Document And Entity Information
Document And Entity Information | 12 Months Ended |
Dec. 31, 2022 shares | |
Document Information Line Items | |
Entity Registrant Name | Xiao-I Corp |
Trading Symbol | AIXI |
Document Type | 20-F |
Current Fiscal Year End Date | --12-31 |
Entity Common Stock, Shares Outstanding | 24,015,592 |
Amendment Flag | false |
Entity Central Index Key | 0001935172 |
Entity Current Reporting Status | Yes |
Entity Voluntary Filers | No |
Entity Filer Category | Non-accelerated Filer |
Entity Well-known Seasoned Issuer | No |
Document Period End Date | Dec. 31, 2022 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | FY |
Entity Emerging Growth Company | true |
Entity Shell Company | false |
Entity Ex Transition Period | false |
ICFR Auditor Attestation Flag | false |
Document Registration Statement | false |
Document Annual Report | true |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-41631 |
Entity Incorporation, State or Country Code | E9 |
Entity Address, Address Line One | 7th floor, Building 398 |
Entity Address, Address Line Two | No. 1555 West Jinshajiang Rd |
Entity Address, City or Town | Shanghai |
Entity Address, Country | CN |
Entity Address, Postal Zip Code | 201803 |
Title of 12(b) Security | American Depositary Shares, each representing one-third of an Ordinary Share, par value $0.00005 per share |
Security Exchange Name | NASDAQ |
Entity Interactive Data Current | Yes |
Document Accounting Standard | U.S. GAAP |
Auditor Firm ID | 5395 |
Auditor Name | Marcum Asia CPAs LLP |
Auditor Location | New York, NY |
Business Contact [Member] | |
Document Information Line Items | |
Entity Address, Address Line One | 7th floor, Building 398 |
Entity Address, Address Line Two | No. 1555 West Jinshajiang Rd |
Entity Address, City or Town | Shanghai |
Entity Address, Country | CN |
Entity Address, Postal Zip Code | 201803 |
Contact Personnel Name | Hui Yuan |
City Area Code | 86 |
Local Phone Number | 021-39512112 |
Contact Personnel Fax Number | 86 021-39518822 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,026,245 | $ 1,311,846 |
Accounts receivable, net | 41,362,705 | 31,184,779 |
Amounts due from related parties | 346,517 | 391,919 |
Inventories | 768,216 | 768,762 |
Contract costs | 2,012,309 | 1,669,519 |
Deferred offering costs | 1,330,902 | |
Advance to suppliers | 1,115,672 | 90,350 |
Prepaid expenses and other current assets, net | 460,854 | 388,848 |
Total current assets | 48,423,420 | 35,806,023 |
Non-current assets: | ||
Property and equipment, net | 219,470 | 207,989 |
Intangible assets, net | 637,114 | 798,459 |
Long-term investment | 2,852,492 | 335,448 |
Right of use assets | 865,399 | 1,194,859 |
Deferred tax assets, net | 3,888,574 | 4,906,287 |
Prepaid expenses and other, non-current assets | 3,697,675 | 3,941,346 |
Total non-current assets | 12,160,724 | 11,384,388 |
TOTAL ASSETS | 60,584,144 | 47,190,411 |
Commitments and Contingencies | ||
Current liabilities: | ||
Short-term borrowings | 18,784,459 | 9,117,158 |
Accounts payable | 9,180,532 | 5,581,879 |
Amount due to related parties-current | 896,431 | 1,558,642 |
Deferred revenue | 2,553,808 | 2,953,238 |
Convertible loans | 3,754,269 | 5,717,737 |
Accrued expenses and other current liabilities | 17,006,713 | 10,316,432 |
Lease liabilities, current | 435,462 | 800,658 |
Income tax payable | 17,904 | |
Total current liabilities | 52,611,674 | 36,063,648 |
Non-current liabilities: | ||
Amount due to related parties-non current | 8,581,743 | 8,905,313 |
Accrued liabilities, non-current | 8,073,912 | 5,157,971 |
Lease liabilities, non-current | 300,974 | 446,140 |
Total non-current liabilities | 16,956,629 | 14,509,424 |
TOTAL LIABILITIES | 69,568,303 | 50,573,072 |
Shareholders’ deficit | ||
Ordinary shares (par value of $0.00005 per share; 1,000,000,000 shares authorized as of December 31, 2021 and December 31, 2022, respectively; 22,115,592 shares issued and outstanding as of December 31,2021 and December 31, 2022, respectively) | 1,106 | 1,106 |
Additional paid-in capital | 75,621,294 | 75,621,294 |
Statutory reserve | 237,486 | 237,486 |
Accumulated deficit | (78,483,156) | (72,584,621) |
Accumulated other comprehensive loss | (3,262,666) | (3,464,423) |
XIAO-I CORPORATION shareholders’ deficit | (5,885,936) | (189,158) |
Non-controlling interests | (3,098,223) | (3,193,503) |
Total shareholders’ deficit | (8,984,159) | (3,382,661) |
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT | $ 60,584,144 | $ 47,190,411 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Ordinary shares, per share (in Dollars per share) | $ 0.00005 | $ 0.00005 |
Ordinary shares, shares authorized | 1,000,000,000 | 1,000,000,000 |
Ordinary shares, shares issued | 22,115,592 | 22,115,592 |
Ordinary shares, shares outstanding | 22,115,592 | 22,115,592 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive (Loss)/Income - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Sale of software products | $ 3,547,113 | $ 14,878,256 | $ 5,098,730 |
Sale of hardware products | 46,295 | 75,011 | 415,723 |
Technology development service | 16,419,889 | 9,246,992 | 6,404,394 |
M&S service | 2,429,526 | 2,772,795 | 1,937,887 |
Sale of cloud platform products | 25,742,135 | 5,550,959 | |
Net revenues (including sales to related parties of $2,449,560, $286,875 and nil for the years ended December 31, 2020, 2021 and 2022, respectively) | 48,184,958 | 32,524,013 | 13,856,734 |
Cost of revenues | (17,379,144) | (10,885,731) | (7,228,046) |
Gross profit | 30,805,814 | 21,638,282 | 6,628,688 |
Operating expenses: | |||
Selling expenses | (3,911,818) | (4,620,113) | (4,566,760) |
General and administrative expenses | (6,028,637) | (6,657,251) | (5,694,785) |
Research and development expenses | (24,001,138) | (5,363,909) | (4,236,723) |
Total operating expenses | (33,941,593) | (16,641,273) | (14,498,268) |
(Loss)/Income from operations | (3,135,779) | 4,997,009 | (7,869,580) |
Other income/(loss): | |||
Investment losses | (143,181) | (156,630) | (207,497) |
Interest expense | (2,440,815) | (1,866,831) | (1,026,636) |
Foreign currency exchange gain/(loss) | (68,902) | 11,252 | 41,592 |
Other income, net | 444,018 | 932,557 | 1,770,225 |
Total other income/(loss) | (2,208,880) | (1,079,652) | 577,684 |
(Loss)/Income before income tax expense | (5,344,659) | 3,917,357 | (7,291,896) |
Income tax benefit/(expense) | (660,655) | (552,355) | 235,854 |
Net (loss)/income | (6,005,314) | 3,365,002 | (7,056,042) |
Net loss attributable to non-controlling interests | (106,779) | (312,811) | (247,677) |
Net (loss)/income attributable to XIAO-I CORPORATION shareholders | (5,898,535) | 3,677,813 | (6,808,365) |
Other comprehensive (loss)/income | |||
Foreign currency translation change, net of nil income taxes | 403,816 | (117,291) | (357,695) |
Total other comprehensive (loss)/income | 403,816 | (117,291) | (357,695) |
Total comprehensive (loss)/income | (5,601,498) | 3,247,711 | (7,413,737) |
Total comprehensive (loss)/income attributable to non-controlling interests | 95,280 | (370,503) | (386,914) |
Total comprehensive (loss)/income attributable to XIAO-I CORPORATION shareholders | $ (5,696,778) | $ 3,618,214 | $ (7,026,823) |
(Loss)/Earnings per ordinary share attributable to XIAO-I CORPORATION shareholders | |||
Basic (in Dollars per share) | $ (0.27) | $ 0.17 | $ (0.31) |
Diluted (in Dollars per share) | $ (0.27) | $ 0.16 | $ (0.31) |
Weighted average number of ordinary shares outstanding | |||
Basic (in Shares) | 22,115,592 | 22,115,592 | 22,115,592 |
Diluted (in Shares) | 22,115,592 | 22,362,552 | 22,115,592 |
Consolidated Statements of Op_2
Consolidated Statements of Operations and Comprehensive (Loss)/Income (Parentheticals) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Sales to related parties | $ 286,875 | $ 2,449,560 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) | Ordinary shares | Additional paid-in capital | Statutory reserve | Accumulated deficit | Accumulated other comprehensive loss | Total shareholder’s equity/(deficit) | Non-controlling interests | Total |
Balance at Dec. 31, 2019 | $ 1,106 | $ 75,621,294 | $ 237,486 | $ (69,454,069) | $ (3,186,366) | $ 3,219,451 | $ (2,436,086) | $ 783,365 |
Balance (in Shares) at Dec. 31, 2019 | 22,115,592 | |||||||
Net income/(loss) | (6,808,365) | (6,808,365) | (247,677) | (7,056,042) | ||||
Foreign currency translation adjustment | (218,458) | (218,458) | (139,237) | (357,695) | ||||
Balance at Dec. 31, 2020 | $ 1,106 | 75,621,294 | 237,486 | (76,262,434) | (3,404,824) | (3,807,372) | (2,823,000) | (6,630,372) |
Balance (in Shares) at Dec. 31, 2020 | 22,115,592 | |||||||
Net income/(loss) | 3,677,813 | 3,677,813 | (312,811) | 3,365,002 | ||||
Foreign currency translation adjustment | (59,599) | (59,599) | (57,692) | (117,291) | ||||
Balance at Dec. 31, 2021 | $ 1,106 | 75,621,294 | 237,486 | (72,584,621) | (3,464,423) | (189,158) | (3,193,503) | (3,382,661) |
Balance (in Shares) at Dec. 31, 2021 | 22,115,592 | |||||||
Net income/(loss) | (5,898,535) | (5,898,535) | (106,779) | (6,005,314) | ||||
Foreign currency translation adjustment | 201,757 | 201,757 | 202,059 | 403,816 | ||||
Balance at Dec. 31, 2022 | $ 1,106 | $ 75,621,294 | $ 237,486 | $ (78,483,156) | $ (3,262,666) | $ (5,885,936) | $ (3,098,223) | $ (8,984,159) |
Balance (in Shares) at Dec. 31, 2022 | 22,115,592 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net (loss)/income | $ (6,005,314) | $ 3,365,002 | $ (7,056,042) |
Adjustments to reconcile net (loss)/income to net cash used in operating activities: | |||
Allowance for accounts receivable | 2,149,176 | 270,649 | 758,019 |
Allowance for prepaid expenses and other current assets | 1,380,331 | ||
Allowance for amount due from a related party | 20,887 | ||
Return of inventories to a related party | (239,330) | ||
Debt relief offered by a related party | (72,819) | ||
Written-down of inventories | 154,664 | ||
Depreciation and amortization | 182,269 | 173,055 | 168,795 |
Gain from the disposal of property and equipment | (31,409) | (33,256) | |
Gain from the disposal of intangible assets | (22,636) | ||
Loss from equity investment | 143,181 | 156,630 | 207,497 |
Deferred tax (benefits)/expenses | 660,653 | 534,668 | (235,854) |
Right-of-use assets amortization | 712,844 | 1,087,035 | 1,380,588 |
Changes in assets and liabilities | |||
Accounts receivable | (15,012,712) | (23,393,437) | (701,260) |
Inventories | (2,130,389) | (495,398) | 256,507 |
Contract costs | 1,434,836 | (607,850) | 313,541 |
Prepaid expenses and other current assets | (1,162,117) | (11,120) | 957,035 |
Amount due from related parties | (368,847) | (4,332) | |
Accounts payable | 4,123,775 | 3,394,069 | (614,200) |
Deferred revenue | (179,177) | 1,038,149 | (10,785) |
Accrued expenses and other current liabilities | 5,163,654 | 2,693,914 | 1,019,524 |
Amount due to related parties | 100,315 | (56,030) | 208,249 |
Income tax payable | (16,956) | 17,904 | (16,399) |
Lease payment liabilities | (893,276) | (1,071,775) | (1,312,365) |
Prepaid expenses and other, non-current assets | (57,510) | 61,130 | (3,786,999) |
Accrued liabilities, non-current | (1,156) | 5,038,643 | |
Net cash used in operating activities | (10,923,346) | (11,887,122) | (3,463,094) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Purchase of property and equipment | (106,814) | (18,853) | (19,932) |
Proceeds from disposal of property and equipment | 96,112 | 15,256 | |
Purchase of intangible assets | (308) | (21,149) | |
Purchase of equity method investments | (2,749,294) | ||
Net cash (used in)/provided by investing activities | (2,856,416) | 77,259 | (25,825) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Proceeds from short-term borrowings | 21,252,786 | 11,393,910 | 10,392,225 |
Repayments of short-term borrowings | (10,633,055) | (16,470,788) | (11,005,324) |
Proceeds from interests-free borrowings from related parties | 2,315,351 | 16,764,954 | 1,448 |
Repayments of interests-free borrowings from related parties | (2,314,311) | (6,893,702) | |
Proceeds from borrowings from third-parties | 7,950,661 | 15,115,236 | 2,911,271 |
Repayments of borrowings from third-parties | (2,065,948) | (7,716,658) | (506,938) |
Repayment of convertible loans | (1,634,715) | ||
Deferred offering costs | (1,364,169) | ||
Net cash provided by financing activities | 13,506,600 | 12,192,952 | 1,792,682 |
Effect of exchange rate changes | (12,439) | 101,728 | (797,954) |
Net change in cash, cash equivalents and restricted cash | (285,601) | 484,817 | (2,494,191) |
Cash, cash equivalents and restricted cash, at beginning of year | 1,311,846 | 827,029 | 3,321,220 |
Cash, cash equivalents and restricted cash, at end of year | 1,026,245 | 1,311,846 | 827,029 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||
Interest paid | 609,451 | 121,666 | 747,529 |
Income taxes paid/(refund) | 2 | (36,279) | 52,381 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: | |||
Recognition of Right-of-use assets and Lease payment liability | $ 467,359 | $ 3,630,939 |
Organization and Principal Acti
Organization and Principal Activities | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Principal Activities [Abstract] | |
ORGANIZATION AND PRINCIPAL ACTIVITIES | 1. ORGANIZATION AND PRINCIPAL ACTIVITIES XIAO-I CORPORATION. (“Xiao-I”, or the “Company”) was incorporated under the laws of the Cayman Islands on August 20, 2018. The Company through its wholly-owned subsidiaries, variable interest entity (“VIE”) and VIE’s subsidiaries (collectively, the “Group”) primarily engages in Internet technology development in the People’s Republic of China (“PRC” or “China”). As of December 31, 2022, the Company’s major subsidiaries and consolidated VIE are as follows: Name Date of Percentage of Principal Wholly owned subsidiaries AI PLUS HOLDING LIMITED (“AI Plus”) August 30, 2018 100% Investing holding company Xiao-i Technology Limited (“Xiao-i Technology”) December 17, 2018 100% Investing holding company Zhizhen Artificial Intelligent Technology (Shanghai) Co. Ltd. (“Zhizhen Technology”) (“WFOE”) February, 21, 2020 100% WFOE, a holding company Name Date of Percentage of Principal VIE Shanghai Xiao-i Robot Technology August 27, 2009 100% Internet technology development Name Date of Percentage of Principal Subsidiaries of VIE Xiaoi Robot Technology (H.K) Ltd. June 3, 2016 100% Internet technology development Guizhou Xiao-i Robot Technology Co., Ltd. (“Guizhou Xiao-i”) July 18, 2016 70% AI robot development Reorganization The Company undertook a reorganization and became the ultimate holding company of AI PLUS, Xiaoi Robot and WFOE, in which the shareholding percentages and rights of each shareholder are the same before and after the Reorganization. Effective on March 29, 2019, shareholders of Shanghai Xiao-i and WFOE entered into a series of contractual arrangements (“VIE Agreements”) which are described below. The VIE Agreements The PRC government regulates the telecommunications and internet industry, including software industry, through strict business licensing requirements and other government regulations. These laws and regulations also include limitations on foreign ownership of PRC companies that engage in software business. The Company, AI Plus, Zhizhen Technology, are considered as foreign invested enterprises. To comply with these regulations, the Group conducts the majority of its activities in PRC through Shanghai Xiao-i (the “VIE”), and the VIE’s subsidiaries. The currently effective contractual arrangements, as described in more detail below, by and among Zhizhen Technology, the VIE, and 61 of the VIE’s shareholders include (i) certain exclusive call option agreement, proxy agreement and share interest pledge agreement, that enable the Company to exercise operational control over the VIE, and (ii) exclusive business cooperation agreement, that enable the Company to realize all of the economic risks and benefits arising from Shanghai Xiao-i and its subsidiaries (excluding non-controlling interests). Therefore, the Group, through its wholly owned subsidiaries AI Plus and Zhizhen Technology, has been determined to be the primary beneficiary of Shanghai Xiao-i and its subsidiaries for accounting purposes and has consolidated Shanghai Xiao-i’s and its subsidiaries’ assets, liabilities, results of operations, and cash flows in the accompanying consolidated financial statements. Immediately before and after reorganization, the Company together with its wholly-owned subsidiaries AI Plus and Zhizhen Technology and its VIE were effectively controlled by the same shareholders; therefore, the Reorganization is accounted for in a manner similar to a common control transaction because it is determined that the transfers lack economic substance. The accompanying consolidated financial statements have been prepared as if the current corporate structure has been in existence throughout the periods presented. The consolidation of the Company and its subsidiaries and VIE has been accounted for at historical cost as of the beginning of the first period presented in the accompanying financial statements. Exclusive Call Option Agreement Pursuant to the Exclusive Call Option Agreement among Zhizhen Technology, Shanghai Xiao-i and its shareholders, the shareholders irrevocably granted Zhizhen Technology or any third party designated by Zhizhen Technology an option to purchase all or part of their equity interests in Shanghai Xiao-i at any time at a price determined at Zhizhen Technology’s discretion. According to the Exclusive Call Option Agreement, the purchase price to be paid by the Company to each shareholder of Shanghai Xiao-i will be the minimum price permitted by applicable PRC Law at the time when such share transfer occurs. Without Zhizhen Technology’s prior written consent, the shareholders and Shanghai Xiao-i agreed not to, among other things: set encumbrance on, transfer all or part of, or dispose of the equity interests; amend the articles of association of Shanghai Xiao-i; change the registered capital of Shanghai Xiao-i or holding structure; change Shanghai Xiao-i’s business activities; sell, assign, mortgage or dispose of any legal or beneficial rights to or in any of Shanghai Xiao-i’s assets, business, or revenue; incur, assume or guarantee any debts; enter into any material contract; extend any loan or credit to any party, or provide any guarantee or assume any obligation of any party; merge or consolidate with any third party or acquire or invest in any third party; or distribute dividends. The shareholders and Shanghai Xiao-i agreed to manage business and handle financial and commercial affairs prudently and in accordance with relevant laws and codes of practice. This Agreement will continue with full force and effect until the earlier of the date on which Zhizhen Technology has acquired all of the Equity Interests in Shanghai Xiao-i, or this Agreement is terminated by the mutual written consent. Exclusive Business Cooperation Agreement On March 29, 2019, Zhizhen Technology entered into an Exclusive Business Cooperation Agreement with Shanghai Xiao-i to enable Zhizhen Technology to engage in the development and operation of the Internet technology development in accordance with applicable laws. Under this Agreement, Zhizhen Technology intends to use its labor, technology and information advantages to provide exclusive technical services, technical consultation and other services to Shanghai Xiao-i, and Shanghai Xiao-i agrees to accept such services. The term of the Services provided by Zhizhen Technology shall be 10 years from the effective date of March 29, 2019, and will be automatically extended after the expiration until when terminated in writing by Zhizhen Technology. Additionally, Zhizhen Technology has the full and exclusive right to manage and direct all cash flow and assets of Shanghai Xiao-i and to direct and administrate the financial affairs and daily operation of Shanghai Xiao-i. Shanghai Xiao-i pays service fees to Zhizhen Technology in an amount determined by Zhizhen Technology in its sole discretion. If Shanghai Xiao-i is unable to pay the service fees due to the actual managing situation, with the written consent of Zhizhen Technology, the unpaid part of the service fees in the previous fiscal year can be deferred to the end of the next year and settled together. During the validity term of this agreement, Zhizhen Technology will bear all the economic benefits and risks arising from the business of Shanghai Xiao-i and its subsidiaries. Zhizhen Technology will provide financial support to Shanghai Xiao-i or its subsidiaries in the event of a loss or serious operational difficulties. Power of Attorney Agreement On March 29, 2019, each shareholder of Shanghai Xiao-i, signed the Power of Attorney Agreement to irrevocably entrust Zhizhen Technology or any person(s) designated by Zhizhen Technology to act as its attorney-in-fact to exercise any and all of its rights as a shareholder of Shanghai Xiao-i, including, but not limited to, the right to convene, attend and present the shareholders’ meetings, vote, sign and perform as a shareholder; transfer, pledge or dispose of all the equity interest of Shanghai Xiao-i held by the shareholder; collect the dividend, and participate in litigation procedures. This agreement is effective and irrevocable until all of each shareholder’s equity interest in Shanghai Xiao-i has been transferred to Shanghai Xiao-i or the person(s) designated by Zhizhen Technology. Share Interest Pledge Agreement Under the Share Interest Pledge Agreement signed on March 29, 2019 by and among Zhizhen Technology and each shareholder of Shanghai Xiao-i, the shareholders of Shanghai Xiao-i have agreed to pledge 100% equity interest in Shanghai Xiao-i to Zhizhen Technology to guarantee the performance obligations of Shanghai Xiao-i under the Exclusive Business Cooperation Agreement, and the performance obligations of each shareholder under the Exclusive Call Option Agreement. If Shanghai Xiao-i or its shareholders breach their contractual obligations under these agreements, Zhizhen Technology, as pledgee, will have the right to exercise the pledge. The shareholders also agreed that, without prior written consent of Zhizhen Technology, they will not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. The pledge of equity interests in Shanghai Xiao-i has been registered with the relevant office of the State Administration for Market Regulation in accordance with the Civil Code of the People’s Republic of China. Spousal Commitment Letters The spouses of each individual shareholder of Shanghai Xiao-i have each signed Spousal Commitment Letters. Under the Spousal Commitment Letter, the signing spouse unconditionally and irrevocably has agreed to the execution by his or her spouse of the above-mentioned Exclusive Business Cooperation Agreement, Exclusive Call Option Agreement, Power of Attorney Agreement and Share Interest Pledge Agreement, and that his or her spouse may perform, amend or terminate such agreements without his or her consent. In addition, in the event that the spouse obtains any equity interest in Shanghai Xiao-i held by his or her spouse for any reason, he or she agrees to be bound by and sign any legal documents substantially similar to the contractual arrangements entered into by his or her spouse, as may be amended from time to time. Risks in relation to the VIE structure The Company believes that the contractual arrangements with its VIE and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could, among others: ● revoke the business licenses and/or operating licenses of the Company; ● discontinue or place restrictions or onerous conditions on the operations; ● impose fines, confiscate the income from Zhizhen Technology or the VIE, or impose other requirements with which the Company or the VIE may not be able to comply; ● require the Company to restructure the ownership structure or operations, including terminate the contractual arrangements with the VIE and deregister the equity pledges of the VIE, which in turn would affect our ability to consolidate, derive economic interests from, or exert operational control over the VIE, or impose restrictions on the Company’s right to collect revenues; ● impose additional conditions or requirements with which the Company may not be able to comply; ● require the Company to restructure the operations in such a way as to compel the Company to establish a new enterprise, re-apply for the necessary licenses or relocate our businesses, staff and assets; or ● restrict or prohibiting the Company use of the proceeds of overseas offering to finance the business and operations in China. The revenue producing assets that are held by the VIE and the VIE’s subsidiaries primarily comprise of leasehold improvements, electronic equipment, office equipment and software. Substantially all of such assets are recognized in the Group’s consolidated financial statements, except for certain Internet Content Provider Licenses, internally developed software, trademarks and patent applications which were not recorded in the Company’s consolidated balance sheets as they do not meet all the capitalization criteria. The Internet content provision and other licenses are required under relevant PRC laws, rules and regulations for the operation of Internet businesses in the PRC, and therefore are integral to the Company’s operations. The Internet content provision licenses require that core PRC trademark registrations and domain names are held by the VIE and the VIE’s subsidiaries that provide the relevant services. The VIE and the VIE’s subsidiaries also hire assembled work force on sales, research and development and operations whose costs are expensed as incurred. The Company’s ability to conduct its business may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, The Company may not be able to consolidate its VIE in its consolidated financial statements as it may lose the ability to exert operational control over the VIE and their respective shareholders and it may lose the ability to receive economic benefits from the VIE. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiaries and VIE. The interests of the shareholders of VIE may diverge from that of the Company and that may potentially increase the risk that they would seek to act contrary to the contractual terms, for example by influencing VIE not to pay the service fees when required to do so. The Company cannot assure that when conflicts of interest arise, shareholders of VIE will act in the best interests of the Company or that conflicts of interests will be resolved in the Company’s favor. The Company believes the shareholders of VIE will not act contrary to any of the contractual arrangements and the exclusive option agreements provide the Company with a mechanism to remove the current shareholders of VIE should they act to the detriment of the Company. The Company relies on certain current shareholders of VIE to fulfill their fiduciary duties and abide by laws of the PRC and act in the best interest of the Company. If the Company cannot resolve any conflicts of interest or disputes between the Company and the shareholders of VIE, the Company would have to rely on legal proceedings, which could result in disruption of its business, and there is substantial uncertainty as to the outcome of any such legal proceedings. The following financial statement amounts and balances of the VIE and its subsidiaries were included in the accompanying consolidated financial statements after elimination of intercompany transactions: Consolidated Balance Sheets Information As of December 31, 2021 2022 Assets Current assets: Cash and cash equivalents $ 1,310,737 $ 1,025,141 Accounts receivable, net 31,184,779 41,362,705 Amounts due from related parties 391,919 346,517 Inventories 768,762 768,216 Contract costs 1,669,519 2,012,309 Advance to suppliers 90,350 1,115,672 Deferred offering costs - 1,330,902 Prepaid expenses and other current assets, net 388,844 460,850 Total current assets 35,804,910 48,422,312 Non-current assets: Property and equipment, net 207,989 219,470 Intangible assets, net 798,459 637,114 Long-term investment 335,448 204,899 Right of use assets 1,194,859 865,399 Deferred tax assets, net 4,906,287 3,888,574 Prepaid expenses and other, non-current assets 3,941,346 3,697,675 Total non-current assets 11,384,388 9,513,131 TOTAL ASSETS $ 47,189,298 $ 57,935,443 Liabilities Current liabilities: Short-term borrowings $ 9,117,158 $ 18,784,459 Accounts payable 5,581,879 9,180,532 Amount due to related parties-current 1,558,642 896,431 Deferred revenue 2,953,238 2,553,808 Accrued expenses and other current liabilities 10,316,428 17,006,680 Convertible loans 5,717,737 3,754,269 Lease liabilities, current 800,658 435,462 Income tax payable 17,904 - Total current liabilities 36,063,644 52,611,641 Non-current liabilities: Amount due to related parties-non current 8,905,313 8,581,743 Accrued liabilities, non-current 5,157,971 5,391,664 Lease liabilities, non-current 446,140 300,974 Total non-current liabilities 14,509,424 14,274,381 TOTAL LIABILITIES $ 50,573,068 $ 66,886,022 Consolidated Statements of Operations and Comprehensive (loss)/Income For the years ended December 31, 2020 2021 2022 Net Revenue $ 13,856,734 $ 32,524,013 $ 48,184,958 Net (loss)/income $ (7,056,042 ) $ 3,365,002 $ (5,969,762 ) Consolidated Cash Flows Information For the years ended December 31, 2020 2021 2022 Net cash used in operating activities $ (3,463,094 ) $ (11,887,122 ) $ (10,923,345 ) Net cash (used in)/provided by investing activities (25,825 ) 77,259 (107,122 ) Net cash provided by financing activities 1,792,682 12,192,952 10,757,306 Effect of exchange rate changes (797,954 ) 101,728 (12,435 ) Net change in cash, cash equivalents and restricted cash $ (2,494,191 ) $ 484,817 $ (285,596 ) As of December 31, 2020, 2021 and 2022, there were no pledge or collateralization of the VIE’s assets that can only be used to settle obligations of the VIE. The amount of the net liabilities of the VIE was $3,383,770 and $8,950,579 as of December 31, 2021 and 2022, respectively. The creditors of the VIE’s third party liabilities did not have recourse to the general credit of the Company in normal course of business. Currently there is a contractual arrangement that would require the Company or its subsidiaries to provide financial support to the VIE. Under the Exclusive Business Cooperation Agreement signed on March 29, 2019 between WFOE and the VIE, WFOE will provide financial support to the VIE or the VIE’s subsidiaries in the event of a loss or serious operational difficulties during the validity term of this agreement. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a). Basis of presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The accompanying consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to operate profitably, to generate cash flows from operations, and its ability to attract investors and to borrow funds on reasonable economic terms. (b). Principles of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE in which the Company, through its WFOE, has a controlling financial interest, and the VIE’s subsidiaries. Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors. A VIE is an entity in which the Company, or its WFOE, through contractual arrangements, is fully and exclusively responsible for the management of the entity, absorbs all risk of losses of the entity (excluding non-controlling interests), receives the benefits of the entity that could be significant to the entity (excluding non-controlling interests), and has the exclusive right to exercise all voting rights of the entity, and therefore the Company or its WFOE is the primary beneficiary of the entity for accounting purposes. However, the contractual arrangements with the VIE and its shareholders may not be as effective as equity ownership in providing operational control. All intercompany transactions and balances among the Company, its subsidiaries, the VIE, and the VIE’s subsidiaries have been eliminated upon consolidation. (c). Use of estimates The preparation of the consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but not limited to, the allowance for doubtful accounts, net realizable value of inventories, depreciable lives and recoverability of property and equipment, the realization of deferred income tax assets and other equity investments, transaction price allocation between software income and maintenance service income. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements. (d). Cash and cash equivalents Cash and cash equivalents consist of cash on hand, the Group’s demand deposit placed with financial institutions, which have original maturities of less than three months and unrestricted as to withdrawal and use. (e). Restricted cash Restricted cash represented a time deposit pledged for bank loan facilities within one-year maturities. (f). Accounts receivable, net Accounts receivable, net are stated at the original amount less an allowance for doubtful accounts. Accounts receivable are recognized in the period when the Group has provided services to its customers and when its right to consideration is unconditional. The Group reviews the accounts receivable on a periodic basis and makes specific allowances when there is doubt as to the collectability of individual balances. The Group considers many factors in assessing the collectability of its receivables, such as the age of the amounts due, the customer’s payment history, credit-worthiness and other specific circumstances related to the accounts. An allowance for doubtful accounts is recorded in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted. (g). Contract costs Contract costs represented the costs directly related to a contract with a customer including labor costs and direct materials used in fulfilling the contract and other allocations of costs that relate directly to the contract or to contract activities. The contract costs are determined principally by the specific identification method, and recognize as cost of revenues on a systematic basis that is consistent with the transfer to the customer of the related services. (h). Inventories Inventories, primarily consisting of robot, displayer, server and software, are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventory is determined using the specific identification method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged products, which is dependent upon factors such as historical and forecasted consumer demand. There was nil nil (i). Property and equipment, net Property and equipment are stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis over the estimated useful lives of the assets. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use. Estimated useful lives are as follows: Category Estimated useful lives Electronic equipment 5 years Office equipment 5 years Leasehold improvement Shorter of the lease term or the estimated useful life of the assets Repair and maintenance costs are charged to expenses as incurred, whereas the cost of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the consolidated statements of (loss)/income. (j). Intangible assets, net Intangible assets are carried at cost less accumulated amortization and any recorded impairment. Intangible assets are amortized using the straight-line approach over the estimated economic useful lives of the assets as follows: Category Estimated useful lives Software 5 years (k). Impairment of long-lived assets The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Group measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. There was no impairment of long-lived assets for the years ended December 31, 2020, 2021 and 2022. (l). Long-term investments For an investee over which the Group holds less than 20% voting interest and has no ability to exercise significant influence, the investments are accounted for under the cost method. For an investee over which the Group has the ability to exercise significant influence, but does not own a majority equity interest or otherwise control, the Group accounted for those using the equity method. Significant influence is generally considered to exist when the Group has an ownership interest in the voting stock of the investee between 20% and 50%. Other factors, such as representation on the investee’s board of directors, voting rights and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the Group’s share of the investee’s results of operations is reported as share of losses of equity method investments in the consolidated statements of comprehensive (loss)/income. The process of assessing and determining whether impairment on an investment is other than temporary requires a significant amount of judgment. To determine whether an impairment is other than temporary, management considers whether it has the ability and intent to hold the investment until recovery and whether evidence indicating the carrying value of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the decline in value, any change in value subsequent to the period end, and forecasted performance of the investee. As of December 31, 2020, 2021 and 2022, management believes no impairment charge is necessary. (m). Fair value measurement Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are: (a) Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. (b) Level 2 — Include other inputs that are directly or indirectly observable in the marketplace. (c) Level 3 — Unobservable inputs which are supported by little or no market activity. Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. Financial assets and liabilities of the Group primarily consist of cash and cash equivalents, accounts receivable, amounts due from related parties, other receivables included in prepayments and other current assets, equity investment, short-term borrowings, accounts payable, amounts due to related parties, other payables included in accrued expenses and other current liabilities. The Group’s non-financial assets, such as property and equipment as well as intangible assets, would be measured at fair value only if they were determined to be impaired. (n). Commitments and contingencies In the normal course of business, the Group is subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter. (o). Revenue recognition The Group’s revenues are mainly generated from (1) sale of software products; (2) sale of hardware products; (3) technology development services; (4) maintenance and support service, and (5) sale of cloud platform products, etc. The Group recognizes revenue pursuant to ASC 606, Revenue from Contracts with Customers 1. Identification of the contract, or contracts, with the customer; 2. Identification of the performance obligations in the contract; 3. Determination of the transaction price; 4. Allocation of the transaction price to the performance obligations in the contract; and 5. Recognition of the revenue when, or as, a performance obligation is satisfied. The Group enters into two major kinds of revenue arrangements with customers. The first kind of contract can include various combinations of software products, hardware products and maintenance and support service which are generally distinct and accounted for as separate performance obligations. The other kind of contract is sale of cloud platform products, which include software products and cloud platform service as two separate performance obligations. As a result, the Group’s contracts may contain multiple performance obligations. The Group determines whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. Sale of software products The Group’s software products sold to customers comprising customized software products for specific needs. The software products sold by the Group are intended to provide the customer with full control of software, which means that revenues from the sale of such products are recognized at the point-in-time at which the control over the products is transferred to the customer upon the acceptance. Typically, the software delivery period is less than six months from the date of signing the contract. Payments are made by the customers in multiple instalments according to the payment schedule determined in the contract. Sale of hardware products Hardware products sold to customers comprising the hardware designed for specific needs. Revenue is recognized at the point-in-time when the customer is able to use and benefit from the hardware products, which is generally upon delivery to the customer. Technology development services The technology development service provided to customers comprises customized technology development services for specific needs. Revenue is recognized at the point-in-time when the service is completed and the customer can benefit from it upon acceptance. Payments are made by the customers in multiple installments according to the payment schedule determined in the contract. Maintenance and support service Maintenance and support (“M&S”) service is provided for software products contracts and consists of unspecified future software updates, upgrades, and enhancements as well as technical product support services, and the provision of unspecified updates and upgrades on a when-and-if-available basis. Maintenance and support services are renewable, generally on an annual basis, at the option of the customer. Maintenance represents stand-ready obligations for which revenue is recognized ratably over the term of the arrangement. Sale of cloud platform products Cloud platform products sold to customers comprising software products uploaded in the cloud platform. The Group does not provide any cancellation and refund provisions to customers. Pursuant to contract terms, customers can benefit from the software products and cloud platform from each on its own, meanwhile the Group fulfils its promise by transferring software products and cloud platform services independently. Therefore, the software products and the cloud platform services are distinct performance obligations. The transaction prices for two performance obligations were determined separately in the contract, which also reflects their stand-alone selling price (“SSP”) respectively. Since customers continuously consume the benefits from both software products and cloud platform, the Group recognizes revenue from sale of cloud platform products over time when the Group provides the customer a right to access the Group’s intellectual property throughout the service period. The timing and pattern of transfer the right to access software products and cloud platform is the same. The service period is usually 1 year and customer made quarterly payment after usage. Contracts with multiple performance obligations Most contracts with customers contain multiple performance obligations that are distinct and are accounted for separately. The transaction price is allocated to the separate performance obligations on a relative SSP basis. The Group determines SSP for all performance obligations using observable inputs, such as standalone sales and historical contract pricing. SSP is consistent with the Group’s overall pricing objectives, taking into consideration the type of software products, maintenance and support services, and professional services purchased by the customer. SSP also reflects the amount the Group would charge for that performance obligation if it were sold separately in a standalone sale, and the price the Group would sell to similar customers in similar circumstances. The following table disaggregates the Group’s revenue for the year ended December 31, 2020, 2021 and 2022: For the years ended December 31, 2020 2021 2022 By revenue type Sale of software products $ 5,098,730 $ 14,878,256 $ 3,547,113 Sale of hardware products 415,723 75,011 46,295 Technology development service 6,404,394 9,246,992 16,419,889 M&S service 1,937,887 2,772,795 2,429,526 Sale of cloud platform products - 5,550,959 25,742,135 Total $ 13,856,734 $ 32,524,013 $ 48,184,958 Remaining performance obligations Remaining performance obligations represent the transaction price of orders meeting the definition of a contract in the new revenue standard for which work has not been performed or has been partially performed and excludes unexercised contract options. The Company has elected to apply the practical expedient, which allows companies to exclude remaining performance obligations with an original expected duration of one year or less. The aggregate amount of the transaction price allocated to remaining performance obligations for such contracts with a duration of more than one year was approximately $4,176,929 at December 31, 2022. The Company expects to recognize revenue on approximately $4,129,513 and $47,416 of the remaining performance obligations over the next 12 and 24 months, respectively. Contract balances When the Group begins to deliver the products or services pursuant to the performance obligations in the contract, the Group presents the contract in the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between the Group’s performance and the customer’s payment. The contract assets consist of accounts receivable and contract costs. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Group has satisfied its performance obligation and has unconditional right to the payment. Contract costs are deferred for the contract preparation and will be recognized as cost of revenues when goods or services are transferred to customers. During the years ended December 31, 2020, 2021 and 2022, the Group recognized $7,228,046, $10,885,731 and $17,379,144 of contract costs as cost of revenues. The contract liabilities consist of deferred revenue, which represent the billings or cash received for services in advance of revenue recognition and is recognized as revenue when all of the Group’s revenue recognition criteria are met. The Group’s deferred revenue amounted to $2,953,238 and $2,553,808 as of December 31, 2021 and 2022, respectively. During the years ended December 31, 2020, 2021 and 2022, the Group recognized $1,201,576, $900,686 and $1,545,866 revenue that was included in deferred revenue balance at January 1, 2020,2021 and 2022, respectively. (p). Cost of revenues Cost of revenues consists primarily of (i) purchased software, (ii) payroll, (iii) cloud hosting service fees, and (iv) depreciation and other costs related to the business operation. (q). Research and development expenses Research and development costs are expensed as incurred in accordance with ASC 730. Software development costs required to be capitalized under ASC 985-20. The Company determined that technology feasibility for the software product is not reached. There is no software development costs capitalized for the years ended December 31, 2020, 2021 and 2022. Research and development expenses consist primarily of (i) Software development costs, (ii) payroll and related expenses for research and development professionals, and (iii) depreciation and rental related to technology and development functions. Research and development expenses are expensed as incurred. (r). Selling and marketing expenses Selling and marketing expenses mainly consist of (i) staff cost, rental and depreciation related to selling and marketing functions, and (ii) advertising costs and market promotion expenses. Advertising costs, which consist primarily of online advertisements, are expensed as incurred. (s). General and administrative expenses General and administrative expenses mainly consist of (i) staff cost, rental and depreciation related to general and administrative personnel, (ii) professional service fees, and (iii) other corporate expenses. (t). Government grants Government grant is recognized when there is reasonable assurance that the Group will comply with the conditions attached to it and the grant will be received. Government grant for the purpose of giving immediate financial support to the Group with no future related costs or obligation is recognized in the Group’s consolidated statements of comprehensive (loss)/income when the grant becomes receivable. The Group recognized government grants $1,699,231, $853,011 and $216,893 in other income, net for the years ended December 31, 2020, 2021 and 2022, respectively. (u). Employee benefits The Group’s subsidiaries and VIE and the VIE’s subsidiary in PRC participate in a government mandated, multiemployer, defined contribution plan, pursuant to which certain retirement, medical, housing and other welfare benefits are provided to employees. PRC labor laws require the entities incorporated in the PRC to pay to the local labor bureau a monthly contribution calculated at a stated contribution rate on the monthly basic compensation of qualified employees. The Group has no further commitments beyond its monthly contribution. (v). Leases On January 1, 2020, the Group adopted Accounting Standards Update (“ASU”) 2016-02, Lease (FASB ASC Topic 842). The adoption of Topic 842 resulted in the presentation of operating lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheet. The Group has elected the package of practical expedients, which allows the Group not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Group elected the short-term lease exemption for all contracts with lease terms of 12 months or less. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset. The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Group recognizes operating lease expenses on a straight-line basis over the lease term. Operating lease right-of-use of assets The right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received. Operating lease liabilities Lease liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed lease payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee and any exercise price under a purchase option that the Group is reasonably certain to exercise. Lease liability is measured at amortized cost using the effective interest rate method. It is re-measured when there is a change in future lease payments, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if there is any change in the Group assessment of option purchases, contract extensions or termination options. (w). Income taxes The Group accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Group’s operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000 ($14,537). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Group did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of its consolidated statements of income for the years ended December 31, 2020, 2021 and 2022, respectively. The Group does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months. (x). Value added tax (“VAT”) The Group is subject to VAT and related surcharges on revenue generated from sales of products, facilitation services and platform services. The Group records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Group to suppliers. Net VAT balance between input VAT and output VAT is recorded in the line item of other current assets on the consolidated balance sheets. The VAT rate is 13% for taxpayers selling consumer products. For revenue generated from services, the VAT rate is 6% depending on whether the entity is a general tax payer, and related surcharges on revenue generated from providing services. Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to suppliers against their output VAT liabilities. (y). Foreign currency translation The consolidated financial statements are presented in United States dollars (“USD’’ or “$’’). The functional currency of certain of PRC subsidiaries is the Renminbi (“RMB’’). Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period. Capital accounts of the consolidated financial statements are translated into USD from RMB at their historical exchange rates when the capital transactions occurred. Transaction gains and losses are recorded in foreign currency exchange gain/(loss) in the consolidated statements of operations and comprehensive (loss)/income. The rates are obtained from H.10 statistical release of the U.S. Federal Reserve Board. As of December 31, 2021 2022 Period end RMB: USD exchange rate 6.3726 6.8972 For the years ended December 31, 2020 2021 2022 Average RMB: USD exchange rate 6.9042 6.4508 6.7290 (z). Non-controlling interest For the Group’s majority-owned subsidiaries of VIE, a non-controlling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group’s consolidated net (loss)/income on the consolidated statements of operation and comprehensive (loss)/income includes the net (loss)/income attributable to non-controlling interests. The cumulative results of operations attributable to non-controlling interests, are recorded as non-controlling interests in the Group’s consolidated balance sheets. (aa). Statutory reserves In accordance with the PRC Company Laws, the Group’s PRC subsidiaries, VIE and the VIE’s subsidiary must make appropriations from their after-tax profits as determined under the generally accepted accounting principles in the PRC (“PRC GAAP”) to non-distributable reserve funds including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus fund must be 10% of the after-tax profits as determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the PRC companies. Appropriation to the discretionary surplus fund is made at the discretion of the PRC companies. The statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase the registered capital of the respective companies. These reserves are not allowed to be transferred to the Company by way of cash dividends, loans or advances, nor can they be distributed except for liquidation. As of December 31, 2022, none of the Group’s PRC subsidiaries and VIE entities had a general reserve that reached the 50% of their registered capital threshold. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. Therefore, no appropriations from after tax profits were recognized for the years ended December 31, 2021 and 2022. (bb). (Loss)/Earnings per share Basic (loss)/earnings per share is computed by dividing net (loss)/earnings attributable to ordinary shareholders, taking into consideration the deemed dividends to preferred shareholders (if any), by the weighted average |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable, Net [Abstract] | |
ACCOUNTS RECEIVABLE, NET | 3. ACCOUNTS RECEIVABLE, NET Accounts receivable, net consisted of the following: As of December 31, 2021 2022 Accounts receivable 33,747,099 45,826,900 Allowance for doubtful accounts (2,562,320 ) (4,464,195 ) $ 31,184,779 $ 41,362,705 The Group recorded bad debt expense of $758,019, $270,649 and $2,149,176 for the years ended December 31, 2020, 2021 and 2022, respectively. |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expenses and Other Assets [Abstract] | |
PREPAID EXPENSES AND OTHER ASSETS | 4. PREPAID EXPENSES AND OTHER ASSETS Prepayments and other assets consisted of the following: As of December 31, 2021 2022 Prepaid expenses and other current assets : Receivables from third parties (1) 2,479,412 359,994 Rent deposits 211,224 13,629 Bid security 70,767 - Others 10,119 87,231 Prepaid expenses and other current assets, gross 2,771,522 460,854 Bad debt provisions (1) (2,382,674 ) - Prepaid expenses and other current assets, net $ 388,848 $ 460,854 Prepaid expenses and other non-current assets : Prepaid case acceptance fee (2) $ 3,931,033 $ 3,632,039 Others 10,313 65,636 Prepaid expenses and other non-current assets 3,941,346 3,697,675 Total $ 4,330,194 $ 4,158,529 (1) Receivables from third parties mainly includes funds lent to third parties. The Group established business partnership with these third parties and provided funds to support their business operation. Due to the third parties deteriorated financial position affected by COVID -19, the Group recorded bad debt expense for receivables from third parties of nil nil (2) Prepaid case acceptance fee is the expense paid by the plaintiff in advance according to PRC law when the court decides to accept civil cases, economic dispute cases, maritime cases and administrative cases. The court charged the case acceptance fee of US$3.6 million in proportion to the claim amount of the lawsuit between the Group and Apple. The claim amount was RMB 10 billion, approximately US$1,450 million. The lawsuit is not expected to close within the one As of December 31, 2021 and 2022, the Group wrote off the other current assets of nil |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, Net [Abstract] | |
PROPERTY AND EQUIPMENT, NET | 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net, consisted of the following: As of December 31, 2021 2022 Electronic equipment $ 147,406 $ 168,937 Office equipment 194,241 240,788 Leasehold improvement 55,857 63,683 Construction in progress 2,088 - Less: accumulated depreciation (191,603 ) (253,938 ) Property and equipment, net $ 207,989 $ 219,470 Depreciation expense was $68,514, $65,160 and $78,831 for the years ended December 31, 2020, 2021 and 2022, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets, Net [Abstract] | |
INTANGIBLE ASSETS, NET | 6. INTANGIBLE ASSETS, NET As of December 31, 2021 2022 Software $ 1,092,197 $ 1,009,425 Less: accumulated amortization (293,738 ) (372,311 ) Intangible asset, net $ 798,459 $ 637,114 For the years ended December 31, 2020, 2021 and 2022, amortization expense amounted to $100,281, $107,895 and $103,438, respectively. Future estimated amortization expense of intangible assets is as follows: 2023 $ 100,942 2024 100,942 2025 100,942 2026 100,942 2027 100,942 Thereafter 132,404 Total $ 637,114 |
Long-Term Investment
Long-Term Investment | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Investment [Abstract] | |
LONG-TERM INVESTMENT | 7. LONG-TERM INVESTMENT Long-term investment consists of investments in privately held companies. In September 2015, the Group signed an investment agreement to acquire 20% of the shares of Shanghai Shenghan Information Technology Co., Ltd (“Shanghai Shenghan”) for RMB 5 million, of which the registered capital of RMB 125,000 was subscribed. In January 2018, with the addition of new investors to the investee, Xiao-i’s shareholding percentage in Shanghai Shenghan was diluted to 17.6%. In June 2020, with the capital injection of Wuxi Zhixin Integrated Circuit Investment Center (Limited Partnership), Xiao-i’s shareholding in Shanghai Shenghan was once again diluted to 16.56%. According to the investment agreement, Shanghai Shenghan’s board of directors consists of 3 directors, one of whom is appointed by the Group. Therefore, the Group recognized it as long-term equity investment and measured in equity method since investor had the ability to exercise significant influence over Shanghai Shenghan. In February 2022, the Group entered into agreements with third parties to establish Zhizhen Guorui (Shanghai) Information Technology Development Co., Ltd. (“Zhizhen Guorui”) with a total consideration of $2.9 million. According to the investment agreement, Zhizhen Guorui’s board of directors consists of 5 directors, two of whom is appointed by the Group. Therefore, the Group recognized it as long-term equity investment and measured in equity method since investor had the ability to exercise significant influence over Zhizhen Guorui. The following table sets forth the changes in the Group’s long-term investment: As of December 31, 2021 As of December 31, 2022 USD Interest % USD Interest % Equity method investments Zhizhen Guorui - - % 2,647,593 37 % Shanghai Shenghan 335,448 16.56 % 204,899 16.56 % Total 335,448 2,852,492 The Group recognized its share of loss of $207,497, $156,630, and $143,181 for the years ended December 31, 2020, 2021 and 2022, respectively. |
Short-Term Borrowings
Short-Term Borrowings | 12 Months Ended |
Dec. 31, 2022 | |
Short-Term Borrowings [Abstract] | |
SHORT-TERM BORROWINGS | 8. SHORT-TERM BORROWINGS As of December 31, 2021 and 2022, the bank borrowings were for working capital and capital expenditure purposes. Short-term borrowings consisted of the following: Annual Maturity (Months) Principal As of December 31, 2021 As of December 31, 2022 USD USD USD Short-term borrowings: Agricultura Bank of China 3.45% April, 2023 2,029,809 - 2,029,809 Agricultura Bank of China 2.70% May, 2023 1,449,864 - 1,449,864 Agricultura Bank of China 3.45% June, 2023 1,449,864 - 1,449,864 Bank of Jiangsu 4.60% October, 2023 1,449,864 - 1,449,864 CHINA CITIC BANK 4.65% August, 2023 1,448,414 - 1,448,414 CHINA CITIC BANK 4.65% September, 2023 1,448,414 - 1,448,414 Shanghai Bank 5.20% January, 2023 1,304,877 - 1,304,877 Shanghai Bank 4.65% October, 2023 1,304,877 - 1,304,877 Agricultura Bank of China 4.00% March, 2023 1,159,891 - 1,159,891 Agricultura Bank of China 2.70% May, 2023 1,159,891 - 1,159,891 Shanghai Bank 4.65% November, 2023 869,918 - 869,918 Shanghai Bank 4.65% November, 2023 724,932 - 724,932 Bank of Nanjing * 5.50% June, 2023 724,932 - 724,932 Bank of Nanjing * 5.50% July, 2023 724,932 - 724,932 Bank of Ningbo 5.35% June, 2023 724,932 - 724,932 China Merchants Bank * 5.05% August, 2023 704,634 - 664,062 Shanghai Bank 5.20% January, 2023 144,986 - 144,986 China Merchants Bank * 5.05% August, 2022 1,004,300 1,004,300 - China Merchants Bank * 5.05% September, 2022 1,035,684 1,035,684 - Bank of Communications 5.31% February, 2022 627,687 627,687 - Xiamen International Bank 6.80% April, 2022 784,609 784,609 - Shanghai Pudong Development Bank* 5.22% March, 2022 1,114,145 1,114,145 - Shanghai Rural Commercial Bank 5.20% May, 2022 1,412,296 1,412,296 - Shanghai Bank 5.20% November, 2021 784,609 784,609 - Shanghai Bank 5.20% October, 2022 1,412,296 1,412,296 - Shanghai Bank 5.20% November, 2022 941,531 941,532 - Total 9,117,158 18,784,459 * These borrowings are guaranteed by Guizhou Xiao-I. The interest expense of short-term borrowings were $744,761, $625,176 and $651,287 for the years ended December 31, 2020, 2021 and 2022, respectively. The weighted average interest rates of short-term loans outstanding were 4.67%, 5.52% and 4.73% per annum as of December 31, 2020, 2021 and 2022, respectively. |
Convertible Loans
Convertible Loans | 12 Months Ended |
Dec. 31, 2022 | |
Convertible Loans [Abstract] | |
CONVERTIBLE LOANS | 9. CONVERTIBLE LOANS From May to September 2021, the VIE entered into loan agreements with third parties, pursuant to which the VIE has the option to deliver either ordinary shares or cash to pay the debt upon the closing of an Initial Public Offering (“IPO”). Annual Convertible Maturity As of As of USD USD Convertible loans: Fumei Shi (1) 15.00% 73,719 December, 2022 1,569,218 1,449,863 Guoqiang Chen (2) 12.00% 22,116 September, 2023 941,531 869,918 SUNNY CONCORD INTERNATIONAL LTD (3) 15.00% 36,860 December, 2022 774,699 782,049 Senbiao Hu (4) 15.00% 18,430 November, 2022 392,305 362,466 Jun Xu (5) 15.00% 14,744 May, 2023 313,844 289,973 Jinzhi Li (6) 14.40% 73,719 August, 2022 1,569,218 - Chunhui Li (7) 15.00% 7,372 November, 2022 156,922 - Total 246,960 5,717,737 3,754,269 (1) The loan was extended in January, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option (Note 17). The principal and interest of the loan were repaid in April, 2023. (2) The loan was originally matured before September, 2022 and extended in September 2022. In April 2023, the loan was extended to May 31, 2023 with annual interest rate of 12% (Note 17). (3) The loan was extended in January, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option. In April, 2023, the maturity date of the loan was changed to May 31, 2023 with annual interest rate of 15% (Note 17). (4) The loan was extended in February, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option. The principal and interest of the loan were repaid in March, 2023 (Note 17). (5) The loan was originally matured before May 2022 and extended in In August, 2022. In April, 2023, the loan was further extended to May 31, 2023. (6) The principal and interest of the loan were repaid in 2022. (7) The principal and interest of the loan were repaid in 2022. Pursuant to the terms of agreements, the VIE or a subsidiary of the VIE is required to repay principal and interest of the loans if (i) either an affiliate of the VIE, including Xiao-I, is unable to consummate an Initial Public Offering (“IPO”) before the maturity of loans, or (ii) even if IPO is consummated before the maturity of loans, the enterprise market value does not equal or exceed $435 million (RMB 3 billion) upon closing of the IPO. If such affiliate of the VIE completes an IPO before the maturity of convertible loans with enterprise market value above $435 million, the convertible loan can be paid by the VIE or a subsidiary of the VIE, at the VIE’s option, by delivering either ordinary shares of such affiliate or an equivalent amount in cash. Accordingly, upon completion of an IPO pursuant to the relevant loan agreements, the shares to be issued if such loans were converted would be ordinary shares of Xiao-I Corporation should the VIE decided to convert shares. Whether the loans are paid for in cash within ten working days after completion of the listing or in ordinary shares of Xiao-I Corporation is at the option of the VIE. Loans can be extended with both parties’ consensus. Since the conversion is only exercisable upon closing of the IPO, the Group has determined that the conversion feature embedded in the convertible loans should not be bifurcated, and accounted the convertible loans as a liability until the contingency event is resolved. The interest expenses of convertible loans were nil In March, 2023, the Company completed its initial public offering and was listed on the Nasdaq Global Market while the enterprise market value did not meet the agreed criteria. In March and April, 2023, the VIE made repayment of the loans and interest of convertible loans of Senbiao Hu and Fumei Shi. |
Accrued Expenses and Other Liab
Accrued Expenses and Other Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Liabilities [Abstract] | |
ACCRUED EXPENSES AND OTHER LIABILITIES | 10. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities consisted of the following: As of December 31, 2021 2022 Accrued expenses and other current liabilities: Loan from third parties (1) $ 4,381,136 $ 6,485,125 Payroll payable 1,591,662 4,722,793 Other tax payable 2,777,187 2,852,728 Interest payable 1,053,854 2,054,136 Others 512,593 891,931 Accrued expenses and other current liabilities $ 10,316,432 $ 17,006,713 Accrued liabilities, non-current : Long-term loan from third parties (2) - 3,303,986 Litigation related payable (3) 5,157,971 4,769,926 Accrued liabilities, non-current 5,157,971 8,073,912 TOTAL $ 15,474,403 $ 25,080,625 (1) Loan from third parties mainly consisted of the unsecured borrowings from third parties for ordinary business operation. For the borrowings, the interest rates range from 3.8% to 25.55% and the interest expenses were $216,020 $815,994 and $1,013,209 for the years ended December 31, 2020, 2021 and 2022. The borrowings are payable on demand. In April, 2023, the Group made the repayment of principal amounted to $3,133,371 to the third parties. (2) Long-term loan from a third party was primarily consisted of: (i) Long-term loan for the purpose of investing in Zhizhen Guorui in February 2022, amounted to $2,682,248 as of December 31, 2022 (Note 7), with free interest rate in the first three years. The loan is due in five years, and if Zhizhen Guorui declares any cash dividend to the Group, the cash dividend would become the source to repay the loan in the first priority. (ii) In October 2022, the Group entered into an exclusive license agreement with a third party, under which the term of exclusive license was 2 years, and the third party should pay the license fee of $1,449,864 (RMB10 million) to the Group upon the effective of the agreement. Meanwhile, the same party entered into the agreement to grant the exclusive right to use these patents to the Group for 2 years at the consideration of $63,608 per month, aggregately $1,526,581 (RMB10.5 million). The patents under the agreements were pledged to the third party. The transaction was substantially loan from the third party with the patents pledged. The Group accounted for $1,449,864 (RMB10 million) as the principal of the loan from the third party, and the interests were calculated under effective interest method. In November 2022, the Group entered into another exclusive license agreement with the same party in the similar form to obtain another $1,449,864 (RMB10 million) loan, which was received subsequently in 2023. (3) Litigation related payable mainly consisted of the litigation fee of the lawsuit between the Group and Apple paid by the third parties on behalf of the Group. |
Taxation
Taxation | 12 Months Ended |
Dec. 31, 2022 | |
Taxation [Abstract] | |
TAXATION | 11. TAXATION Cayman Islands The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands. Hong Kong In accordance with the relevant tax laws and regulations of Hong Kong, a company registered in Hong Kong is subject to income taxes within Hong Kong at the applicable tax rate on taxable income. In March 2018, the Hong Kong Government introduced a two-tiered profit tax rate regime by enacting the Inland Revenue (Amendment) (No.3) Ordinance 2018 (the “Ordinance”). Under the two-tiered profits tax rate regime, the first HK dollar 2 million of assessable profits of qualifying corporations is taxed at 8.25% and the remaining assessable profits at 16.5%. The Ordinance is effective from the year of assessment 2018-2019. According to the policy, if no election has been made, the whole of the taxpaying entity’s assessable profits will be chargeable to Profits Tax at the rate of 16.5% or 15%, as applicable. Because the preferential tax treatment is not elected by the Group, all the subsidiaries registered in Hong Kong are subject to income tax at a rate of 16.5%. Payments of dividends by the subsidiary to the Company are not subject to withholding tax in Hong Kong. PRC Generally, the Group’s WFOE, VIE and subsidiaries of VIE, which are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%. In accordance with the implementation rules of EIT Laws, a qualified “High and New Technology Enterprise” (“HNTE”) is eligible for a preferential tax rate of 15%. The HNTE certificate is effective for a period of three Guizhou Xiao-I was qualified as an eligible software enterprise before the income tax year-end final settlement in 2017. As a result of this qualification, it is entitled to a tax holiday of a full exemption for the years ended December 31, 2017 and 2018, in which its taxable income is greater than zero, followed by a three-year 50% exemption. In 2022, the tax holiday has expired and Guizhou Xiao-I applied qualification of HNTE, which allows Guizhou Xiao-i to enjoy a preferential tax rate of 15% from 2022 to 2024. The benefit of the preferred tax treatment on net income per share (basic and diluted) was $0.02 for the year ended December 31, 2021. No benefit of preferred tax treatment on net loss per share (basic and diluted) for the years ended December 31, 2020 and 2022. In general, the PRC tax authority has up to five years to conduct examinations of the Company’s tax filings. Accordingly, the PRC subsidiaries’ and the VIE and subsidiaries of the VIE’s tax years 2016 through 2021 remain open to examination by the taxing jurisdictions. According to PRC tax regulations, the PRC net operating loss can generally carry forward for no longer than five years starting from the year subsequent to the year in which the loss was incurred, and that of high-tech enterprises is no more than 10 years. Carryback of losses is not permitted. The income tax provision consists of the following components: For the years ended December 31, 2020 2021 2022 Current income tax expenses $ - $ 17,687 $ 2 Deferred income tax (benefits) expenses (235,854 ) 534,668 660,653 Total income tax (benefits) expenses $ (235,854 ) $ 552,355 $ 660,655 A reconciliation between the Group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate is as follows: For the years ended December 31, 2020 2021 2022 (Loss)/income before income tax $ (7,291,896 ) $ 3,917,357 $ (5,344,659 ) (Loss)/Income tax expense at statutory tax rate (1,822,974 ) 979,339 (1,336,164 ) Additional deduction for R&D expenses (343,193 ) (1,005,733 ) (1,087,622 ) Investment loss 51,874 39,158 35,795 Non-deductible expenses 33,392 41,679 278,277 Tax effect of tax rate in a different jurisdiction 13,058 134,570 51,119 Effect of preferential tax rates 157,236 (356,448 ) 5,259 Deferred tax effect of tax rate change - - 538,660 Change in valuation allowance 459,885 719,790 1,697,503 Write-off of NOL 1,214,868 - 477,828 Income tax (benefit) expense $ (235,854 ) $ 552,355 $ 660,655 The significant components of the net deferred tax assets are summarized below: As of December 31, 2021 2022 Deferred tax assets: Tax losses $ 6,239,757 $ 4,475,379 Allowance for doubtful accounts 773,701 1,053,028 Accrued expenses 257,966 716,673 Impairment 310,430 301,150 Non-deductible education expense 818 756 Lease liabilities 191,758 112,203 Amortization of intangible assets - 972,696 Valuation allowance (2,685,373 ) (3,611,707 ) Total deferred tax assets $ 5,089,057 $ 4,020,178 Deferred tax liabilities: Right-of-use assets (182,770 ) (131,604 ) Deferred tax assets, net $ 4,906,287 $ 3,888,574 As of December 31, 2021 and 2022, the Group had net operating loss carryforwards of approximately $36,288,770 and $28,198,108, respectively, which arose from the Group’s subsidiaries, the VIE and the VIE’s subsidiaries established in the PRC and Hong Kong. As of December 31, 2021 and 2022, deferred tax assets from the net operating loss carryforwards amounted to $6,239,757 and $4,475,379, respectively. Due to the Group’s history of recurrent losses, the management did not expect the subsidiaries of VIE will generate enough profit to utilize the deferred tax assets in the future. The Group has recognized an increase to the valuation allowance of $570,253, $810,159 and $1,723,347 for the years ended December 31, 2020, 2021 and 2022, respectively. Changes in valuation allowance are as follows: As of December 31, 2021 2022 Balance at the beginning of the year $ 1,911,048 $ 2,685,373 Current year addition 810,159 1,723,347 Current year reduction (90,370 ) (25,844 ) Deferred tax effect of tax rate change - (538,660 ) Exchange rate effect 54,536 (232,509 ) Balance at the end of the year $ 2,685,373 $ 3,611,707 As of December 31, 2022, net operating loss carryforwards from PRC will expire, if unused, in the following amounts: 2023 $ 322,766 2024 897,460 2025 380,244 2026 407,436 2027 913,779 Thereafter 21,417,987 Total $ 24,339,672 As of December 31, 2022, net operating loss from HK will carry forward indefinitely, in the following amounts: Net operating loss carryforwards indefinitely 3,858,436 Total $ 3,858,436 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
