UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of October 2023
Commission File Number 001-41631
Xiao-I Corporation
(Translation of registrant’s name into English)
7th floor, Building 398, No. 1555 West
Jinshajiang Rd
Shanghai, China 201803
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K
On October 20, 2023, Xiao-I Corporation (“Xiao-I”) released its unaudited semi-annual report for the six months ended June 30, 2023, which report is furnished as Exhibit 99.1 to this Report on Form 6-K, and incorporated herein by reference.
In early 2022, Xiao-I’s indirect wholly owned subsidiary, Zhizhen Artificial Intelligent Technology (Shanghai) Co. Ltd. (“WFOE”) was recognized by the Shanghai municipal government as a “leading enterprise” and was approved to set up an AI industrial park in the Shanghai Lingang Area through Zhizhen Guorui (Shanghai) Information Technology Development Co., Ltd. (“Zhizhen Guorui”). In February 2022, WFOE invested in Zhizhen Guorui at a total consideration of $2.9 million, acquiring less than 51% of its equity interest with significant influence, which was accounted as long-term investment. For the purpose of Zhizhen Guorui’s operations, i.e., ensuring its ability to properly establish and operate the AI Industrial Park, Shanghai Xiao-i Robot Technology Co., Ltd. (“Shanghai Xiao-i Robot”) entered into a loan agreement with Zhizhen Guorui on March 31, 2023, under which Shanghai Xiao-i Robot agreed to provide Zhizhen Guorui with an interest-free credit line of up to US$13.8 million (approximately RMB100.0 million) (“Loan Agreement”). As of June 30, 2023, Shanghai Xiao-i Robot’s loan to Zhizhen Guorui amounted to US$11.0 million (approximately RMB79.9 million). We believe that the establishment and operation of the AI Industrial Park will consolidate our competitive position in the AI industry and provide us with additional business opportunities. The Loan Agreement is furnished as Exhibit 99.2 to this Report on Form 6-K.
Exhibit Index
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Date: October 20, 2023 | Xiao-I Corporation | |
| By: | /s/ Hui Yuan | |
| Name: | Hui Yuan | |
| Title: | Chief Executive Officer | |
2
Exhibit 99.1
Xiao-I Corporation
Reports Unaudited 2023 First Half Financial Results
SHANGHAI, China, October 20, 2023 (GLOBE NEWSWIRE) -- Xiao-I Corporation (“Xiao-I” or the “Company”), a leading cognitive artificial intelligence (“AI”) enterprise in China, today reported its unaudited financial results for the six months ended June 30, 2023.
First Half 2023 Financial Highlights
| ● | Net revenues increased 106% year over year to a record high of US$26.5 million. |
| ● | Sale of cloud platform products increased 523% year over year to US$22.7 million. |
| ● | Gross profit increased 124% year over year to US$20.5 million. |
| ● | Gross margin was 77.3%, up 620 basis points year over year. |
Mr. Hui Yuan, Chairman and Chief Executive Officer of Xiao-I, commented, “Amidst our industry’s dynamic and ever-evolving landscape, we remained steadfast in our dedication to innovation and growth. Our results speak volumes, as we achieved an outstanding 106% increase in net revenues during the first half of this year, reaching a record-breaking $26.5 million. This remarkable performance underscores the value of our continuous investments in cutting-edge AI technology that are effectively aligned with the growing digital transformation demands of various businesses.”
“Our commitment to innovation is exemplified by our unparalleled R&D investment in the first half of 2023, which surpasses our entire investment for the previous year. More importantly, we have significantly expanded our product and service portfolio with the introduction of our distinguished large language model, Hua Zang. This innovative offering is expected to be seamlessly applied across a wide array of industries swiftly with cost-efficiency, opening up new horizons for our clients. In addition to our product innovations, we have also made substantial strides in our global expansion. This includes the establishment of a U.S. subsidiary and active participation in a local exhibition. These concerted efforts place us in a good position to lead the global AI industry into a future full of immense opportunities and transformative solutions to drive our continued growth.”
