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United States securities and exchange commission logo
November 9, 2022
Chao Xu
General Counsel
Xiao-I Corporation
7th floor, Building 398, No. 1555 West
Jinshajiang Rd
Shanghai, China 201803
Re: Xiao-I Corporation
Amendment No. 2 to
Draft Registration Statement on Form F-1
Submitted October
26, 2022
CIK No. 0001935172
Dear Chao Xu:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
September 19, 2022 letter.
Amendment No. 2 to Draft Registration Statement on Form F-1
About this Prospectus
Conventions that apply to this Prospectus, page 1
1. We note the revisions
you made in response to prior comment 5; however, you continue to
disclose that "in the
context of describing our business, operations and consolidated
financial information,
we, us, or the Company are to Shanghai Xiao-i." As
previously requested,
please exclude the variable interest entity, Shanghai Xiao-i, from
this definition and
make appropriate revisions throughout your filing. Similarly, please
revise your definition
of the "Group" on page 6 to remove the VIE and the VIE's
Chao Xu
Xiao-I Corporation
November 9, 2022
Page 2
subsidiaries from this definition.
Capitalization, page 82
2. We note in your response to prior comment 15 that the VIE has decided
to pay cash to the
lenders upon completion of this offering. Please revise footnote (1)
to reflect this
decision, quantifying the total cash payment as of the most recent
balance sheet date and
disclosing the expected source of funds to cash settle these
obligations. Additionally, if
the intent is to use proceeds from this offering, ensure that such
disclosure is accompanied
by the risk that such a transfer may be delayed or restricted. This
comment also applies to
your Use of Proceeds, Dilution, and Liquidity and Capital Resources in
MD&A
disclosures, as applicable.
Principal Shareholders, page 144
3. We note your response to prior comment 11; however, we were unable to
locate
disclosures responsive to Items 7.A.1.c and 7.A.2. Please revise or
advise. With respect
to Item 7.A.3, while we note you made revisions to the corporate legal
structure diagram,
please revise to add a narrative discussion responsive to this item in
your Principal
Shareholders section.
Related Party Transactions, page 146
4. We note that the "Principal Shareholders" chart indicates that Hui
Yuan beneficially owns
14.73% of Ordinary Shares prior to the offering. Please revise the
"Related parties" chart
on page 146 and page F-33 to reflect Hui Yuan's updated ownership
percentage, or revise
as appropriate.
Consolidated Financial Statements
Note 1. Organization and Principal Activities, page F-9
5. We note your revised disclosure on page F-10 in response to prior
comment 12. We
further note the revised disclosure on page F-15 that the "WFOE, through
contractual
arrangements, . . . absorbs all risk of losses of the entity, receives
benefits of the entity that
could be significant to the entity, excluding non-controlling interests.
.. ." The disclosure
on page F-15 appears to imply that the exclusion of non-controlling
interests applies to the
WFOE's ability to receive benefits of the VIE, but not to absorbing the
risk of losses.
FirstName LastNameChao Xu
Please revise your disclosure throughout the registration statement to
Comapany NameXiao-I
consistently Corporation
disclose the exclusion of non-controlling interests from
absorbing the risk of
losses and receiving
November 9, 2022 Page 2 the benefits of the VIE and its subsidiaries.
FirstName LastName
Chao Xu
FirstName LastNameChao Xu
Xiao-I Corporation
Comapany 9,
November NameXiao-I
2022 Corporation
November
Page 3 9, 2022 Page 3
FirstName LastName
Note 2. Summary of Significant Accounting Policies
(p) Revenue recognition , page F-18
6. Please revise your disclosure regarding contract balances to quantify
the amount of
amortization expense related to contract costs for each period
presented. Additionally,
disclose any adjustments to the amount of amortization expense as part
of the
restatement. Refer to ASC 340-40-50-3(b).
Note 9. Convertible Loans, page F-28
7. In your response to prior comment 15 you state that the VIE has
decided to pay cash to the
lenders upon completion of this offering; however, you also indicate
that you will disclose
the reclassification of convertible loans into ordinary loans under
the subsequent events
footnote in the June 30, 2022 financial statements. Please explain why
you would
reclassify such convertible loans into ordinary shares as of June 30,
2022 considering the
obligations remain outstanding and the VIE intends to cash settle the
obligations. Also
revise to quantify the total cash to be paid to settle all outstanding
convertible loans. In
this regard, Section II of the Investment Agreement appears to adjust
the cash payment
calculation depending on the market value of the Proposed Listing
Company. Finally,
considering the VIE cash balance as of December 31, 2021 please
disclose the expected
source of funds that the VIE will use to pay cash to the lenders. In
this regard, in your
response you state that the VIE will settle liabilities on its own
without involving the
company.
Note 18. Restatement, page F-37
8. Please revise your restatement disclosures for the Statement of
Operations to include
the impact on operating income/(loss) before taxes and income tax
expense/(benefit). In
this regard, ASC 250-10-50-7(a) requires the disclosure of the effect
of the correction on
each financial statement line item. Also, please provide us with a
summary of how the
restatement was reflected and a qualitative discussion of the
adjustments. In this
regard, explain to us why the restatement resulted in a reduction in
the balance of
capitalized contract costs and deferred revenues at December 31, 2020
and 2021. Also,
describe for us the nature of the added cost of revenues and explain
why these costs were
not previously reflected in your Statements of Operations. Finally,
explain to us why
there was a lower amount of additional cost of revenues in the year
ended December 31,
2021 compared to 2020 despite the relatively larger amount of added
revenues in 2021.
Note 19. Subsequent events, page F-41
9. We note your revised disclosure and response to prior comment 15.
Please revise to
disclose the extensions of the Xu***, Shi***, and Chen *** loans and
the decision by the
VIE to pay cash to the lenders within ten working days after
completion of the listing date
to settle the outstanding convertible loans, quantifying the total
cash payment. Refer to
ASC 855-10-50-4(b).
Chao Xu
Xiao-I Corporation
November 9, 2022
Page 4
You may contact Joyce Sweeney, Senior Staff Accountant, at 202-551-3449
or Christine
Dietz, Senior Staff Accountant, at 202-551-3408 if you have questions regarding
comments on
the financial statements and related matters. Please contact Charli
Gibbs-Tabler, Staff Attorney,
at 202-551-6388 or Mitchell Austin, Staff Attorney, at 202-551-3574 with any
other questions.
Sincerely,
FirstName LastNameChao Xu
Division of
Corporation Finance
Comapany NameXiao-I Corporation
Office of
Technology
November 9, 2022 Page 4
cc: Fred Summer
FirstName LastName