LEASES | 12. LEASES Effective on January 1, 2020, the Company adopted Topic 842. At the inception of a contract, the Group determines if the arrangement is, or contains, a lease. ROU assets represent the Group’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Rent expense is recognized on a straight-line basis over the lease term. Supplemental balance sheet information related to operating lease was as follows: As of December 31, 2021 2022 Right-of-use Assets $ 1,194,859 $ 865,399 Lease payment liabilities-current (800,658 ) (435,462 ) Lease payment liabilities- non-current (446,140 ) (300,974 ) Total $ (1,246,798 ) $ (736,436 ) The weighted-average discount rate for the operating lease was 4.75%,4.75% and 4.83% as of December 31, 2020, 2021 and 2022. The amortization expenses of right-of-use assets were $1,380,588, $1,087,035 and $712,844 for the years ended December 31, 2020, 2021 and 2022. For the years ended December 31, 2020, 2021 and 2022, the lease expense was as follows: For the years ended December 31, 2020 2021 2022 Operating leases cost excluding short-term rental expense $ 1,567,532 $ 1,207,920 $ 739,582 Short-term lease cost 17,714 8,991 51,274 Total $ 1,585,246 $ 1,216,911 $ 790,856 The following is a schedule of future minimum payments under our operating leases: For the year ended December 31, Operating Leases 2023 $ 509,152 2024 200,912 2025 60,749 Total lease payments 770,813 Less: imputed interest (34,377 ) Total $ 736,436 |
Restricted Net Assets
Restricted Net Assets | 12 Months Ended |
Dec. 31, 2022 | |
Restricted Net Assets [Abstract] | |
RESTRICTED NET ASSETS | 13. RESTRICTED NET ASSETS A significant portion of the Group’s operations are conducted through its PRC (excluding Hong Kong) VIE, the Group’s ability to pay dividends is primarily dependent on receiving distributions of funds from its VIE and VIE’s subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by its VIE and VIE’s subsidiaries only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations, and after it has met the PRC requirements for appropriation to statutory reserves. Paid in capital of the VIE and VIE’s subsidiaries included in the Group’s consolidated net assets are also non-distributable for dividend purposes. In accordance with the PRC regulations on Enterprises with Foreign Investment, a WFOE established in the PRC is required to provide certain statutory reserves, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profit as reported in the enterprise’s PRC statutory accounts. A WFOE is required to allocate at least 10% of its annual after-tax profit to the general reserve until such reserve has reached 50% of its registered capital based on the enterprise’s PRC statutory accounts. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the board of directors. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. WFOE is subject to the above mandated restrictions on distributable profits. Additionally, in accordance with the Company Law of the PRC, a domestic enterprise is required to provide a statutory common reserve of at least 10% of its annual after-tax profit until such reserve has reached 50% of its registered capital based on the enterprise’s PRC statutory accounts. A domestic enterprise is also required to provide for a discretionary surplus reserve, at the discretion of the board of directors. The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. All of the Group’s PRC consolidated VIE and VIE’s subsidiaries are subject to the above mandated restrictions on distributable profits. As a result of these PRC laws and regulations, the Group’ s VIE and VIE’s subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. As of December 31, 2021 and 2022, net assets restricted in the aggregate, which include paid-in capital and statutory reserve funds of the Group’s VIE and VIE’s subsidiaries, that are included in the Group’s consolidated net assets were approximately $75,858,780 and $75,858,780, respectively. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 14. RELATED PARTY TRANSACTIONS Related parties The following is a list of related parties which the Group has transactions with: No. Name of Related Parties Relationship 1 Zhejiang Baiqianyin Network Technology Co., Ltd (“Zhejiang Baiqianyin”) An entity which has a common director of the Board of Directors with the Group 2 Shanghai Shenghan An entity which the Group holds 16.56% equity interests 3 Shanghai Aoshu Enterprise Management Partnership (Limited Partnership) (“Shanghai Aoshu”) An entity which is the Group’s employee stock ownership platform, and has a common director of the Board of Directors with the Group 4 Shanghai Machinemind Intelligent Technology Co., Ltd. An entity which the Company holds 18% equity interests 5 Jiaxing Sound Core Intelligent Technology Co., LTD An entity which Shanghai Shenghan holds 20% equity interests 6 Hui Yuan Chairman of the board, one of the major shareholders holding 14.73% equity interests of the Company 7 Weng Wei CFO of the Company 8 Tianjin Haiyin Equity Investment Fund Partnership (Limited Partnership) (“Tianjin Haiyin”) A significant shareholder holding 5.18% equity interests of the Company 9 Jiaxing Chiyu Investment Partnership (limited Partnership) A significant shareholder holding 5.44% equity interests of the Company 10 Haiyin Capital Investment (International) Limited A subsidiary of Tianjin Haiyin 11 Zhizhen Guorui An entity which the Group holds 37% equity interests Amounts due from related parties Amounts due from related parties consisted of the following for the periods indicated: As of December 31, 2021 2022 Accounts receivable $ $ Zhejiang Baiqianyin (a) 52,883 48,860 Other receivables Zhejiang Baiqianyin (b) 316,981 297,657 Shanghai Aoshu (c) 22,055 20,377 Bad debt provisions - (20,377 ) Total $ 391,919 $ 346,517 (a). In April, 2023, the Group collected accounts receivable from Zhejiang Baiqianyin; (b). Other receivable from Zhejiang Baiqianyin consists of the interest-free borrowings for ordinary business. In April, 2023, the Group collected other receivables from Zhejiang Baiqianyin; (c). Other receivable from Shanghai Aoshu was the payment to an employee on behalf of Shanghai Aoshu. For the year ended December 31, the Group made fully provisions of receivables from Shanghai Aoshu. Amounts due to related parties Amount due to related parties consisted of the following for the periods indicated: As of December 31, 2021 2022 Due to related parties-current Accounts payable Shanghai Shenghan $ 470,765 $ 201,465 Shanghai Machinemind Intelligent Technology Co., Ltd. 76,892 - Jiaxing Sound Core Intelligent Technology Co., LTD 98,076 32,622 Zhizhen Guorui (Shanghai) Information Technology Development Co., Ltd. - 97,868 Interest-free loans (c) Jiaxing Chiyu Investment Partnership (limited Partnership) $ 784,610 $ 434,959 Haiyin Capital Investment (International) Limited 128,299 129,517 Subtotal-due to related parties-current 1,558,642 896,431 Due to related parties-non current Interest-free loans (c) Hui Yuan $ 8,905,313 $ 8,581,743 Subtotal-due to related parties-non current 8,905,313 8,581,743 Total $ 10,463,955 $ 9,478,174 (c) The balance represents the advance funds from related parties for daily operational purposes. The funds are interest-free, unsecured and repayable on demand. Loans from Hui Yuan are not required to be settled within one year. Significant transactions with related parties For the years ended December 31, Nature 2020 2021 2022 Software and service income Zhejiang Baiqianyin $ 2,449,560 $ 286,875 $ - Technology service fee payable Shanghai Shenghan $ 130,356 $ 465,058 $ - Zhizhen Guorui (Shanghai) Information Technology Development Co., Ltd. - - 100,315 Interest-free loans from related parties Zhejiang Baiqianyin $ 1,448 $ 5,782,216 $ 1,783,326 Hui Yuan - 9,696,450 532,026 Haiyin Capital Investment (International) Limited - 126,744 - Jiaxing Chiyu Investment Partnership (limited Partnership) - 775,097 - Tianjin Haiyin - 310,038 - Weng Wei - 74,409 - Interest-free loans repayment to related parties Zhejiang Baiqianyin $ - $ 5,470,627 $ 1,788,230 Jiaxing Chiyu Investment Partnership (limited Partnership) - - 297,221 Hui Yuan - 899,111 169,416 Jiaxing Sound Core Intelligent Technology Co., LTD - - 59,444 Shanghai Shenghan - 139,517 - Weng Wei - 74,409 - Tianjin Haiyin - 310,038 - Return of inventories to a related party Shanghai Shenghan $ - $ - $ 239,330 Debt relief Shanghai Machinemind Intelligent Technology Co., Ltd. $ - $ - $ 72,819 |
Concentration of Credit Risk
Concentration of Credit Risk | 12 Months Ended |
Dec. 31, 2022 | |
Concentration of Credit Risk [Abstract] | |
CONCENTRATION OF CREDIT RISK | 15. CONCENTRATION OF CREDIT RISK Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of accounts receivable. The Group conducts credit evaluations of its customers, and generally does not require collateral or other security from them. The Group evaluates its collection experience and long outstanding balances to determine the need for an allowance for doubtful accounts. The Group conducts periodic reviews of the financial condition and payment practices of its customers to minimize collection risk on accounts receivable. The following table sets forth a summary of single customers who represent 10% or more of the Group’s total revenue. For the Years ended December 31, 2020 2021 2022 Percentage of the Group’s total revenue Amount % Amount % Amount % Customer A - - 3,363,631 10.3 % 9,824,275 20.4 % Customer B - - 13,384,613 41.2 % 5,364,265 11.1 % Customer C - - - - 4,980,628 10.3 % Customer D 2,449,557 17.70 % - - - - Customer E 1,780,014 12.80 % - - - - The following table sets forth a summary of single customers who represent 10% or more of the Group’s total accounts receivable: As of December 31, 2021 2022 Percentage of the Group’s accounts receivable Amount % Amount % Customer B 15,203,371 48.8 % 12,801,742 30.9 % Customer A 3,138,436 10.1 % 5,279,171 12.8 % Customer C - - 4,175,607 10.1 % Customer F - - 4,523,575 10.9 % The following table sets forth a summary of single suppliers who represent 10% or more of the Group’s total purchases: For the Years ended December 31, 2020 2021 2022 Percentage of the Group’s total purchase Amount % Amount % Amount % Supplier A - - 3,756,094 73.8 % 11,475,851 34.6 % Supplier B - - - - 7,281,914 21.9 % Supplier C - - - - 3,402,612 10.3 % Supplier D 139,040 10.0 % - - - - Supplier E 181,046 13.0 % - - - - Supplier F 550,496 39.5 % - - - - |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 16. COMMITMENTS AND CONTINGENCIES Lease Commitments The Group leases offices for operation under operating leases. Future minimum lease payments under non-cancellable operating leases with initial terms in excess of one year was included in Note 12. Contingencies In the ordinary course of business, the Group may be subject to legal proceedings regarding contractual and employment relationships and a variety of other matters. The Group records contingent liabilities resulting from such claims, when a loss is assessed to be probable and the amount of the loss is reasonably estimable. On August 3, 2020, Shanghai Xiao-i filed a lawsuit with the High People’s Court of Shanghai in China, against Apple Computer Trading (Shanghai) Co., Ltd., Apple, Inc., and Apple Computer Trading (Shanghai) Co., Ltd. (together, “Apple”), demanding that Apple cease its infringement of Shanghai Xiao-i’s intelligent assistant patent (ZL200410053749.9 invention patent) by its Siri (intelligent assistant) (the “Patent Infringement Case”). The lawsuit seeks various remedies, including but not limited to, requiring Apple to stop manufacturing, using, offering to sell, selling or importing products that infringe Shanghai Xiao-i’s patent, and a temporary claim amount of 10 billion yuan (RMB). On August 10, 2020, the High People’s Court of Shanghai formally accepted the Patent Infringement Case filed by Shanghai Xiao-i against Apple. On September 4, 2021, Shanghai Xiao-i filed a behavior preservation application (injunction) with the Shanghai High People’s Court, demanding Apple to immediately stop the patent infringement involving Siri, including but not limited to stopping the production, selling, offering to sell, importing or using of iPhone products that infringe Shanghai Xiao-i’s patent. As of the date of this annual report, the Patent Infringement Case is pending in the High People’s Court of Shanghai. In the opinion of management, there were no other pending or threatened claims and litigation as of December 31, 2022 and through the issuance date of these consolidated financial statements. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS Extension and settlement of convertible loans From January to April, 2023, Fumei Shi, Sunny Concord International Ltd., Senbiao Hu, Guoqiang Chen and Jun Xu entered into a series of extension agreements with the VIE. In the latest extension agreement in April 2023, Guoqiang Chen, Sunny Concord International Ltd. and Jun Xu extended the maturity date of convertible loans to May 31, 2023 with annual interest rate of 12%, 15% and 15%, respectively. Pursuant to the extension agreements, the loans would be settled in cash without conversion options. In March, 2023, the VIE has repaid principal and interest of the convertible loans to Senbiao Hu, in amount of US$0.46 million. In April, 2023, the VIE has repaid principal and interest of the convertible loans to Fumei Shi, in amount of US$1.77 million. List on Nasdaq Global Market In March, 2023, the Company completed its initial public offering and was listed on the Nasdaq Global Market under the symbol “AIXI”. 5,700,000 American depositary shares (each, an “ADS”, collectively, “ADSs”), each represents one-third of an ordinary shares, were issued at a price of $6.8 per share for net proceeds of approximately $35.44 million, after deducting underwriting discounts, commissions and other offering expense of $3.32 million. After the initial public offering, there were 24,015,592 ordinary shares outstanding, with par value of $0.00005. Collection of accounts receivable The Group has collected accounts receivable subsequent to December 31, 2022 amounted to $26,275,295. Repayments and proceeds of loans From January to April, 2023, The Group has repaid principle of loans from banks and third parties accounted for $2,882,633 and $3,133,371. In January, 2023, The Group received a short-term loan $724,932 (RMB5 million) from bank with interest rate 5.50%. From February to March, 2023, The Group has pledged patents to obtain short-term borrowings from banks accounted for $6,234,414 (RMB43 million) with interest rates range from 3.45% to 4.65%. In January, 2023, The Group received a loan $1,449,864 (RMB10 million) from a third party. The Group has evaluated subsequent events through April 28th, 2023, the date of issuance of the revised consolidated financial statements, and noted that there are no other subsequent events. |
Condensed Financial Information
Condensed Financial Information of the Parent Company | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information of the Parent Company [Abstract] | |
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY | 18. CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY The Group performed a test on the restricted net assets of consolidated subsidiary in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Group to disclose the financial statements for the parent Company. PARENT COMPANY BALANCE SHEETS As of December 31, 2021 2022 ASSETS Cash and cash equivalents $ 1,105 $ 1,104 Investment income in subsidiaries - - Prepaid expenses and other current assets, net 4 2 TOTAL ASSETS $ 1,109 $ 1,106 LIABILITIES Investment deficit in subsidiaries 190,267 5,887,042 TOTAL LIABILITIES $ 190,267 $ 5,887,042 Shareholders’ deficit Ordinary shares (par value of $0.00005 per share; 1,000,000,000 shares authorized as of December 31, 2021 and December 31, 2022, respectively; 22,115,592 shares issued and outstanding as of December 31,2021 and December 31, 2022, respectively) 1,106 1,106 Additional paid-in capital 75,621,294 75,621,294 Statutory reserve 237,486 237,486 Accumulated deficit (72,584,621 ) (78,483,156 ) Accumulated other comprehensive loss (3,464,423 ) (3,262,666 ) Total shareholders’ deficit $ (189,158 ) $ (5,885,936 ) * The shares and per share information are presented on a retroactive basis to reflect the reorganization completed on March 29, 2019. PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS)/INCOME Years ended December 31, 2020 2021 2022 Revenue $ - $ - $ - Cost of revenue - - - Gross profit - - - Operating expenses: Share of (loss)/income in subsidiaries and VIEs $ (6,808,365 ) $ 3,677,813 $ (5,898,535 ) (Loss)/Income before income tax provision (6,808,365 ) 3,677,813 (5,898,535 ) Provision for income tax - - - Net (loss)/income $ (6,808,365 ) $ 3,677,813 $ (5,898,535 ) PARENT COMPANY STATEMENTS OF CASH FLOW Years ended December 31, 2020 2021 2022 Net cash used in operating activities $ - $ - $ (1 ) Net cash used in investing activities - - - Net cash provided by financing activities - - - Net cash inflow $ - $ - $ (1 ) |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The accompanying consolidated financial statements contemplate the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Group’s ability to operate profitably, to generate cash flows from operations, and its ability to attract investors and to borrow funds on reasonable economic terms. |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIE in which the Company, through its WFOE, has a controlling financial interest, and the VIE’s subsidiaries. Subsidiaries are those entities in which the Company, directly or indirectly, controls more than one half of the voting power or has the power to govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a majority of votes at the meeting of directors. A VIE is an entity in which the Company, or its WFOE, through contractual arrangements, is fully and exclusively responsible for the management of the entity, absorbs all risk of losses of the entity (excluding non-controlling interests), receives the benefits of the entity that could be significant to the entity (excluding non-controlling interests), and has the exclusive right to exercise all voting rights of the entity, and therefore the Company or its WFOE is the primary beneficiary of the entity for accounting purposes. However, the contractual arrangements with the VIE and its shareholders may not be as effective as equity ownership in providing operational control. All intercompany transactions and balances among the Company, its subsidiaries, the VIE, and the VIE’s subsidiaries have been eliminated upon consolidation. |
Use of estimates | Use of estimates The preparation of the consolidated financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent assets and liabilities at the balance sheet date, and the reported revenues and expenses during the reported periods in the consolidated financial statements and accompanying notes. Significant accounting estimates include, but not limited to, the allowance for doubtful accounts, net realizable value of inventories, depreciable lives and recoverability of property and equipment, the realization of deferred income tax assets and other equity investments, transaction price allocation between software income and maintenance service income. Changes in facts and circumstances may result in revised estimates. Actual results could differ from those estimates, and as such, differences may be material to the consolidated financial statements. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents consist of cash on hand, the Group’s demand deposit placed with financial institutions, which have original maturities of less than three months and unrestricted as to withdrawal and use. |
Restricted cash | Restricted cash Restricted cash represented a time deposit pledged for bank loan facilities within one-year maturities. |
Accounts receivable, net | Accounts receivable, net Accounts receivable, net are stated at the original amount less an allowance for doubtful accounts. Accounts receivable are recognized in the period when the Group has provided services to its customers and when its right to consideration is unconditional. The Group reviews the accounts receivable on a periodic basis and makes specific allowances when there is doubt as to the collectability of individual balances. The Group considers many factors in assessing the collectability of its receivables, such as the age of the amounts due, the customer’s payment history, credit-worthiness and other specific circumstances related to the accounts. An allowance for doubtful accounts is recorded in the period in which a loss is determined to be probable. Accounts receivable balances are written off after all collection efforts have been exhausted. |
Contract costs | Contract costs Contract costs represented the costs directly related to a contract with a customer including labor costs and direct materials used in fulfilling the contract and other allocations of costs that relate directly to the contract or to contract activities. The contract costs are determined principally by the specific identification method, and recognize as cost of revenues on a systematic basis that is consistent with the transfer to the customer of the related services. |
Inventories | Inventories Inventories, primarily consisting of robot, displayer, server and software, are stated at the lower of cost or net realizable value, with net realized value represented by estimated selling prices in the ordinary course of business, less reasonably predictable costs of disposal and transportation. Cost of inventory is determined using the specific identification method. Adjustments are recorded to write down the cost of inventory to the estimated net realizable value due to slow-moving merchandise and damaged products, which is dependent upon factors such as historical and forecasted consumer demand. There was nil nil |
Property and equipment, net | Property and equipment, net Property and equipment are stated at cost less accumulated depreciation and impairment, if any, and depreciated on a straight-line basis over the estimated useful lives of the assets. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use. Estimated useful lives are as follows: Category Estimated useful lives Electronic equipment 5 years Office equipment 5 years Leasehold improvement Shorter of the lease term or the estimated useful life of the assets Repair and maintenance costs are charged to expenses as incurred, whereas the cost of renewals and betterment that extends the useful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the costs, accumulated depreciation and impairment with any resulting gain or loss recognized in the consolidated statements of (loss)/income. |
Intangible assets, net | Intangible assets, net Intangible assets are carried at cost less accumulated amortization and any recorded impairment. Intangible assets are amortized using the straight-line approach over the estimated economic useful lives of the assets as follows: Category Estimated useful lives Software 5 years |
Impairment of long-lived assets | Impairment of long-lived assets The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Group measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. There was no impairment of long-lived assets for the years ended December 31, 2020, 2021 and 2022. |
