Xiao-I Corp (NASDAQ: AIXI), a China-based conversational-AI company, carries about $6.5 million in outstanding variable-rate convertible notes whose full conversion at recent levels would create approximately 5.8 million new American Depositary Shares — roughly 10.7 times the company's entire public float of about 545,000 ADS.
That single ratio is the dominant structural fact. The float itself is already larger than most data services show: feeds still pull from the year-end 2025 XBRL filing (131,500 ADS-equivalent), missing an estimated 421,000 ADS issued during 2026. Our reconstruction, based on 424B5 prospectus supplements filed in May, June, and August 2026, places shares outstanding at roughly 554,000 ADS and the public float at about 545,000.
The Streeterville Structure
All three outstanding notes were issued to Streeterville Capital, a Chicago-area convertible lender affiliated with John M. Fife, whose related entities the SEC successfully sued as an unregistered dealer. The notes convert at 90% of the lowest volume-weighted average price over the prior ten trading days, minus a fixed $0.05 per ADS — meaning the buyer pays well below the prevailing market price, and the effective discount deepens as the ADS falls. At a $1.30 VWAP, for instance, the $0.05 deduction alone adds roughly nine extra percentage points of discount on top of the stated 10%.
The cadence is brisk. Streeterville received a $3.25 million note in April 2026, a $2.17 million note in June, and a $4.33 million note in August — one every 60 days. The April note has already fully converted. During that conversion the ADS fell approximately 92%. Streeterville also holds contractual rights to purchase additional notes, and the next tranche is structurally expected around October or November 2026.
Authorized-Share Ceiling
One hard constraint exists. The company has authorized 1 billion ordinary shares, equivalent to about 2.38 million ADS at the current 420:1 ratio. With roughly 554,000 ADS already outstanding, the remaining headroom is about 1.82 million ADS. That is less than one-third of what full conversion of the notes would require. In other words, the company would need to increase its authorized share capital before Streeterville could fully convert — a proposal shareholders should expect.
Shelf and Reverse-Split History
AIXI maintains an active F-3 shelf registration — a pre-filed framework that lets the company issue securities on short notice — with an estimated $86 million of remaining capacity. The company's market capitalization is roughly $770,000. That shelf is currently exempt from the SEC's "baby shelf" rule, which normally caps issuance at one-third of public float for smaller companies, but the exemption expires at the next annual report filing, likely around April 2027.
The company has executed three reverse ADS-ratio changes in 25 months: 1-for-9 in August 2024, 1-for-20 in May 2026, and 1-for-7 in September 2026 — a cumulative 1-for-1,260. Each reset temporarily raises the per-ADS price but also resets the share math on future conversions. A bid-price failure within twelve months of the most recent split could trigger immediate delisting under Nasdaq Rule 5810(c)(3)(A)(iv), which in turn pressures the company toward yet another split.
Dilution Risk Grade: 9 out of 10
The score reflects maximum-severity ratings on convertible overhang, historical dilution pattern, and recent issuance activity. The only component that scores zero is warrants — there are none. Ordinary shares grew an estimated 321% in the first nine months of 2026 alone, following a 73% increase in 2025.
The August 2026 note alone — the largest at $4.33 million — could produce about 3.87 million ADS at current conversion levels, equivalent to roughly seven times the float before a single share from the June note is counted.