{"url_path":"/sec/aixi/10-k/2026/item-8","section_key":"item-8","section_title":"Item 8 Financial 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":2065,"has_tables":true,"body_markdown":"Item\n8. Financial Information.\n\n \n\nA.\nConsolidated Statements and Other Financial Information.\n\n \n\nPlease\nsee Item 18. “Financial Statements” for our audited consolidated financial statements filed as part of this annual report.\n\n \n\n*Litigation*\n\n \n\nIn\nthe ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and\na variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable\nand the amount of the loss is reasonably estimable.\n\n \n\nOn\nJune 26, 2024, a securities class action was filed in the Supreme Court of the State of New York, County of New York, against Xiao-I\nCorporation and certain of its officers and directors. Plaintiffs alleged violations of the Securities Act of 1933, asserting that the\ncompany’s IPO registration statement and prospectus contained materially misleading statements or omissions related to its AI capabilities\nand customer contracts. The action seeks unspecified damages and other relief. On September 13, 2024, plaintiffs filed an amended complaint\nexpanding the allegations to include new information from Xiao-I’s subsequent SEC filings, arguing that post-IPO disclosures also\nfailed to correct earlier misstatements. On June 30, 2025, in a significant development, Plaintiff elected to file a Second Amended Complaint.\nOn July 14, 2025, Defendants Xiao-I and the underwriters formally submitted a pre-motion letter seeking dismissal. The court granted\nDefendants’ request to file a motion to dismiss on July 15, 2025. To date, the court has not yet issued a ruling and continues\nto deliberate on the dismissal motion.\n\n \n\nSeparately,\non October 15, 2024, a second securities class action lawsuit was filed in the U.S. District Court for the Southern District of New York\nalleging violations of both the Securities Act and the Securities Exchange Act of 1934. The complaint focuses on similar alleged misrepresentations\nin the IPO filings and alleges the company failed to disclose material risks about its technology and commercialization prospects. Xiao-I\ndisclosed that it intends to vigorously contest both lawsuits. Xiao-I Corporation submitted pre-motion to dismiss letters on May 7, 2025,\nand motions to dismiss are due on June 9, 2025.\n\n \n\n109\n\n \n\n \n\nIn\naddition, Xiao-I remains involved in a long-standing patent litigation with Apple Inc. Xiao-I claims that Apple’s Siri prod-uct\ninfringes on its patented voice assistant technology. On August 3, 2020, Shanghai Xiao-I filed a lawsuit with the High People’s\nCourt of Shanghai in China, against Apple Computer Trading (Shanghai) Co., Ltd., Apple, Inc., and Apple Computer Trading (Shanghai) Co.,\nLtd. (together, “Apple”), demanding that Apple cease its infringement of Shanghai Xiao-I’s intelligent assistant patent\n(ZL200410053749.9 invention patent) by its Siri (intelligent assistant) (the “Patent Infringement Case”). The lawsuit seeks\nvarious remedies, including but not limited to, requiring Apple to stop manufacturing, using, offering to sell, selling or importing\nproducts that infringe Shanghai Xiao-I’s patent, and a temporary claim amount of 10 billion yuan (RMB). On August 27, 2020, the\nHigh People’s Court of Shanghai formally accepted the Patent Infringement Case filed by Shanghai Xiao-I against Apple. On September\n4, 2021, Shanghai Xiao-I filed a behavior preservation application (injunction) with the Shanghai High People’s Court, demanding\nApple to immediately stop the patent infringement involving Siri, including but not limited to stopping the production, selling, offering\nto sell, importing or using of iPhone products that infringe Shanghai Xiao-I’s patent. On February 3, 2023, Apple filed a lawsuit\nagainst Shanghai Xiao-I with the Shanghai High People’s Court, requesting (i) confirmation that the iPhone SE, iPhone 12, and iPhone\n13 series products equipped with Siri (the “products in question”) do not infringe on the patent rights of ZL200410053749.9\ninvention patent, and (ii) Shanghai Xiao-I to compensate the plaintiff for reasonable expenses, including lawyer fees, notarization fees,\netc., totaling RMB 2 million currently.\n\n \n\nOn\nJanuary 29, 2024, the Shanghai High Court decided to merge the above two cases for trial, and they are currently under review The Shanghai\nHigh Court held two hearings on September 24, 2024 and November 1, 2024. A verdict in the infringement case is pending as of the date\nof the most recent filing. Xiao-I emphasized that protecting its IP portfolio remains a critical strategic priority.