the information is\nnot necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over\nwhich the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire\nwithin 60 days of April 30, 2025 through the exercise of any option or other right.\n\n \n\nExcept as otherwise indicated, and subject to\napplicable community property laws, the persons named in the table have sole voting and investment power with respect to all ordinary\nshares held by that person.\n\n \n\nThe percentage of ordinary shares beneficially\nowned is computed on the basis of 37,381,009 ordinary shares outstanding as of April 30, 2025 on an as-converted basis. Ordinary shares\nthat a person has the right to acquire within 60 days of April 30, 2025 are deemed outstanding for purposes of computing the percentage\nownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any\nother person, except with respect to the percentage ownership of all board members and executive officers as a group.\n\n \n\nExcept as otherwise indicated below, the address\nfor each beneficial owner listed is c/o Xiao-I Corporation, Room 501, No. 363, Lane 1555, Jinshajiang West Road, Jiading District, People’s\nRepublic of China.\n\n \n\n  \nOrdinary Shares\nBeneficially Owned \n\n  \nNumber  \nPercent \n\nDirectors and Executive Officers: \n   \n  \n\nHui Yuan(1) \n 3,272,633  \n 1.83%\n\nWei Weng(2) \n 10,000  \n * \n\nAll directors and executive officers as a group (2 individuals): \n 3,282,633  \n 1.83%\n\nOther ≥ 5% Beneficial Owners \n    \n   \n\nZunTian Holding Limited(3) \n 1,969,546  \n 3.1%\n\n \n\n*Indicates\nbeneficial ownership of less than 1% of the total outstanding ordinary shares.\n\n \n\n(1)\nIncludes\nshares held by ZunTian Holding Limited and iTeam Holding Limited and shares Mr. Yuan shall receive because of the equity awards granted\nto him on January 3, 2024 (see B. Compensation under Item 6. Directors, Senior Management and Employees).\n\n \n \n\n(2)\nIncludes shares Ms. Weng shall receive because of the equity awards granted to her on January 3, 2024 (see B.\nCompensation under Item 6. Directors, Senior Management and Employees).\n\n \n \n\n(3)\nZunTian Holding Limited is incorporated in British Virgin Islands and is wholly owned and controlled by our Chairman\nand CEO, Mr. Yuan. The registered address of ZunTian Holding Limited is Sea Meadow House, P.O. Box 116, Road Town, Tortola, British Virgin\nIslands. On December 13, 2023, Xiao-I issued 3,700,000 preferred shares, each with a par value of US$0.00005 and carrying a voting right\nequivalent to 20 votes (the “3.7 million Preferred Shares” or the “Preferred Shares”) to ZunTian Holding Limited.\n\n \n\n95\n\n \n\n \n\nAs of the date of this annual report, none of\nour outstanding ordinary shares were held by record holders in the United States.\n\n \n\nAs of the date of this annual report, we have\na total of 20 shareholders, with 1 of them owning more than 5% each, and 19 of them owning less than 5% each. The names of the entities\nand their corresponding ownership percentages are listed on the principal shareholders table above. Other than these shareholders, to\nthe extent known to the company (1) no other corporations, individuals or foreign governments directly or indirectly controls the company,\n(2) no other corporations, individuals or foreign governments directly owns the company, (3) some entities or individuals, other than\nforeign governments, indirectly own certain small percentage of the company which are listed on our corporate legal structure diagram\nin detail. See our corporate legal structure diagram for detailed information.\n\n \n\nWe are not aware of any arrangement that may,\nat a subsequent date, result in a change of control of our Company.\n\n \n\nB. Related Party Transactions.\n\n \n\nThe VIE Agreements\n\n \n\nThe PRC government regulates the telecommunications\nand internet industry, including software industry, through strict business licensing requirements and other government regulations. These\nlaws and regulations also include limitations on foreign ownership of PRC companies that engage in software business. Xiao-I, AI Plus\nand Zhizhen Technology, are considered as foreign invested enterprises. To comply with these regulations, the Company conducts the majority\nof its activities in PRC through the PRC operating entities. Uncertainties exist as to the Company’s ability to enforce the VIE\nAgreements, and the VIE Agreements have not been tested in a court of law.\n\n \n\nZhizhen Technology has entered into the following\ncontractual arrangements with Shanghai Xiao-I and its shareholders, whom together hold 100% equity interest in Shanghai Xiao-I, that enable\nthe Company to (i) have power to direct the activities that most significantly affect the performance of Shanghai Xiao-I and its subsidiaries,\nand (ii) receive the benefits of Shanghai Xiao-I and its subsidiaries that could be significant to Shanghai Xiao-I and its subsidiaries.\nThe Company, through its indirect wholly owned subsidiary, Zhizhen Technology, is fully and exclusively responsible for the management\nof Shanghai Xiao-I, absorbs all risk of losses of Shanghai Xiao-I (excluding non-controlling interests) and has the exclusive right to\nexercise all voting rights of Shanghai Xiao-I’s shareholders. In exchange, Shanghai Xiao-I pays service fees to Zhizhen Technology.\nThe service fees shall consist of 100% of the profit before tax of Shanghai Xiao-I, after the deduction of all costs, expenses, taxes\nand other fee required under PRC laws and regulations. Shanghai Xiao-I agrees not to accept the same or any similar services provided\nby any third party and shall not establish cooperation relationships similar to that formed by the Exclusive Business Cooperation Agreement\nwith any third party, except with the prior written consent of Zhizhen Technology. Therefore, the Company, through its wholly owned subsidiaries\nAI Plus and Zhizhen Technology, has been determined to be the primary beneficiary of Shanghai Xiao-I and the VIE’s subsidiaries\nfor accounting purposes and has consolidated Shanghai Xiao-I’s and its subsidiaries’ assets, liabilities, results of operations,\nand cash flows in the accompanying consolidated financial statements.\n\n \n\n*Exclusive Call Option Agreement*\n\n \n\nPursuant to the Exclusive Call Option Agreement\nsigned on March 29, 2019 by and among Zhizhen Technology, Shanghai Xiao-I and its shareholders, the shareholders irrevocably granted Zhizhen\nTechnology or any third party designated by Zhizhen Technology an option to purchase all or part of their equity interests in Shanghai\nXiao-I at any time at a price determined at Zhizhen Technology’s discretion. According to the Exclusive Call Option Agreement, the\npurchase price to be paid by the Company to each shareholder of Shanghai Xiao-I will be the minimum price permitted by applicable PRC\nLaw at the time when such share transfer occurs. Without Zhizhen Technology’s prior written consent, the shareholders and Shanghai\nXiao-I agreed not to, among other things: set encumbrance on, transfer all or part of, or dispose of the equity interests; amend the articles\nof association of Shanghai Xiao-I; change the registered capital of Shanghai Xiao-I or holding structure; change Shanghai Xiao-I’s\nbusiness activities; sell, assign, mortgage or dispose of any legal or beneficial rights to or in any of Shanghai Xiao-I’s assets,\nbusiness, or revenue; incur, assume or guarantee any debts; enter into any material contract; extend any loan or credit to any party,\nor provide any guarantee or assume any obligation of any party; merge or consolidate with any third party or acquire or invest in any\nthird party; or distribute dividends. The shareholders and Shanghai Xiao-I agreed to manage business and handle financial and commercial\naffairs prudently and in accordance with relevant laws and codes of practice. This agreement will continue with full force and effect\nuntil the earlier of the date on which Zhizhen Technology has acquired all of the Equity Interests in Shanghai Xiao-I, or this Agreement\nis terminated by the mutual written consent.