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United States securities and exchange commission logo
July 27, 2023
Hui Yuan
Chief Executive Officer
Xiao-I Corporation
7th floor, Building 398, No. 1555 West
Jinshajiang Rd
Shanghai, China 201803
Re: Xiao-I Corporation
Form 20-F for the
Fiscal Year Ended December 31, 2022
Filed April 28,
2023
File No. 001-41631
Dear Hui Yuan:
We have limited our review of your filing to the financial
statements and related
disclosures 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 these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2022
Risk Factors
Some of our shareholders are not in compliance with the PRC's
regulations relating to offshore
investment activities by PRC residents. . ., page 28
1. We note your disclosure
that the WFOE is unable to open a new capital account with
banks within China, and
currently, you are unable to use most of the IPO proceeds for
product development and
company operations because you are unable to transfer the
funds from Xiao-I
Corporation to the WFOE and then to the VIE. Previously, in your
Form F-1, the heading
for this risk factor indicated that as a result of non-compliance, the
shareholders may be
subject to penalties. Further, the description of the risks may imply
that restrictions on
foreign exchange activities and ability to receive registered capital are
limited to interactions
between the WFOE and the shareholders that failed to complete
Circular 37
registration. Please revise this risk factor and throughout your filing to
clarify
Hui Yuan
FirstName LastNameHui Yuan
Xiao-I Corporation
Comapany
July NameXiao-I Corporation
27, 2023
July 27,
Page 2 2023 Page 2
FirstName LastName
the risks and potential impact to the company and the PRC operating
entities as a result of
PRC resident shareholders that do not comply with Circular 37
registration, including
explicit discussion of the potential inability to use offering
proceeds for business
development and operations as intended.
Item 4. Information on the Company
C. Organizational Structure, page 68
2. Please revise to include the diagram of your corporate organizational
structure in the
forepart of the filing.
Item 5. Operating and Financial Review and Prospects
B. Liquidity and Capital Resources, page 79
3. You disclose that you intend to use the net offering proceeds from
your March 2023 initial
public offering for research and development, investment in technology
infrastructure,
marketing and branding, and other capital expenditure, and other
general corporate
purpose. Please revise here and on page v to prominently disclose that
you are currently
unable to use most of the IPO proceeds for the intended product
development and
company operations because you are unable to transfer the funds from
Xiao-I Corporation
to the WFOE and then to the VIE. Refer to Item 5.B of Form 20-F.
Consolidated Financial Statements
Consolidated Statements of Operations and Comprehensive (Loss)/Income, page F-4
4. Please revise to state separately the cost of products sold and cost
of services for the
periods presented. Refer to Rule 5-03(b)(2) of Regulation S-X.
Note 2. Summary of Significant Accounting Policies
(o) Revenue recognition, page F-16
5. Regarding technology development services, please tell us the
following:
Describe the nature of the services included within this revenue
category;
The reasons for the change in accounting and/or presentation from
your registration
statement on Form F-1;
How you considered the guidance in ASC 606-10-25-19 through 25-21
in
determining the performance obligation is capable of being distinct
and distinct
within the context of the contract and how you determine the
stand-alone selling
price. In this regard we note your September 2, 2022 response to
comment 34
that the software development services performance obligation is to
deliver
customized software products and that the company does not offer
stand-alone set-up
implementation services to customers, but as a supplementary step
to deliver its
products; and
How you considered the guidance in ASC 606-10-25-27 through 25-29
in concluding
that revenues should be recognized at a point-in-time, upon
customer acceptance. As
Hui Yuan
Xiao-I Corporation
July 27, 2023
Page 3
part of your response, address the Support Agreement pursuant to
which you provide
technical support and co-operation of the drawing review platform
for three years as
described on page 75.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Joyce Sweeney, Senior Staff Accountant, at 202-551-3449
or Christine
Dietz, Senior Staff Accountant, at 202-551-3408 with any questions.
Sincerely,
FirstName LastNameHui Yuan
Division of
Corporation Finance
Comapany NameXiao-I Corporation
Office of Technology
July 27, 2023 Page 3
cc: Fred Summer
FirstName LastName