Faruqi & Faruqi Reminds Xiao-I Investors of the Pending Class Action Lawsuit with a Lead Plaintiff Deadline of December 16, 2024 - AIXI
Faruqi & Faruqi, LLP Securities Litigation Partner James (Josh) Wilson Encourages Investors Who Suffered Losses Exceeding $50,000 In Xiao-I To Contact Him Directly To Discuss Their Options
If you suffered losses exceeding $50,000 in Xiao-I as a result of purchasing (a) Xiao-I American depository shares (ADSs) issued in connection with the Company's initial public offering on or about March 9, 2023 and/or (b) Xiao-I securities between March 9, 2023 and July 12, 2024 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).
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NEW YORK, Dec. 12, 2024 /PRNewswire/ -- Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Xiao-I Corporation ("Xiao-I" or the "Company") (NASDAQ: AIXI) and reminds investors of the December 16, 2024 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
Faruqi & Faruqi is a leading national securities law firm with offices in New York, Pennsylvania, California and Georgia. The firm has recovered hundreds of millions of dollars for investors since its founding in 1995. See www.faruqilaw.com.
As detailed below, the complaint alleges that the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that (1) Defendants had downplayed the true scope and severity of risks that Xiao-I faced due to certain of its Chinese shareholders' non-compliance with Circular 37 Registration, including the Company's inability to use Offering proceeds for intended business purposes; (2) Xiao-I failed to comply with GAAP in preparing its financial statements; (3) Defendants overstated Xiao-I's efforts to remediate material weaknesses in the Company's financial controls; (4) Xiao-I was forced to incur significant R&D expenses to effectively compete in the AI industry; (5) Xiao-I downplayed the significant negative impact that such expenses would have on the Company's business and financial results; (6) accordingly, Xiao-I overstated its AI capabilities, R&D resources, and overall ability to compete in the AI market; (7) as a result of all the foregoing, there was a substantial likelihood that Xiao-I would fail to comply with the NASDAQ's Minimum Bid Price Requirement; and (8) as a result, the Offering Documents and Defendants' public statements throughout the Class Period were materially false and/or misleading and failed to state information required to be stated therein.
On or around March 8, 2023, Xiao-I launched its initial public offering (IPO), selling 5.7 million American depositary shares (ADSs) at $6.80 each. Since the IPO, the price of Xiao-I's ADSs has dropped significantly, causing losses for investors.
On August 10, 2023, Xiao-I Corporation filed with the U.S. Securities and Exchange Commission its amended annual report for the year ended December 31, 2022 on Form 10-K/A. In the amended annual report, Xiao-I disclosed that "However, should there be any changes to PRC laws and regulations or internal control policies of Bank of Ningbo in the future, [Zhizhen Artificial Technology (Shanghai) Company Limited, a Company subsidiary] then may be restricted from transferring funds from overseas to its capital account with Bank of Ningbo as a result."
On this news, the price of Xiao-I American Depositary Shares ("ADSs") fell $0.93 per ADS, or 11.56%, to close at $7.11 on August 11, 2023.
On September 25, 2023, Xiao-I issued a press release announcing its unaudited, unreviewed financial results for the first half of 2023, including, inter alia, a net loss of $18.8 million for the first half of 2023, compared to a net income of $0.6 million for the same period of 2022. In discussing these results, Xiao-I revealed that its "[t]otal operating expenses were US$34.1 million in the first half of 2023, representing an increase of 355% year over year from US$7.5 million for the same period of 2022", noting that although "selling, general and administrative expenses demonstrated improved efficiency with larger business scales, they couldn't offset the increase in [R&D] expenses, which grew by 708% year over year" (emphases added).
On this news, Xiao-I's ADS price fell $0.30 per ADS, or 14.22%, to close at $1.81 per ADS on September 25, 2023.
On October 20, 2023, Xiao-I issued a press release announcing its unaudited, reviewed financial results for the first half of 2023. Therein, the Company reiterated that it had suffered a net loss of $18.8 million and total operating expenses of $34.1 million for the first half of 2023, again citing Xiao-I's inability to "offset the increase in [R&D] expenses, which grew by 708% year over year," while further revealing that the increase in R&D "was primarily driven by the significantly [sic] increase of professional service fee[s], including the purchase of supercomputing service fees, data services, intelligent computing technology services and software outsourcing, etc. mainly from four third parties for the requirement of [a] big data model development project and other cloud platform products." The Company further explained that, "[i]n November 2022, OpenAI launched the ChatGPT, which opened up a new situation of [AI]" and that, "[u]nder such background, the Company increased investment in AI+ Industrial Internet research and development, including the research and procurement of intelligent collaborative platform, digital twin platform, data intelligence platform, industrial enterprise services and research and judgment platform and other platform products."
On this news, Xiao-I's ADS price fell $0.03 per ADS, or 1.79%, to close at $1.65 per ADS on October 20, 2023.
On April 30, 2024, Xiao-I issued a press release announcing its unaudited full year ("FY") 2023 financial results, including, inter alia, FY 2023 revenues of $59.2 million, missing consensus estimates by $30.08 million, as well as a net loss of $27 million for FY 2023, compared to a net loss of $6 million for FY 2022. In discussing these results, the Company revealed that its "[t]otal operating expenses were US$61.3 million in 2023, representing an increase of 80.7% year over year from US$33.9 million for the same period of 2022", again noting that although "the selling, general, and administrative expenses demonstrated improved efficiency with larger business scales, they couldn't offset the increase in [R&D] expenses, which grew by 118.3% year over year" (emphases added).
On this news, Xiao-I's ADS price fell $0.08 per ADS, or 6.15%, to close at $1.22 per ADS on April 30, 2024.
Then, on July 15, 2024, Xiao-I issued a press release announcing "that it received a notification letter dated July 11, 2024 (the 'Deficiency Letter') from the Listing Qualifications Department of [t]he [NASDAQ], indicating that the Company is no longer in compliance with the minimum bid price requirement as set forth in Nasdaq Listing Rule 5450(a)(1) as the Company's closing bid price per [ADS] . . . has been below $1.00 for a period of 30 consecutive business days."
On this news, Xiao-I's ADS price fell 2.28% to close at approximately $0.67 per ADS on July 15, 2024.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Xiao-I's conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
To learn more about the Xiao-I Corporation class action, go to www.faruqilaw.com/AIXI or call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310).
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Attorney Advertising. The law firm responsible for this advertisement is Faruqi & Faruqi, LLP (www.faruqilaw.com). Prior results do not guarantee or predict a similar outcome with respect to any future matter. We welcome the opportunity to discuss your particular case. All communications will be treated in a confidential manner.
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