\n\n \n\n96\n\n \n\n \n\n*Exclusive\nBusiness Cooperation Agreement*\n\n \n\nOn\nMarch 29, 2019, Zhizhen Technology entered into an Exclusive Business Cooperation Agreement with Shanghai Xiao-I to enable Zhizhen Technology\nto engage in the development and operation of the Internet technology development in accordance with applicable laws. Under this agreement,\nShanghai Xiao-I appointed Zhizhen Technology to provide exclusive comprehensive business support, technical services, consulting services\nand other services to Shanghai Xiao-I, and Shanghai Xiao-I agreed to accept such services. The term of the Services provided by Zhizhen\nTechnology shall be 10 years from the effective date of March 29, 2019, and will be automatically extended after the expiration until\nwhen terminated in writing by Zhizhen Technology. Additionally, Zhizhen Technology has the full and exclusive right to manage and direct\nall cash flow and assets of Shanghai Xiao-I and to direct and administrate the financial affairs and daily operation of Shanghai Xiao-I.\nIn exchange, Shanghai Xiao-I pays service fees to Zhizhen Technology. The service fees shall consist of 100% of the profit before tax\nof Shanghai Xiao-I, after the deduction of all costs, expenses, taxes and other fee required under PRC laws and regulations. If Shanghai\nXiao-I is unable to pay the service fees due to the actual managing situation, with the written consent of Zhizhen Technology, the unpaid\npart of the service fees in the previous fiscal year can be deferred to the end of the next year and settled together. Shanghai Xiao-I\nagrees not to accept the same or any similar services provided by any third party and shall not establish cooperation relationships similar\nto that formed by the Exclusive Business Cooperation Agreement with any third party, except with the prior written consent of Zhizhen\nTechnology. During the validity term of this agreement, Zhizhen Technology will bear all the economic benefits and risks arising from\nthe business of Shanghai Xiao-I and its subsidiaries. Zhizhen Technology will provide financial support to Shanghai Xiao-I or its subsidiaries\nin the event of a loss or serious operational difficulties.\n\n \n\n*Power\nof Attorney Agreement*\n\n \n\nOn\nMarch 29, 2019, each shareholder of Shanghai Xiao-I, signed the Power of Attorney Agreement to irrevocably entrust Zhizhen Technology\nor any person(s) designated by Zhizhen Technology to act as its attorney-in-fact to exercise any and all of its rights as a shareholder\nof Shanghai Xiao-I, including, but not limited to, the right to convene, attend and present the shareholders’ meetings, vote, sign\nand perform as a shareholder; transfer, pledge or dispose of all the equity interest of Shanghai Xiao-I held by the shareholder; collect\nthe dividend, and participate in litigation procedures. This agreement is effective and irrevocable until all of each shareholder’s\nequity interest in Shanghai Xiao-I has been transferred to Shanghai Xiao-I or the person(s) designated by Zhizhen Technology.\n\n \n\n*Share\nInterest Pledge Agreement*\n\n \n\nUnder\nthe Share Interest Pledge Agreement signed on March 29, 2019 by and among Zhizhen Technology and each shareholder of Shanghai Xiao-I,\nthe shareholders of Shanghai Xiao-I have agreed to pledge 100% equity interest in Shanghai Xiao-I to Zhizhen Technology to guarantee\nthe performance obligations of Shanghai Xiao-I under the Exclusive Business Cooperation Agreement, and the performance obligations of\neach shareholder under the Exclusive Call Option Agreement. If Shanghai Xiao-I or its shareholders breach their contractual obligations\nunder these agreements, Zhizhen Technology, as pledgee, will have the right to exercise the pledge.\n\n \n\nThe\nshareholders also agreed that, without prior written consent of Zhizhen Technology, they will not dispose of the pledged equity interests\nor create or allow any encumbrance on the pledged equity interests. The pledge of equity interests in Shanghai Xiao-I has been registered\nwith the relevant office of the State Administration for Market Regulation in accordance with the Civil Code of the People’s Republic\nof China.\n\n \n\n*Spousal\nCommitment Letter*\n\n \n\nThe\nspouses of each individual shareholder of Shanghai Xiao-I have each signed a Commitment Letter. Under the Commitment Letter, the signing\nspouse unconditionally and irrevocably has agreed to the execution by his or her spouse of the above-mentioned Exclusive Business Cooperation\nAgreement, Exclusive Call Option Agreement, Power of Attorney Agreement and Share Interest Pledge Agreement, and that his or her spouse\nmay perform, amend or terminate such agreements without his or her consent. In addition, in the event that the spouse obtains any equity\ninterest in Shanghai Xiao-I held by his or her spouse for any reason, he or she agrees to be bound by and sign any legal documents substantially\nsimilar to the contractual arrangements entered into by his or her spouse, as may be amended from time to time.\n\n \n\n97\n\n \n\n \n\nAs\nthe lock-up period of some shareholders of Xiao-I has expired, the shareholders wish to withdraw their shares in Xiao-I, and in order\nto mirror the shareholding of Xiao-I at Shanghai Xiao-I, they need to correspondingly withdraw their shares in Shanghai Xiao-I. Therefore,\nShanghai Rongzhi Industry Co., Ltd. (the “Shanghai Rongzhi”) was set up to purchase the withdrawn shares of the shareholders\nin Shanghai Xiao-I, and thus Shanghai Rongzhi became the new shareholder of Shanghai Xiao-I. Pursuant to the VIE agreements, Shanghai\nRongzhi signed Exclusive Call Option Agreement, Share Interest Pledge Agreement, and Power of Attorney Agreement separately with Zhizhen\nTechnology and Shanghai Xiao-I on January 24, 2024. The provisions of these agreements are substantively consistent with the text of\nthe VIE Agreements signed on March 29, 2019.\n\n \n\nThe\nVIE structure is used to provide investors with exposure to foreign investment in China-based companies where Chinese law prohibits direct\nforeign investment in the operating companies. Xiao-I has evaluated the guidance in FASB ASC 810 and determined that Xiao-I is the primary\nbeneficiary of the VIE, for accounting purposes, based upon such contractual arrangements. ASC 810 requires a VIE to be consolidated\nif the company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual\nreturns. A VIE is an entity in which a company or its WFOE, through contractual arrangements, is fully and exclusively responsible for\nthe management of the entity, absorbs all risk of losses of the entity (excluding non-controlling interests), receives the benefits of\nthe entity that could be significant to the entity (excluding non-controlling interests), and has the exclusive right to exercise all\nvoting rights of the entity, and therefore the company or its WFOE is the primary beneficiary of the entity for accounting purposes.