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Sentage Holdings Inc.

Sentage Holdings Inc.SNTG決算レポート

Nasdaq

Sentage Holdings Inc is a financial technology service provider focused on inclusive consumer finance. It offers small-value short-term credit products, integrated payment processing solutions, and related supporting services, with its core operating market covering lower-tier cities and rural areas in mainland China.

What changed in Sentage Holdings Inc.'s 20-F — 2022 vs 2023

Top changes in Sentage Holdings Inc.'s 2023 20-F

404 paragraphs added · 485 removed · 293 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

103 edited+66 added−38 removed480 unchanged
Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment; ● Our PRC operating entities are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business; ● We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies; ● Governmental control of currency conversion may affect the value of your investment and our payment of dividends; 3 ● There are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of the PRC Operating Entities, and dividends payable by the PRC operating entities to our offshore subsidiaries may not qualify to enjoy certain treaty benefits; ● The “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the “Opinions,” recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirement in the future; ● Recent greater oversight by the Cyberspace Administration of China (“CAC”) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business; ● If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation; ● The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC; ● The recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act and related regulations, all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment; ● Our PRC operating entities are subject to restrictions on paying dividends or making other payments to us, which may have a material adverse effect on our ability to conduct our business; ● We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies; ● Governmental control of currency conversion may affect the value of your investment and our payment of dividends; 3 ● There are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of the PRC Operating Entities, and dividends payable by the PRC operating entities to our offshore subsidiaries may not qualify to enjoy certain treaty benefits; ● The “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the “Opinions,” recently issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject us to additional compliance requirement in the future; ● Recent greater oversight by the Cyberspace Administration of China (“CAC”) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business; ● If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation; ● The disclosures in our reports and other filings with the SEC and our other public pronouncements may be subject to the scrutiny of any regulatory bodies in the PRC; ● The recent joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act and related regulations, all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB.
On June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law (《中华人民共和国数据安全法》), which became effective in September 2021.
On June 10, 2021, the Standing Committee of the National People’s Congress of China, or the SCNPC, promulgated the PRC Data Security Law ( 《中华人民共和国数据安全法》 ), which became effective in September 2021.
The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used.
The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and introduces a data classification and hierarchical protection system based on the importance of data in economic and social development, and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, illegally acquired or used.
The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data and information.
The PRC Data Security Law also provides for a national security review procedure for data activities that may affect national security and imposes export restrictions on certain data and information.
Where it is necessary to provide such information and data to an overseas party, such provision are required to pass the security evaluation organized by the CAC, unless otherwise waived by laws or administrative regulations.
Where it is necessary to provide such information and data to an overseas party, such provision are required to pass the security evaluation organized by the CAC, unless otherwise waived by laws or administrative regulations.
According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing.
According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing.
In the event that we, our subsidiaries, the VIEs, or any of their subsidiaries are subject to the compliance requirements, we cannot assure you that any of these entities will be able to receive clearance of such compliance requirements in a timely manner, or at all.
In the event that we, our subsidiaries, the VIEs, or any of their subsidiaries are subject to any compliance requirements, we cannot assure you that any of these entities will be able to receive clearance of such compliance requirements in a timely manner, or at all.
If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction, and even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction. 26 Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: ● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, rights, platforms, products and services of the acquired business; ● the inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; ● difficulties in retaining, training, motivating and integrating key personnel; ● the diversion of managements’ time and resources from our daily operations; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with borrowers, employees and suppliers of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● the assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk of liability; ● the failure to successfully further develop the acquired technology; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; ● potential disruptions to our ongoing businesses; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
If we are able to identify an appropriate business opportunity, we may not be able to successfully consummate the transaction, and even if we do consummate such a transaction, we may be unable to obtain the benefits or avoid the difficulties and risks of such transaction. 24 Strategic investments or acquisitions will involve risks commonly encountered in business relationships, including: ● difficulties in assimilating and integrating the operations, personnel, systems, data, technologies, rights, platforms, products and services of the acquired business; ● the inability of the acquired technologies, products or businesses to achieve expected levels of revenue, profitability, productivity or other benefits; ● difficulties in retaining, training, motivating and integrating key personnel; ● the diversion of managements’ time and resources from our daily operations; ● difficulties in maintaining uniform standards, controls, procedures and policies within the combined organizations; ● difficulties in retaining relationships with borrowers, employees and suppliers of the acquired business; ● risks of entering markets in which we have limited or no prior experience; ● regulatory risks, including remaining in good standing with existing regulatory bodies or receiving any necessary pre-closing or post-closing approvals, as well as being subject to new regulators with oversight over an acquired business; ● the assumption of contractual obligations that contain terms that are not beneficial to us, require us to license or waive intellectual property rights or increase our risk of liability; ● the failure to successfully further develop the acquired technology; ● liability for activities of the acquired business before the acquisition, including intellectual property infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; ● potential disruptions to our ongoing businesses; and ● unexpected costs and unknown risks and liabilities associated with strategic investments or acquisitions.
Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations. 44
We could also be perceived to have originated or participated in the illegal misappropriation of funds, documents or data, or the failure to follow protocol, and therefore be subject to civil or criminal liability. 21 Furthermore, we rely on certain third-party service providers, such as borrower acquisition partners, data providers, and third-party collection agencies, to conduct our business.
We could also be perceived to have originated or participated in the illegal misappropriation of funds, documents or data, or the failure to follow protocol, and therefore be subject to civil or criminal liability. Furthermore, we rely on certain third-party service providers, such as borrower acquisition partners, data providers, and third-party collection agencies, to conduct our business.
According to the Measures, if a data handler transfers data abroad under any of the following circumstances, it shall file with the State Cyberspace Administration for security assessment via the Province Cyberspace Administration: (i) a data handler who transfers important data abroad; (ii) a critical information infrastructure operator, or a data handler processing the personal information of more than one million individuals transfers personal information to abroad；(iii) since January 1 of the previous year, a data handler cumulatively transferred abroad the personal information of more than 100,000 individuals, or the sensitive personal information of more than 10,000 individuals, or；(iv) other circumstances where the security assessment for the outbound data transfer is required by the State Cyberspace Administration. 23 As of the date of this annual report, our PRC operating entities have not received any notice from any authorities identifying the operating entities as a CIIO or requiring the operating entities to go through cybersecurity review or network data security review by the CAC.
According to the Measures, if a data handler transfers data abroad under any of the following circumstances, it shall file with the State Cyberspace Administration for security assessment via the Province Cyberspace Administration: (i) a data handler who transfers important data abroad; (ii) a critical information infrastructure operator, or a data handler processing the personal information of more than one million individuals transfers personal information to abroad ； (iii) since January 1 of the previous year, a data handler cumulatively transferred abroad the personal information of more than 100,000 individuals, or the sensitive personal information of more than 10,000 individuals, or ; (iv) other circumstances where the security assessment for the outbound data transfer is required by the State Cyberspace Administration. 21 As of the date of this annual report, our PRC operating entities have not received any notice from any authorities identifying the operating entities as a CIIO or requiring the operating entities to go through cybersecurity review or network data security review by the CAC.