\n\n \n\nOn\nMarch 27, 2023, the Beijing Intellectual Property Court notified that Apple Computer Trading (Shanghai) Co., Ltd. had filed a patent\nadministrative lawsuit against the defendant China National Intellectual Property Administration and the third person, Shanghai Xiao-I,\nregarding the 58271 and 58272 Review Decision of Request for Invalidation. On June 28, 2024, the Beijing Intellectual Property Court\nruled against Apple, confirming the validity of Xiao-I’s Chinese patent.\n\n \n\nOn March 27, 2026,\nthe Supreme People’s Court issued a final judgment, rejecting Apple’s request to invalidate the patent for “Chat Robot System”\n(ZL200410053749.9) held by Shanghai Xiaoi, and confirming the patent’s legality and validity. This judgment is final, and neither party\nhas the right to appeal further.\n\n \n\nOn\nMay 2025, the Huangpu District People’s Court of Shanghai accepted the financial contract dispute case filed by China Construction Bank\nCorporation Shanghai Branch against Shanghai Xiao-I. The plaintiff sought a judgment ordering the defendant to immediately repay the\nloan principal and penalty interest totaling RMB 25,036,162.25. The case has now been adjudicated in its final judgment, ordering the\ndefendant to pay the aforementioned loan amount plus penalty interest to the plaintiff.\n\n \n\nOn\nJuly 2025, the Qingpu District People’s Court of Shanghai accepted the private lending dispute case filed by Quan Feng against Shanghai\nXiao-I. The plaintiff sought a judgment ordering the defendant to pay the principal, interest, and attorney fees totaling RMB 15,116,000.\nThe case has now been settled through mediation under an installment repayment plan.\n\n \n\nOn\nJune 2025, the Huangpu District People’s Court of Shanghai accepted the case of private lending dispute filed by Shanghai Tianyong Asset\nManagement Co., Ltd. against Shanghai Xiao-I. The plaintiff sought a judgment ordering the defendant to pay the principal and attorney\nfees totaling RMB 13,060,000 plus interest. In August 2025, the defendant raised a jurisdictional objection, and the case was transferred\nto the Jiading District People’s Court of Shanghai on August 18,2025. The hearing took place on March 19,2026, but no judgment has yet\nbeen rendered.\n\n \n\nOn\nJuly 2025, the Jiading District People’s Court of Shanghai accepted the case of financial contract dispute filed by Jiangsu Bank Co.,\nLtd. Shanghai Jiading Branch against Shanghai Xiao-I. The plaintiff sought a judgment ordering the defendant to immediately pay the loan\nprincipal, penalty interest, compound interest, attorney fees, and other litigation costs totaling RMB 20,139,027.78. The first-instance\njudgment has been rendered; our company has appealed, and the second-instance hearing has not yet commenced.\n\n \n\nOn\nJune 2025, the Shanghai Pudong New Area People’s Court accepted the case filed by Shanghai Jixuan Enterprise Management Consulting Partnership\n(Limited Partnership) against Xiao-I Corporation and Yuan Hui regarding a dispute over liability for damages to shareholder interests.\nThe plaintiff alleged that the defendants’ failure to promptly assist shareholders in converting Cayman Islands common shares into American\nDepositary Shares (ADS) and selling them on the secondary market resulted in a decline in the plaintiff’s stock value and corresponding\nlosses. The plaintiff sought a judgment ordering the defendants to: 1) immediately lift the lock-up restrictions and complete the transfer\nprocedures for the 183,600 American Depositary Shares (ADS) held by the plaintiff in Defendant 1 (US stock code: AIXI); 2) compensate\nthe plaintiff for losses amounting to RMB 2,265,315.41. The defendants submitted a jurisdictional objection in August 2025, which was\nrejected by the court. The defendants have since appealed, and no hearing has been held yet.\n\n \n\n110\n\n \n\n \n\nOn\nSeptember 2025, the Shanghai Pudong New Area People’s Court accepted the case filed by Shanghai Jiding Enterprise Management Consulting\nPartnership (Limited Partnership) against Xiao-I Corporation and Yuan Hui regarding a dispute over liability for damages to shareholder\ninterests. The plaintiff alleged that the defendants’ failure to promptly assist shareholders in converting Cayman Islands common shares\ninto American Depositary Shares (ADS) and selling them on the secondary market resulted in a decline in the plaintiff’s stock value and\ncorresponding losses. The plaintiff sought a judgment ordering the defendants: 1) to immediately lift the lock-up restrictions and process\nthe transfer of the 980,661 American Depositary Shares (ADS) held by the plaintiff in Defendant 1 (US stock code: AIXI); 2) to compensate\nthe plaintiff for losses amounting to RMB 12,108,027.86. The defendants submitted a jurisdictional objection in October 2025, which the\ncourt rejected; the defendants have since appealed, and no hearing has been held yet.