Recent Developments and Strategic Highlights:
| ● | Secured Contract for AI Contact Center Project with Leading Chinese Aviation Group: In June 2023, Xiao-I secured a contract for an intelligent contact center project with a leading Chinese aviation group. This partnership aims to enhance the aviation group’s service provision capabilities and drive its digital transformation. |
| ● | Introduced Pioneering Hua Zang Generative AI Model: In June 2023, Xiao-I launched Hua Zang, its advanced large language model. The model, analogous to an operating system, is built on Xiao-I’s robust platform capabilities and designed to empower various industries. |
| ● | Establishment of U.S. Subsidiary as Part of Going Global Strategy: In June 2023, Xiao-I established an U.S. subsidiary, Xiao-I Plus Inc., marking another significant milestone for its global expansion strategy. |
| ● | Launched IDP Solution for Future-Ready Enterprise Document Management: In May 2023, Xiao-I launched its state-of-the-art Intelligent Document Processing (“IDP”) product. This innovative solution is delivered by a smart and efficient platform that streamlines and automates the document management process, empowering businesses towards an era of intelligent operations. |
| ● | Recognition as Outstanding Supplier by China Merchants Bank Credit Card Center: In May 2023, Xiao-I announced that the Credit Card Center of China Merchants Bank Co. recognized it as an outstanding supplier. This prestigious acknowledgement follows the Bank’s annual supplier assessment evaluation for 2022, during which Xiao-I demonstrated exemplary performance in business collaboration, product implementation, and service quality. |
First Half 2023 Financial Results
Net Revenues
Net revenues were US$26.5 million for the first half of 2023, up 106% year over year from US$12.9 million for the same period of 2022. The increase was primarily due to the increased sales of cloud platform products and hardware products.
| By Revenue Type | 1H 2023 | 1H 2022 | % Change YoY | |||||||||
| Sale of cloud platform products | $ | 22,719,659 | $ | 3,648,339 | 523 | |||||||
| Technology development service | 1,763,797 | 6,296,844 | (72 | ) | ||||||||
| Sale of software products | 535,004 | 1,397,996 | (62 | ) | ||||||||
| Maintenance & support service | 1,426,784 | 1,497,871 | (5 | ) | ||||||||
| Sale of hardware products | 30,175 | 18,431 | 64 | |||||||||
| Total | $ | 26,475,419 | $ | 12,859,481 | 106 | |||||||
Cost of Revenues
Cost of revenues was US$6.0 million for the first half of 2023, up 61% year over year from US$3.7 million for the same period of 2022. With a smaller increase compared to net revenues, cost efficiency has improved due to economies of scale.
Gross Profit
Gross profit was US$20.5 million for the first half of 2023, representing an increase of 124% year over year from US$9.1 million for the same period of 2022. Gross margin was 77.3% for the first half of 2023, up 620 basis points from 71.1% for the same period of 2022. The increase in gross margin was mainly due to a shift in product mix towards subscription for cloud platform products from one-time software sales.
Operating Expenses
Total operating expenses were US$34.1 million in the first half of 2023, representing an increase of 355% year over year from US$7.5 million for the same period of 2022. While the selling, general and administrative expenses demonstrated improved efficiency with larger business scales, they couldn’t offset the increase in research and development expenses, which grew by 708% year over year, which was primarily driven by the significantly increase of professional service fee, including the purchase of supercomputing service fees, data services, intelligent computing technology services and software outsourcing, etc. mainly from four third parties for the requirement of big data model development project and other cloud platform products. In November 2022, OpenAI launched the ChatGPT, which opened up a new situation of artificial intelligence. Under such background, the Company increased investment in AI+ Industrial Internet research and development, including the research and procurement of intelligent collaborative platform, digital twin platform, data intelligence platform, industrial enterprise services and research and judgment platform and other platform products.
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Income (Loss) from Operations
Loss from operations was US$13.6 million for the first half of 2023, compared to an income of US$1.6 million from operations for the same period of 2022.
Total Other Loss
Total other loss was US$1.3 million for the first half of 2023, generally on par with the same period of 2022.
Net Income (Loss)
Net loss was US$18.8 million for the first half of 2023, compared to a net income of US$0.6 million for the same period of 2022.
Significant related party transactions
In early 2022, we invested in Zhizhen Guorui (Shanghai) Information Technology Development Co., Ltd. (“Zhizhen Guorui”) at a total consideration of $2.9 million, acquiring less than 51% of its equity interest with significant influence, which was accounted as long-term investment. For the purpose of Zhizhen Guorui’s operation use, on March 31, 2023, Shanghai Xiao-i Robot Technology Co., Ltd. (“Shanghai Xiao-i Robot”) entered into agreement to provide credit line to Zhizhen Guorui of US$13.8 million (RMB100.0 million) with interest free.
As of June 30, 2023, the loan provided to Zhizhen Guorui by Shanghai Xiao-i Robot was US$11.0 million (RMB79.9 million).