Although we believe that we can engage new clients and continue our consumer loan repayment and collection management business successfully, there can be no assurance that such will be the case and we have not been able to execute our plan as of the date of this annual report. 11 We operate a socially sensitive business.
Although we believe that we can engage new clients and continue our consumer loan repayment and collection management business successfully, there can be no assurance that such will be the case and we have not been able to execute our plan as of the date of this annual report. We operate a socially sensitive business.
As advised by our PRC counsel, Dentons, if WFOE, the VIEs, or their ownership structure or the contractual arrangements are determined to be in violation of any existing or future PRC laws, rules or regulations, or if WFOE or the VIEs, fails to obtain or maintain any of the required governmental permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including: ● revoking the business and operating licenses of WFOE or the VIEs; ● discontinuing or restricting the operations of WFOE or the VIEs; ● imposing conditions or requirements with which we, WFOE, or the VIEs may not be able to comply; ● requiring us, WFOE, or the VIEs to restructure the relevant ownership structure or operations which may significantly impair the rights of the holders of our Ordinary Shares; ● restricting or prohibiting our use of the proceeds from our initial public offering to finance our business and operations in China; and ● imposing fines.
As advised by our PRC counsel, Dacheng , if WFOE, the VIEs, or their ownership structure or the contractual arrangements are determined to be in violation of any existing or future PRC laws, rules or regulations, or if WFOE or the VIEs, fails to obtain or maintain any of the required governmental permits or approvals, the relevant PRC regulatory authorities would have broad discretion in dealing with such violations, including: ● revoking the business and operating licenses of WFOE or the VIEs; ● discontinuing or restricting the operations of WFOE or the VIEs; ● imposing conditions or requirements with which we, WFOE, or the VIEs may not be able to comply; ● requiring us, WFOE, or the VIEs to restructure the relevant ownership structure or operations which may significantly impair the rights of the holders of our Ordinary Shares; ● restricting or prohibiting our use of the proceeds from our initial public offering to finance our business and operations in China; and ● imposing fines.
As a result of all of the above, our shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of our board of directors or shareholders than they would as shareholders of a company incorporated in the United States. 46 Certain judgments obtained against us by our shareholders may not be enforceable.
As a result of all of the above, our shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of our board of directors or shareholders than they would as shareholders of a company incorporated in the United States. Certain judgments obtained against us by our shareholders may not be enforceable.
For details as to the corporate governance matters for which we have elected to follow our home country practices, rather than Nasdaq listing standards, please see “Item 16.G—Corporate Governance.” 47 We have incurred and will continue to incur increased costs as a result of being a public company .
For details as to the corporate governance matters for which we have elected to follow our home country practices, rather than Nasdaq listing standards, please see “Item 16.G—Corporate Governance.” We have incurred and will continue to incur increased costs as a result of being a public company .
Negative publicity about our directors or management, even if untrue or inaccurate, may harm our reputation. 12 If the scale and growth of our loan recommendation business are restrained by PRC laws and regulations, our business, financial condition, and prospects would be materially and adversely affected.
Negative publicity about our directors or management, even if untrue or inaccurate, may harm our reputation. If the scale and growth of our loan recommendation business are restrained by PRC laws and regulations, our business, financial condition, and prospects would be materially and adversely affected.
Securities and Exchange Commission (the “SEC”) reporting knowledge, to strengthen the financial reporting function and to set up financial and system control framework; (ii) conducting regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel, including sending our financial staff to attend external U.S.
GAAP and U.S. Securities and Exchange Commission (the “SEC”) reporting knowledge, to strengthen the financial reporting function and to set up financial and system control framework; (ii) conducting regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel, including sending our financial staff to attend external U.S. GAAP training courses.
Our PRC counsel, Dentons, has advised us that, based on its understanding of the current PRC laws and regulations, we are not subject to the CSRC’s approval under the M&A Rules for our continued listing, because (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether any continued listings are subject to this regulation; (ii) we currently control Sentage WFOE by virtue of Sentage HK acquiring 100% of the equity interest of Sentage WFOE, which is not regulated by the M&A Rules.
Our PRC counsel, Dacheng, has advised us that, based on its understanding of the current PRC laws and regulations, we are not subject to the CSRC’s approval under the M&A Rules for our continued listing, because (i) the CSRC currently has not issued any definitive rule or interpretation concerning whether any continued listings are subject to this regulation; (ii) we currently control Sentage WFOE by virtue of Sentage HK acquiring 100% of the equity interest of Sentage WFOE, which is not regulated by the M&A Rules.
Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. 40 On December 15, 2022, the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its previous determinations to the contrary.
Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB shall have independent discretion to select any issuer audits for inspection or investigation and has the unfettered ability to transfer information to the SEC. 38 On December 15, 2022, the PCAOB determined that it was able to secure complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and vacated its previous determinations to the contrary.
We may not be informed of the identities of all the PRC residents holding direct or indirect interest in our company, however, and we have no control over any of our future beneficial owners.
We may not be informed of the identities of all the PRC residents holding direct or indirect interest in our company, and we have no control over any of our future beneficial owners.
However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by Senage WFOE to our Hong Kong subsidiary, in which case, we would be subject to the higher withdrawing tax rate of 10% on dividends received.
However, we cannot assure you that our determination regarding our qualification to enjoy the preferential tax treatment will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the Double Tax Avoidance Arrangement with respect to dividends to be paid by Sentage WFOE to our Hong Kong subsidiary, in which case, we would be subject to the higher withdrawing tax rate of 10% on dividends received.
Accordingly, without governmental approval in China, no entity or individual in China may provide documents and information relating to securities business activities to overseas regulators when it is under direct investigation or evidence discovery conducted by overseas regulators, which could present significant legal and other obstacles to obtaining information needed for investigations and litigation conducted outside of China. 32 Increases in labor costs in the PRC may adversely affect our business and our profitability.
Accordingly, without governmental approval in China, no entity or individual in China may provide documents and information relating to securities business activities to overseas regulators when it is under direct investigation or evidence discovery conducted by overseas regulators, which could present significant legal and other obstacles to obtaining information needed for investigations and litigation conducted outside of China. 30 Increases in labor costs in the PRC may adversely affect our business and our profitability.
If any of the foregoing were to occur in the future, our funding partners may try to rescind their affected investments or decide not to invest in loans, or borrowers may seek to revise the terms of their loans or reduce the use of our services, and our reputation and market share would be materially and adversely affected, which would severely impact our business and results of operations. 14 We rely on our risk management team to establish and execute our risk management policies.
