Xiao-I (US:AIXI) GlobeNewswire News Roomยท2024-11-12 11:00Core Viewpoint - Xiao-I Corporation is facing a federal securities class action lawsuit due to alleged failures in disclosing financial risks and compliance issues, leading to significant financial losses and a decline in stock price since its IPO in March 2023 [1][6]. Financial Performance - For the first half of 2023, Xiao-I reported a net loss of $18.8 million, a significant decline from a net income of $0.6 million in the same period of 2022, with total operating expenses increasing by 355% year-over-year to $34.1 million [2]. - The company experienced a 708% year-over-year increase in R&D expenses, primarily due to rising professional service fees related to big data model development and AI investments [3]. - For the full year 2023, Xiao-I's revenues were $59.2 million, missing consensus estimates by $30.08 million, and reported a net loss of $27 million compared to a net loss of $6 million in 2022 [4]. Stock Performance - Following the financial results announcements, Xiao-I's ADS price declined significantly, closing at $1.81 on September 25, 2023, and further dropping to $1.65 on October 20, 2023, and $1.22 on April 30, 2024 [2][3][4]. - On July 15, 2024, the company received a notification from NASDAQ regarding non-compliance with the minimum bid price requirement, as its ADS price had been below $1.00 for 30 consecutive business days, resulting in a further decline to $0.67 [5]. Legal Issues - The lawsuit alleges that Xiao-I downplayed the risks associated with its Chinese shareholders' non-compliance, failed to adhere to GAAP in financial reporting, and overstated its AI capabilities and R&D resources, which contributed to its financial struggles [6].