Long-term investments | Long-term investments For an investee over which the Group holds less than 20% voting interest and has no ability to exercise significant influence, the investments are accounted for under the cost method. For an investee over which the Group has the ability to exercise significant influence, but does not own a majority equity interest or otherwise control, the Group accounted for those using the equity method. Significant influence is generally considered to exist when the Group has an ownership interest in the voting stock of the investee between 20% and 50%. Other factors, such as representation on the investee’s board of directors, voting rights and the impact of commercial arrangements, are also considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the Group’s share of the investee’s results of operations is reported as share of losses of equity method investments in the consolidated statements of comprehensive (loss)/income. The process of assessing and determining whether impairment on an investment is other than temporary requires a significant amount of judgment. To determine whether an impairment is other than temporary, management considers whether it has the ability and intent to hold the investment until recovery and whether evidence indicating the carrying value of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the decline in value, any change in value subsequent to the period end, and forecasted performance of the investee. As of December 31, 2020, 2021 and 2022, management believes no impairment charge is necessary. |
Fair value measurement | Fair value measurement Accounting guidance defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs are: (a) Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. (b) Level 2 — Include other inputs that are directly or indirectly observable in the marketplace. (c) Level 3 — Unobservable inputs which are supported by little or no market activity. Accounting guidance also describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. Financial assets and liabilities of the Group primarily consist of cash and cash equivalents, accounts receivable, amounts due from related parties, other receivables included in prepayments and other current assets, equity investment, short-term borrowings, accounts payable, amounts due to related parties, other payables included in accrued expenses and other current liabilities. The Group’s non-financial assets, such as property and equipment as well as intangible assets, would be measured at fair value only if they were determined to be impaired. |
Commitments and contingencies | Commitments and contingencies In the normal course of business, the Group is subject to commitments and contingencies, including operating lease commitments, legal proceedings and claims arising out of its business that relate to a wide range of matters, such as government investigations and tax matters. The Group recognizes a liability for such contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Group may consider many factors in making these assessments on liability for contingencies, including historical and the specific facts and circumstances of each matter. |
Revenue recognition | Revenue recognition The Group’s revenues are mainly generated from (1) sale of software products; (2) sale of hardware products; (3) technology development services; (4) maintenance and support service, and (5) sale of cloud platform products, etc. The Group recognizes revenue pursuant to ASC 606, Revenue from Contracts with Customers 1. Identification of the contract, or contracts, with the customer; 2. Identification of the performance obligations in the contract; 3. Determination of the transaction price; 4. Allocation of the transaction price to the performance obligations in the contract; and 5. Recognition of the revenue when, or as, a performance obligation is satisfied. The Group enters into two major kinds of revenue arrangements with customers. The first kind of contract can include various combinations of software products, hardware products and maintenance and support service which are generally distinct and accounted for as separate performance obligations. The other kind of contract is sale of cloud platform products, which include software products and cloud platform service as two separate performance obligations. As a result, the Group’s contracts may contain multiple performance obligations. The Group determines whether arrangements are distinct based on whether the customer can benefit from the product or service on its own or together with other resources that are readily available and whether our commitment to transfer the product or service to the customer is separately identifiable from other obligations in the contract. Sale of software products The Group’s software products sold to customers comprising customized software products for specific needs. The software products sold by the Group are intended to provide the customer with full control of software, which means that revenues from the sale of such products are recognized at the point-in-time at which the control over the products is transferred to the customer upon the acceptance. Typically, the software delivery period is less than six months from the date of signing the contract. Payments are made by the customers in multiple instalments according to the payment schedule determined in the contract. Sale of hardware products Hardware products sold to customers comprising the hardware designed for specific needs. Revenue is recognized at the point-in-time when the customer is able to use and benefit from the hardware products, which is generally upon delivery to the customer. Technology development services The technology development service provided to customers comprises customized technology development services for specific needs. Revenue is recognized at the point-in-time when the service is completed and the customer can benefit from it upon acceptance. Payments are made by the customers in multiple installments according to the payment schedule determined in the contract. Maintenance and support service Maintenance and support (“M&S”) service is provided for software products contracts and consists of unspecified future software updates, upgrades, and enhancements as well as technical product support services, and the provision of unspecified updates and upgrades on a when-and-if-available basis. Maintenance and support services are renewable, generally on an annual basis, at the option of the customer. Maintenance represents stand-ready obligations for which revenue is recognized ratably over the term of the arrangement. Sale of cloud platform products Cloud platform products sold to customers comprising software products uploaded in the cloud platform. The Group does not provide any cancellation and refund provisions to customers. Pursuant to contract terms, customers can benefit from the software products and cloud platform from each on its own, meanwhile the Group fulfils its promise by transferring software products and cloud platform services independently. Therefore, the software products and the cloud platform services are distinct performance obligations. The transaction prices for two performance obligations were determined separately in the contract, which also reflects their stand-alone selling price (“SSP”) respectively. Since customers continuously consume the benefits from both software products and cloud platform, the Group recognizes revenue from sale of cloud platform products over time when the Group provides the customer a right to access the Group’s intellectual property throughout the service period. The timing and pattern of transfer the right to access software products and cloud platform is the same. The service period is usually 1 year and customer made quarterly payment after usage. Contracts with multiple performance obligations Most contracts with customers contain multiple performance obligations that are distinct and are accounted for separately. The transaction price is allocated to the separate performance obligations on a relative SSP basis. The Group determines SSP for all performance obligations using observable inputs, such as standalone sales and historical contract pricing. SSP is consistent with the Group’s overall pricing objectives, taking into consideration the type of software products, maintenance and support services, and professional services purchased by the customer. SSP also reflects the amount the Group would charge for that performance obligation if it were sold separately in a standalone sale, and the price the Group would sell to similar customers in similar circumstances. The following table disaggregates the Group’s revenue for the year ended December 31, 2020, 2021 and 2022: For the years ended December 31, 2020 2021 2022 By revenue type Sale of software products $ 5,098,730 $ 14,878,256 $ 3,547,113 Sale of hardware products 415,723 75,011 46,295 Technology development service 6,404,394 9,246,992 16,419,889 M&S service 1,937,887 2,772,795 2,429,526 Sale of cloud platform products - 5,550,959 25,742,135 Total $ 13,856,734 $ 32,524,013 $ 48,184,958 Remaining performance obligations Remaining performance obligations represent the transaction price of orders meeting the definition of a contract in the new revenue standard for which work has not been performed or has been partially performed and excludes unexercised contract options. The Company has elected to apply the practical expedient, which allows companies to exclude remaining performance obligations with an original expected duration of one year or less. The aggregate amount of the transaction price allocated to remaining performance obligations for such contracts with a duration of more than one year was approximately $4,176,929 at December 31, 2022. The Company expects to recognize revenue on approximately $4,129,513 and $47,416 of the remaining performance obligations over the next 12 and 24 months, respectively. Contract balances When the Group begins to deliver the products or services pursuant to the performance obligations in the contract, the Group presents the contract in the consolidated balance sheet as a contract asset or a contract liability, depending on the relationship between the Group’s performance and the customer’s payment. The contract assets consist of accounts receivable and contract costs. Accounts receivable represent revenue recognized for the amounts invoiced and/or prior to invoicing when the Group has satisfied its performance obligation and has unconditional right to the payment. Contract costs are deferred for the contract preparation and will be recognized as cost of revenues when goods or services are transferred to customers. During the years ended December 31, 2020, 2021 and 2022, the Group recognized $7,228,046, $10,885,731 and $17,379,144 of contract costs as cost of revenues. The contract liabilities consist of deferred revenue, which represent the billings or cash received for services in advance of revenue recognition and is recognized as revenue when all of the Group’s revenue recognition criteria are met. The Group’s deferred revenue amounted to $2,953,238 and $2,553,808 as of December 31, 2021 and 2022, respectively. During the years ended December 31, 2020, 2021 and 2022, the Group recognized $1,201,576, $900,686 and $1,545,866 revenue that was included in deferred revenue balance at January 1, 2020,2021 and 2022, respectively. |
Cost of revenues | Cost of revenues Cost of revenues consists primarily of (i) purchased software, (ii) payroll, (iii) cloud hosting service fees, and (iv) depreciation and other costs related to the business operation. |
Research and development expenses | Research and development expenses Research and development costs are expensed as incurred in accordance with ASC 730. Software development costs required to be capitalized under ASC 985-20. The Company determined that technology feasibility for the software product is not reached. There is no software development costs capitalized for the years ended December 31, 2020, 2021 and 2022. Research and development expenses consist primarily of (i) Software development costs, (ii) payroll and related expenses for research and development professionals, and (iii) depreciation and rental related to technology and development functions. Research and development expenses are expensed as incurred. |
Selling and marketing expenses | Selling and marketing expenses Selling and marketing expenses mainly consist of (i) staff cost, rental and depreciation related to selling and marketing functions, and (ii) advertising costs and market promotion expenses. Advertising costs, which consist primarily of online advertisements, are expensed as incurred. |
General and administrative expenses | General and administrative expenses General and administrative expenses mainly consist of (i) staff cost, rental and depreciation related to general and administrative personnel, (ii) professional service fees, and (iii) other corporate expenses. |
Government grants | Government grants Government grant is recognized when there is reasonable assurance that the Group will comply with the conditions attached to it and the grant will be received. Government grant for the purpose of giving immediate financial support to the Group with no future related costs or obligation is recognized in the Group’s consolidated statements of comprehensive (loss)/income when the grant becomes receivable. The Group recognized government grants $1,699,231, $853,011 and $216,893 in other income, net for the years ended December 31, 2020, 2021 and 2022, respectively. |
Employee benefits | Employee benefits The Group’s subsidiaries and VIE and the VIE’s subsidiary in PRC participate in a government mandated, multiemployer, defined contribution plan, pursuant to which certain retirement, medical, housing and other welfare benefits are provided to employees. PRC labor laws require the entities incorporated in the PRC to pay to the local labor bureau a monthly contribution calculated at a stated contribution rate on the monthly basic compensation of qualified employees. The Group has no further commitments beyond its monthly contribution. |
Leases | Leases On January 1, 2020, the Group adopted Accounting Standards Update (“ASU”) 2016-02, Lease (FASB ASC Topic 842). The adoption of Topic 842 resulted in the presentation of operating lease right-of-use (“ROU”) assets and operating lease liabilities on the consolidated balance sheet. The Group has elected the package of practical expedients, which allows the Group not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. Lastly, the Group elected the short-term lease exemption for all contracts with lease terms of 12 months or less. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset. The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Group recognizes operating lease expenses on a straight-line basis over the lease term. Operating lease right-of-use of assets The right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received. Operating lease liabilities Lease liability is initially measured at the present value of the outstanding lease payments at the commencement date, discounted using the Group’s incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed lease payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee and any exercise price under a purchase option that the Group is reasonably certain to exercise. Lease liability is measured at amortized cost using the effective interest rate method. It is re-measured when there is a change in future lease payments, if there is a change in the estimate of the amount expected to be payable under a residual value guarantee, or if there is any change in the Group assessment of option purchases, contract extensions or termination options. |
Income taxes | Income taxes The Group accounts for income taxes under ASC 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Group’s operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000 ($14,537). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Group did not accrue any liability, interest or penalties related to uncertain tax positions in its provision for income taxes line of its consolidated statements of income for the years ended December 31, 2020, 2021 and 2022, respectively. The Group does not expect that its assessment regarding unrecognized tax positions will materially change over the next 12 months. |
Value added tax (“VAT”) | Value added tax (“VAT”) The Group is subject to VAT and related surcharges on revenue generated from sales of products, facilitation services and platform services. The Group records revenue net of VAT. This VAT may be offset by qualified input VAT paid by the Group to suppliers. Net VAT balance between input VAT and output VAT is recorded in the line item of other current assets on the consolidated balance sheets. The VAT rate is 13% for taxpayers selling consumer products. For revenue generated from services, the VAT rate is 6% depending on whether the entity is a general tax payer, and related surcharges on revenue generated from providing services. Entities that are VAT general taxpayers are allowed to offset qualified input VAT, paid to suppliers against their output VAT liabilities. |
Foreign currency translation | Foreign currency translation The consolidated financial statements are presented in United States dollars (“USD’’ or “$’’). The functional currency of certain of PRC subsidiaries is the Renminbi (“RMB’’). Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the reporting period. Capital accounts of the consolidated financial statements are translated into USD from RMB at their historical exchange rates when the capital transactions occurred. Transaction gains and losses are recorded in foreign currency exchange gain/(loss) in the consolidated statements of operations and comprehensive (loss)/income. The rates are obtained from H.10 statistical release of the U.S. Federal Reserve Board. As of December 31, 2021 2022 Period end RMB: USD exchange rate 6.3726 6.8972 For the years ended December 31, 2020 2021 2022 Average RMB: USD exchange rate 6.9042 6.4508 6.7290 |
Non-controlling interest | Non-controlling interest For the Group’s majority-owned subsidiaries of VIE, a non-controlling interest is recognized to reflect the portion of their equity which is not attributable, directly or indirectly, to the Group’s consolidated net (loss)/income on the consolidated statements of operation and comprehensive (loss)/income includes the net (loss)/income attributable to non-controlling interests. The cumulative results of operations attributable to non-controlling interests, are recorded as non-controlling interests in the Group’s consolidated balance sheets. |
Statutory reserves | Statutory reserves In accordance with the PRC Company Laws, the Group’s PRC subsidiaries, VIE and the VIE’s subsidiary must make appropriations from their after-tax profits as determined under the generally accepted accounting principles in the PRC (“PRC GAAP”) to non-distributable reserve funds including statutory surplus fund and discretionary surplus fund. The appropriation to the statutory surplus fund must be 10% of the after-tax profits as determined under PRC GAAP. Appropriation is not required if the statutory surplus fund has reached 50% of the registered capital of the PRC companies. Appropriation to the discretionary surplus fund is made at the discretion of the PRC companies. The statutory surplus fund and discretionary surplus fund are restricted for use. They may only be applied to offset losses or increase the registered capital of the respective companies. These reserves are not allowed to be transferred to the Company by way of cash dividends, loans or advances, nor can they be distributed except for liquidation. As of December 31, 2022, none of the Group’s PRC subsidiaries and VIE entities had a general reserve that reached the 50% of their registered capital threshold. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. Therefore, no appropriations from after tax profits were recognized for the years ended December 31, 2021 and 2022. |
(Loss)/Earnings per share | (Loss)/Earnings per share Basic (loss)/earnings per share is computed by dividing net (loss)/earnings attributable to ordinary shareholders, taking into consideration the deemed dividends to preferred shareholders (if any), by the weighted average number of ordinary shares outstanding during the year using the two-class method. Under the two-class method, net (loss)/income is allocated between ordinary shares and other participating securities based on their participating rights. Shares issuable for little to no consideration upon the satisfaction of certain conditions are considered as outstanding shares and included in the computation of basic loss per share as of the date that all necessary conditions have been satisfied. Net losses are not allocated to other participating securities if based on their contractual terms they are not obligated to share the losses. Diluted earnings per share is calculated by dividing net loss attributable to ordinary shareholders, as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the year. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the preferred shares, using the if-converted method, and shares issuable upon the exercise of share options using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted loss per share calculation when inclusion of such share would be anti-dilutive. |
Segment reporting | Segment reporting The Group uses the management approach in determining its operating segments. The Group’s chief operating decision maker (“CODM”) identified as the Group’s Chief Executive Officer, relies upon the consolidated results of operations as a whole when making decisions about allocating resources and assessing the performance of the Group. As a result of the assessment made by CODM, the Group has only one reportable segment. The Group does not distinguish between markets or segments for the purpose of internal reporting. As the Group’s long-lived assets are substantially located in the PRC, no geographical segments are presented. |
Risks and uncertainties | Risks and uncertainties After the initial outbreak of a novel strain of coronavirus (“COVID-19”), from time to time, some instances of COVID-19 infections have emerged in various regions of China, including infections caused by Omicron variants in early 2022. A wave of infections caused by the Omicron variants emerged in Shanghai in early 2022, and a series of restrictions and quarantines were implemented to contain the spread. The COVID-19 outbreak in China made adverse impact on the Group’s financial condition and results of operations. However, in December 2022, Chinese government declared to treat COVID-19 as Category B disease, and authorities dropped quarantine measures against people infected with COVID-19 and stopped designating high-risk and low-risk areas. Hence, the management believed that the adverse impact due to the pandemic was temporary. In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements. |
Recent accounting pronouncements | Recent accounting pronouncements The Group is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Group does not opt out of extended transition period for complying with any new or revised financial accounting standards. Therefore, the Group’s financial statements may not be comparable to companies that comply with public company effective dates. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326)”, which will require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Subsequently, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, to clarify that receivables arising from operating leases are within the scope of lease accounting standards. Further, the FASB issued ASU No. 2020-04, ASU 2020-05, ASU 2020-10, ASU 2020-11 and ASU 2021-02 to provide additional guidance on the credit losses standard. For all other entities, the amendments for ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. Adoption of the ASUs is on a modified retrospective basis. The Group will adopt ASU 2016-13 from January 1, 2023. The Group considers the effect of adoption of this ASU was immaterial. Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Group does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures. |
Organization and Principal Ac_2
Organization and Principal Activities (Tables) - Variable Interest Entity [Member] | 12 Months Ended |
Dec. 31, 2022 | |
Organization and Principal Activities (Tables) [Line Items] | |
Schedule of company’s major subsidiaries and consolidated VIE | Name Date of Percentage of Principal Wholly owned subsidiaries AI PLUS HOLDING LIMITED (“AI Plus”) August 30, 2018 100% Investing holding company Xiao-i Technology Limited (“Xiao-i Technology”) December 17, 2018 100% Investing holding company Zhizhen Artificial Intelligent Technology (Shanghai) Co. Ltd. (“Zhizhen Technology”) (“WFOE”) February, 21, 2020 100% WFOE, a holding company Name Date of Percentage of Principal VIE Shanghai Xiao-i Robot Technology August 27, 2009 100% Internet technology development Name Date of Percentage of Principal Subsidiaries of VIE Xiaoi Robot Technology (H.K) Ltd. June 3, 2016 100% Internet technology development Guizhou Xiao-i Robot Technology Co., Ltd. (“Guizhou Xiao-i”) July 18, 2016 70% AI robot development |