If any of the foregoing were to occur in the future, our funding partners may try to rescind their affected investments or decide not to invest in loans, or borrowers may seek to revise the terms of their loans or reduce the use of our services, and our reputation and market share would be materially and adversely affected, which would severely impact our business and results of operations. 13 We rely on our risk management team to establish and execute our risk management policies.
Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. 22 The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides legal basis for privacy and personal information infringement claims under the Chinese civil laws.
Providers are also obliged to provide security maintenance for their products and services and shall comply with provisions regarding the protection of personal information as stipulated under the relevant laws and regulations. 20 The Civil Code of the PRC (issued by the PRC National People’s Congress on May 28, 2020 and effective from January 1, 2021) provides legal basis for privacy and personal information infringement claims under the Chinese civil laws.
If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demand, we may not be able to pay dividends in foreign currencies to our shareholders. 36 There are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of the PRC Operating Entities, and dividends payable by the PRC operating entities to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.
If the foreign exchange control system prevents us from obtaining sufficient foreign currencies to satisfy our foreign currency demand, we may not be able to pay dividends in foreign currencies to our shareholders. 34 There are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of the PRC Operating Entities, and dividends payable by the PRC operating entities to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.
Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of the Opinions or any future implementation rules on a timely basis, or at all. 37 Recent greater oversight by the Cyberspace Administration of China (“CAC”) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business.
Therefore, we cannot assure you that we will remain fully compliant with all new regulatory requirements of the Opinions or any future implementation rules on a timely basis, or at all. 35 Recent greater oversight by the Cyberspace Administration of China (“CAC”) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business.
Although we have not experienced any material business or reputational harm as a result of fraudulent activities in the past, we cannot rule out the possibility that fraudulent activities may materially and adversely affect our business, financial condition, and results of operations in the future. 13 We rely on our risk management model in assessing the creditworthiness of borrowers, the value of collateralized property, and risks associated with loans.
Although we have not experienced any material business or reputational harm as a result of fraudulent activities in the past, we cannot rule out the possibility that fraudulent activities may materially and adversely affect our business, financial condition, and results of operations in the future. 12 We rely on our risk management model in assessing the creditworthiness of borrowers, the value of collateralized property, and risks associated with loans.
These limitation on the ability of our PRC operating entities to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments, or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. 35 We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
These limitation on the ability of our PRC operating entities to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments, or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business. 33 We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.
As of the date of this annual report, according to our PRC counsel, Dentons, our business and industry are not on the negative list, and our VIE structure is not implemented to avoid direct foreign investment in the prohibited fields, but to protect the Company, its subsidiaries and VIEs from uncertainties and risks related to China’s policy on foreign investments in Sentage Operating Companies’ line of businesses.
As of the date of this annual report, according to our PRC counsel, Dacheng, our business and industry are not on the negative list, and our VIE structure is not implemented to avoid direct foreign investment in the prohibited fields, but to protect the Company, its subsidiaries and VIEs from uncertainties and risks related to China’s policy on foreign investments in Sentage Operating Companies’ line of businesses.
If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and our operational efficiency could diminish, resulting in a material adverse effect to our business. 27 Failure to maintain the quality of customer services could harm our reputation and our ability to retain existing customers and attract new customers, which may materially and adversely affect our business, financial condition, and results of operations.
If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements, and our operational efficiency could diminish, resulting in a material adverse effect to our business. 25 Failure to maintain the quality of customer services could harm our reputation and our ability to retain existing customers and attract new customers, which may materially and adversely affect our business, financial condition, and results of operations.
Furthermore, if the PRC government issues any laws and regulations that restrict or prohibit our collaboration with our funding partners, our collaboration with our funding partners may have to be terminated or suspended, which may materially and adversely affect our business, financial condition and results of operations. 16 If our loan recommendation services do not achieve sufficient market acceptance, our financial results and competitive position will be harmed.
Furthermore, if the PRC government issues any laws and regulations that restrict or prohibit our collaboration with our funding partners, our collaboration with our funding partners may have to be terminated or suspended, which may materially and adversely affect our business, financial condition and results of operations. 14 If our loan recommendation services do not achieve sufficient market acceptance, our financial results and competitive position will be harmed.
The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE. 33 In addition to SAFE Circular 37 and SAFE Notice 13, our ability to conduct foreign exchange activities in China may be subject to the interpretation and enforcement of the Implementation Rules of the Administrative Measures for Individual Foreign Exchange promulgated by SAFE in January 2007 (as amended and supplemented, the “Individual Foreign Exchange Rules”).
The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE. 31 In addition to SAFE Circular 37 and SAFE Notice 13, our ability to conduct foreign exchange activities in China may be subject to the interpretation and enforcement of the Implementation Rules of the Administrative Measures for Individual Foreign Exchange promulgated by SAFE in January 2007 (as amended and supplemented, the “Individual Foreign Exchange Rules”).
Related party arrangements and transactions may be subject to challenge or tax inspection by the PRC tax authorizes Under a tax inspection, as advised by our PRC counsel, Dentons, if our transfer pricing arrangements among Sentage WFOE and each of the Sentage Operating Companies are judged to be tax avoidance vehicles, or related documentation does not meet the requirements, Sentage WFOE and each of the Sentage Operating Companies may be subject to material adverse tax consequences, such as transfer pricing adjustment.
Related party arrangements and transactions may be subject to challenge or tax inspection by the PRC tax authorizes Under a tax inspection, as advised by our PRC counsel, Dacheng, if our transfer pricing arrangements among Sentage WFOE and each of the Sentage Operating Companies are judged to be tax avoidance vehicles, or related documentation does not meet the requirements, Sentage WFOE and each of the Sentage Operating Companies may be subject to material adverse tax consequences, such as transfer pricing adjustment.
Our PRC counsel, Dentons, has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas listing, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules.
Our PRC counsel, Dacheng, has further advised us that there remains some uncertainty as to how the M&A Rules will be interpreted or implemented in the context of an overseas listing, and its opinions summarized above are subject to any new laws, rules and regulations or detailed implementations and interpretations in any form relating to the M&A Rules.
These new products, services and technologies may be superior to, impair, or render obsolete the payment services we currently offer, or the technologies we currently use to provide them. 17 Incorporating new technologies into our payment services may require substantial expenditures and considerable time, and we may not be successful in realizing a return on these development efforts in a timely manner or at all.
These new products, services and technologies may be superior to, impair, or render obsolete the payment services we currently offer, or the technologies we currently use to provide them. 15 Incorporating new technologies into our payment services may require substantial expenditures and considerable time, and we may not be successful in realizing a return on these development efforts in a timely manner or at all.
Any of these events could damage our reputation, significantly disrupt our operations, and subject us to liability, which could materially and adversely affect our business, financial condition, and results of operations. 24 Our internal systems rely on software that is highly technical, and if it contains undetected errors, our business could be adversely affected.