About Xiao-I Corporation
Xiao-I Corporation is a leading cognitive intelligence enterprise in China that offers a diverse range of business solutions and services in artificial intelligence, covering natural language processing, voice and image recognition, machine learning and affective computing. Since its inception in 2001, the Company has developed an extensive portfolio of cognitive intelligence technologies that are highly suitable and have been applied to a wide variety of business cases. Xiao-I powers its cognitive intelligence products and services with its cutting-edge, proprietary AI technologies to enable and promote industrial digitization, intelligent upgrading, and transformation.
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “approximates,” “assesses,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may” or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC.
For investor and media inquiries, please contact:
Ms. Berry Xia
Phone: +86 186 8158 5169
Email: ir@xiaoi.com
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XIAO-I CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In U.S. dollars, except for share and per share data, or otherwise noted)
| As of | ||||||||
| December 31, 2022 | June 30, 2023 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,026,245 | $ | 4,746,836 | ||||
| Accounts receivable, net | 41,362,705 | 16,025,831 | ||||||
| Amounts due from related parties | 346,517 | - | ||||||
| Inventories | 768,216 | 701,119 | ||||||
| Contract costs | 2,012,309 | 1,936,073 | ||||||
| Advance to suppliers | 1,115,672 | 1,586,618 | ||||||
| Deferred offering costs | 1,330,902 | - | ||||||
| Prepaid expenses and other current assets, net | 460,854 | 6,656,705 | ||||||
| Total current assets | 48,423,420 | 31,653,182 | ||||||
| Non-current assets: | ||||||||
| Property and equipment, net | 219,470 | 313,953 | ||||||
| Intangible assets, net | 637,114 | 557,995 | ||||||
| Long-term investment | 2,852,492 | 3,187,416 | ||||||
| Right of use assets | 865,399 | 969,400 | ||||||
| Deferred tax assets, net | 3,888,574 | - | ||||||
| Prepaid expenses and other, non-current assets | 3,697,675 | 3,616,218 | ||||||
| Amount due from related parties-non current | - | 11,018,714 | ||||||
| Total non-current assets | 12,160,724 | 19,663,696 | ||||||
| TOTAL ASSETS | $ | 60,584,144 | $ | 51,316,878 | ||||
| Commitments and Contingencies | ||||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Short-term borrowings | $ | 18,784,459 | $ | 16,548,757 | ||||
| Accounts payable | 9,180,532 | 7,222,235 | ||||||
| Amount due to related parties-current | 896,431 | 742,714 | ||||||
| Deferred revenue | 2,553,808 | 3,444,636 | ||||||
| Convertible loans | 3,754,269 | - | ||||||
| Accrued expenses and other current liabilities | 17,006,713 | 9,214,618 | ||||||
| Lease liabilities, current | 435,462 | 458,018 | ||||||
| Total current liabilities | 52,611,674 | 37,630,978 | ||||||
| Non-current liabilities: | ||||||||
| Amount due to related parties-non current | 8,581,743 | 7,573,563 | ||||||
| Accrued liabilities, non-current | 8,073,912 | 5,194,843 | ||||||
| Lease liabilities, non-current | 300,974 | 392,436 | ||||||
| Total non-current liabilities | 16,956,629 | 13,160,842 | ||||||
| TOTAL LIABILITIES | 69,568,303 | 50,791,820 | ||||||
| Shareholders’ (deficit)/equity | ||||||||
| Ordinary shares (par value of $0.00005 per share; 1,000,000,000 shares authorized as of December 31, 2022 and June 30, 2023, respectively; 22,115,592 and 24,015,592 shares issued and outstanding as of December 31,2022 and June 30, 2023, respectively) | $ | 1,106 | $ | 1,201 | ||||
| Additional paid-in capital | 75,621,294 | 108,762,797 | ||||||
| Statutory reserve | 237,486 | 237,486 | ||||||
| Accumulated deficit | (78,483,156 | ) | (102,449,177 | ) | ||||
| Accumulated other comprehensive loss | (3,262,666 | ) | (2,852,695 | ) | ||||
| XIAO-I CORPORATION shareholders’ (deficit)/equity | (5,885,936 | ) | 3,699,612 | |||||
| Non-controlling interests | (3,098,223 | ) | (3,174,554 | ) | ||||