Schedule of consolidated balance sheets Information | As of December 31, 2021 2022 Assets Current assets: Cash and cash equivalents $ 1,310,737 $ 1,025,141 Accounts receivable, net 31,184,779 41,362,705 Amounts due from related parties 391,919 346,517 Inventories 768,762 768,216 Contract costs 1,669,519 2,012,309 Advance to suppliers 90,350 1,115,672 Deferred offering costs - 1,330,902 Prepaid expenses and other current assets, net 388,844 460,850 Total current assets 35,804,910 48,422,312 Non-current assets: Property and equipment, net 207,989 219,470 Intangible assets, net 798,459 637,114 Long-term investment 335,448 204,899 Right of use assets 1,194,859 865,399 Deferred tax assets, net 4,906,287 3,888,574 Prepaid expenses and other, non-current assets 3,941,346 3,697,675 Total non-current assets 11,384,388 9,513,131 TOTAL ASSETS $ 47,189,298 $ 57,935,443 Liabilities Current liabilities: Short-term borrowings $ 9,117,158 $ 18,784,459 Accounts payable 5,581,879 9,180,532 Amount due to related parties-current 1,558,642 896,431 Deferred revenue 2,953,238 2,553,808 Accrued expenses and other current liabilities 10,316,428 17,006,680 Convertible loans 5,717,737 3,754,269 Lease liabilities, current 800,658 435,462 Income tax payable 17,904 - Total current liabilities 36,063,644 52,611,641 Non-current liabilities: Amount due to related parties-non current 8,905,313 8,581,743 Accrued liabilities, non-current 5,157,971 5,391,664 Lease liabilities, non-current 446,140 300,974 Total non-current liabilities 14,509,424 14,274,381 TOTAL LIABILITIES $ 50,573,068 $ 66,886,022 |
Schedule of consolidated statements of operations and comprehensive (loss)/Income | For the years ended December 31, 2020 2021 2022 Net Revenue $ 13,856,734 $ 32,524,013 $ 48,184,958 Net (loss)/income $ (7,056,042 ) $ 3,365,002 $ (5,969,762 ) |
Schedule of Consolidated Cash Flows Information | For the years ended December 31, 2020 2021 2022 Net cash used in operating activities $ (3,463,094 ) $ (11,887,122 ) $ (10,923,345 ) Net cash (used in)/provided by investing activities (25,825 ) 77,259 (107,122 ) Net cash provided by financing activities 1,792,682 12,192,952 10,757,306 Effect of exchange rate changes (797,954 ) 101,728 (12,435 ) Net change in cash, cash equivalents and restricted cash $ (2,494,191 ) $ 484,817 $ (285,596 ) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of estimated useful lives | Category Estimated useful lives Electronic equipment 5 years Office equipment 5 years Leasehold improvement Shorter of the lease term or the estimated useful life of the assets Category Estimated useful lives Software 5 years |
Schedule of disaggregation of revenue | For the years ended December 31, 2020 2021 2022 By revenue type Sale of software products $ 5,098,730 $ 14,878,256 $ 3,547,113 Sale of hardware products 415,723 75,011 46,295 Technology development service 6,404,394 9,246,992 16,419,889 M&S service 1,937,887 2,772,795 2,429,526 Sale of cloud platform products - 5,550,959 25,742,135 Total $ 13,856,734 $ 32,524,013 $ 48,184,958 |
Schedule of assets and liabilities translated exchange rates | As of December 31, 2021 2022 Period end RMB: USD exchange rate 6.3726 6.8972 For the years ended December 31, 2020 2021 2022 Average RMB: USD exchange rate 6.9042 6.4508 6.7290 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounts Receivable, Net [Abstract] | |
Schedule of accounts receivable, net | As of December 31, 2021 2022 Accounts receivable 33,747,099 45,826,900 Allowance for doubtful accounts (2,562,320 ) (4,464,195 ) $ 31,184,779 $ 41,362,705 |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expenses and Other Assets [Abstract] | |
Schedule of prepayments and other assets | As of December 31, 2021 2022 Prepaid expenses and other current assets : Receivables from third parties (1) 2,479,412 359,994 Rent deposits 211,224 13,629 Bid security 70,767 - Others 10,119 87,231 Prepaid expenses and other current assets, gross 2,771,522 460,854 Bad debt provisions (1) (2,382,674 ) - Prepaid expenses and other current assets, net $ 388,848 $ 460,854 Prepaid expenses and other non-current assets : Prepaid case acceptance fee (2) $ 3,931,033 $ 3,632,039 Others 10,313 65,636 Prepaid expenses and other non-current assets 3,941,346 3,697,675 Total $ 4,330,194 $ 4,158,529 (1) Receivables from third parties mainly includes funds lent to third parties. The Group established business partnership with these third parties and provided funds to support their business operation. Due to the third parties deteriorated financial position affected by COVID -19, the Group recorded bad debt expense for receivables from third parties of nil nil (2) Prepaid case acceptance fee is the expense paid by the plaintiff in advance according to PRC law when the court decides to accept civil cases, economic dispute cases, maritime cases and administrative cases. The court charged the case acceptance fee of US$3.6 million in proportion to the claim amount of the lawsuit between the Group and Apple. The claim amount was RMB 10 billion, approximately US$1,450 million. The lawsuit is not expected to close within the one |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, Net [Abstract] | |
Schedule of property and equipment, net | As of December 31, 2021 2022 Electronic equipment $ 147,406 $ 168,937 Office equipment 194,241 240,788 Leasehold improvement 55,857 63,683 Construction in progress 2,088 - Less: accumulated depreciation (191,603 ) (253,938 ) Property and equipment, net $ 207,989 $ 219,470 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets, Net [Abstract] | |
Schedule of intangible assets, net | As of December 31, 2021 2022 Software $ 1,092,197 $ 1,009,425 Less: accumulated amortization (293,738 ) (372,311 ) Intangible asset, net $ 798,459 $ 637,114 |
Schedule of estimated amortization expense of intangible assets | 2023 $ 100,942 2024 100,942 2025 100,942 2026 100,942 2027 100,942 Thereafter 132,404 Total $ 637,114 |
Long-Term Investment (Tables)
Long-Term Investment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Long-Term Investment [Abstract] | |
Schedule of group’s long-term investment | As of December 31, 2021 As of December 31, 2022 USD Interest % USD Interest % Equity method investments Zhizhen Guorui - - % 2,647,593 37 % Shanghai Shenghan 335,448 16.56 % 204,899 16.56 % Total 335,448 2,852,492 |
Short-Term Borrowings (Tables)
Short-Term Borrowings (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Short-Term Borrowings [Abstract] | |
Schedule of short-term borrowings | Annual Maturity (Months) Principal As of December 31, 2021 As of December 31, 2022 USD USD USD Short-term borrowings: Agricultura Bank of China 3.45% April, 2023 2,029,809 - 2,029,809 Agricultura Bank of China 2.70% May, 2023 1,449,864 - 1,449,864 Agricultura Bank of China 3.45% June, 2023 1,449,864 - 1,449,864 Bank of Jiangsu 4.60% October, 2023 1,449,864 - 1,449,864 CHINA CITIC BANK 4.65% August, 2023 1,448,414 - 1,448,414 CHINA CITIC BANK 4.65% September, 2023 1,448,414 - 1,448,414 Shanghai Bank 5.20% January, 2023 1,304,877 - 1,304,877 Shanghai Bank 4.65% October, 2023 1,304,877 - 1,304,877 Agricultura Bank of China 4.00% March, 2023 1,159,891 - 1,159,891 Agricultura Bank of China 2.70% May, 2023 1,159,891 - 1,159,891 Shanghai Bank 4.65% November, 2023 869,918 - 869,918 Shanghai Bank 4.65% November, 2023 724,932 - 724,932 Bank of Nanjing * 5.50% June, 2023 724,932 - 724,932 Bank of Nanjing * 5.50% July, 2023 724,932 - 724,932 Bank of Ningbo 5.35% June, 2023 724,932 - 724,932 China Merchants Bank * 5.05% August, 2023 704,634 - 664,062 Shanghai Bank 5.20% January, 2023 144,986 - 144,986 China Merchants Bank * 5.05% August, 2022 1,004,300 1,004,300 - China Merchants Bank * 5.05% September, 2022 1,035,684 1,035,684 - Bank of Communications 5.31% February, 2022 627,687 627,687 - Xiamen International Bank 6.80% April, 2022 784,609 784,609 - Shanghai Pudong Development Bank* 5.22% March, 2022 1,114,145 1,114,145 - Shanghai Rural Commercial Bank 5.20% May, 2022 1,412,296 1,412,296 - Shanghai Bank 5.20% November, 2021 784,609 784,609 - Shanghai Bank 5.20% October, 2022 1,412,296 1,412,296 - Shanghai Bank 5.20% November, 2022 941,531 941,532 - Total 9,117,158 18,784,459 * These borrowings are guaranteed by Guizhou Xiao-I. |
Convertible Loans (Tables)
Convertible Loans (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Convertible Loans [Abstract] | |
Schedule of loan agreements with third parties | Annual Convertible Maturity As of As of USD USD Convertible loans: Fumei Shi (1) 15.00% 73,719 December, 2022 1,569,218 1,449,863 Guoqiang Chen (2) 12.00% 22,116 September, 2023 941,531 869,918 SUNNY CONCORD INTERNATIONAL LTD (3) 15.00% 36,860 December, 2022 774,699 782,049 Senbiao Hu (4) 15.00% 18,430 November, 2022 392,305 362,466 Jun Xu (5) 15.00% 14,744 May, 2023 313,844 289,973 Jinzhi Li (6) 14.40% 73,719 August, 2022 1,569,218 - Chunhui Li (7) 15.00% 7,372 November, 2022 156,922 - Total 246,960 5,717,737 3,754,269 (1) The loan was extended in January, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option (Note 17). The principal and interest of the loan were repaid in April, 2023. (2) The loan was originally matured before September, 2022 and extended in September 2022. In April 2023, the loan was extended to May 31, 2023 with annual interest rate of 12% (Note 17). (3) The loan was extended in January, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option. In April, 2023, the maturity date of the loan was changed to May 31, 2023 with annual interest rate of 15% (Note 17). (4) The loan was extended in February, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option. The principal and interest of the loan were repaid in March, 2023 (Note 17). (5) The loan was originally matured before May 2022 and extended in In August, 2022. In April, 2023, the loan was further extended to May 31, 2023. (6) The principal and interest of the loan were repaid in 2022. (7) The principal and interest of the loan were repaid in 2022. |
Accrued Expenses and Other Li_2
Accrued Expenses and Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Liabilities [Abstract] | |
Schedule of accrued expenses and other liabilities | As of December 31, 2021 2022 Accrued expenses and other current liabilities: Loan from third parties (1) $ 4,381,136 $ 6,485,125 Payroll payable 1,591,662 4,722,793 Other tax payable 2,777,187 2,852,728 Interest payable 1,053,854 2,054,136 Others 512,593 891,931 Accrued expenses and other current liabilities $ 10,316,432 $ 17,006,713 Accrued liabilities, non-current : Long-term loan from third parties (2) - 3,303,986 Litigation related payable (3) 5,157,971 4,769,926 Accrued liabilities, non-current 5,157,971 8,073,912 TOTAL $ 15,474,403 $ 25,080,625 (1) Loan from third parties mainly consisted of the unsecured borrowings from third parties for ordinary business operation. For the borrowings, the interest rates range from 3.8% to 25.55% and the interest expenses were $216,020 $815,994 and $1,013,209 for the years ended December 31, 2020, 2021 and 2022. The borrowings are payable on demand. In April, 2023, the Group made the repayment of principal amounted to $3,133,371 to the third parties. (2) Long-term loan from a third party was primarily consisted of: (i) Long-term loan for the purpose of investing in Zhizhen Guorui in February 2022, amounted to $2,682,248 as of December 31, 2022 (Note 7), with free interest rate in the first three years. The loan is due in five years, and if Zhizhen Guorui declares any cash dividend to the Group, the cash dividend would become the source to repay the loan in the first priority. (ii) In October 2022, the Group entered into an exclusive license agreement with a third party, under which the term of exclusive license was 2 years, and the third party should pay the license fee of $1,449,864 (RMB10 million) to the Group upon the effective of the agreement. Meanwhile, the same party entered into the agreement to grant the exclusive right to use these patents to the Group for 2 years at the consideration of $63,608 per month, aggregately $1,526,581 (RMB10.5 million). The patents under the agreements were pledged to the third party. The transaction was substantially loan from the third party with the patents pledged. The Group accounted for $1,449,864 (RMB10 million) as the principal of the loan from the third party, and the interests were calculated under effective interest method. In November 2022, the Group entered into another exclusive license agreement with the same party in the similar form to obtain another $1,449,864 (RMB10 million) loan, which was received subsequently in 2023. (3) Litigation related payable mainly consisted of the litigation fee of the lawsuit between the Group and Apple paid by the third parties on behalf of the Group. |
Taxation (Tables)
Taxation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Taxation [Abstract] | |
Schedule of income tax provision | For the years ended December 31, 2020 2021 2022 Current income tax expenses $ - $ 17,687 $ 2 Deferred income tax (benefits) expenses (235,854 ) 534,668 660,653 Total income tax (benefits) expenses $ (235,854 ) $ 552,355 $ 660,655 |
Schedule of a reconciliation between the group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate | For the years ended December 31, 2020 2021 2022 (Loss)/income before income tax $ (7,291,896 ) $ 3,917,357 $ (5,344,659 ) (Loss)/Income tax expense at statutory tax rate (1,822,974 ) 979,339 (1,336,164 ) Additional deduction for R&D expenses (343,193 ) (1,005,733 ) (1,087,622 ) Investment loss 51,874 39,158 35,795 Non-deductible expenses 33,392 41,679 278,277 Tax effect of tax rate in a different jurisdiction 13,058 134,570 51,119 Effect of preferential tax rates 157,236 (356,448 ) 5,259 Deferred tax effect of tax rate change - - 538,660 Change in valuation allowance 459,885 719,790 1,697,503 Write-off of NOL 1,214,868 - 477,828 Income tax (benefit) expense $ (235,854 ) $ 552,355 $ 660,655 |
Schedule of significant components of net deferred tax assets | As of December 31, 2021 2022 Deferred tax assets: Tax losses $ 6,239,757 $ 4,475,379 Allowance for doubtful accounts 773,701 1,053,028 Accrued expenses 257,966 716,673 Impairment 310,430 301,150 Non-deductible education expense 818 756 Lease liabilities 191,758 112,203 Amortization of intangible assets - 972,696 Valuation allowance (2,685,373 ) (3,611,707 ) Total deferred tax assets $ 5,089,057 $ 4,020,178 Deferred tax liabilities: Right-of-use assets (182,770 ) (131,604 ) Deferred tax assets, net $ 4,906,287 $ 3,888,574 |
Schedule of changes in valuation allowance | As of December 31, 2021 2022 Balance at the beginning of the year $ 1,911,048 $ 2,685,373 Current year addition 810,159 1,723,347 Current year reduction (90,370 ) (25,844 ) Deferred tax effect of tax rate change - (538,660 ) Exchange rate effect 54,536 (232,509 ) Balance at the end of the year $ 2,685,373 $ 3,611,707 |
Schedule of net operating loss carryforwards | 2023 $ 322,766 2024 897,460 2025 380,244 2026 407,436 2027 913,779 Thereafter 21,417,987 Total $ 24,339,672 |
Schedule of net operating loss from HK will carry forward indefinitely | Net operating loss carryforwards indefinitely 3,858,436 Total $ 3,858,436 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Schedule of operating lease related assets and liabilities | As of December 31, 2021 2022 Right-of-use Assets $ 1,194,859 $ 865,399 Lease payment liabilities-current (800,658 ) (435,462 ) Lease payment liabilities- non-current (446,140 ) (300,974 ) Total $ (1,246,798 ) $ (736,436 ) |
Schedule of lease expense | For the years ended December 31, 2020 2021 2022 Operating leases cost excluding short-term rental expense $ 1,567,532 $ 1,207,920 $ 739,582 Short-term lease cost 17,714 8,991 51,274 Total $ 1,585,246 $ 1,216,911 $ 790,856 |
Schedule of future minimum payments operating leases | For the year ended December 31, Operating Leases 2023 $ 509,152 2024 200,912 2025 60,749 Total lease payments 770,813 Less: imputed interest (34,377 ) Total $ 736,436 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Schedule of related parties transactions | No. Name of Related Parties Relationship 1 Zhejiang Baiqianyin Network Technology Co., Ltd (“Zhejiang Baiqianyin”) An entity which has a common director of the Board of Directors with the Group 2 Shanghai Shenghan An entity which the Group holds 16.56% equity interests 3 Shanghai Aoshu Enterprise Management Partnership (Limited Partnership) (“Shanghai Aoshu”) An entity which is the Group’s employee stock ownership platform, and has a common director of the Board of Directors with the Group 4 Shanghai Machinemind Intelligent Technology Co., Ltd. An entity which the Company holds 18% equity interests 5 Jiaxing Sound Core Intelligent Technology Co., LTD An entity which Shanghai Shenghan holds 20% equity interests 6 Hui Yuan Chairman of the board, one of the major shareholders holding 14.73% equity interests of the Company 7 Weng Wei CFO of the Company 8 Tianjin Haiyin Equity Investment Fund Partnership (Limited Partnership) (“Tianjin Haiyin”) A significant shareholder holding 5.18% equity interests of the Company 9 Jiaxing Chiyu Investment Partnership (limited Partnership) A significant shareholder holding 5.44% equity interests of the Company 10 Haiyin Capital Investment (International) Limited A subsidiary of Tianjin Haiyin 11 Zhizhen Guorui An entity which the Group holds 37% equity interests |
Schedule of due from related parties | As of December 31, 2021 2022 Accounts receivable $ $ Zhejiang Baiqianyin (a) 52,883 48,860 Other receivables Zhejiang Baiqianyin (b) 316,981 297,657 Shanghai Aoshu (c) 22,055 20,377 Bad debt provisions - (20,377 ) Total $ 391,919 $ 346,517 (a). In April, 2023, the Group collected accounts receivable from Zhejiang Baiqianyin; (b). Other receivable from Zhejiang Baiqianyin consists of the interest-free borrowings for ordinary business. In April, 2023, the Group collected other receivables from Zhejiang Baiqianyin; (c). Other receivable from Shanghai Aoshu was the payment to an employee on behalf of Shanghai Aoshu. For the year ended December 31, the Group made fully provisions of receivables from Shanghai Aoshu. As of December 31, 2021 2022 Due to related parties-current Accounts payable Shanghai Shenghan $ 470,765 $ 201,465 Shanghai Machinemind Intelligent Technology Co., Ltd. 76,892 - Jiaxing Sound Core Intelligent Technology Co., LTD 98,076 32,622 Zhizhen Guorui (Shanghai) Information Technology Development Co., Ltd. - 97,868 Interest-free loans (c) Jiaxing Chiyu Investment Partnership (limited Partnership) $ 784,610 $ 434,959 Haiyin Capital Investment (International) Limited 128,299 129,517 Subtotal-due to related parties-current 1,558,642 896,431 Due to related parties-non current Interest-free loans (c) Hui Yuan $ 8,905,313 $ 8,581,743 Subtotal-due to related parties-non current 8,905,313 8,581,743 Total $ 10,463,955 $ 9,478,174 For the years ended December 31, Nature 2020 2021 2022 Software and service income Zhejiang Baiqianyin $ 2,449,560 $ 286,875 $ - Technology service fee payable Shanghai Shenghan $ 130,356 $ 465,058 $ - Zhizhen Guorui (Shanghai) Information Technology Development Co., Ltd. - - 100,315 Interest-free loans from related parties Zhejiang Baiqianyin $ 1,448 $ 5,782,216 $ 1,783,326 Hui Yuan - 9,696,450 532,026 Haiyin Capital Investment (International) Limited - 126,744 - Jiaxing Chiyu Investment Partnership (limited Partnership) - 775,097 - Tianjin Haiyin - 310,038 - Weng Wei - 74,409 - Interest-free loans repayment to related parties Zhejiang Baiqianyin $ - $ 5,470,627 $ 1,788,230 Jiaxing Chiyu Investment Partnership (limited Partnership) - - 297,221 Hui Yuan - 899,111 169,416 Jiaxing Sound Core Intelligent Technology Co., LTD - - 59,444 Shanghai Shenghan - 139,517 - Weng Wei - 74,409 - Tianjin Haiyin - 310,038 - Return of inventories to a related party Shanghai Shenghan $ - $ - $ 239,330 Debt relief Shanghai Machinemind Intelligent Technology Co., Ltd. $ - $ - $ 72,819 |
Concentration of Credit Risk (T
Concentration of Credit Risk (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Concentration of Credit Risk [Abstract] | |
Schedule of single customers total revenue | For the Years ended December 31, 2020 2021 2022 Percentage of the Group’s total revenue Amount % Amount % Amount % Customer A - - 3,363,631 10.3 % 9,824,275 20.4 % Customer B - - 13,384,613 41.2 % 5,364,265 11.1 % Customer C - - - - 4,980,628 10.3 % Customer D 2,449,557 17.70 % - - - - Customer E 1,780,014 12.80 % - - - - |
Schedule of single customers total accounts receivable | As of December 31, 2021 2022 Percentage of the Group’s accounts receivable Amount % Amount % Customer B 15,203,371 48.8 % 12,801,742 30.9 % Customer A 3,138,436 10.1 % 5,279,171 12.8 % Customer C - - 4,175,607 10.1 % Customer F - - 4,523,575 10.9 % |
Schedule of single suppliers total purchase | For the Years ended December 31, 2020 2021 2022 Percentage of the Group’s total purchase Amount % Amount % Amount % Supplier A - - 3,756,094 73.8 % 11,475,851 34.6 % Supplier B - - - - 7,281,914 21.9 % Supplier C - - - - 3,402,612 10.3 % Supplier D 139,040 10.0 % - - - - Supplier E 181,046 13.0 % - - - - Supplier F 550,496 39.5 % - - - - |
Condensed Financial Informati_2
Condensed Financial Information of the Parent Company (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Condensed Financial Information of the Parent Company [Abstract] | |
Schedule of parent company balance sheets | As of December 31, 2021 2022 ASSETS Cash and cash equivalents $ 1,105 $ 1,104 Investment income in subsidiaries - - Prepaid expenses and other current assets, net 4 2 TOTAL ASSETS $ 1,109 $ 1,106 LIABILITIES Investment deficit in subsidiaries 190,267 5,887,042 TOTAL LIABILITIES $ 190,267 $ 5,887,042 Shareholders’ deficit Ordinary shares (par value of $0.00005 per share; 1,000,000,000 shares authorized as of December 31, 2021 and December 31, 2022, respectively; 22,115,592 shares issued and outstanding as of December 31,2021 and December 31, 2022, respectively) 1,106 1,106 Additional paid-in capital 75,621,294 75,621,294 Statutory reserve 237,486 237,486 Accumulated deficit (72,584,621 ) (78,483,156 ) Accumulated other comprehensive loss (3,464,423 ) (3,262,666 ) Total shareholders’ deficit $ (189,158 ) $ (5,885,936 ) * The shares and per share information are presented on a retroactive basis to reflect the reorganization completed on March 29, 2019. |
Schedule of parent company statements of operations and comprehensive (loss)/income | Years ended December 31, 2020 2021 2022 Revenue $ - $ - $ - Cost of revenue - - - Gross profit - - - Operating expenses: Share of (loss)/income in subsidiaries and VIEs $ (6,808,365 ) $ 3,677,813 $ (5,898,535 ) (Loss)/Income before income tax provision (6,808,365 ) 3,677,813 (5,898,535 ) Provision for income tax - - - Net (loss)/income $ (6,808,365 ) $ 3,677,813 $ (5,898,535 ) |
Schedule of parent company statements of cash flow | Years ended December 31, 2020 2021 2022 Net cash used in operating activities $ - $ - $ (1 ) Net cash used in investing activities - - - Net cash provided by financing activities - - - Net cash inflow $ - $ - $ (1 ) |
Organization and Principal Ac_3
Organization and Principal Activities (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 29, 2019 |
Organization and Principal Activities (Details) [Line Items] | |||
Net liabilities | $ 3,383,770 | $ 8,950,579 | |
Shanghai Xiao-i [Member] | |||
Organization and Principal Activities (Details) [Line Items] | |||
Equity interest rate | 100% |
Organization and Principal Ac_4
Organization and Principal Activities (Details) - Schedule of company’s major subsidiaries and consolidated VIE - Variable Interest Entities [Member] | 12 Months Ended |
Dec. 31, 2022 | |
AI PLUS HOLDING LIMITED (“AI Plus”) [Member] | |
Wholly owned subsidiaries | |
Date of Incorporation | Aug. 30, 2018 |
Percentage of beneficial ownership for purposes of accounting | 100% |
Principal Activities | Investing holding company |
Xiao-i Technology Limited (“Xiao-i Technology”) [Member] | |
Wholly owned subsidiaries | |
Date of Incorporation | Dec. 17, 2018 |
Percentage of beneficial ownership for purposes of accounting | 100% |
Principal Activities | Investing holding company |
Zhizhen Artificial Intelligent Technology (Shanghai) Co. Ltd. (“Zhizhen Technology”) (“WFOE”) [Member] | |