Any of these events could damage our reputation, significantly disrupt our operations, and subject us to liability, which could materially and adversely affect our business, financial condition, and results of operations. 22 Our internal systems rely on software that is highly technical, and if it contains undetected errors, our business could be adversely affected.
As a result, we cannot assure you that the Foreign Investment Law will not have a material and adverse effect on our ability to conduct our business through the VIE Agreements. 30 Changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on our business and operations.
As a result, we cannot assure you that the Foreign Investment Law will not have a material and adverse effect on our ability to conduct our business through the VIE Agreements. 28 Changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on our business and operations.
Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of auditing our consolidated financial statements for the fiscal year ended December 31, 2022, our independent registered public accounting firm identified two material weaknesses and other control deficiencies in our internal control over financial reporting.
Our independent registered public accounting firm has not conducted an audit of our internal control over financial reporting. In the course of auditing our consolidated financial statements for the fiscal year ended December 31, 2023, our independent registered public accounting firm identified two material weaknesses and other control deficiencies in our internal control over financial reporting.
Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition, and results of operations. 25 We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
Any failure in protecting or enforcing our intellectual property rights could have a material adverse effect on our business, financial condition, and results of operations. 23 We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
Although China relaxed the COVID-19 restrictions at the end of 2022, because the COVID-19 has deeply affected businesses and economy in China from 2020 to 2022, the extent of any future impact of COVID-19 on our operations remains highly uncertain and unpredictable.
Although China relaxed the COVID-19 restrictions at the end of 2022, because the COVID-19 pandemic has deeply affected businesses and the economy in China from 2020 to 2023, the extent of any future impact of COVID-19 on our operations remains highly uncertain and unpredictable.
As a result, fluctuations in exchange rates may have a material adverse effect on your investment. 34 Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes.
As a result, fluctuations in exchange rates may have a material adverse effect on your investment. 32 Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes.
Our existing loan repayment and collection management engagements were completed by the end of 2021, and no related revenue was generated in fiscal year 2022. With a team of experienced loan management professionals, the Company plans to continue its consumer loan repayment and collection management business by expanding its client base and collaborating with third-party financial institutions.
Our existing loan repayment and collection management engagements were completed by the end of 2021, and no related revenue was generated in fiscal years 2022 and 2023. The Company plans to continue its consumer loan repayment and collection management business, with a team of experienced loan management professionals, by expanding its client base and collaborating with third-party financial institutions.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq.
We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a half-yearly basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq.
In addition, our Ordinary Shares may be delisted in the future if the PCAOB is unable to inspect our accounting firm within two years.
In addition, our Class A Ordinary Shares may be delisted in the future if the PCAOB is unable to inspect our accounting firm within two years.
Risks Related to Our Corporate Structure We are also subject to risks and uncertainties related to our corporate structure, including, but are not limited to, the following: ● If the PRC government finds that the contractual arrangements that establish the structure for our business operations do not comply with applicable PRC laws and regulations, we could be subject to severe penalties or be forced to relinquish our interests in those operations; ● We rely on contractual arrangements with the VIEs and their shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership; ● Substantial uncertainties exist with respect to the interpretation and implementation of any new PRC laws, rules and regulations relating to foreign investment and how they may impact the viability of our current corporate structure, corporate governance and business operations; 1 ● The Sentage Operating Companies Shareholders have potential conflicts of interest with us, which may adversely affect our business and financial condition; ● Because we rely on the exclusive business cooperation agreement with each of the Sentage Operating Companies for our revenue, the termination of this agreement would severely and detrimentally affect our continuing business viability under our current corporate structure; and ● Because we are a Cayman island company and all of our business is conducted in the PRC, you may be unable to bring an action against us or our officers and directors or to enforce any judgment you may obtain.
Each of these risks is discussed more thoroughly in the succeeding section under the same title, starting on page 3 of this annual report. 1 Risks Related to Our Corporate Structure We are also subject to risks and uncertainties related to our corporate structure, including, but are not limited to, the following: ● If the PRC government finds that the contractual arrangements that establish the structure for our business operations do not comply with applicable PRC laws and regulations, we could be subject to severe penalties or be forced to relinquish our interests in those operations; ● We rely on contractual arrangements with the VIEs and their shareholders for our operations in China, which may not be as effective in providing operational control as direct ownership; ● Substantial uncertainties exist with respect to the interpretation and implementation of any new PRC laws, rules and regulations relating to foreign investment and how they may impact the viability of our current corporate structure, corporate governance and business operations; ● The Sentage Operating Companies Shareholders have potential conflicts of interest with us, which may adversely affect our business and financial condition; ● Because we rely on the exclusive business cooperation agreement with each of the Sentage Operating Companies for our revenue, the termination of this agreement would severely and detrimentally affect our continuing business viability under our current corporate structure; and ● Because we are a Cayman Island company and all of our business is conducted in the PRC, you may be unable to bring an action against us or our officers and directors or to enforce any judgment you may obtain.
These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S; ● We may be unable to complete a business combination transaction efficiently or on favorable terms due to complicated merger and acquisition regulations and certain other PRC regulations; ● The Chinese government exerts substantial influence over the manner in which we must conduct our business, and may intervene or influence our operations at any time, which could result in a material change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, and cause the value of our Ordinary Shares to significantly decline or be worthless; and ● To the extent cash or assets of our business, or of the PRC Operating Entities, is in the PRC or Hong Kong, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets.
These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S; ● We may be unable to complete a business combination transaction efficiently or on favorable terms due to complicated merger and acquisition regulations and certain other PRC regulations; ● The Chinese government exerts substantial influence over the manner in which we must conduct our business, and may intervene or influence our operations at any time, which could result in a material change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, and cause the value of our Ordinary Shares to significantly decline or be worthless; ● The Trial Measures and other relevant rules promulgated by the CSRC may subject us to additional compliance requirements in the future; and ● To the extent cash or assets of our business, or of the PRC Operating Entities, is in the PRC or Hong Kong, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets.
On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), (《境内企业境外发行证券和上市管理试行办法》) and five supporting guidelines (collectively, the “Overseas Listings Rules”), which has taken effect on March 31, 2023.
On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), ( 《境内企业境外发行证券和上市管理试行办法》 ) and five supporting guidelines, which has taken effect on March 31, 2023.
As a result of the above, to the extent cash or assets of our business, or of the PRC Operating Entities, is in the PRC or Hong Kong, such funds or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets.
To the extent cash or assets of our business, or of the PRC Operating Entities, is in the PRC or Hong Kong, such cash or assets may not be available to fund operations or for other use outside of the PRC or Hong Kong, due to interventions in or the imposition of restrictions and limitations by the PRC government to the transfer of cash or assets.
We have been closely monitoring the development in the regulatory landscape in the PRC, particularly regarding the requirement of approvals, including on a retrospective basis, from the CAC, the CSRC, or other PRC authorities with respect to this offering, as well as other procedures that may be imposed on us.
