Xiao-I Corp Annual Report - How They Did This Year

I’ve put together this guide to help you understand how Xiao-I Corp performed this year. My goal is to turn complex financial filings into plain English so you can decide if this company fits your investment strategy.

1. What does this company do?

Xiao-I is a Chinese tech company that builds "AI brains" for businesses. They create conversational AI, virtual assistants, and software that automates customer service. They make money by selling software, cloud services, and custom AI projects.

Important Note for Investors: You aren't buying the Chinese business directly. Because of Chinese laws, Xiao-I uses a "Variable Interest Entity" (VIE) structure. You are buying shares in a Cayman Islands holding company that has contracts with the Chinese business. If the Chinese government bans this structure, your shares could become worthless because you don't own the actual assets.

2. Financial performance

The company is struggling to make a profit and is burning through cash quickly.

• 2023: $27.01 million loss.
• 2024: $14.55 million loss.
• 2025: $101.82 million loss.

The massive jump in 2025 losses is a major red flag. They spend 85% of their budget on research and development to keep up in the AI race. They admit they may never turn a profit. Their future depends on factors outside their control, like the Chinese economy and market demand.

3. Major wins and challenges

Xiao-I is a "controlled company." CEO Mr. Hui Yuan holds over 50% of the voting power. As a minority shareholder, you have almost no say in how the company is run.

Operationally, they have a "material weakness" in their accounting. This means their systems for tracking money aren't fully reliable. They also rely on physical "seals" (chops) to authorize legal documents. Under Chinese law, whoever holds the seal controls the company. If these seals are stolen or misused, the company could lose control of its operations.

4. Competitive positioning & New Ventures

The Chinese AI market moves fast. Xiao-I fights against larger, better-funded competitors. To grow, they are moving into consumer hardware, like AI-powered smart glasses. However, they have no experience in manufacturing or supply chains. This adds significant risk and cost to a business that is already low on cash.

5. Key risks

• Customer Concentration: They rely on a small group of clients. Their top five customers provided nearly 66% of their 2025 revenue. If these clients leave, revenue will crash.
• Payment Delays: They struggle to collect money from customers. This creates a cash crunch, as they must pay their own bills while waiting for clients to pay them.
• Cybersecurity: They rely on third-party data centers. If these servers are hacked or go down, Xiao-I could face lawsuits and damage to their reputation.
• Regulatory Risk: As a foreign company, they provide less transparency than U.S. firms. They face the constant threat of being kicked off the Nasdaq if they fail to meet U.S. auditing standards.

6. Future outlook

The company is trying to pivot into hardware to find a steady income. However, they are doing this while burning cash and struggling to collect payments. Their survival depends on succeeding with these new ventures before their cash runs out.

Investor Takeaway: When looking at Xiao-I, ask yourself if you are comfortable with the high risk of a company that is currently losing significant amounts of money, lacks a clear path to profitability, and operates under a complex legal structure that limits your rights as a shareholder. If you are looking for a stable, predictable investment, this company’s current financial trajectory and operational risks may be a reason for caution.