Wholly owned subsidiaries | |
Date of Incorporation | Feb. 21, 2020 |
Percentage of beneficial ownership for purposes of accounting | 100% |
Principal Activities | WFOE, a holding company |
Shanghai Xiao-i Robot Technology Co., Ltd. (“Shanghai Xiao-i”) [Member] | |
Wholly owned subsidiaries | |
Date of Incorporation | Aug. 27, 2009 |
Percentage of beneficial ownership for purposes of accounting | 100% |
Principal Activities | Internet technology development |
Xiaoi Robot Technology (H.K) Ltd. (“Xiaoi Robot”) [Member] | |
Wholly owned subsidiaries | |
Date of Incorporation | Jun. 03, 2016 |
Percentage of beneficial ownership for purposes of accounting | 100% |
Principal Activities | Internet technology development |
Guizhou Xiao-i Robot Technology Co., Ltd. (“Guizhou Xiao-i”) [Member] | |
Wholly owned subsidiaries | |
Date of Incorporation | Jul. 18, 2016 |
Percentage of beneficial ownership for purposes of accounting | 70% |
Principal Activities | AI robot development |
Organization and Principal Ac_5
Organization and Principal Activities (Details) - Schedule of consolidated balance sheets Information - Restated [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 1,025,141 | $ 1,310,737 |
Accounts receivable, net | 41,362,705 | 31,184,779 |
Amounts due from related parties | 346,517 | 391,919 |
Inventories, | 768,216 | 768,762 |
Contract costs | 2,012,309 | 1,669,519 |
Advance to suppliers | 1,115,672 | 90,350 |
Deferred offering costs | 1,330,902 | |
Prepaid expenses and other current assets, net | 460,850 | 388,844 |
Total current assets | 48,422,312 | 35,804,910 |
Non-current assets: | ||
Property and equipment, net | 219,470 | 207,989 |
Intangible assets, net | 637,114 | 798,459 |
Long-term investment | 204,899 | 335,448 |
Right of use assets | 865,399 | 1,194,859 |
Deferred tax assets, net | 3,888,574 | 4,906,287 |
Prepaid expenses and other, non-current assets | 3,697,675 | 3,941,346 |
Total non-current assets | 9,513,131 | 11,384,388 |
TOTAL ASSETS | 57,935,443 | 47,189,298 |
Current liabilities: | ||
Short-term borrowings | 18,784,459 | 9,117,158 |
Accounts payable | 9,180,532 | 5,581,879 |
Amount due to related parties-current | 896,431 | 1,558,642 |
Deferred revenue | 2,553,808 | 2,953,238 |
Accrued expenses and other current liabilities | 17,006,680 | 10,316,428 |
Convertible loans | 3,754,269 | 5,717,737 |
Lease liabilities, current | 435,462 | 800,658 |
Income tax payable | 17,904 | |
Total current liabilities | 52,611,641 | 36,063,644 |
Non-current liabilities: | ||
Amount due to related parties-non current | 8,581,743 | 8,905,313 |
Accrued liabilities, non-current | 5,391,664 | 5,157,971 |
Lease liabilities, non-current | 300,974 | 446,140 |
Total non-current liabilities | 14,274,381 | 14,509,424 |
TOTAL LIABILITIES | $ 66,886,022 | $ 50,573,068 |
Organization and Principal Ac_6
Organization and Principal Activities (Details) - Schedule of consolidated statements of operations and comprehensive (loss)/Income - Restated [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Condensed Statement of Income Captions [Line Items] | |||
Net Revenue | $ 48,184,958 | $ 32,524,013 | $ 13,856,734 |
Net (loss)/income | $ (5,969,762) | $ 3,365,002 | $ (7,056,042) |
Organization and Principal Ac_7
Organization and Principal Activities (Details) - Schedule of Consolidated Cash Flows Information - Restated [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Condensed Cash Flow Statements, Captions [Line Items] | |||
Net cash used in operating activities | $ (10,923,345) | $ (11,887,122) | $ (3,463,094) |
Net cash (used in)/provided by investing activities | (107,122) | 77,259 | (25,825) |
Net cash provided by financing activities | 10,757,306 | 12,192,952 | 1,792,682 |
Effect of exchange rate changes | (12,435) | 101,728 | (797,954) |
Net change in cash, cash equivalents and restricted cash | $ (285,596) | $ 484,817 | $ (2,494,191) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Inventory write-down | $ 154,664 | |||
Long term investments interest | 20% | |||
Number of customers | 2 | 2 | ||
Number of performance obligations | 2 | 2 | ||
Service period | 1 year | 1 year | ||
Remaining performance obligation | $ 4,176,929 | |||
Deferred revenue | 2,553,808 | 2,953,238 | ||
Revenue recognized | 1,545,866 | 900,686 | 1,201,576 | |
Other income | 216,893 | 853,011 | (1,699,231) | |
Underpayment of taxes | $ (14,537) | ¥ 100,000 | ||
Selling consumer products rate | 13% | 13% | ||
General tax payer rate | 6% | 6% | ||
Statutory surplus percentage | 10% | 10% | ||
General reserve percentage | 50% | 50% | ||
Number of reportable segment | 1 | 1 | ||
Minimum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Long term investments interest | 20% | |||
Remaining performance obligation | $ 47,416 | |||
Maximum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Long term investments interest | 50% | |||
Remaining performance obligation | $ 4,129,513 | |||
VIE [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Statutory surplus percentage | 50% | 50% | ||
Sale of cloud platform products [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Number of performance obligations | 2 | 2 | ||
Contract balances [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Cost of revenues | $ 17,379,144 | $ 10,885,731 | $ 7,228,046 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of estimated useful lives | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of Estimated Useful Lives [Abstract] | |
Leasehold improvement | Shorter of the lease term or the estimated useful life of the assets |
Electronic equipment [Member] | |
Schedule of Estimated Useful Lives [Abstract] | |
Estimated useful lives | 5 years |
Office equipment [Member] | |
Schedule of Estimated Useful Lives [Abstract] | |
Estimated useful lives | 5 years |
Software [Member] | |
Schedule of Estimated Useful Lives [Abstract] | |
Estimated useful lives | 5 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of disaggregation of revenue - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Summary of Significant Accounting Policies (Details) - Schedule of disaggregation of revenue [Line Items] | |||
Total revenue | $ 48,184,958 | $ 32,524,013 | $ 13,856,734 |
Sale of software products [Member] | |||
Summary of Significant Accounting Policies (Details) - Schedule of disaggregation of revenue [Line Items] | |||
Total revenue | 3,547,113 | 14,878,256 | 5,098,730 |
Sale of hardware products [Member] | |||
Summary of Significant Accounting Policies (Details) - Schedule of disaggregation of revenue [Line Items] | |||
Total revenue | 46,295 | 75,011 | 415,723 |
Technology development service [Member] | |||
Summary of Significant Accounting Policies (Details) - Schedule of disaggregation of revenue [Line Items] | |||
Total revenue | 16,419,889 | 9,246,992 | 6,404,394 |
M&S service [Member] | |||
Summary of Significant Accounting Policies (Details) - Schedule of disaggregation of revenue [Line Items] | |||
Total revenue | 2,429,526 | 2,772,795 | 1,937,887 |
Sale of cloud platform products [Member] | |||
Summary of Significant Accounting Policies (Details) - Schedule of disaggregation of revenue [Line Items] | |||
Total revenue | $ 25,742,135 | $ 5,550,959 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of assets and liabilities translated exchange rates | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Schedule of Assets and Liabilities Translated Exchange Rates [Abstract] | |||
Period end RMB: USD exchange rate | 6.8972 | 6.3726 | |
Average RMB: USD exchange rate | 6.729 | 6.4508 | 6.9042 |
Accounts Receivable, Net (Detai
Accounts Receivable, Net (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Accounts Receivable, Net [Abstract] | |||
Bad debt expense | $ 2,149,176 | $ 270,649 | $ 758,019 |
Accounts Receivable, Net (Det_2
Accounts Receivable, Net (Details) - Schedule of accounts receivable, net - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Accounts Receivable Net [Abstract] | ||
Accounts receivable | $ 45,826,900 | $ 33,747,099 |
Allowance for doubtful accounts | (4,464,195) | (2,562,320) |
Accounts receivable net | $ 41,362,705 | $ 31,184,779 |
Prepaid Expenses and Other As_3
Prepaid Expenses and Other Assets (Details) ¥ in Billions | 12 Months Ended | |||
Dec. 31, 2022 USD ($) | Dec. 31, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Prepaid Expenses and Other Assets [Abstract] | ||||
Bad debts | $ 1,380,331 | |||
Case acceptance fee | 3,600,000 | |||
Amount claim | $ 1,450,000,000 | ¥ 10 | ||
Expected year | 1 year | 1 year | ||
Other current assets write-off | $ 2,201,448 |
Prepaid Expenses and Other As_4
Prepaid Expenses and Other Assets (Details) - Schedule of prepayments and other assets - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | |
Prepaid expenses and other current assets: | |||
Receivables from third parties | [1] | $ 359,994 | $ 2,479,412 |
Rent deposits | 13,629 | 211,224 | |
Bid security | 70,767 | ||
Others | 87,231 | 10,119 | |
Prepaid expenses and other current assets, gross | 460,854 | 2,771,522 | |
Bad debt provisions | [1] | (2,382,674) | |
Prepaid expenses and other current assets, net | 460,854 | 388,848 | |
Prepaid case acceptance fee | [2] | 3,632,039 | 3,931,033 |
Others | 65,636 | 10,313 | |
Prepaid expenses and other non-current assets | 3,697,675 | 3,941,346 | |
Total | $ 4,158,529 | $ 4,330,194 | |
[1]Receivables from third parties mainly includes funds lent to third parties. The Group established business partnership with these third parties and provided funds to support their business operation. Due to the third parties deteriorated financial position affected by COVID -19, the Group recorded bad debt expense for receivables from third parties of nil nil one |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment, Net [Abstract] | |||
Depreciation expense | $ 78,831 | $ 65,160 | $ 68,514 |
Property and Equipment, Net (_2
Property and Equipment, Net (Details) - Schedule of property and equipment, net - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (253,938) | $ (191,603) |
Property and equipment, net | 219,470 | 207,989 |
Electronic equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 168,937 | 147,406 |
Office Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 240,788 | 194,241 |
Leasehold improvement [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 63,683 | 55,857 |
Construction in progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,088 |
Intangible Assets, Net (Details
Intangible Assets, Net (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets [Member] | |||
Intangible Assets, Net (Details) [Line Items] | |||
Amortization expense amount | $ 103,438 | $ 107,895 | $ 100,281 |
Intangible Assets, Net (Detai_2
Intangible Assets, Net (Details) - Schedule of intangible assets, net - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of Intangible Assets Net [Abstract] | ||
Software | $ 1,009,425 | $ 1,092,197 |
Less: accumulated amortization | (372,311) | (293,738) |
Intangible asset, net | $ 637,114 | $ 798,459 |
Intangible Assets, Net (Detai_3
Intangible Assets, Net (Details) - Schedule of estimated amortization expense of intangible assets | Dec. 31, 2022 USD ($) |
Schedule of estimated amortization expense of intangible assets [Abstract] | |
2023 | $ 100,942 |
2024 | 100,942 |
2025 | 100,942 |
2026 | 100,942 |
2027 | 100,942 |
Thereafter | 132,404 |
Total | $ 637,114 |
Long-Term Investment (Details)
Long-Term Investment (Details) | 1 Months Ended | 12 Months Ended | |||||
Feb. 28, 2022 USD ($) | Sep. 30, 2015 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jun. 30, 2020 | Jan. 31, 2018 | |
Short-Term Borrowings [Abstract] | |||||||
Investment agreement to acquire | 20% | ||||||
Investment agreement (in Yuan Renminbi) | ¥ | ¥ 5,000,000 | ||||||
Registered capital amount (in Yuan Renminbi) | ¥ | ¥ 125,000 | ||||||
Percentage in diluted | 16.56% | 17.60% | |||||
Total consideration | $ | $ 2,900,000 | ||||||
Share of loss amount | $ | $ (143,181) | $ (156,630) | $ (207,497) |
Long-Term Investment (Details)
Long-Term Investment (Details) - Schedule of group’s long-term investment - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Equity method investments | ||
Equity method investments amount | $ 2,852,492 | $ 335,448 |
Zhizhen Guorui [Member] | ||
Equity method investments | ||
Equity method investments amount | $ 2,647,593 | |
Equity method investments Interest | 37% | |
Shanghai Shenghan [Member] | ||
Equity method investments | ||
Equity method investments amount | $ 204,899 | $ 335,448 |
Equity method investments Interest | 16.56% | 16.56% |
Short-Term Borrowings (Details)
Short-Term Borrowings (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Short-Term Borrowings [Abstract] | |||
Interest expenses of short-term borrowings | $ 651,287 | $ 625,176 | $ 744,761 |
Weighted average interest rates of short-term loans | 4.73% | 5.52% | 4.67% |
Short-Term Borrowings (Detail_2
Short-Term Borrowings (Details) - Schedule of short-term borrowings - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Short-term borrowings: | |||
Total short-term borrowings | $ 18,784,459 | $ 9,117,158 | |
Agricultura Bank of China [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 3.45% | ||
Maturity (Months) | 2023-04 | ||
Principal | $ 2,029,809 | ||
Total short-term borrowings | $ 2,029,809 | ||
Agricultura Bank of China [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 2.70% | ||
Maturity (Months) | 2023-05 | ||
Principal | $ 1,449,864 | ||
Total short-term borrowings | $ 1,449,864 | ||
Agricultura Bank of China [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 3.45% | ||
Maturity (Months) | 2023-06 | ||
Principal | $ 1,449,864 | ||
Total short-term borrowings | $ 1,449,864 | ||
Bank of Jiangsu [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 4.60% | ||
Maturity (Months) | 2023-10 | ||
Principal | $ 1,449,864 | ||
Total short-term borrowings | $ 1,449,864 | ||
CHINA CITIC BANK [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 4.65% | ||
Maturity (Months) | 2023-08 | ||
Principal | $ 1,448,414 | ||
Total short-term borrowings | $ 1,448,414 | ||
CHINA CITIC BANK [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 4.65% | ||
Maturity (Months) | 2023-09 | ||
Principal | $ 1,448,414 | ||
Total short-term borrowings | $ 1,448,414 | ||
Shanghai Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 5.20% | ||
Maturity (Months) | 2023-01 | ||
Principal | $ 1,304,877 | ||
Total short-term borrowings | $ 1,304,877 | ||
Shanghai Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 4.65% | ||
Maturity (Months) | 2023-10 | ||
Principal | $ 1,304,877 | ||
Total short-term borrowings | $ 1,304,877 | ||
Agricultura Bank of China [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 4% | ||
Maturity (Months) | 2023-03 | ||
Principal | $ 1,159,891 | ||
Total short-term borrowings | $ 1,159,891 | ||
Agricultura Bank of China [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 2.70% | ||
Maturity (Months) | 2023-05 | ||
Principal | $ 1,159,891 | ||
Total short-term borrowings | $ 1,159,891 | ||
Shanghai Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 4.65% | ||
Maturity (Months) | 2023-11 | ||
Principal | $ 869,918 | ||
Total short-term borrowings | $ 869,918 | ||
Shanghai Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 4.65% | ||
Maturity (Months) | 2023-11 | ||
Principal | $ 724,932 | ||
Total short-term borrowings | $ 724,932 | ||
Bank of Nanjing [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | [1] | 5.50% | |
Maturity (Months) | [1] | 2023-06 | |
Principal | [1] | $ 724,932 | |
Total short-term borrowings | [1] | $ 724,932 | |
Bank of Nanjing [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | [1] | 5.50% | |
Maturity (Months) | [1] | 2023-07 | |
Principal | [1] | $ 724,932 | |
Total short-term borrowings | [1] | $ 724,932 | |
Bank of Ningbo [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 5.35% | ||
Maturity (Months) | 2023-06 | ||
Principal | $ 724,932 | ||
Total short-term borrowings | $ 724,932 | ||
China Merchants Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | [1] | 5.05% | |
Maturity (Months) | [1] | 2023-08 | |
Principal | [1] | $ 704,634 | |
Total short-term borrowings | [1] | $ 664,062 | |
Shanghai Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 5.20% | ||
Maturity (Months) | 2023-01 | ||
Principal | $ 144,986 | ||
Total short-term borrowings | $ 144,986 | ||
China Merchants Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | [1] | 5.05% | |
Maturity (Months) | [1] | 2022-08 | |
Principal | [1] | $ 1,004,300 | |
Total short-term borrowings | [1] | 1,004,300 | |
China Merchants Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | [1] | 5.05% | |
Maturity (Months) | [1] | 2022-09 | |
Principal | [1] | $ 1,035,684 | |
Total short-term borrowings | [1] | 1,035,684 | |
Bank of Communications [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 5.31% | ||
Maturity (Months) | 2022-02 | ||
Principal | $ 627,687 | ||
Total short-term borrowings | 627,687 | ||
Xiamen International Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 6.80% | ||
Maturity (Months) | 2022-04 | ||
Principal | $ 784,609 | ||
Total short-term borrowings | 784,609 | ||
Shanghai Pudong Development Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | [1] | 5.22% | |
Maturity (Months) | [1] | 2022-03 | |
Principal | [1] | $ 1,114,145 | |
Total short-term borrowings | [1] | 1,114,145 | |
Shanghai Rural Commercial Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 5.20% | ||
Maturity (Months) | 2022-05 | ||
Principal | $ 1,412,296 | ||
Total short-term borrowings | 1,412,296 | ||
Shanghai Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 5.20% | ||
Maturity (Months) | 2021-11 | ||
Principal | $ 784,609 | ||
Total short-term borrowings | 784,609 | ||
Shanghai Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 5.20% | ||
Maturity (Months) | 2022-10 | ||
Principal | $ 1,412,296 | ||
Total short-term borrowings | 1,412,296 | ||
Shanghai Bank [Member] | |||
Short-term borrowings: | |||
Annual Interest Rate | 5.20% | ||
Maturity (Months) | 2022-11 | ||
Principal | $ 941,531 | ||
Total short-term borrowings | $ 941,532 | ||
[1]These borrowings are guaranteed by Guizhou Xiao-I. |
Convertible Loans (Details)
Convertible Loans (Details) ¥ in Billions | 12 Months Ended | ||||||
Dec. 31, 2022 USD ($) days shares | Dec. 31, 2022 CNY (¥) days shares | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | May 31, 2023 | Feb. 28, 2023 | Jan. 31, 2023 | |
Convertible Loans [Abstract] | |||||||
Maturity of convertible loans | $ 1,634,715 | ||||||
Working days (in days) | days | 10 | 10 | |||||
Interest expenses of convertible loans | $ 686,022 | $ 405,316 | |||||
IPO [Member] | |||||||
Convertible Loans [Abstract] | |||||||
Maturity of convertible loans | $ 435,000,000 | ||||||
Conversion of total loans outstanding shares (in Shares) | shares | 165,869 | 165,869 | |||||
Variable Interest Entity [Member] | |||||||
Convertible Loans [Abstract] | |||||||
Maturity of loans, enterprise market value | $ 435,000,000 | ¥ 3 | |||||
Subsequent Event [Member] | |||||||
Convertible Loans [Abstract] | |||||||
Interest rate percentage | 12% | 3.45% | 5.50% | ||||
Annual interest rate percentage | 15% |
Convertible Loans (Details) - S
Convertible Loans (Details) - Schedule of loan agreements with third parties - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Mar. 31, 2023 | Dec. 31, 2021 | ||
Convertible loans: | ||||
Convertible shares (in Shares) | 246,960 | |||
Convertible loans | $ 3,754,269 | $ 460,000 | $ 5,717,737 | |
Fumei Shi [Member] | ||||
Convertible loans: | ||||
Annual Interest Rate | [1] | 15% | ||
Convertible shares (in Shares) | [1] | 73,719 | ||
Maturity (Months) | [1] | 2022-12 | ||
Convertible loans | [1] | $ 1,449,863 | 1,569,218 | |
Guoqiang Chen [Member] | ||||
Convertible loans: | ||||
Annual Interest Rate | [2] | 12% | ||
Convertible shares (in Shares) | [2] | 22,116 | ||
Maturity (Months) | [2] | 2023-09 | ||
Convertible loans | [2] | $ 869,918 | 941,531 | |
Sunny Concord International Ltd [Member] | ||||
Convertible loans: | ||||
Annual Interest Rate | [3] | 15% | ||
Convertible shares (in Shares) | [3] | 36,860 | ||
Maturity (Months) | [3] | 2022-12 | ||
Convertible loans | [3] | $ 782,049 | 774,699 | |
Senbiao Hu [Member] | ||||
Convertible loans: | ||||
Annual Interest Rate | [4] | 15% | ||
Convertible shares (in Shares) | [4] | 18,430 | ||
Maturity (Months) | [4] | 2022-11 | ||
Convertible loans | [4] | $ 362,466 | 392,305 | |
Jun Xu [Member] | ||||
Convertible loans: | ||||
Annual Interest Rate | [5] | 15% | ||
Convertible shares (in Shares) | [5] | 14,744 | ||
Maturity (Months) | [5] | 2023-05 | ||
Convertible loans | [5] | $ 289,973 | 313,844 | |
Jinzhi Li [Member] | ||||
Convertible loans: | ||||
Annual Interest Rate | [6] | 14.40% | ||
Convertible shares (in Shares) | [6] | 73,719 | ||
Maturity (Months) | [6] | 2022-08 | ||
Convertible loans | [6] | 1,569,218 | ||
Chunhui Li [Member] | ||||
Convertible loans: | ||||
Annual Interest Rate | [7] | 15% | ||
Convertible shares (in Shares) | [7] | 7,372 | ||
Maturity (Months) | [7] | 2022-11 | ||
Convertible loans | [7] | $ 156,922 | ||
[1]The loan was extended in January, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option (Note 17). The principal and interest of the loan were repaid in April, 2023.[2]The loan was originally matured before September, 2022 and extended in September 2022. In April 2023, the loan was extended to May 31, 2023 with annual interest rate of 12% (Note 17).[3]The loan was extended in January, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option. In April, 2023, the maturity date of the loan was changed to May 31, 2023 with annual interest rate of 15% (Note 17).[4]The loan was extended in February, 2023. Pursuant to the extension agreement, the loan would be settled in cash without the conversion option. The principal and interest of the loan were repaid in March, 2023 (Note 17).[5]The loan was originally matured before May 2022 and extended in In August, 2022. In April, 2023, the loan was further extended to May 31, 2023.[6]The principal and interest of the loan were repaid in 2022.[7]The principal and interest of the loan were repaid in 2022. |
Accrued Expenses and Other Li_3
Accrued Expenses and Other Liabilities (Details) ¥ in Millions | 1 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2023 USD ($) | Oct. 31, 2022 USD ($) | Oct. 31, 2022 CNY (¥) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | May 31, 2023 | Nov. 30, 2022 USD ($) | Nov. 30, 2022 CNY (¥) | Oct. 31, 2022 CNY (¥) | |
Accrued Expenses and Other Liabilities (Details) [Line Items] | ||||||||||
Borrowings, interest expenses | $ 1,013,209 | $ 815,994 | $ 216,020 | |||||||
Long-term loan | $ 2,682,248 | |||||||||
Free interest rate term | 3 years | |||||||||
Loan due term | 5 years | |||||||||
Exclusive license term | 2 years | 2 years | ||||||||
License fee | $ 1,449,864 | ¥ 10 | ||||||||
Consideration of per month | 63,608 | |||||||||
Consideration of aggregate amount | 1,526,581 | ¥ 10.5 | ||||||||
Loan from the third party | $ 1,449,864 | ¥ 10 | ||||||||
Loan amount | $ 1,449,864 | ¥ 10 | ||||||||
Subsequent Event [Member] | ||||||||||
Accrued Expenses and Other Liabilities (Details) [Line Items] | ||||||||||
Borrowings, interest rate | 15% | |||||||||
Repayment amounted | $ 3,133,371 | |||||||||
Minimum [Member] | ||||||||||
Accrued Expenses and Other Liabilities (Details) [Line Items] | ||||||||||
Borrowings, interest rate | 3.80% | |||||||||
Maximum [Member] | ||||||||||
Accrued Expenses and Other Liabilities (Details) [Line Items] | ||||||||||
Borrowings, interest rate | 25.55% |
Accrued Expenses and Other Li_4
Accrued Expenses and Other Liabilities (Details) - Schedule of accrued expenses and other liabilities - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | ||
Accrued expenses and other current liabilities: | |||
Loan from third parties | [1] | $ 6,485,125 | $ 4,381,136 |
Payroll payable | 4,722,793 | 1,591,662 | |
Payable to staff | 2,852,728 | 2,777,187 | |
Interest payable | 2,054,136 | 1,053,854 | |
Others | 891,931 | 512,593 | |
Accrued expenses and other current liabilities | 17,006,713 | 10,316,432 | |
Accrued liabilities, non-current: | |||
Long-term loan from third parties | [2],[3],[4] | 3,303,986 | |
Litigation related payable | [5] | 4,769,926 | 5,157,971 |
Accrued liabilities, non-current | 8,073,912 | 5,157,971 | |
TOTAL | $ 25,080,625 | $ 15,474,403 | |