\nUnder ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity\nhas both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s\neconomic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant\nto the VIE. Through the VIE agreements, the Company is deemed the primary beneficiary of the VIE for accounting purposes. The VIE has\nno assets that are collateral for or restricted solely to settle its obligations. The creditors of VIE do not have recourse to the Company’s\ngeneral credit. Accordingly, under U.S. GAAP, the results of the PRC operating entities are consolidated in Xiao-I’s financial\nstatements.\n\n \n\nHowever,\ninvestors will not and may never hold equity interests in the PRC operating entities. The VIE Agreements may not be effective in providing\ncontrol over Shanghai Xiao-I. Uncertainties exist as to Xiao-I’s ability to enforce the VIE Agreements, and the VIE Agreements\nhave not been tested in a court of law. If the VIE or its shareholders fail to perform their respective obligations under the contractual\narrangements, Xiao-I may have to incur substantial costs and expend additional resources to enforce such arrangements. The Chinese regulatory\nauthorities could disallow this VIE structure, which would likely result in a material change in the PRC operating entities’ operations\nand the value of Xiao-I’s ADSs, including that it could cause the value of such securities to significantly decline or become worthless.\nSee “Risk Factors — Risks Relating to Our Corporate Structure.”\n\n \n\nSubscription\nAgreement\n\n \n\nOn\nDecember 13, 2023, Xiao-I issued 3,700,000 preferred shares, each with a par value of US$0.00005 (the “Preferred Shares”)\nto ZunTian Holding Limited (“ZunTian”), an existing shareholder of Xiao-I (the “Issuance”). ZunTian is a BVI-incorporated\ncompany wholly owned and controlled by Mr. Hui Yuan (“Mr. Yuan”). Mr. Yuan is the CEO and Chairman of the Company. Each Preferred\nShare confers on the holder thereof the right to twenty (20) votes and holders of the Preferred Shares shall at all times vote together\nwith holders of ordinary shares of the Company as one class on all resolutions submitted to a vote by the members of the Company save\nwhere a separate class meeting is required by law. The Issuance is subject to the Subscription Agreement, between Xiao-I and ZunTian\ndated December 13, 2023, which was subsequently amended on April 4, 2024, to clarify that the Preferred Shares shall not confer any other\nrights, including, without limitation, dividend or liquidation rights or any other financial or economic rights.\n\n \n\nConsolidation\n\n \n\nXiao-I\nconducts substantially all of its business in China through Shanghai Xiao-I, the VIE, due to PRC legal restrictions of foreign ownership\nin certain sectors. Substantially all of Xiao-I’s revenues, costs and net income in China are directly or indirectly generated\nthrough the VIE. Xiao-I, through its indirect wholly owned subsidiary, Zhizhen Technology, has signed various agreements with the VIE\nand shareholders of the VIE to allow the transfer of economic benefits from the VIE to Zhizhen Technology and to direct the activities\nof the VIE. Total assets and liabilities presented on Xiao-I’s consolidated balance sheets and revenue, expense, net income presented\non consolidated statement of operations and comprehensive income as well as the cash flow from operating, investing and financing activities\npresented on the consolidated statement of cash flows are the financial position, operation and cash flow of the PRC operating entities\n(excluding non-controlling interests). The Company has not provided any financial support to the PRC operating entities for the fiscal\nyears ended at December 31, 2022, but transferred cash through other subsidiaries and WFOE to VIE and its consolidated subsidiaries\nin 2023 and 2024, and the variable interest entities accounted for an aggregate of 96%, 83% and 99% of the Company’s total assets\nin 2022, 2023 and 2024, respectively. As of December 31, 2023 and 2024, US$688,277 and US$461,382 of cash and cash equivalents were\ndenominated in RMB, respectively.\n\n \n\n98\n\n \n\n \n\nXiao-I\nand its directly and indirectly wholly owned subsidiaries, AI Plus, Xiao-I Technology and Zhizhen Technology do not have any substantial\nassets or liabilities or result of operations. The following table sets forth the assets, liabilities, results of operations and changes\nin cash, cash equivalents of the PRC operating entities, which were included in the Company’s consolidated balance sheets and statements\nof comprehensive income/(loss) and statements of cash flows with intercompany transactions eliminated:\n\n \n\n  \nAs\nof December 31, 2023 \n\nCondensed\nConsolidating Schedule of Financial Position \nParent  \nVIE\nand its\nconsolidated\nsubsidiaries  \nWFOE  \nOther\n\nSubsidiaries  \nElimination\n\nAdjustments  \nConsolidated\n\nTotal \n\n  \n(in\nU.S. dollars) \n\nAssets \n   \n   \n   \n   \n   \n  \n\nCurrent\nassets: \n   \n   \n   \n   \n   \n  \n\nCash\nand cash equivalents \n 1,889  \n 890,365  \n 9,145  \n 663,143  \n -  \n 1,564,542 \n\nRestricted\ncash \n -  \n 20,676  \n -  \n -  \n -  \n 20,676 \n\nAccounts\nreceivable, net \n -  \n 28,326,985  \n -  \n -  \n -  \n 28,326,985 \n\nInventories \n -  \n 67,826  \n -  \n -  \n -  \n 67,826 \n\nContract\ncosts \n -  \n 1,691,293  \n -  \n -  \n -  \n 1,691,293 \n\nAdvance\nto suppliers \n -  \n 1,134,529  \n 15,113  \n -  \n -  \n 1,149,642 \n\nPrepaid\nexpenses and other current assets, net \n 2,493,301  \n 1,665,653  \n 24,632,707  \n 17,983,479  \n (41,541,587) \n 5,233,553 \n\nAmount\ndue from intercompany-current \n 17,656,465  \n 748,183  \n -  \n -  \n (18,404,648) \n - \n\nTotal\ncurrent assets \n 20,151,655  \n 34,545,510  \n 24,656,965  \n 18,646,622  \n (59,946,235) \n 38,054,517 \n\n  \n    \n    \n    \n    \n    \n   \n\nNon-current\nassets: \n    \n    \n    \n    \n    \n   \n\nProperty\nand equipment, net \n -  \n 1,913,693  \n 211,936  \n -  \n -  \n 2,125,629 \n\nIntangible\nassets, net \n -  \n 212,445  \n -  \n -  \n -  \n 212,445 \n\nLong-term\ninvestment \n -  \n 964,250  \n 1,686,209  \n -  \n (1) \n 2,650,458 \n\nInvestment\nin subsidiaries \n -  \n -  \n -  \n 23,163,931  \n (23,163,931) \n - \n\nRight\nof use assets \n -  \n 173,879  \n 2,257,596  \n -  \n -  \n 2,431,475 \n\nPrepaid\nexpenses and other non-current assets \n -  \n 3,710,351  \n 290,007  \n -  \n 2,999,999  \n 7,000,357 \n\nAmount\ndue from related parties-non current \n -  \n 13,859,350  \n 15,582  \n -  \n (15,582) \n 13,859,350 \n\nTotal\nnon-current assets \n -  \n 20,833,968  \n 4,461,330  \n 23,163,931  \n (20,179,515) \n 28,279,714 \n\n  \n 　  \n -  \n 　  \n 　  \n 　  \n 　 \n\nTOTAL\nASSETS \n 20,151,655  \n 55,379,478  \n 29,118,295  \n 41,810,553  \n (80,125,750) \n 66,334,231 \n\n  \n    \n    \n    \n    \n    \n   \n\nLiabilities \n    \n    \n    \n    \n    \n   \n\nCurrent\nliabilities: \n    \n    \n    \n    \n    \n   \n\nShort-term\nborrowings \n -  \n 26,760,940  \n -  \n -  \n -  \n 26,760,940 \n\nAccounts\npayable \n 34,277  \n 13,210,566  \n 101,495  \n 328,000  \n 1  \n 13,674,339 \n\nAmount\ndue to related parties-current \n -  \n 704,947  \n -  \n -  \n -  \n 704,947 \n\nDeferred\nrevenue \n -  \n 1,654,145  \n -  \n -  \n -  \n 1,654,145 \n\nAccrued\nexpenses and other current liabilities \n 347,014  \n 13,295,209  \n 27,160  \n 33,456,901  \n (33,188,031) \n 13,938,253 \n\nLease\nliabilities, current \n -  \n 93,284  \n 836,470  \n -  \n 1  \n 929,755 \n\nDeficit\nof VIE and VIE’s subsidiaries absorbed by WFOE \n -  \n -  \n 36,321,088  \n -  \n (36,321,088) \n - \n\nInvestment\ndeficit in subsidiaries \n 24,469,459  \n -  \n -  \n -  \n (24,469,459) \n - \n\nAmount\ndue to intercompany-current \n 164,593  \n 26,864,085  \n -  \n -  \n (27,028,678) \n - \n\nTotal\ncurrent liabilities \n 25,015,343  \n 82,583,176  \n 37,286,213  \n 33,784,901  \n (121,007,254) \n 57,662,379 \n\n  \n    \n    \n    \n    \n    \n   \n\nNon-current\nliabilities: \n    \n    \n    \n    \n    \n   \n\nAmount\ndue to related parties-non current \n -  \n 7,505,290  \n -  \n 400,000  \n -  \n 7,905,290 \n\nAccrued\nliabilities, non-current \n -  \n 5,153,803  \n -  \n -  \n 2,605,671  \n 7,759,474 \n\nAmount\ndue to intercompany, non-current \n -  \n -  \n 2,605,671  \n    \n (2,605,671) \n - \n\nLease\nliabilities, non-current \n -  \n 61,471  \n 1,412,480  \n -  \n (1) \n 1,473,950 \n\nTotal\nnon-current liabilities \n -  \n 12,720,564  \n 4,018,151  \n 400,000  \n (1) \n 17,138,714 \n\n  \n 　  \n 　  \n 　  \n 　  \n 　  \n 　 \n\nTOTAL\nLIABILITIES \n 25,015,343  \n 95,303,740  \n 41,304,364  \n 34,184,901  \n (121,007,255) \n 74,801,093 \n\n  \n    \n    \n    \n    \n    \n   \n\nShareholders’\ndeficit \n    \n    \n    \n    \n    \n   \n\nOrdinary\nshares \n 1,201  \n -  \n -  \n -  \n -  \n 1,201 \n\nPreferred\nshares \n 185  \n -  \n -  \n -  \n -  \n 185 \n\nAdditional\npaid-in capital \n 108,729,047  \n 73,978,700  \n 24,459,360  \n 20,350,000  \n (118,788,060) \n 108,729,047 \n\nStatutory\nreserve \n 237,486  \n 237,486  \n -  \n -  \n (237,486) \n 237,486 \n\nAccumulated\ndeficit \n (110,833,045) \n (107,821,825) \n (36,648,068) \n (12,724,348) \n 157,194,241  \n (110,833,045)\n\nAccumulated\nother comprehensive loss \n (2,998,562) \n (2,715,449) \n 2,639  \n -  \n 2,712,810  \n (2,998,562)\n\nXIAO-I\nCORPORATION shareholders’ deficit \n (4,863,688) \n (36,321,088) \n (12,186,069) \n 7,625,652  \n 40,881,505  \n (4,863,688)\n\nNon-controlling\ninterests \n -  \n (3,603,174) \n -  \n -  \n -  \n (3,603,174)\n\nTotal\nshareholders’ deficit \n (4,863,688) \n (39,924,262) \n (12,186,069) \n 7,625,652  \n 40,881,505  \n (8,466,862)\n\nTOTAL\nLIABILITIES AND SHAREHOLDERS’ DEFICIT \n 20,151,655  \n 55,379,478  \n 29,118,295  \n 41,810,553  \n (80,125,750) \n 66,334,231 \n\n \n\n99\n\n \n\n \n\n  \nFor\nthe year ended December 31, 2023 \n\nCondensed\nConsolidating Schedule of Results of Operations \nParent  \nVIE\nand its\nconsolidated\nsubsidiaries  \nWFOE  \nOther\n\nSubsidiaries  \nElimination\n\nAdjustments  \nConsolidated\n\nTotal \n\n  \n(in\nU.S. dollars) \n\nNet\nrevenues \n -  \n 59,165,259  \n -  \n -  \n -  \n 59,165,259 \n\nCost\nof revenues \n -  \n (19,741,689) \n -  \n -  \n -  \n (19,741,689)\n\nGross\nprofit \n -  \n 39,423,570  \n -  \n -  \n -  \n 39,423,570 \n\nOperating\nexpenses \n (2,307,368) \n (58,274,909) \n (221,950) \n (541,525) \n -  \n (61,345,752)\n\nIncome\nof VIE and VIE’s subsidiaries absorbed by WFOE \n -  \n -  \n (23,486,141) \n -  \n 23,486,141  \n - \n\nShare\nof income in subsidiaries \n (24,315,847) \n -  \n -  \n (23,777,571) \n 48,093,418  \n - \n\nTotal\noperating expenses \n (26,623,215) \n (58,274,909) \n (23,708,091) \n (24,319,096) \n 71,579,559  \n (61,345,752)\n\nIncome\nfrom operations \n (26,623,215) \n (18,851,339) \n (23,708,091) \n (24,319,096) \n 71,579,559  \n (21,922,182)\n\nOther\nloss \n 161,408  \n (1,391,071) \n (69,480) \n 3,249  \n -  \n (1,295,894)\n\nIncome\ntax expenses \n -  \n (3,787,692) \n -  \n -  \n -  \n (3,787,692)\n\nNet\nincome \n (26,461,807) \n (24,030,102) \n (23,777,571) \n (24,315,847) \n 71,579,559  \n (27,005,768)\n\nNet\nloss attributable to non-controlling interests \n -  \n (543,961) \n -  \n -  \n -  \n (543,961)\n\nNet\nincome attributable to XIAO-I CORPORATION shareholders \n (23,486,141) \n (23,486,141) \n (23,777,571) \n (24,315,847) \n 71,579,559  \n (23,486,141)\n\n \n\n  \nFor\nthe year ended December 31, 2023 \n\nCondensed\nConsolidating Schedule of Cash Flows \nParent  \nVIEs\nand their\nconsolidated\nsubsidiaries  \nWFOE  \nOther\n\nSubsidiaries  \nElimination\n\nAdjustments  \nConsolidated\n\nTotal \n\n  \n(in\nU.S. dollars) \n\nNet\ncash (used in) provided by operating activities \n (21,749,842) \n 15,185,225  \n (24,233,134) \n 15,263,143  \n (254,890) \n (15,789,498)\n\nNet\ncash used in investing activities \n (13,000,000) \n (16,842,456) \n (217,358) \n (35,350,000) \n 45,350,000  \n (20,059,814)\n\nNet\ncash provided by financing activities \n 34,750,627  \n 1,322,448  \n 24,459,360  \n 20,750,000  \n (44,809,360) \n 36,473,075 \n\nEffect\nof exchange rate changes \n -  \n 200,007  \n 277  \n -  \n (285,750) \n (85,466)\n\nNet\nchange in cash, cash equivalents and restricted cash \n 785  \n (134,776) \n 9,145  \n 663,143  \n -  \n 538,297 \n\nCash,\ncash equivalents and restricted cash, at beginning of year \n 1,104  \n 1,025,141  \n -  \n -  \n -  \n 1,026,245 \n\nCash,\ncash equivalents and restricted cash, at end of year \n 1,889  \n 890,365  \n 9,145  \n 663,143  \n -  \n 1,564,542 \n\n \n\n100\n\n \n\n \n\n  \nAs\nof December 31, 2024 \n\nCondensed\nConsolidating Schedule of Financial Position \nParent  \nVIE\nand its\nconsolidated\nsubsidiaries  \nWFOE  \nOther\n\nSubsidiaries  \nElimination\n\nAdjustments  \nConsolidated\n\nTotal \n\n  \n(in\nU.S. dollars) \n\nAssets \n   \n   \n   \n   \n   \n  \n\nCurrent assets: \n   \n   \n   \n   \n   \n  \n\nCash\nand cash equivalents \n 2,442  \n 566,544  \n 7,802  \n 269,805  \n -  \n 846,593 \n\nAccounts\nreceivable, net \n -  \n 55,522,880  \n -  \n 20,137  \n -  \n 55,543,017 \n\nAmounts\ndue from related parties \n -  \n 13,587,536  \n -  \n -  \n -  \n 13,587,536 \n\nInventories \n -  \n 10,724  \n 3,638  \n -  \n -  \n 14,362 \n\nContract\ncosts \n -  \n 2,357,950  \n -  \n 150,000  \n (5,272) \n 2,502,678 \n\nAdvance\nto suppliers \n -  \n 3,205,098  \n -  \n -  \n -  \n 3,205,098 \n\nPrepaid\nexpenses and other current assets, net \n 49,049  \n 413,579  \n 225,104  \n 105,000  \n -  \n 792,732 \n\nAmount\ndue from intercompany-current \n 32,055,968  \n 2,063,000  \n 27,495,150  \n 3,566,962  \n (65,181,080) \n - \n\nTotal\ncurrent assets \n 32,107,459  \n 77,727,311  \n 27,731,694  \n 4,111,904  \n (65,186,352) \n 76,492,016 \n\n  \n    \n    \n    \n    \n    \n   \n\nNon-current\nassets: \n    \n    \n    \n    \n    \n   \n\nProperty\nand equipment, net \n -  \n 1,777,249  \n 90,487  \n -  \n -  \n 1,867,736 \n\nIntangible\nassets, net \n -  \n 140,366  \n 3,004  \n -  \n -  \n 143,370 \n\nLong-term\ninvestment \n -  \n 937,909  \n 1,559,685  \n -  \n -  \n 2,497,594 \n\nInvestment\nin subsidiaries \n    \n -  \n -  \n 16,672,470  \n (16,672,470) \n - \n\nRight\nof use assets \n -  \n 66,913  \n 766,117  \n -  \n -  \n 833,030 \n\nPrepaid\nexpenses and other non-current assets \n -  \n 3,558,515  \n 119,213  \n -  \n -  \n 3,677,728 \n\nAmount\ndue from related parties-non current \n -  \n -  \n -  \n -  \n -  \n - \n\nTotal\nnon-current assets \n -  \n 6,480,952  \n 2,538,506  \n 16,672,470  \n (16,672,470) \n 9,019,458 \n\n  \n    \n    \n    \n    \n    \n   \n\nTOTAL\nASSETS \n 32,107,459  \n 84,208,263  \n 30,270,200  \n 20,784,374  \n (81,858,822) \n 85,511,474 \n\nLiabilities \n    \n    \n    \n    \n    \n   \n\nCurrent\nliabilities: \n    \n    \n    \n    \n    \n   \n\nShort-term\nborrowings \n -  \n 32,879,865  \n -  \n -  \n -  \n 32,879,865 \n\nAccounts\npayable \n 38,412  \n 26,740,606  \n 32,421  \n 320,000  \n -  \n 27,131,439 \n\nAmount\ndue to related parties-current \n -  \n 67,068  \n -  \n 150,000  \n -  \n 217,068 \n\nDeferred\nrevenue \n -  \n 2,385,228  \n -  \n -  \n -  \n 2,385,228 \n\nConvertible\nloans \n 216,756  \n -  \n -  \n -  \n -  \n 216,756 \n\nAccrued\nexpenses and other current liabilities \n 335,563  \n 22,173,896  \n 741,023  \n 624,560  \n (585,589) \n 23,289,453 \n\nLease\nliabilities, current \n -  \n 57,545  \n 426,113  \n -  \n -  \n 483,658 \n\nDeficit\nof VIE and VIE’s subsidiaries absorbed by WFOE \n -  \n -  \n 39,456,318  \n -  \n (39,456,318) \n - \n\nInvestment\ndeficit in subsidiaries \n 43,544,549  \n -  \n -  \n -  \n (43,544,549) \n - \n\nAmount\ndue to intercompany-current \n 174,593  \n 31,080,404  \n 171,403  \n 33,177,069  \n (64,603,469) \n - \n\nTotal\ncurrent liabilities \n 44,309,873  \n 115,384,612  \n 40,827,278  \n 34,271,629  \n (148,189,925) \n 86,603,467 \n\n  \n    \n    \n    \n    \n    \n   \n\nNon-current\nliabilities: \n    \n    \n    \n    \n    \n   \n\nAmount\ndue to related parties-non current \n -  \n 7,336,833  \n -  \n -  \n -  \n 7,336,833 \n\nAccrued\nliabilities, non-current \n -  \n 4,508,695  \n 2,534,490  \n -  \n -  \n 7,043,185 \n\nLease\nliabilities, non-current \n -  \n -  \n 295,962  \n -  \n -  \n 295,962 \n\nTotal\nnon-current liabilities \n -  \n 11,845,528  \n 2,830,452  \n -  \n -  \n 14,675,980 \n\n  \n    \n    \n    \n    \n    \n   \n\nTOTAL\nLIABILITIES \n 44,309,873  \n 127,230,140  \n 43,657,730  \n 34,271,629  \n (148,189,925) \n 101,279,447 \n\n  \n    \n    \n    \n    \n    \n   \n\nShareholders’\ndeficit \n    \n    \n    \n    \n    \n   \n\nOrdinary\nshares \n 1,598  \n -  \n -  \n -  \n -  \n 1,598 \n\nPreferred\nshares \n 185  \n -  \n -  \n -  \n -  \n 185 \n\nAdditional\npaid-in capital \n 115,745,140  \n 73,978,700  \n 29,225,626  \n 240,000  \n (103,444,326) \n 115,745,140 \n\nStatutory\nreserve \n 237,486  \n 237,486  \n -  \n -  \n (237,486) \n 237,486 \n\nAccumulated\ndeficit \n (125,338,509) \n (112,035,976) \n (41,987,769) \n (13,727,255) \n 167,751,000  \n (125,338,509)\n\nAccumulated\nother comprehensive loss \n (2,848,314) \n (1,636,528) \n (625,387) \n -  \n 2,261,915  \n (2,848,314)\n\nXIAO-I\nCORPORATION shareholders’ deficit \n (12,202,414) \n (39,456,318) \n (13,387,530) \n (13,487,255) \n 66,331,103  \n (12,202,414)\n\nNon-controlling\ninterests \n -  \n (3,565,559) \n -  \n -  \n -  \n (3,565,559)\n\nTotal\nshareholders’ deficit \n (12,202,414) \n (43,021,877) \n (13,387,530) \n (13,487,255) \n 66,331,103  \n (15,767,973)\n\nTOTAL\nLIABILITIES AND SHAREHOLDERS’ DEFICIT \n 32,107,459  \n 84,208,263  \n 30,270,200  \n 20,784,374  \n (81,858,822) \n 85,511,474 \n\n \n\n101\n\n \n\n \n\n  \nFor\nthe year ended December 31, 2024 \n\nCondensed\nConsolidating Schedule of Results of Operations \nParent  \nVIE\nand its\nconsolidated subsidiaries  \nWFOE  \nOther\nSubsidiaries  \nElimination\nAdjustments  \nConsolidated\nTotal \n\n  \n(in\nU.S. dollars) \n\nNet\nrevenues \n -  \n 71,030,671  \n 1,311,056  \n 3,111,639  \n (5,139,051) \n 70,314,315 \n\n  \n    \n    \n    \n    \n    \n   \n\nCost\nof revenues \n -  \n (22,261,142) \n (79,267) \n (2,454,526) \n 2,530,167  \n (22,264,768)\n\nGross\nprofit \n -  \n 48,769,529  \n 1,231,789  \n 657,113  \n (2,608,884) \n 48,049,547 \n\nOperating\nexpenses \n (8,381,108) \n (51,453,460) \n (3,254,279) \n (453,846) \n 2,622,112  \n (60,920,581)\n\nLoss\nof VIE and VIE’s subsidiaries absorbed by WFOE \n -  \n -  \n (4,214,151) \n -  \n 4,214,151  \n - \n\nShare\nof loss in subsidiaries \n (6,225,339) \n -  \n -  \n (6,418,622) \n 12,643,961  \n - \n\nTotal\noperating expenses \n (14,606,447) \n (51,453,460) \n (7,468,430) \n (6,872,468) \n 19,480,224  \n (60,920,581)\n\nLoss\nfrom operations \n (14,606,447) \n (2,683,931) \n (6,236,641) \n (6,215,355) \n 16,871,340  \n (12,871,034)\n\nOther\nincome/(loss) \n 100,983  \n (1,576,084) \n (181,981) \n (4,711) \n (18,501) \n (1,680,294)\n\nIncome\ntax expenses \n -  \n -  \n -  \n -  \n -  \n - \n\nNet\nloss \n (14,505,464) \n (4,260,015) \n (6,418,622) \n (6,220,066) \n 16,852,839  \n (14,551,328)\n\nNet\nloss attributable to non-controlling interests \n -  \n (45,864) \n -  \n -  \n -  \n (45,864)\n\nNet\nloss attributable to XIAO-I CORPORATION shareholders \n (14,505,464) \n (4,214,151) \n (6,418,622) \n (6,220,066) \n 16,852,839  \n (14,505,464)\n\n \n\n  \nFor\nthe year ended December 31, 2024 \n\nCondensed\nConsolidating Schedule of Cash Flows \nParent  \nVIEs\nand their\nconsolidated\nsubsidiaries  \nWFOE  \nOther\n\nSubsidiaries  \nElimination\n\nAdjustments  \nConsolidated\n\nTotal \n\n  \n(in\nU.S. dollars) \n\nNet\ncash (used in) provided by operating activities \n (5,476,392) \n (10,504,500) \n (4,101,611) \n 14,697,338  \n (9,753,084) \n (15,138,249)\n\nNet\ncash (used in) provided by investing activities \n -  \n (465,451) \n (3,120) \n 5,290,000  \n (5,290,000) \n (468,571)\n\nNet\ncash provided by (used in) financing activities \n 5,476,945  \n 10,612,756  \n 4,766,266  \n (20,360,000) \n 15,343,734  \n 15,839,701 \n\nEffect\nof exchange rate changes \n -  \n 12,698  \n (662,878) \n -  \n (300,650) \n (950,830)\n\nNet\nchange in cash, cash equivalents and restricted cash \n 553  \n (344,497) \n (1,343) \n (372,662) \n -  \n (717,949)\n\nCash,\ncash equivalents and restricted cash, at beginning of year \n 1,889  \n 911,041  \n 9,145  \n 642,467  \n -  \n 1,564,542 \n\nCash,\ncash equivalents and restricted cash, at end of year \n 2,442  \n 566,544  \n 7,802  \n 269,805  \n -  \n 846,593 \n\n \n\n102\n\n \n\n \n\n  \nAs of December 31, 2025 \n\nCondensed Consolidating Schedule of Financial Position \nParent  \nVIE and its\nconsolidated\nsubsidiaries  \nWFOE  \nOther\nSubsidiaries  \nElimination\nAdjustments  \nConsolidated\nTotal \n\n  \n(in U.S. dollars) \n\nAssets \n   \n   \n   \n   \n   \n  \n\nCurrent assets: \n   \n   \n   \n   \n   \n  \n\nCash and cash equivalents \n 4,140  \n 43,721  \n 69,881  \n 2,201,711  \n -  \n 2,319,453 \n\nRestricted cash \n -  \n 116,838  \n 28  \n -  \n -  \n 116,866 \n\nAccounts receivable, net \n -  \n 5,097,619  \n 137,497  \n 1,074,360  \n -  \n 6,309,476 \n\nAmounts due from related parties \n -  \n 21,356  \n -  \n -  \n -  \n 21,356 \n\nInventories \n -  \n    \n    \n -  \n -  \n - \n\nContract costs \n -  \n 1,639,891  \n 160,060  \n    \n    \n 1,799,951 \n\nAdvance to suppliers \n -  \n 36,478  \n -  \n -  \n -  \n 36,478 \n\nPrepaid expenses and other current assets, net \n 709,976  \n 343,376  \n 227,286  \n 42,998  \n -  \n 1,323,636 \n\nAmount due from intercompany-current \n 39,456,083  \n 3,537,843  \n 58,938,490  \n 3,117,694  \n (105,050,110) \n - \n\nTotal current assets \n 40,170,199  \n 10,837,122  \n 59,533,242  \n 6,436,763  \n (105,050,110) \n 11,927,216 \n\n  \n    \n    \n    \n    \n    \n   \n\nNon-current assets: \n    \n    \n    \n    \n    \n   \n\nProperty and equipment, net \n -  \n 118,497  \n 23,308  \n -  \n -  \n 141,805 \n\nIntangible assets, net \n    \n 111,420  \n 3,022  \n -  \n -  \n 114,442 \n\nInvestment in subsidiaries \n -  \n -  \n -  \n 33,108,000  \n (33,108,000) \n - \n\nRight of use assets \n -  \n 61,981  \n -  \n -  \n -  \n 61,981 \n\nPrepaid expenses and other non-current assets \n -  \n 3,655,687  \n -  \n -  \n -  \n 3,655,687 \n\nTotal non-current assets \n -  \n 3,947,585  \n 26,330  \n 33,108,000  \n (33,108,000) \n 3,973,915 \n\n  \n    \n    \n    \n    \n    \n   \n\nTOTAL ASSETS \n 40,170,199  \n 14,784,707  \n 59,559,572  \n 39,544,763  \n (138,158,110) \n 15,901,131 \n\nLiabilities \n    \n    \n    \n    \n    \n   \n\nCurrent liabilities: \n    \n    \n    \n    \n    \n   \n\nShort-term borrowings \n -  \n 29,214,396  \n -  \n -  \n -  \n 29,214,396 \n\nAccounts payable \n -  \n 36,757,500  \n 1,049,889  \n 1,389,822  \n -  \n 39,197,211 \n\nAmount due to related parties-current \n -  \n 70,004  \n -  \n -  \n -  \n 70,004 \n\nDeferred revenue \n -  \n 2,363,266  \n 479,612  \n -  \n -  \n 2,842,878 \n\nConvertible loans \n 2,006,119  \n -  \n -  \n -  \n -  \n 2,006,119 \n\nAccrued expenses and other current liabilities \n 331,885  \n 24,988,421  \n 3,900,510  \n 696,919  \n -  \n 29,917,735 \n\nLease liabilities, current \n -  \n 40,098  \n -  \n -  \n -  \n 40,098 \n\nInvestment deficit in subsidiaries \n 137,728,637  \n -  \n -  \n -  \n (137,728,637) \n - \n\nAmount due to intercompany-current \n 658,318  \n 37,322,575  \n 26,382,149  \n 41,627,058  \n (105,990,100) \n - \n\nTotal current liabilities \n 140,724,959  \n 130,756,260  \n 31,812,160  \n 43,713,799  \n (243,718,737) \n 103,288,441 \n\n  \n    \n    \n    \n    \n    \n   \n\nNon-current liabilities: \n    \n    \n    \n    \n    \n   \n\nAmount due to related parties-non current \n -  \n 7,602,043  \n -  \n -  \n -  \n 7,602,043 \n\nAccrued liabilities, non-current \n -  \n 4,704,972  \n 3,764,131  \n -  \n -  \n 8,469,103 \n\nLong-term borrowing \n -  \n 1,387,082  \n -  \n -  \n -  \n 1,387,082 \n\nLease liabilities, non-current \n -  \n 18,390  \n -  \n -  \n -  \n 18,390 \n\nTotal non-current liabilities \n -  \n 13,712,487  \n 3,764,131  \n -  \n -  \n 17,476,618 \n\n  \n    \n    \n    \n    \n    \n   \n\nTOTAL LIABILITIES \n 140,724,959  \n 144,468,747  \n 35,576,291  \n 43,713,799  \n (243,718,737) \n 120,765,059 \n\n  \n    \n    \n    \n    \n    \n   \n\nShareholders’ deficit \n    \n    \n    \n    \n    \n   \n\nOrdinary shares \n 2,762  \n -  \n -  \n -  \n -  \n 2,762 \n\nPreferred shares \n 185  \n -  \n    \n -  \n -  \n 185 \n\nAdditional paid-in capital \n 130,134,778  \n 73,978,700  \n 32,420,549  \n 240,000  \n (106,639,249) \n 130,134,778 \n\nStatutory reserve \n 237,486  \n 237,486  \n    \n    \n (237,486) \n 237,486 \n\nAccumulated deficit \n (226,559,555) \n (197,532,387) \n (6,815,405) \n (4,049,035) \n 208,396,827  \n (226,559,555)\n\nAccumulated other comprehensive loss \n (4,370,416) \n (2,418,670) \n (1,621,863) \n (1) \n 3,530,444  \n (4,370,415)\n\nXIAO-I CORPORATION shareholders’ deficit \n (100,554,760) \n (125,734,871) \n 23,983,281  \n (3,809,036) \n 105,560,627  \n (100,554,759)\n\nNon-controlling interests \n    \n (3,949,169) \n    \n (360,000) \n -  \n (4,309,169)\n\nTotal shareholders’ deficit \n (100,554,760) \n (129,684,040) \n 23,983,280  \n (4,169,036) \n 105,560,627  \n (104,863,928)\n\nTOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT \n 40,170,199  \n 14,784,707  \n 59,559,572  \n 39,544,763  \n (138,158,110) \n 15,901,131 \n\n \n\n \n\n103\n\n \n\n \n\n  \nFor the year ended December 31, 2025 \n\nCondensed Consolidating Schedule of Results of Operations \nParent  \nVIE and its\nconsolidated subsidiaries  \nWFOE  \nOther Subsidiaries  \nElimination Adjustments  \nConsolidated Total \n\n  \n(in U.S. dollars) \n\nNet revenues \n -  \n 18,315,230  \n 6,369,324  \n 1,308,057  \n (13,664,928) \n 12,327,684 \n\n  \n    \n    \n    \n    \n    \n   \n\nCost of revenues \n -  \n (6,699,033) \n (1,499,124) \n (1,910,531) \n 3,259,988  \n (6,848,700)\n\nGross profit \n -  \n 11,616,197  \n 4,870,200  \n (602,474) \n (10,404,940) \n 5,478,984 \n\nOperating expenses \n (8,032,652) \n (94,732,934) \n (7,482,573) \n (3,175,514) \n 11,341,610  \n (102,082,064)\n\nIncome of VIE and VIE’s subsidiaries absorbed by WFOE \n (92,661,985) \n -  \n -  \n -  \n 92,661,985  \n - \n\nTotal operating expenses \n (100,694,637) \n (94,732,934) \n (7,482,573) \n (3,175,514) \n 104,003,595  \n (102,082,064)\n\nLoss from operations \n (100,694,637) \n (83,116,737) \n (2,612,373) \n (3,777,988) \n 93,598,655  \n (96,603,080)\n\nOther loss \n (526,409) \n (2,625,048) \n (1,671,581) \n (293,903) \n (106,398) \n (5,223,339)\n\nIncome tax expenses \n -  \n -  \n -  \n -  \n -  \n - \n\nNet loss \n (101,221,046) \n (85,741,785) \n (4,283,954) \n (4,071,891) \n 93,492,257  \n (101,826,419)\n\nNet loss attributable to non-controlling interests \n -  \n (605,373) \n -  \n -  \n -  \n (605,373)\n\nNet loss attributable to XIAO-I CORPORATION shareholders \n (101,221,046) \n (85,136,412) \n (4,283,954) \n (4,071,891) \n 93,492,257  \n (101,221,046)\n\n \n\n  \nFor the year ended December 31, 2025 \n\nCondensed Consolidating Schedule of Cash Flows \nParent  \nVIEs and their\nconsolidated\nsubsidiaries  \nWFOE  \nOther\nSubsidiaries  \nElimination\nAdjustments  \nConsolidated\nTotal \n\n  \n(in U.S. dollars) \n\nNet cash (used in) provided by operating activities \n (9,883,802) \n 4,599,443  \n (3,424,817) \n 5,127,331  \n (107,019) \n (3,688,864)\n\nNet cash provided by (used in) investing activities \n -  \n 42,087  \n -  \n (3,048,000) \n 3,048,000  \n 42,087 \n\nNet cash provided by (used in) financing activities \n 9,885,500  \n (4,015,965) \n 3,194,923  \n (150,000) \n (3,194,923) \n 5,719,535 \n\nEffect of exchange rate changes \n -  \n (1,031,550) \n 292,002  \n 2,574  \n 253,942  \n (483,032)\n\nNet change in cash, cash equivalents and restricted cash \n 1,698  \n (405,985) \n 62,108  \n 1,931,905  \n -  \n 1,589,726 \n\nCash, cash equivalents and restricted cash, at beginning of year \n 2,442  \n 566,544  \n 7,801  \n 269,805  \n -  \n 846,593 \n\nCash, cash equivalents and restricted cash, at end of year \n 4,140  \n 160,559  \n 69,909  \n 2,201,710  \n -  \n 2,436,319 \n\n \n\n104\n\n \n\n \n\nFor\nthe years ended December 31, 2023, 2024 and 2025, the cash flows that have occurred between the Company, the VIE and its consolidated\nsubsidiaries, WFOE which is the primary beneficiary of the VIE, and other subsidiaries are summarized as the following:\n\n \n\n  \nFor the years ended December 31, \n\n  \n2023  \n2024  \n2025 \n\nCash paid by Xiao-I Corporation to other subsidiaries \n$27,897,826  \n$5,427,500  \n$8,841,121 \n\nCash transfer from other subsidiaries to WFOE \n 25,000,000  \n 4,820,000  \n 847,142 \n\nCash transfer from WFOE to VIE and its consolidated subsidiaries \n 24,504,585  \n 4,936,837  \n 3,530,468 \n\nCash transfer from VIE and its consolidated subsidiaries to WFOE \n 640,150  \n 651,188  \n 1,224,630 \n\nCash transfer from VIE and its consolidated subsidiaries to other subsidiaries \n 740,000  \n 935,400  \n 604,641 \n\nCash transfer from WFOE to other subsidiaries \n 576,205  \n -  \n 983,398 \n\nCash transfer from other subsidiaries to Xiao-I Corporation \n 453,800  \n 1,596,500  \n 806,550 \n\nCash transfer from other subsidiaries to VIE and its consolidated \n -  \n -  \n$2,676,084 \n\n \n\nFrom\nJanuary 1, 2026 to March 31, 2026, cash was transferred among the Company, WFOE, other subsidiaries of the Company, the VIE and its\nconsolidated subsidiaries, as follows: (i) the Company provided a total of nil in cash to its other subsidiaries while other\nsubsidiaries transferred US$0.81 million to the Company; (ii) WFOE provided a total of US$0.98 million to VIE and its subsidiaries\nwhile VIE and its subsidiaries transferred US$0.85 million to WFOE; (iii) WFOE and VIE and its subsidiaries transferred US$0.60\nmillion and US$2.68 million to other subsidiaries, respectively; and (iv) other subsidiaries transferred US$0.85 million to WFOE.