We have been closely monitoring the development in the regulatory landscape in the PRC, particularly regarding the requirement of approvals, including on a retrospective basis, from the CAC, the CSRC, or other PRC authorities, as well as other procedures that may be imposed on us.
Non-compliance with new financial regulations or new licensing requirements may materially affect our business operations and financial results; ● The wind-down of our past engagements in the consumer loan repayment and collection management business affected our business operation and financial performance, and we may not be able to expand our customer base by collaborating with third-party financial institutions as we have planned; ● We operate a socially sensitive business public complaints against the consumer loan repayment and collection management industry generally or against us in particular may materially and adversely affect our business, financial condition and results of operations; ● If we fail to maintain collaboration with our funding partners, our reputation, results of operations, and financial condition may be materially and adversely affected; ● Fluctuations in interest rates could negatively affect our loan origination volume; ● We are dependent on NetsUnion Clearing Corporation, and any changes to its rules or practices could harm our prepaid payment network business; ● If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report the results of operations or prevent fraud, and investor confidence and the market price of our securities may be materially and adversely affected; and ● We may be liable for improper use or appropriation of personal information provided by the customers and any failure to comply with PRC laws and regulations over data security could result in materially adverse impact on our business, results of operations, and our continued listing on Nasdaq. 2 Risks Related to Doing Business in China Risks and uncertainties related to doing business in China include, but are not limited to, the following: ● There are uncertainties under the Foreign Investment Law relating to the status of businesses in China controlled by foreign invested projects primarily through contractual arrangements, such as our business; ● Changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on our business and operations; ● Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protection available to you and us; ● PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably; ● You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in the reporting based on foreign laws; ● U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China; ● Increases in labor costs in the PRC may adversely affect our business and our profitability; ● PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or the PRC operating entities to liability or penalties, limit our ability to inject capital into the PRC Operating Entities, limit the PRC Operating Entities’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us; ● Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment; ● Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes.
Non-compliance with new financial regulations or new licensing requirements may materially affect our business operations and financial results; ● The wind-down of our past engagements in the consumer loan repayment and collection management business affected our business operation and financial performance, and we may not be able to expand our customer base by collaborating with third-party financial institutions as we have planned; ● We operate a socially sensitive business public complaints against the consumer loan repayment and collection management industry generally or against us in particular may materially and adversely affect our business, financial condition and results of operations; ● If we fail to maintain collaboration with our funding partners, our reputation, results of operations, and financial condition may be materially and adversely affected; ● Fluctuations in interest rates could negatively affect our loan origination volume; ● We are dependent on NetsUnion Clearing Corporation, and any changes to its rules or practices could harm our prepaid payment network business; ● If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately or timely report the results of operations or prevent fraud, and investor confidence and the market price of our securities may be materially and adversely affected; and ● We may be liable for improper use or appropriation of personal information provided by the customers and any failure to comply with PRC laws and regulations over data security could result in materially adverse impact on our business, results of operations, and our continued listing on Nasdaq. 2 Risks Related to Doing Business in China Risks and uncertainties related to doing business in China include, but are not limited to, the following: ● There are uncertainties under the Foreign Investment Law relating to the status of businesses in China controlled by foreign invested projects primarily through contractual arrangements, such as our business; ● Changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on our business and operations; ● Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protection available to you and us; ● There are uncertainties regarding the enforcement of laws and rules and regulations in mainland China, which can change quickly with little advance notice, and there is a risk that the Chinese government may exert more oversight and control over offerings that are conducted overseas, which could materially and adversely affect our business and hinder our ability to offer our securities or continue our operations, and cause the value of our securities to significantly decline or become worthless; ● You may experience difficulties in effecting service of legal process, enforcing foreign judgments, or bringing actions in China against us or our management named in the reporting based on foreign laws; ● U.S. regulatory bodies may be limited in their ability to conduct investigations or inspections of our operations in China; ● Increases in labor costs in the PRC may adversely affect our business and our profitability; ● PRC regulations relating to offshore investment activities by PRC residents may subject our PRC resident beneficial owners or the PRC operating entities to liability or penalties, limit our ability to inject capital into the PRC Operating Entities, limit the PRC Operating Entities’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us; ● Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment; ● Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers. For more information regarding the relevant laws of the Cayman Islands and the PRC.
Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of the PRC may render you unable to enforce a judgment against our assets or the assets of our directors and officers.
The COVID-19 negatively affected our operations in fiscal year 2022 and could cause the Company’s revenue and cash flows to underperform in the next 12 months.
The COVID-19 pandemic negatively affected our operations in fiscal years 2022 and 2023 and could cause the Company’s revenue and cash flows to underperform in the next 12 months.
To remedy the identified material weakness and the other control deficiencies, we have implemented and will continue to implement initiatives to improve our internal control over financial reporting to address the material weaknesses that have been identified, including: (i) obtain additional resources, including experienced staff with U.S. GAAP and U.S.
We plan to implement a number of measures to remedy these material weaknesses. To remedy the identified material weakness and the other control deficiencies, we have implemented and will continue to implement initiatives to improve our internal control over financial reporting to address the material weaknesses that have been identified, including: (i) obtain additional resources, including experienced staff with U.S.
Notwithstanding the above, our PRC counsel has further advised us that uncertainties still exist as to whether we, our subsidiaries,the VIEs to operate in China, or any of their subsidiaries are required to obtain permissions from the CAC, the CSRC, or any other governmental agency that is required to approve our operations and/or offering.
Notwithstanding the above, our PRC counsel has further advised us that uncertainties exist as to whether we, our subsidiaries, the VIEs, or any of their subsidiaries are required to obtain permissions from the CAC, the CSRC, or any other governmental agency that is required to approve our operations and/or subsequent offerings.
Even though our business does not substantially depend on any particular third-party service providers, the above-mentioned occurrences may result in our diminished ability to operate our business, potential liability to borrowers, inability to attract borrowers, reputational damage, regulatory intervention, and financial harm. Such occurrences could negatively impact our business, financial condition, and results of operations.
Even though our business does not substantially depend on any particular third-party service providers, the above-mentioned occurrences may result in our diminished ability to operate our business, potential liability to borrowers, inability to attract borrowers, reputational damage, regulatory intervention, and financial harm.
Additionally, ineffective internal controls could expose us to an increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list our Ordinary Shares or to other regulatory investigations and civil or criminal sanctions. As a public company, we are subject to Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley Act.
Additionally, ineffective internal controls could expose us to an increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list our Class A Ordinary Shares or to other regulatory investigations and civil or criminal sanctions.
Moreover, even if management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified, if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. 29 During the course of documenting and testing our internal control procedures, we may identify other weaknesses and deficiencies in our internal control over financial reporting.
Moreover, even if management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified, if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us.