\n\n \n\nOn\nOctober 2025, the Shanghai Pudong New Area People’s Court accepted the financial contract dispute case filed by Bank of Ningbo Co., Ltd.\nShanghai Branch against Shanghai Xiao-I. The plaintiff sought a judgment ordering the defendant to immediately pay the loan principal,\npenalty interest, and compound interest totaling RMB 20,151,522.3. The case was resolved through mediation.\n\n \n\nOn\nOctober 2025, the Jiading District People’s Court of Shanghai accepted the financial contract dispute case filed by Shanghai Rural Commercial\nBank Co., Ltd. Jiading Branch against Shanghai Xiao-I. The plaintiff sought a judgment ordering the defendant to immediately pay the\nloan principal and overdue interest totaling RMB 10,023,435.07; the plaintiff has since withdrawn the lawsuit.\n\n \n\nOn\nApril 2026, the Shanghai Pudong New Area People’s Court accepted the contract dispute case filed by Shanghai Bank Co., Ltd. Pudong Branch\nagainst Shanghai Xiao-I., Zhizhen Artificial Intelligence Technology (Shanghai) Co., Ltd., and Xiaoi Technology Limited. The plaintiff\nsought a judgment ordering the defendants to pay the factoring receivable principal, interest, default penalties, and attorney fees totaling\nRMB 20,650,594.37. The hearing for this case was scheduled for May 20,2026.\n\n \n\nOn\nApril 2026, the Shanghai Pudong New Area People’s Court accepted the case filed by Bank of Beijing Co., Ltd. Shanghai Branch against\nShanghai Xiao-I. regarding a financial loan contract dispute. The plaintiff sought a judgment ordering the defendant to immediately pay\nthe loan principal, interest, and attorney fees totaling RMB 20,892,235.63. The hearing was scheduled for June 23,2026.\n\n \n\nDuring\n2025, in addition to the aforementioned lawsuits, Xiao-I was involved in a total of 22 other litigation cases domestically, primarily\nconcerning outstanding debts arising from the company’s business operations. The cumulative amount involved in these cases amounted to\napproximately RMB 24,924,150.38.\n\n \n\nFurthermore,\nas of December 31, 2025,, Xiao-I is involved in labor disputes in China involving more than 117 former employees who were laid off as\npart of a workforce optimization initiative. The disputes primarily relate to claims for unpaid wages, social insurance contributions,\nhousing fund payments, and severance compensation. The total amount of claims asserted exceeds RMB 20.3 million. Out of these disputes,\nmore than 30 disputes are currently pending before local labor arbitration authorities and the rest has been concluded. The company is\nactively engaging with relevant agencies to seek resolution. While management does not currently expect the outcome to have a material\nadverse effect on its consolidated financial statements, the disputes could adversely affect employee morale, operational efficiency,\nor public perception. \n\n \n\nIn\nthe opinion of management, there were no other pending or threatened claims and litigation as of December 31, 2025 and through the\ndate of this annual report.\n\n \n\n*Dividend\nPolicy*\n\n \n\n**In\nthe following discussion of dividend policy, “we,” “us,” or “our” refer to Xiao-I.**\n\n \n\nWe\nhave not previously declared or paid cash dividends and we have no plan to declare or pay any dividends in the near future on our shares.\nWe currently intend to retain most, if not all, of our available funds and any future earnings to operate and expand our business. Any\nfuture determination related to a dividend policy will be made at the discretion of our board of directors, and subject to Cayman Islands\nlaw. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or its share premium account, 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\nas they fall due in the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing,\namount and form of future dividends, if any, will be based upon conditions then existing, including our results of operations, financial\ncondition, current and anticipated capital requirements, business prospects, contractual restrictions and other factors our board of\ndirectors deems relevant, and subject to the restrictions contained in any future financing instruments.\n\n \n\n111\n\n \n\n \n\nB. Significant Changes.\n\n \n\nNo significant change has occurred since the date\nof the financial statements included in this annual report."}