| Total shareholders’ (deficit)/equity | (8,984,159 | ) | 525,058 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT)/EQUITY | $ | 60,584,144 | $ | 51,316,878 | ||||
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XIAO-I CORPORATION
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(In U.S. dollars, except for share and per share data, or otherwise noted)
| For the six months ended June 30, | ||||||||
| 2022 | 2023 | |||||||
| Sale of software products | $ | 1,397,996 | $ | 535,004 | ||||
| Sale of hardware products | 18,431 | 30,175 | ||||||
| Technology development service | 6,296,844 | 1,763,797 | ||||||
| M&S service | 1,497,871 | 1,426,784 | ||||||
| Sale of cloud platform products | 3,648,339 | 22,719,659 | ||||||
| Net revenues | 12,859,481 | 26,475,419 | ||||||
| Cost of sale of software products | (170,377 | ) | (368,021 | ) | ||||
| Cost of sale of hardware products | (12,545 | ) | (26,118 | ) | ||||
| Cost of technology development service | (2,661,707 | ) | (1,286,290 | ) | ||||
| Cost of M&S service | (339,213 | ) | (805,948 | ) | ||||
| Cost of sale of cloud platform products | (536,863 | ) | (3,519,521 | ) | ||||
| Cost of revenues | (3,720,705 | ) | (6,005,898 | ) | ||||
| Gross profit | 9,138,776 | 20,469,521 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | (2,094,124 | ) | (2,377,409 | ) | ||||
| General and administrative expenses | (1,725,928 | ) | (2,070,052 | ) | ||||
| Research and development expenses | (3,669,196 | ) | (29,649,703 | ) | ||||
| Total operating expenses | (7,489,248 | ) | (34,097,164 | ) | ||||
| Income/(Loss) from operations | 1,649,528 | (13,627,643 | ) | |||||
| Other loss: | ||||||||
| Investment losses | (121,618 | ) | (225,351 | ) | ||||
| Interest expenses | (1,202,391 | ) | (1,570,847 | ) | ||||
| Other income, net | 44,160 | 525,431 | ||||||
| Total other loss | (1,279,849 | ) | (1,270,767 | ) | ||||
| Income/(Loss) before income tax expense | 369,679 | (14,898,410 | ) | |||||
| Income tax benefits/(expenses) | 220,820 | (3,871,118 | ) | |||||
| Net income/(loss) | $ | 590,499 | $ | (18,769,528 | ) | |||
| Net loss attributable to non-controlling interests | (2,674 | ) | (173,782 | ) | ||||
| Net income/(loss) attributable to XIAO-I CORPORATION shareholders | 593,173 | (18,595,746 | ) | |||||
| Other comprehensive income/(loss) | ||||||||
| Foreign currency translation change, net of nil income taxes | 145,129 | 507,422 | ||||||
| Total other comprehensive income | 145,129 | 507,422 | ||||||
| Total comprehensive income/(loss) | $ | 735,628 | $ | (18,262,106 | ) | |||
| Total comprehensive income/(loss) attributable to non-controlling interests | 124,849 | (76,331 | ) | |||||
| Total comprehensive income/(loss) attributable to XIAO-I CORPORATION shareholders | 610,779 | (18,185,775 | ) | |||||
| Earnings/(Loss) per ordinary share attributable to XIAO-I CORPORATION shareholders | ||||||||
| Basic | 0.03 | (0.80 | ) | |||||
| Diluted | 0.03 | (0.80 | ) | |||||
| Weighted average number of ordinary shares outstanding | ||||||||
| Basic | 22,115,592 | 23,308,370 | ||||||
| Diluted | 22,362,552 | 23,308,370 | ||||||
5
Exhibit 99.2
Loan Agreement
借款协议
Lender: Shanghai Xiao-i Robot Technology
Co., Ltd.
Legal Representative: Yuan Hui
Address: 1st Floor, No. 383, Lane 1555, Jinshajiang West Road, Jiading District, Shanghai, P.R. China
出借人: 上海智臻智能网络科技股份有限公司
法定代表人：袁辉
住所（地址）：上海市嘉定区金沙江西路1555弄383号1层
Borrower: Zhizhen Guorui (Shanghai) Information Technology Development Co. Ltd.
Legal representative: Li Hang
Address: Building C, No. 888, West Huanhu Road No. 2, Lingang New Area, Pilot Free Trade Zone, Shanghai, China
借款人: 智臻国瑞（上海）信息科技发展有限公司
法定代表人：李航
住所（地址）:
中国（上海）自由贸易试验区临港新片区环湖西二路888号C楼
The Borrower and the Lender, having reached an agreement on the borrowing from the Lender by the Borrower through equal consultation,
hereby enter into this Contract.
借款人、出借人经平等协商，就借款人向出借人借款事宜达成一致，特订立本合同。
Article 1. Purpose of Borrowing
第一条 借款用途
The borrowings under this contract shall be used for the following purposes, and the Borrower shall not divert the borrowings for other
purposes without the written consent of the Lender, who shall have the right to supervise the use of the funds.