Our prospective clients, including commercial banks, may refuse to work with us if we suffer from a tarnished reputation, since any perceived or actual violation of laws and regulations by service providers could increase our clients’ regulatory risks. As such, our business is particularly vulnerable to negative media coverage and negative publicity.
Our prospective clients, including commercial banks, may refuse to work with us if we suffer from a tarnished reputation, since any perceived or actual violation of laws and regulations by service providers could increase our clients’ regulatory risks.
See “Business—Prepaid Payment Network Services— Risk Management and Internal Control.” Our limited experience in providing prepaid payment network services may render risk management less effective in addressing some of the risks, exacerbating our risk exposure. Additionally, our data-driven risk management system and internal control policies and procedures may not be able to exhaustively mitigate our exposure to these risks.
Currently, we rely on our data driven risk management system, and internal control policies and procedures to address and mitigate these risks. See “Business—Prepaid Payment Network Services— Risk Management and Internal Control.” Our limited experience in providing prepaid payment network services may render risk management less effective in addressing some of the risks, exacerbating our risk exposure.
The Chinese government exerts substantial influence over the manner in which we must conduct our business, and may intervene or influence our operations at any time, which could result in a material change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, and cause the value of our Ordinary Shares to significantly decline or be worthless The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership.
The Chinese government exerts substantial influence over the manner in which we must conduct our business, and may intervene or influence our operations at any time, which could result in a material change in our operations, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, and cause the value of our Ordinary Shares to significantly decline or be worthless.
In addition, our directors and management may become subject to scrutiny by the media and the public regarding our business, which may result in unverified, inaccurate or misleading information about our directors and management being reported by the press.
As such, our business is particularly vulnerable to negative media coverage and negative publicity. 11 In addition, our directors and management may become subject to scrutiny by the media and the public regarding our business, which may result in unverified, inaccurate or misleading information about our directors and management being reported by the press.
Our ability to protect the confidential information of various parties, including borrowers, funding partners, and merchants, may be adversely affected by cyberattacks, computer viruses, physical or electronic break-ins or similar disruptions.
Such occurrences could negatively impact our business, financial condition, and results of operations. 19 Our ability to protect the confidential information of various parties, including borrowers, funding partners, and merchants, may be adversely affected by cyberattacks, computer viruses, physical or electronic break-ins or similar disruptions.
Our SEC reports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review by China Securities Regulatory Commission, a PRC regulator that is responsible for oversight of the capital markets in China.
For example, the disclosure in our SEC reports and other filings are not subject to the review by the CSRC, a PRC regulator that is responsible for oversight of the capital markets in China.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.
For more information regarding the relevant laws of the Cayman Islands and the PRC. 43 We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.
Even after June 2022, due to the uncertainties caused by COVID-19, the demand from customers decreased sharply and the we were not able to generate any revenue for fiscal year 2022. For the prepaid payment network services, the revenue in 2022 declined sharply because decreased demand from customers due to the uncertainties caused by COVID-19.
Even after June 2022, due to the uncertainties caused by COVID-19, the demand from customers decreased sharply and we were not able to generate any revenue for fiscal years 2022 and 2023.
To the extent we choose to follow home country practice with respect to corporate governance matters such as the exemption from holding an annual general meeting pursuant to Nasdaq Rule 5620(a), our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
To the extent we choose to follow home country practice with respect to corporate governance matters , our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
Instead, for the foreseeable future, it is expected that we will continue to retain any earnings to finance the development and expansion of its business, and not to pay any cash dividends on our Ordinary Shares.
Instead, for the foreseeable future, it is expected that we will continue to retain any earnings to finance the development and expansion of its business, and not to pay any cash dividends on our Ordinary Shares. Consequently, you should not rely on an investment in the Company as a source for any future dividend income.
The material weaknesses identified relate to (i) our lack of a sufficient number of finance and accounting personnel or sufficiently trained finance and accounting personnel, as well as comprehensive accounting policies in accordance with U.S.
The material weaknesses identified relate to (i) our lack of a sufficient number of finance and accounting personnel or sufficiently trained finance and accounting personnel, as well as comprehensive accounting policies in accordance with U.S. GAAP financial reporting; and (ii) a lack of formal policies and procedures to establish risk assessment process and internal control framework..
Any failure of our Company, our subsidiaries, and the VIEs, or any of their subsidiaries to fully comply with new regulatory requirements may subject us to regulatory actions, such as fines, relevant businesses or operations suspension for rectification, revocation of relevant business permits or operational license, or other sanctions, which may significantly limit or completely hinder our ability to offer or continue to offer our securities cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our securities to significantly decline in value or become worthless. 42 We may be unable to complete a business combination transaction efficiently or on favorable terms due to complicated merger and acquisition regulations and certain other PRC regulations.
Any failure of our Company, our subsidiaries, and the VIEs, or any of their subsidiaries to fully comply with new regulatory requirements may subject us to regulatory actions, such as fines, relevant businesses or operations suspension for rectification, revocation of relevant business permits or operational license, or other sanctions, which may significantly limit or completely hinder our ability to offer or continue to offer our securities and cause significant disruption to our business operations, severely damage our reputation, materially and adversely affect our financial condition and results of operations and cause our securities to significantly decline in value or become worthless. 39 The Trial Measures and other relevant rules promulgated by the CSRC may subject us to additional compliance requirements in the future.
Fraudulent and fictitious transactions, and misconduct committed by our employees, customers, and other third parties may pose challenges to our risk management capabilities, and failure to manage the related risks may adversely affect our business, financial condition, and results of operations.
Any insufficiency in our risk management system and internal control policies and procedures may have a material adverse effect on our business, results of operations, and financial condition. 17 Fraudulent and fictitious transactions, and misconduct committed by our employees, customers, and other third parties may pose challenges to our risk management capabilities, and failure to manage the related risks may adversely affect our business, financial condition, and results of operations.
For example, if we are a PFIC, its U.S. investors will become subject to increased tax liabilities under U.S. federal income tax laws and regulations and will become subject to burdensome reporting requirements. We cannot assure you that we will not be a PFIC for our current taxable year or any future taxable year.
For example, if we are a PFIC, its U.S. investors will become subject to increased tax liabilities under U.S. federal income tax laws and regulations and will become subject to burdensome reporting requirements.
Any settlements or judgments against us could have a material adverse impact on our financial condition, results of operations and cash flows.
Any settlements or judgments against us could have a material adverse impact on our financial condition, results of operations and cash flows. In addition, negative publicity regarding claims or judgments made against us may damage our reputation and may result in material adverse impact on us.
We are regulated by the SEC, and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act.
The disclosures in our reports and other filings with the SEC and our other public pronouncements may be subject to the scrutiny of regulatory bodies in the PRC. Our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act and the Exchange Act.
Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act of the Cayman Islands and the common law of the Cayman Islands.