[1]Loan from third parties mainly consisted of the unsecured borrowings from third parties for ordinary business operation. For the borrowings, the interest rates range from 3.8% to 25.55% and the interest expenses were $216,020 $815,994 and $1,013,209 for the years ended December 31, 2020, 2021 and 2022. The borrowings are payable on demand. In April, 2023, the Group made the repayment of principal amounted to $3,133,371 to the third parties.[2] (i) Long-term loan for the purpose of investing in Zhizhen Guorui in February 2022, amounted to $2,682,248 as of December 31, 2022 (Note 7), with free interest rate in the first three years. The loan is due in five years, and if Zhizhen Guorui declares any cash dividend to the Group, the cash dividend would become the source to repay the loan in the first priority. (ii) In October 2022, the Group entered into an exclusive license agreement with a third party, under which the term of exclusive license was 2 years, and the third party should pay the license fee of $1,449,864 (RMB10 million) to the Group upon the effective of the agreement. Meanwhile, the same party entered into the agreement to grant the exclusive right to use these patents to the Group for 2 years at the consideration of $63,608 per month, aggregately $1,526,581 (RMB10.5 million). The patents under the agreements were pledged to the third party. The transaction was substantially loan from the third party with the patents pledged. The Group accounted for $1,449,864 (RMB10 million) as the principal of the loan from the third party, and the interests were calculated under effective interest method. In November 2022, the Group entered into another exclusive license agreement with the same party in the similar form to obtain another $1,449,864 (RMB10 million) loan, which was received subsequently in 2023. |
Taxation (Details)
Taxation (Details) $ / shares in Units, $ in Millions | 12 Months Ended | 36 Months Ended | |||||
Dec. 31, 2022 HKD ($) | Dec. 31, 2021 USD ($) $ / shares | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2024 | Dec. 31, 2022 USD ($) | Dec. 31, 2020 USD ($) | |
Taxation (Details) [Line Items] | |||||||
Profits tax rate (in Dollars) | $ 2 | ||||||
Corporation tax percentage | 8.25% | ||||||
Remaining assessable profits percentage | 16.50% | ||||||
Profits tax rate percentage | 15% | ||||||
Income tax rate | 16.50% | ||||||
Standards at a rate | 25% | ||||||
HNTE certificate is effective years | 3 years | ||||||
Taxable income exemption percentage | 50% | 50% | |||||
Net income per share (in Dollars per share) | $ / shares | $ 0.02 | ||||||
PRC tax authority years | 5 years | ||||||
PRC net operating loss years | 5 years | ||||||
High tech enterprises years | 10 years | ||||||
Net operating loss carryforwards (in Dollars) | $ 6,239,757 | $ 4,475,379 | |||||
Valuation allowance (in Dollars) | 810,159 | 1,723,347 | $ 570,253 | ||||
Forecast [Member] | |||||||
Taxation (Details) [Line Items] | |||||||
Preferential tax rate | 15% | ||||||
Hong Kong [Member] | |||||||
Taxation (Details) [Line Items] | |||||||
Profits tax rate percentage | 16.50% | ||||||
PRC [Member] | |||||||
Taxation (Details) [Line Items] | |||||||
Net operating loss carryforwards (in Dollars) | $ 36,288,770 | $ 28,198,108 | |||||
Shanghai Zhizhen [Member] | |||||||
Taxation (Details) [Line Items] | |||||||
Preferential tax rate | 15% | ||||||
High and New Technology Enterprise [Member] | |||||||
Taxation (Details) [Line Items] | |||||||
Preferential tax rate | 15% |
Taxation (Details) - Schedule o
Taxation (Details) - Schedule of income tax provision - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Taxation (Details) - Schedule of income tax provision [Line Items] | |||
Current income tax expenses | $ 2 | ||
Deferred income tax (benefits) expenses | 660,653 | ||
Total income tax (benefits) expenses | $ 660,655 | $ 552,355 | $ (235,854) |
Restated [Member] | |||
Taxation (Details) - Schedule of income tax provision [Line Items] | |||
Current income tax expenses | 17,687 | ||
Deferred income tax (benefits) expenses | 534,668 | (235,854) | |
Total income tax (benefits) expenses | $ 552,355 | $ (235,854) |
Taxation (Details) - Schedule_2
Taxation (Details) - Schedule of a reconciliation between the group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Taxation (Details) - Schedule of a reconciliation between the group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate [Line Items] | |||
(Loss)/income before income tax | $ (5,344,659) | $ 3,917,357 | $ (7,291,896) |
(Loss)/Income tax expense at statutory tax rate | (1,336,164) | ||
Additional deduction for R&D expenses | (1,087,622) | ||
Investment loss | 35,795 | ||
Non-deductible expenses | 278,277 | ||
Tax effect of tax rate in a different jurisdiction | 51,119 | ||
Effect of preferential tax rates | 5,259 | ||
Deferred tax effect of tax rate change | 538,660 | ||
Change in valuation allowance | 1,697,503 | ||
Write-off of NOL | 477,828 | ||
Income tax (benefit) expense | 660,655 | 552,355 | (235,854) |
Restated [Member] | |||
Taxation (Details) - Schedule of a reconciliation between the group’s actual provision for income taxes and the provision at the PRC, mainland statutory rate [Line Items] | |||
(Loss)/income before income tax | 3,917,357 | (7,291,896) | |
(Loss)/Income tax expense at statutory tax rate | 979,339 | (1,822,974) | |
Additional deduction for R&D expenses | (1,005,733) | (343,193) | |
Investment loss | 39,158 | 51,874 | |
Non-deductible expenses | 41,679 | 33,392 | |
Tax effect of tax rate in a different jurisdiction | 134,570 | 13,058 | |
Effect of preferential tax rates | $ 538,660 | (356,448) | 157,236 |
Deferred tax effect of tax rate change | |||
Change in valuation allowance | 719,790 | 459,885 | |
Write-off of NOL | 1,214,868 | ||
Income tax (benefit) expense | $ 552,355 | $ (235,854) |
Taxation (Details) - Schedule_3
Taxation (Details) - Schedule of significant components of net deferred tax assets - Restated [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Taxation (Details) - Schedule of significant components of net deferred tax assets [Line Items] | ||
Tax losses | $ 4,475,379 | $ 6,239,757 |
Allowance for doubtful accounts | 1,053,028 | 773,701 |
Accrued expenses | 716,673 | 257,966 |
Impairment | 301,150 | 310,430 |
Non-deductible education expense | 756 | 818 |
Lease liabilities | 112,203 | 191,758 |
Amortization of intangible assets | 972,696 | |
Valuation allowance | (3,611,707) | (2,685,373) |
Total deferred tax assets | 4,020,178 | 5,089,057 |
Right-of-use assets | (131,604) | (182,770) |
Deferred tax assets, net | $ 3,888,574 | $ 4,906,287 |
Taxation (Details) - Schedule_4
Taxation (Details) - Schedule of changes in valuation allowance - Restated [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Valuation Allowance [Line Items] | |||
Balance at the beginning of the year | $ 2,685,373 | $ 1,911,048 | |
Current year addition | 1,723,347 | 810,159 | |
Current year reduction | (25,844) | (90,370) | |
Deferred tax effect of tax rate change | (538,660) | 356,448 | $ (157,236) |
Exchange rate effect | (232,509) | 54,536 | |
Balance at the end of the year | $ 3,611,707 | $ 2,685,373 | $ 1,911,048 |
Taxation (Details) - Schedule_5
Taxation (Details) - Schedule of net operating loss carryforwards - PRC [Member] | Dec. 31, 2022 USD ($) |
Schedule of net operating loss carryforwards from PRC will expire [Abstract] | |
2023 | $ 322,766 |
2024 | 897,460 |
2025 | 380,244 |
2026 | 407,436 |
2027 | 913,779 |
Thereafter | 21,417,987 |
Total | $ 24,339,672 |
Taxation (Details) - Schedule_6
Taxation (Details) - Schedule of net operating loss from HK will carry forward indefinitely | Dec. 31, 2022 USD ($) |
Schedule of net operating loss from HK will carry forward indefinitely [Line Items] | |
Net operating loss carryforwards indefinitely | $ 3,858,436 |
Total | $ 3,858,436 |
Leases (Details)
Leases (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | |||
Operating lease discount rate | 4.83% | 4.75% | 4.75% |
Amortization expenses of right-of-use assets | $ 712,844 | $ 1,087,035 | $ 1,380,588 |
Leases (Details) - Schedule of
Leases (Details) - Schedule of operating lease related assets and liabilities - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of operating lease related assets and liabilities [Abstract] | ||
Right-of-use Assets | $ 865,399 | $ 1,194,859 |
Lease payment liabilities-current | (435,462) | (800,658) |
Lease payment liabilities- non-current | (300,974) | (446,140) |
Total | $ (736,436) | $ (1,246,798) |
Leases (Details) - Schedule o_2
Leases (Details) - Schedule of lease expense - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of lease expense [Abstract] | |||
Operating leases cost excluding short-term rental expense | $ 739,582 | $ 1,207,920 | $ 1,567,532 |
Short-term lease cost | 51,274 | 8,991 | 17,714 |
Total | $ 790,856 | $ 1,216,911 | $ 1,585,246 |
Leases (Details) - Schedule o_3
Leases (Details) - Schedule of future minimum payments operating leases - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule of future minimum payments operating leases [Abstract] | ||
2023 | $ 509,152 | |
2024 | 200,912 | |
2025 | 60,749 | |
Total lease payments | 770,813 | |
Less: imputed interest | (34,377) | |
Total | $ 736,436 | $ 1,246,798 |
Restricted Net Assets (Details)
Restricted Net Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Restricted Net Assets [Abstract] | ||
Annual after-tax profit, percentage | 10% | |
Registered capital, percentage | 50% | |
Net assets (in Dollars) | $ 75,858,780 | $ 75,858,780 |
WFOE [Member] | ||
Restricted Net Assets [Abstract] | ||
Annual after-tax profit, percentage | 10% | |
Registered capital, percentage | 50% |
Related Party Transactions (Det
Related Party Transactions (Details) - Schedule of related parties transactions | 12 Months Ended |
Dec. 31, 2022 | |
Zhejiang Baiqianyin Network Technology Co., Ltd (“Zhejiang Baiqianyin”) [Member] | |
Related Party Transaction [Line Items] | |
Relationship | An entity which has a common director of the Board of Directors with the Group |
Shanghai Shenghan [Member] | |
Related Party Transaction [Line Items] | |
Relationship | An entity which the Group holds 16.56% equity interests |
Shanghai Aoshu Enterprise Management Partnership (Limited Partnership) (“Shanghai Aoshu”) [Member] | |
Related Party Transaction [Line Items] | |
Relationship | An entity which is the Group’s employee stock ownership platform, and has a common director of the Board of Directors with the Group |
Shanghai Machinemind Intelligent Technology Co., Ltd. [Member] | |
Related Party Transaction [Line Items] | |
Relationship | An entity which the Company holds 18% equity interests |
Jiaxing Sound Core Intelligent Technology Co., LTD [Member] | |
Related Party Transaction [Line Items] | |
Relationship | An entity which Shanghai Shenghan holds 20% equity interests |
Hui Yuan [Member] | |
Related Party Transaction [Line Items] | |
Relationship | Chairman of the board, one of the major shareholders holding 14.73% equity interests of the Company |
Weng Wei [Member] | |
Related Party Transaction [Line Items] | |
Relationship | CFO of the Company |
Tianjin Haiyin Equity Investment Fund Partnership (Limited Partnership) (“Tianjin Haiyin”) [MEmber] | |
Related Party Transaction [Line Items] | |
Relationship | A significant shareholder holding 5.18% equity interests of the Company |
Jiaxing Chiyu Investment Partnership (limited Partnership) [Member] | |
Related Party Transaction [Line Items] | |
Relationship | A significant shareholder holding 5.44% equity interests of the Company |
Haiyin Capital Investment (International) Limited [Member] | |
Related Party Transaction [Line Items] | |
Relationship | A subsidiary of Tianjin Haiyin |
Zhizhen Guorui [Member] | |
Related Party Transaction [Line Items] | |
Relationship | An entity which the Group holds 37% equity interests |
Related Party Transactions (D_2
Related Party Transactions (Details) - Schedule of due from related parties - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Related Party Transactions (Details) - Schedule of due from related parties [Line Items] | ||||
Accounts receivable | [1] | $ 359,994 | $ 2,479,412 | |
Bad debt provisions | (20,377) | |||
Total | 346,517 | 391,919 | ||
Due to related parties-current | ||||
Subtotal-due to related parties-current | [2] | 896,431 | 1,558,642 | |
Due to related parties-non current | ||||
Due to related parties-non current Interest-free loans | 2,054,136 | 1,053,854 | ||
Subtotal-due to related parties-non current | 8,581,743 | 8,905,313 | ||
Total due to related parties | 9,478,174 | 10,463,955 | ||
Zhejiang Baiqianyin [Member] | ||||
Related Party Transactions (Details) - Schedule of due from related parties [Line Items] | ||||
Accounts receivable | [3] | 48,860 | 52,883 | |
Other receivables | [4] | 297,657 | 316,981 | |
Software and service income | ||||
Software and service income | 286,875 | $ 2,449,560 | ||
Technology service fee payable | ||||
Interest-free loans from related parties | 1,783,326 | 5,782,216 | 1,448 | |
Interest-free loans repayment to related parties | 1,788,230 | 5,470,627 | ||
Shanghai Aoshu [Member] | ||||
Related Party Transactions (Details) - Schedule of due from related parties [Line Items] | ||||
Other receivables | [2] | 20,377 | 22,055 | |
Shanghai Shenghan [Member] | ||||
Due to related parties-current | ||||
Due to related parties-current Accounts payable | 201,465 | 470,765 | ||
Technology service fee payable | ||||
Technology service fee payable | 465,058 | 130,356 | ||
Interest-free loans repayment to related parties | 139,517 | |||
Return of inventories to a related party | ||||
Return of inventories to a related party | 239,330 | |||
Shanghai Machinemind Intelligent Technology Co., Ltd. [Member] | ||||
Due to related parties-current | ||||
Due to related parties-current Accounts payable | 76,892 | |||
Technology service fee payable | ||||
Interest-free loans repayment to related parties | 72,819 | |||
Jiaxing Sound Core Intelligent Technology Co., LTD [Member] | ||||
Due to related parties-current | ||||
Due to related parties-current Accounts payable | 32,622 | 98,076 | ||
Technology service fee payable | ||||
Interest-free loans repayment to related parties | 59,444 | |||
Zhizhen Guorui (Shanghai) Information Technology Development Co., Ltd. [Member] | ||||
Due to related parties-current | ||||
Due to related parties-current Accounts payable | 97,868 | |||
Technology service fee payable | ||||
Interest-free loans from related parties | 100,315 | |||
Jiaxing Chiyu Investment Partnership (limited Partnership) [Member] | ||||
Due to related parties-current | ||||
Due to related parties-current Interest-free loans | 434,959 | 784,610 | ||
Technology service fee payable | ||||
Interest-free loans from related parties | 775,097 | |||
Interest-free loans repayment to related parties | 297,221 | |||
Haiyin Capital Investment (International) Limited [Member] | ||||
Due to related parties-current | ||||
Due to related parties-current Interest-free loans | [2] | 129,517 | 128,299 | |
Technology service fee payable | ||||
Interest-free loans repayment to related parties | 126,744 | |||
Hui Yuan [Member] | ||||
Due to related parties-non current | ||||
Due to related parties-non current Interest-free loans | 8,581,743 | 8,905,313 | ||
Technology service fee payable | ||||
Interest-free loans from related parties | 532,026 | 9,696,450 | ||
Interest-free loans repayment to related parties | 169,416 | 899,111 | ||
Tianjin Haiyin [Member] | ||||
Technology service fee payable | ||||
Interest-free loans from related parties | 310,038 | |||
Interest-free loans repayment to related parties | 310,038 | |||
Weng Wei [Member] | ||||
Technology service fee payable | ||||
Interest-free loans from related parties | 74,409 | |||
Interest-free loans repayment to related parties | $ 74,409 | |||
[1]Receivables from third parties mainly includes funds lent to third parties. The Group established business partnership with these third parties and provided funds to support their business operation. Due to the third parties deteriorated financial position affected by COVID -19, the Group recorded bad debt expense for receivables from third parties of nil nil |
Concentration of Credit Risk (D
Concentration of Credit Risk (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Total Revenue [Member] | |
Concentration of Credit Risk (Details) [Line Items] | |
Concentration risk, percentage | 10% |
Accounts Receivable [Member] | |
Concentration of Credit Risk (Details) [Line Items] | |
Concentration risk, percentage | 10% |
Supplier [Member] | |
Concentration of Credit Risk (Details) [Line Items] | |
Concentration risk, percentage | 10% |
Concentration of Credit Risk _2
Concentration of Credit Risk (Details) - Schedule of single customers total revenue - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Customer A [Member] | Total Revenue [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total Revenue, Amount | $ 9,824,275 | $ 3,363,631 | |
Total Revenue, Percentage | 20.40% | 10.30% | |
Customer B [Member] | Total Revenue [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total Revenue, Amount | $ 5,364,265 | $ 13,384,613 | |
Total Revenue, Percentage | 11.10% | 41.20% | |
Customer C [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total Revenue, Amount | $ 4,980,628 | ||
Total Revenue, Percentage | 10.30% | ||
Customer D [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total Revenue, Amount | $ 2,449,557 | ||
Total Revenue, Percentage | 17.70% | ||
Customer E [Member] | |||
Revenue, Major Customer [Line Items] | |||
Total Revenue, Amount | $ 1,780,014 | ||
Total Revenue, Percentage | 12.80% |
Concentration of Credit Risk _3
Concentration of Credit Risk (Details) - Schedule of single customers total accounts receivable - Accounts Receivable [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Customer B [Member] | ||
Concentration of Credit Risk (Details) - Schedule of single customers total accounts receivable [Line Items] | ||
Accounts receivable, Amount | $ 12,801,742 | $ 15,203,371 |
Accounts receivable, Percentage | 30.90% | 48.80% |
Customer A [Member] | ||
Concentration of Credit Risk (Details) - Schedule of single customers total accounts receivable [Line Items] | ||
Accounts receivable, Amount | $ 5,279,171 | $ 3,138,436 |
Accounts receivable, Percentage | 12.80% | 10.10% |
Customer C [Member] | ||
Concentration of Credit Risk (Details) - Schedule of single customers total accounts receivable [Line Items] | ||
Accounts receivable, Amount | $ 4,175,607 | |
Accounts receivable, Percentage | 10.10% | |
Customer F [Member] | ||
Concentration of Credit Risk (Details) - Schedule of single customers total accounts receivable [Line Items] | ||
Accounts receivable, Amount | $ 4,523,575 | |
Accounts receivable, Percentage | 10.90% |
Concentration of Credit Risk _4
Concentration of Credit Risk (Details) - Schedule of single suppliers total purchase - Total Purchase [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Supplier A [Member] | |||
Concentration of Credit Risk (Details) - Schedule of single suppliers total purchase [Line Items] | |||
Total purchase, Amount | $ 11,475,851 | $ 3,756,094 | |
Total purchase, Percentage | 34.60% | 73.80% | |
Supplier B [Member] | |||
Concentration of Credit Risk (Details) - Schedule of single suppliers total purchase [Line Items] | |||
Total purchase, Amount | $ 7,281,914 | ||
Total purchase, Percentage | 21.90% | ||
Supplier C [Member] | |||
Concentration of Credit Risk (Details) - Schedule of single suppliers total purchase [Line Items] | |||
Total purchase, Amount | $ 3,402,612 | ||
Total purchase, Percentage | 10.30% | ||
Supplier D [Member] | |||
Concentration of Credit Risk (Details) - Schedule of single suppliers total purchase [Line Items] | |||
Total purchase, Amount | $ 139,040 | ||
Total purchase, Percentage | 10% | ||
Supplier E [Member] | |||
Concentration of Credit Risk (Details) - Schedule of single suppliers total purchase [Line Items] | |||
Total purchase, Amount | $ 181,046 | ||
Total purchase, Percentage | 13% | ||
Supplier F [Member] | |||
Concentration of Credit Risk (Details) - Schedule of single suppliers total purchase [Line Items] | |||
Total purchase, Amount | $ 550,496 | ||
Total purchase, Percentage | 39.50% |
Subsequent Events (Details)
Subsequent Events (Details) | 1 Months Ended | 4 Months Ended | 12 Months Ended | ||||||||
Apr. 30, 2023 USD ($) | Mar. 31, 2023 USD ($) $ / shares shares | Feb. 28, 2023 USD ($) | Feb. 28, 2023 CNY (¥) | Jan. 31, 2023 USD ($) | Jan. 31, 2023 CNY (¥) | Apr. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) $ / shares | May 31, 2023 | Jan. 31, 2023 CNY (¥) | Dec. 31, 2021 USD ($) $ / shares | |
Subsequent Events (Details) [Line Items] | |||||||||||
Convertible loans | $ 460,000 | $ 3,754,269 | $ 5,717,737 | ||||||||
Convertible loan | $ 1,770,000 | ||||||||||
Ordinary shares par value (in Dollars per share) | $ / shares | $ 0.00005 | $ 0.00005 | |||||||||
Accounts receivable | $ 26,275,295 | ||||||||||
Subsequent Event [Member] | |||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||
Maturity date | May 31, 2023 | May 31, 2023 | |||||||||
Interest rate | 15% | 15% | |||||||||
Depositary shares (in Shares) | shares | 5,700,000 | ||||||||||
Price of per share (in Dollars per share) | $ / shares | $ 6.8 | ||||||||||
Net proceeds approximately | $ 35,440,000 | ||||||||||
Underwriting discounts and commissions | 3,320,000 | ||||||||||
Initial public offering | $ 24,015,592 | ||||||||||
Ordinary shares par value (in Dollars per share) | $ / shares | $ 0.00005 | ||||||||||
Repaid principle loans banks | $ 2,882,633 | ||||||||||
Third parties accounted | $ 3,133,371 | ||||||||||
Loan | $ 724,932 | ¥ 5 | |||||||||
Interest rate percentage | 3.45% | 3.45% | 5.50% | 12% | 5.50% | ||||||
Repayments and proceeds of loans borrowed | $ 6,234,414 | ¥ 43 | |||||||||
Repayments and proceeds of loans term | 4 years 7 months 24 days | 4 years 7 months 24 days | |||||||||
Received loan | $ 1,449,864 | ¥ 10,000,000 | |||||||||
Minimum [Member] | Subsequent Event [Member] | |||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||
Interest rate | 12% | 12% | |||||||||
Maximum [Member] | Subsequent Event [Member] | |||||||||||
Subsequent Events (Details) [Line Items] | |||||||||||
Interest rate | 15% | 15% |
Condensed Financial Informati_3
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets - Parent Company [Member] - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ASSETS | ||
Cash and cash equivalents | $ 1,104 | $ 1,105 |
Investment income in subsidiaries | ||
Prepaid expenses and other current assets, net | 2 | 4 |
TOTAL ASSETS | 1,106 | 1,109 |
LIABILITIES | ||
Investment deficit in subsidiaries | 5,887,042 | 190,267 |
TOTAL LIABILITIES | 5,887,042 | 190,267 |
Shareholders’ deficit | ||
Ordinary shares (par value of $0.00005 per share; 1,000,000,000 shares authorized as of December 31, 2021 and December 31, 2022, respectively; 22,115,592 shares issued and outstanding as of December 31,2021 and December 31, 2022, respectively) | 1,106 | 1,106 |
Additional paid-in capital | 75,621,294 | 75,621,294 |
Statutory reserve | 237,486 | 237,486 |
Accumulated deficit | (78,483,156) | (72,584,621) |
Accumulated other comprehensive loss | (3,262,666) | (3,464,423) |
Total shareholders’ deficit | $ (5,885,936) | $ (189,158) |
Condensed Financial Informati_4
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company balance sheets (Parentheticals) - Parent Company [Member] - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Condensed Balance Sheet Statements, Captions [Line Items] | ||
Ordinary shares par value (in Dollars per share) | $ 0.00005 | $ 0.00005 |
Ordinary shares authorized | 1,000,000,000 | 1,000,000,000 |
Ordinary shares issued | 22,115,592 | 22,115,592 |
Ordinary shares outstanding | 22,115,592 | 22,115,592 |
Condensed Financial Informati_5
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company statements of operations and comprehensive (loss)/income - Parent Company [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Condensed Statement of Income Captions [Line Items] | |||
Revenue | |||
Cost of revenue | |||
Gross profit | |||
Operating expenses: | |||
Share of (loss)/income in subsidiaries and VIEs | (5,898,535) | 3,677,813 | (6,808,365) |
(Loss)/Income before income tax provision | (5,898,535) | 3,677,813 | (6,808,365) |
Provision for income tax | |||
Net (loss)/income | $ (5,898,535) | $ 3,677,813 | $ (6,808,365) |
Condensed Financial Informati_6
Condensed Financial Information of the Parent Company (Details) - Schedule of parent company statements of cash flow - Parent Company [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Schedule of Parent Company Statements of Cash Flow [Abstract] | |||
Net cash used in operating activities | $ (1) | ||
Net cash used in investing activities | |||
Net cash provided by financing activities | |||
Net cash inflow | $ (1) |