\nThe aforementioned cash transfers were generally for working capital purpose among the Company, WFOE, VIE and its consolidated\nsubsidiaries, and other subsidiaries. Xiao-I intends to keep any future  earnings to finance the expansion of its business, and\nit does not anticipate that any cash dividends will be paid in the foreseeable future.\n\n \n\nThe\nCompany, WFOE, the VIE and its consolidated subsidiaries maintain cash management policies that dictate the purpose, amount, appropriate\ninternal control procedures on the handling, depositing, receiving, transferring, safeguarding, and documentation and recording of cash\ntransfers. Subject to the amounts of cash transfer and the nature of the use of funds, requisite internal approval shall be obtained\nprior to each cash transfer. Specifically, all transactions require the approval of the financial manager. As for the large quantity\ntransactions, the Chief Financial Officer and Chief Executive Officer are required to conduct regular review and approve.\n\n \n\nXiao-I\nis a holding company with no operations of its own. It conducts its operations in China primarily through the PRC operating entities\nin China. As a result, although other means are available for Xiao-I to obtain financing at the holding company level, Xiao-I’s\nability to pay dividends and other distributions to its shareholders and to service any debt it may incur may depend upon dividends and\nother distributions paid by Xiao-I’s PRC subsidiaries, which relies on dividends and other distributions paid by the PRC operating\nentities pursuant to the VIE Agreements. If any of these entities incurs debt on its own in the future, the instruments governing such\ndebt may restrict its ability to pay dividends and other distributions to Xiao-I.\n\n \n\nIn\naddition, dividends and distributions from Xiao-I’s PRC subsidiaries and the VIE are subject to regulations and restrictions on\ndividends and payment to parties outside of China. Applicable PRC law permits payment of dividends to Xiao-I by WFOE only out of net\nincome, if any, determined in accordance with PRC accounting standards and regulations. A PRC company is not permitted to distribute\nany profits until any losses from prior fiscal years have been offset by general reserve fund and profits (if general reserve fund is\nnot enough). Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal\nyear. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount\nof net assets held in each operating subsidiary. In contrast, there is presently no foreign exchange control or restrictions on capital\nflows into and out of Hong Kong. Hence, Xiao-I’s Hong Kong subsidiary is able to transfer cash without any limitation to the Cayman\nIslands under normal circumstances. As a result of these PRC laws and regulations, the PRC operating entities are restricted in their\nability to transfer a portion of their net assets to the Company.\n\n \n\n105\n\n \n\n \n\nMoreover,\nthe transfer of funds among the PRC operating entities are subject to the Provisions on Private Lending Cases, which was implemented\non January 1, 2021 to regulate the financing activities between natural persons, legal persons and unincorporated organizations. The\nProvisions on Private Lending Cases does not prohibit using cash generated from one PRC operating entity to fund another affiliated PRC\noperating entity’s operations. Xiao-I, its subsidiaries or the PRC operating entities have not been notified of any other restriction\nwhich could limit the PRC operating entities’ ability to transfer cash among each other. In the future, cash proceeds from overseas\nfinancing activities, including the IPO proceeds, may be transferred by Xiao-I to AI Plus, and then transferred to Xiao-I Technology,\nand then transferred to WFOE via capital contribution or shareholder loans, as the case may be. Cash proceeds may flow to Shanghai Xiao-I\nfrom WFOE pursuant to certain contractual arrangements between WFOE and Shanghai Xiao-I as permitted by the applicable PRC regulations.\n\n \n\nUnder\nCayman Islands law, a Cayman Islands company may pay a dividend on its shares out of either profit or share premium amount, provided\nthat in no circumstances may a dividend be paid out of share premium if this would result in the company being unable to pay its debts\ndue in the ordinary course of business. Xiao-I does not expect to pay dividends in the foreseeable future. If, however, it declares dividends\non its Ordinary Shares, the depositary will pay holders the cash dividends and other distributions it receives on Xiao-I’s Ordinary\nShares after deducting its fees and expenses in accordance with the terms set forth in the deposit agreement. If it determines to pay\ndividends on any of its Ordinary Shares in the future, as a holding company, it will rely on payments made from Shanghai Xiao-I to WFOE,\npursuant to the VIE Agreements between them, and the distribution of such payments to Xiao-I Technology from WFOE, and then to AI Plus\nfrom Xiao-I Technology, and then to Xiao-I from AI Plus as dividends, unless it receives proceeds from future offerings. See “Risk\nFactors — Risks Relating to Doing Business in China — *There are significant uncertainties under the EIT Law relating to\nthe withholding tax liabilities of our PRC subsidiary, and dividends payable by our PRC subsidiary to our offshore subsidiaries may not\nqualify to enjoy certain treaty benefi*ts.”\n\n \n\nOther\nRelated Party Transactions\n\n \n\nThe\nfollowing provides descriptions of related party transactions based on (1) names of related parties and their relationships with the\nCompany through its wholly owned subsidiaries, variable interest entity (“VIE”) and VIE’s subsidiaries (collectively,\nthe “Group”), (2) amounts due from related parties, (3) amounts due to related parties and (4) nature of loans/transactions\nand interest rates of the loans. Unless otherwise specified, the equity interests described herein are calculated based on the total\nnumber of outstanding ordinary shares of the Company as of December 31, 2024.\n\n \n\n**Related\nparties**\n\n \n\nThe\nfollowing is a list of related parties which the Group has transactions with:\n\n  \n\n**No.