We are an exempted company with limited liability incorporated and registered under the laws of the Cayman Islands. Our corporate affairs are governed by our amended and restated memorandum and articles of association, the Companies Act and the common law of the Cayman Islands.
Factors that are vital to this objective include, but are not limited to, our ability to: ● maintain the quality and reliability of our products and services; ● provide our customers with a satisfactory and distinguished customer experience; ● enhance and improve our credit assessment model, risk management system, and IT infrastructure; ● effectively manage and resolve customer complaints; and ● effectively protect personal information and privacy of customers and business partners.
Factors that are vital to this objective include, but are not limited to, our ability to: ● maintain the quality and reliability of our products and services; ● provide our customers with a satisfactory and distinguished customer experience; ● enhance and improve our credit assessment model, risk management system, and IT infrastructure; ● effectively manage and resolve customer complaints; and ● effectively protect personal information and privacy of customers and business partners. 18 Any malicious or innocent negative allegations made by the media or other parties about our company, including, but not limited to our management, business, compliance with law, financial condition or prospects, whether with merit or not, could severely hurt our reputation and harm our business and operating results.
These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting.
An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting.
Any of the foregoing could adversely affect our business, results of operations, financial condition and future growth. 20 Our competitors may be better at developing new services and products, responding to new technologies, charging lower fees on products and services and undertaking more extensive marketing campaigns.
Our competitors may be better at developing new services and products, responding to new technologies, charging lower fees on products and services and undertaking more extensive marketing campaigns.
Uninsured losses or claims, if they occur, could have a material adverse effect on our reputation, business, results of operations, financial condition, or prospects.
However, we may be unable to insure against certain types of losses or claims, or the cost of such insurance may be prohibitive. Uninsured losses or claims, if they occur, could have a material adverse effect on our reputation, business, results of operations, financial condition, or prospects.
Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations. 31 PRC laws and regulations governing our current business operations are sometimes vague and uncertain and any changes in such laws and regulations may impair our ability to operate profitably.
Such uncertainties, including uncertainties over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations, and cause the value of our securities to significantly decline or become worthless.
The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.
Our SEC reports and other disclosures and public pronouncements are currently not subject to the review or scrutiny of any PRC regulatory authority, except as described hereinbelow.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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With a team of experienced loan management professionals, the Sentage Operating Companies plan to continue the consumer loan repayment and collection management business by expanding the client base and collaborating with third-party financial institutions. The Sentage Operating Companies have been actively seeking collaboration with third-party financial institutions to further the consumer loan repayment and collection management services.
The Sentage Operating Companies plan to continue the consumer loan repayment and collection management business with a team of experienced loan management professionals by expanding the client base and collaborating with third-party financial institutions. The Sentage Operating Companies have been actively seeking collaboration with third-party financial institutions to further the consumer loan repayment and collection management services.
For the fiscal year 2021, the Sentage Operating Companies’ funding partners had approved loans to borrowers recommended by the Sentage Operating Companies in the aggregate amount of RMB256.85million (approximately US$39.82million) and the Sentage Operating Companies earned $1,177,822 recommendation service revenue.
For fiscal year 2021, the Sentage Operating Companies’ funding partners had approved loans to borrowers recommended by the Sentage Operating Companies in the aggregate amount of RMB256.85million (approximately US$39.82million) and the Sentage Operating Companies earned $1,177,822 recommendation service revenue.
In order to issue multipurpose prepaid cards, which can be used to purchase goods and services from a diverse group of merchants across industries and regions, and provide related payment services, a service provider must obtain a third-party payment license that allows such activities.
In order to issue multipurpose prepaid cards, which can be used to purchase goods and services from a diverse group of merchants across industries and regions, and provide related payment services, a service provider must obtain a third-party payment license that allows such activities.
(“Daxin Wealth”), formed in Shanghai City, China on August 13, 2014; (2) Daxin Zhuohui Financial Information Services (Shanghai) Co., Ltd. (“Daxin Zhuohui”), formed in Shanghai City, China on January 9, 2015; and (3) Qingdao Buytop Payment Services Co., Ltd. (“Qingdao Buytop”), formed in Qingdao City, Shandong Province, China on August 4, 2009. (4) Zhenyi Information Technology (Shanghai) Co.
(“Daxin Wealth”), formed in Shanghai City, China on August 13, 2014; (2) Daxin Zhuohui Financial Information Services (Shanghai) Co., Ltd. (“Daxin Zhuohui”), formed in Shanghai City, China on January 9, 2015; (3) Qingdao Buytop Payment Services Co., Ltd. (“Qingdao Buytop”), formed in Qingdao City, Shandong Province, China on August 4, 2009; and (4) Zhenyi Information Technology (Shanghai) Co.
The VIE structure is not used to provide contractual exposure to foreign investment in China-based companies where Chinese law prohibits direct foreign investment in the operating companies, rather we use the VIE structure because the Chinese laws and regulations affecting Sentage Operating Companies’ businesses are vague and unclear.
The VIE structure is not used to provide contractual exposure to foreign investment in China-based companies where Chinese law prohibits direct foreign investment in the operating companies, rather we use the VIE structure because the Chinese laws and regulations affecting Sentage Operating Companies’ businesses are vague and unclear.
Sentage Operating Companies engage in (i) consumer loan repayment and collection management service, (ii) loan recommendation service, and (iii) prepaid payment network service.
Sentage Operating Companies engage in (i) consumer loan repayment and collection management service, (ii) loan recommendation service, and (iii) prepaid payment network service.
According to “Administrative Measures of People’s Bank of China on Payment Services Provided by Non-financial Institutions” (“Order 2”) and “People’s Bank of China Announcement [2018] No. 7 — Announcement on Matters Relating to Foreign-funded Payment Organizations” (“Announcement No. 7”), those who engage in prepaid network services business within China need to go through a special legal approval procedure to obtain third-party payment licenses.
According to “Administrative Measures of People’s Bank of China on Payment Services Provided by Non-financial Institutions” (“Order 2”) and “People’s Bank of China Announcement [2018] No. 7 — Announcement on Matters Relating to Foreign-funded Payment Organizations” (“Announcement No. 7”), those who engage in prepaid network services business within China need to go through a special legal approval procedure to obtain third-party payment licenses.
Although the People’s Bank of China has loosened the requirements for foreign-invested enterprises to hold third-party payment licenses, the review procedure is still very strict in practice.
Although the People’s Bank of China has loosened the requirements for foreign-invested enterprises to hold third-party payment licenses, the review procedure is still very strict in practice.
Risk Factor— Risks Related to Doing Business in China— Recent greater oversight by the Cyberspace Administration of China, or the CAC, over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering .” Our PRC legal counsel, has advised us that, based on its understanding of the Cyber Security Law, we are not a network operator and not subject to the requirements imposed to network operators under the Cyber Security Law.