Borrowing purpose: for the operation of Zhizhen Guorui (Shanghai) Information Technology Development Co. Ltd
本合同项下借款用于下列用途，未经出借人书面同意，借款人不得将借款挪作他用，出借人有权监督款项的使用。
借款用途：用于智臻国瑞（上海）信息科技发展有限公司经营
Article 2 Borrowing Amount and Term
第二条 借款金额和期限
2.1 The parties agree that the Lender shall provide the Borrower with loans for the Borrower’s operation in several installments during
the period from April 01, 2023 to June 30, 2023, and the total amount of the loan shall not exceed RMB 100,000,000 (capital: RMB 100 million),
and the actual amount of the loan shall be based on the amount of money actually remitted to the Borrower’s account by the Lender during
the period from April 01, 2023 to June 30, 2023, with the actual amount of money actually transferred to the Borrower’s account by the
Lender. The actual borrowing amount is calculated cumulatively with the amount actually remitted by the lender to the borrower’s account
from April 01, 2023 to June 30, 2023.
Both parties agree that the Lender will remit the loan to the Borrower’s account by way of transfer, and once the transfer is successful,
the loan shall be deemed to have been withdrawn and utilized by the Borrower.
2.1 双方协商一致在2023年04月01日至2023年06月30日期间由出借人分多笔向借款人提供借款用于借款人的经营，借款金额累计不超过100,000,000元（大写：人民币壹亿元整），实际借款金额以2023年04月01日至2023年06月30日期间出借人实际向借款人账户汇入的金额累计计算。
甲乙双方一致同意，出借人将借款通过转账方式汇入借款人账户，转账一旦成功，即视为借款已被借款人提取和使用。
2.2 The term of the loan under this contract is 1 year, calculated from the date of the Borrower’s actual receipt of the said loan amount.
2.2
本合同项下的借款期限为1年，自借款人实际收到上述借款金额之日起计算。
Article 3 Interest rate
第三条 利率
3.1 The borrowing rate is【0】% per annum, and the interest rate remains unchanged during the validity period of the contract.
3.1 借款年利率为O%，在合同有效期内利率不变。
3.2 The overdue interest rate under this contract is 【\】% on top of the original borrowing rate.
3.2 本合同项下逾期利率在原借款利率基础上加收 \ %。
Article 4 Payment
第四条 打款
4.1 The Lender shall remit the borrowing amount to the following account specified by the Borrower before June 30, 2023
Account name: Zhizhen Guorui (Shanghai) Information Technology Development Co.
Bank: 【**】
Account number: 【**】
4.1出借人应于 2023 年 06 月 30日前将借款金额汇入借款人指定的以下账号：
户名：智臻国瑞（上海）信息科技发展有限公司
开户行：【**】
账号： 【**】
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Article 5 Repayment
第五条 还款
5.1 Unless otherwise agreed by both parties, the Borrower shall repay the principal amount of the loan to the Lender in one lump sum after the maturity of the loan, and the Borrower shall repay the principal amount of the loan to the Lender in one lump sum after the maturity of each borrowing if the borrowing is made in batches.
5.1 除双方另有约定外，借款人应在借款到期后一次性向出借人偿还借款本金，借款分批打款的，借款人应在每笔借款到期后一次性向出借人偿还该笔借款本金。
5.2 The Borrower may repay the loan in advance after mutual consensus.
5.2 经双方协商一致后，借款人可以提前还款。
Article 6 Dispute settlement
第六条 争议解决
Disputes under this contract shall be resolved by litigation in the court where the lender is located.
本合同项下争议解决方式为：在出借人所在地法院通过诉讼方式解决。
Article 7 Others
第七条 其他
7.1 This contract shall enter into force on the date of its signing by both parties, and shall be executed in two copies, one by the borrower and one by the lender, and shall have the same legal effect.
7.1 本合同自双方签订之日起生效，本合同一式贰份，借款人、出借人各执壹份，具有同等法律效力。
7.2 Other attachments confirmed by both parties constitute an inseparable part of this contract and have the same legal effect as this
contract.
7.2 经双方共同确认的其他附件构成本合同不可分割的组成部分，与本合同具有同等法律效力。
Lender: Shanghai Xiao-i Robot Technology Co., Ltd.
Date:2023/3/31
出借人： 上海智臻智能网络科技股份有限公司
日期：2023年3月 31 日
Borrower: Zhizhen Guorui (Shanghai) Information Technology Development Co. Ltd.
Date: 2023/3/31
借款人：智臻国瑞（上海）信息科技发展有限公司
日期：2023年3月 31 日
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