**\n \n**Name\nof Related Parties**\n \n**Relationship**\n\n1\n \nZhejiang\nBaiqianyin Network Technology Co., Ltd (“Zhejiang Baiqianyin”)\n \nAn\nentity which has a common director of the Board of Directors with the Group\n\n \n \n \n \n \n\n2\n \nShanghai\nShenghan\n \nAn\nentity which the Group holds 16.56% equity interests\n\n \n \n \n \n \n\n3\n \nShanghai\nAoshu Enterprise Management Partnership (Limited Partnership) (“Shanghai Aoshu”)\n \nAn\nentity which is the Group’s employee stock ownership platform, and has a common director of the Board of Directors with the\nGroup\n\n \n \n \n \n \n\n4\n \nJiaxing\nSound Core Intelligent Technology Co., Ltd\n \nAn\nentity which Shanghai Shenghan holds 20% equity interests\n\n \n \n \n \n \n\n5\n \nHui\nYuan\n \nChairman\nof the board, one of the major shareholders holding 3.1% (excluded the preferred shares) equity interests of the Company\n\n \n \n \n \n \n\n6\n \nJiaxing\nChiyu Investment Partnership (limited Partnership) \n \nA\npredecessor shareholder which holds 5.44% equity interests of the Company\n\n \n \n \n \n \n\n7\n \nHaiyin\nCapital Investment (International) Limited \n \nA\npredecessor shareholder which holds 5.18% equity interests of the Company\n\n \n \n \n \n \n\n8\n \nZhizhen\nGuorui\n \nAn\nentity which the Group holds 26% equity interests\n\n \n \n \n \n \n\n9\n \nShanghai\nMachinemind Intelligent Technology Co., Ltd.\n \nAn\nentity which the Group holds 18% equity interests\n\n \n\n106\n\n \n\n \n\n**Amounts\ndue from related parties**\n\n \n\nAmounts\ndue from related parties consisted of the following for the periods indicated:\n\n \n\n  \nAs\nof December 31, \n\n  \n2024  \n2025 \n\nDue from related parties-current \n   \n  \n\nOther receivables \n   \n  \n\nZhizhen Guorui\n(a) \n$13,587,536  \n$14,092,369 \n\nShanghai Aoshu (b) \n 19,255  \n 20,098 \n\nCredit\nlosses provisions \n (19,255) \n (14,091,111)\n\nTotal \n$13,587,536  \n$21,356 \n\n  \n\n(a).The\nbalance consisted of:\n\n \n\n \n(i)\nOn March\n31, 2023, the Group entered into agreement to provide a loan to Zhizhen Guorui, an equity investment of the Group, with a maximum\namount of $14,084,705 (RMB100.0 million) and interest-free. As of December 31, 2024, the actual loan provided by the Group to Zhizhen\nGuorui amounted to $13,480,745 (RMB98.4 million).  The Group anticipates that it will be able to repay the loan within one year.\nFor the years ended December 31, 2025, the Group made full provision of receivables based on the management’s estimation of\nthe collectability of the receivable;\n\n \n\n \n(ii)\nAs of\nDecember 31, 2024 and 2025, the prepayment of $106,791 and $21,356 to Zhizhen Guorui for the purchase of technology development service.\n\n \n\n(b).Other\nreceivable from Shanghai Aoshu was the payment to an employee on behalf of Shanghai Aoshu.\nFor the year ended December 31, 2023, 2024 and 2025, the Group made full provision of receivables\nfrom Shanghai Aoshu;\n\n \n\n**Amounts\ndue to related parties**\n\n \n\nAmount\ndue to related parties consisted of the following for the periods indicated:\n\n \n\n  \nAs\nof December 31, \n\n  \n2024  \n2025 \n\nDue to related parties-current \n   \n  \n\nAccounts payable \n   \n  \n\nShanghai Shenghan \n$67,068  \n$70,004 \n\nInterest-free loans (c) \n    \n   \n\nHui\nYuan \n$150,000  \n$- \n\nSubtotal-due\nto related parties-current \n 217,068  \n **70,004** \n\n  \n    \n   \n\nDue to\nrelated parties-non current \n    \n   \n\nHui\nYuan(d) \n$7,336,833  \n$7,602,043 \n\nSubtotal-due\nto related parties-non current \n 7,336,833  \n **7,602,043** \n\nTotal \n$7,553,901  \n$7,672,047 \n\n \n\n(c)\nThe balance\nrepresents the advance funds from related parties for daily operational purposes. The funds are interest-free, unsecured and repayable\non demand.\n\n \n\n(d)\n\nHui\nYuan provided several interest-free loans to the Group for its daily operation needs before\n2022. In 2023, the Group entered into agreement with Hui Yuan to establish an annual interest\nrate for the outstanding loans. The interest shall be calculated at an annual rate of 6.8%\nbased on the actual number of days used from January 1, 2023. The maturity of the loans from\nHui Yuan will be extended based on mutual consent. As of December 31, 2024 and 2025, the\ncorresponding balance due to Hui Yuan was $7,336,833 and $7,602,043, respectively.\n\n \n\n107\n\n \n\n \n\n**Significant\ntransactions with related parties**\n\n \n\n  \nFor the years ended December 31, \n\nNature \n2023  \n2024  \n2025 \n\nTechnology service fee payable \n   \n   \n  \n\nZhizhen Guorui \n$661,010  \n$699,404  \n$180,173 \n\nShanghai Shenghan \n -  \n 7,991  \n 3,409 \n\n  \n    \n    \n   \n\nTechnology service fee paid \n    \n    \n   \n\nZhizhen Guorui \n$684,412  \n$878,512  \n$92,499 \n\nShanghai Shenghan \n 112,980  \n 21,888  \n 3,409 \n\n  \n    \n    \n   \n\nLoans from a related party \n    \n    \n   \n\nHui Yuan \n$400,000  \n$-  \n$- \n\n  \n    \n    \n   \n\nRepayment of loans from a related party \n    \n    \n   \n\nHui Yuan \n$-  \n$812,747  \n$474,786 \n\n  \n    \n    \n   \n\nInterest-free loans from related parties \n    \n    \n   \n\nZhejiang Baiqianyin \n$290,076  \n$-  \n$  \n\nHui Yuan \n -  \n 150,000  \n - \n\n  \n    \n    \n   \n\nInterest-free loans repayment to related parties \n    \n    \n   \n\nJiaxing Chiyu Investment Partnership (limited Partnership) \n$-  \n$416,916  \n$  \n\nHui Yuan \n 1,355,760  \n -  \n 150,000 \n\nJiaxing Sound Core Intelligent Technology Co., LTD \n 31,776  \n -  \n - \n\nZhejiang Baiqianyin \n 141  \n -  \n - \n\n  \n    \n    \n   \n\nReturn of inventories to a related party \n    \n    \n   \n\nShanghai Shenghan \n$-  \n$-  \n$- \n\n  \n    \n    \n   \n\nInterest-free loans to a related party \n    \n    \n   \n\nZhizhen Guorui \n$13,896,539  \n$-  \n$- \n\n  \n    \n    \n   \n\nDebt relief \n    \n    \n   \n\nShanghai Machinemind Intelligent Technology Co., Ltd. \n$-  \n$-  \n$- \n\n \n\nArrangements\nwith Our Executive Officers and Directors\n\n \n\n**Agreements\nwith Our Non-Executive Directors**\n\n \n\nWe\nhave entered into an independent director agreement with one of our non-executive directors.\n\n \n\n**Indemnification\nAgreements**\n\n \n\nWe\nhave entered into indemnification agreements with each of our directors and executive officers. See “Item 6.B. Directors and Senior\nManagement and Employees—Compensation—Limitation on Liability and Other Indemnification Matters.”\n\n \n\n108\n\n \n\n \n\n2025\nShare Incentive Plan\n\n \n\nSee\n“Item 6.B. Director, Senior Management and Employees—Compensation—2025 Share Incentive Plan.”\n\n \n\n2023\nShare Incentive Plan\n\n \n\nSee\n“Item 6.B. Director, Senior Management and Employees—Compensation—2023 Share Incentive Plan.”\n\n \n\nRelated\nPerson Transaction Policy\n\n \n\nOur\nboard of directors has adopted a written related party transactions policy setting forth the policies and procedures for the review and\napproval or ratification of related person transactions. This policy covers any transaction or proposed transactions between us and a\nrelated person that are material to us or the related person, including without limitation, purchases of goods or services by or from\nthe related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment\nby us of a related person. In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts\nand circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an\narm’s length transaction and the extent of the related person’s interest in the transaction.\n\n \n\nC.\nInterests of Experts and Counsel.\n\n \n\nNot\napplicable."}