Risk Factor— Risks Related to Doing Business in China— Recent greater oversight by the Cyberspace Administration of China, or the CAC, over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering .” 77 Our PRC legal counsel, has advised us that, based on its understanding of the Cyber Security Law, we are not a network operator and not subject to the requirements imposed to network operators under the Cyber Security Law.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system. Investors may also find more information about us on our website at www.sentageholdings.com. 48 B. Business Overview Sentage Holdings is not an operating company but a Cayman Islands holding company.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system. Investors may also find more information about us on our website at www.sentageholdings.com. B. Business Overview Sentage Holdings is not an operating company but a Cayman Islands holding company.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Net cash used in operating activities - (1,815,919 ) 1,433,255 (382,664 ) Net used in investing activities - (5,500,000 ) (19,977 ) (5,519,977 ) Net cash provided by (used in) financing activities - 17,360,717 (959,420 ) 16,401,297 For the year ended December 31, 2022 USD Sentage Holdings Inc.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Net cash provided by (used in) operating activities - (1,815,919 ) 1,433,255 (382,664 ) Net cash used in investing activities - (5,500,000 ) (19,977 ) (5,519,977 ) Net cash provided by (used in) financing activities (16,851 ) 17,360,717 (959,420 ) 16,401,297 For the year ended December 31, 2022 USD Sentage Holdings Inc.
Each party reserves the right to terminate the agreement at any time with 30 days’ written notice to the other party. Pricing The Sentage Operating Companies charge merchant customers technology consulting and support fees for designing tailored payment solutions, interfacing their internal systems with the prepaid card payment system, and providing their staff with relevant operation training.
Each party reserves the right to terminate the agreement at any time with 30 days’ written notice to the other party. 65 Pricing The Sentage Operating Companies charge merchant customers technology consulting and support fees for designing tailored payment solutions, interfacing their internal systems with the prepaid card payment system, and providing their staff with relevant operation training.
The bank card acceptance refers to the act of collecting monetary capital for business activities involving bank cards through terminals of point-of-sells (POS). 78 Pursuant to Order No.2, to provide payment services, a non-financial institution shall obtain a “Payment License” to qualify as a paying institution.
The bank card acceptance refers to the act of collecting monetary capital for business activities involving bank cards through terminals of point-of-sells (POS). Pursuant to Order No.2, to provide payment services, a non-financial institution shall obtain a “Payment License” to qualify as a paying institution.
The Sentage Operating Companies’ mission is to provide the best-in-class credit assessment and risk management, all within a streamlined, transparent, and compliant workflow process. Master Review Policy The Sentage Operating Companies operate under a documented master review policy, which outlines the standard credit assessment guidelines and risk management procedures.
The Sentage Operating Companies’ mission is to provide the best-in-class credit assessment and risk management, all within a streamlined, transparent, and compliant workflow process. 59 Master Review Policy The Sentage Operating Companies operate under a documented master review policy, which outlines the standard credit assessment guidelines and risk management procedures.
Any failure or perceived failure by us to comply with such filing requirements under the Overseas Listings Rules may result in forced corrections, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities. 87 C.
Any failure or perceived failure by us to comply with such filing requirements under the Overseas Listings Rules may result in forced corrections, warnings and fines against us and could materially hinder our ability to offer or continue to offer our securities. C.
Although China relaxed the COVID-19 restrictions at the end of 2022, because the COVID-19 has deeply affected businesses and economy in China from 2020 to 2022, the extent of any future impact of COVID-19 on our operations remains highly uncertain and unpredictable.
Although China relaxed the COVID-19 restrictions at the end of 2022, because the COVID-19 has deeply affected businesses and economy in China from 2020 to 2024, the extent of any future impact of COVID-19 on our operations remains highly uncertain and unpredictable.
The Sentage Operating Companies also cross-examine data the Sentage Operating Companies collect from different outside sources to verify data provided by applicants. 73 Fraud The Sentage Operating Companies have fraud risk management policies and procedures in place to govern the business operation.
The Sentage Operating Companies also cross-examine data the Sentage Operating Companies collect from different outside sources to verify data provided by applicants. Fraud The Sentage Operating Companies have fraud risk management policies and procedures in place to govern the business operation.
The Sentage Operating Companies establish relationships with the funding partners through word-of-mouth referrals and referrals made by the shareholders and management team members, many of whom have established extensive connections in the financial industry based on their professional experience. 69 The funding partners choose to partner with the Sentage Operating Companies for access to the Sentage Operating Companies’ borrower applicants base, enhanced credit assessment and risk management capabilities, and other services, including borrower and product matching.
The Sentage Operating Companies establish relationships with the funding partners through word-of-mouth referrals and referrals made by the shareholders and management team members, many of whom have established extensive connections in the financial industry based on their professional experience. 62 The funding partners choose to partner with the Sentage Operating Companies for access to the Sentage Operating Companies’ borrower applicants base, enhanced credit assessment and risk management capabilities, and other services, including borrower and product matching.
Risk Factors—Risks Related to Our Business and Industries— We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position .” As of the date of this annual report, Qingdao Buytop owns the trademark Buytop, effective from February 21, 2014 to February 20, 2034, and the domain name www.buytoppay.com, effective from December 16, 2016 to December 16, 2023.
Risk Factors—Risks Related to Our Business and Industries— We may not be able to prevent others from unauthorized use of our intellectual property, which could harm our business and competitive position .” As of the date of this annual report, Qingdao Buytop owns the trademark Buytop, effective from February 21, 2014 to February 20, 2034, and the domain name www.buytoppay.com, effective from December 16, 2016 to December 16, 2024.
Therefore, we currently do not need to conduct security assessments or seek approval from relevant authorities under the Data Security Law. 81 Cybersecurity Review Measures On November 7, 2016, the SCNPC published the Cyber Security Law of the PRC (《中华人民共和国网络安全法》), or the Cyber Security Law, which took effect on June 1, 2017 and requires network operators to perform certain functions related to cyber security protection and the strengthening of network information management.
Therefore, we currently do not need to conduct security assessments or seek approval from relevant authorities under the Data Security Law. 76 Cybersecurity Review Measures On November 7, 2016, the SCNPC published the Cyber Security Law of the PRC ( 《中华人民共和国网络安全法》 ), or the Cyber Security Law, which took effect on June 1, 2017 and requires network operators to perform certain functions related to cyber security protection and the strengthening of network information management.
Furthermore, each third-party law firm with whom the Sentage Operating Companies collaborate is selected from an accredited industry law firm list, has compatible information technology systems, and meet certain other specific criteria. 62 Compliance We believe the Sentage Operating Companies’ core competence lies in the ability to provide quality customer service and compliance with applicable laws and regulations.
Furthermore, each third-party law firm with whom the Sentage Operating Companies collaborate is selected from an accredited industry law firm list, has compatible information technology systems, and meet certain other specific criteria. 55 Compliance We believe the Sentage Operating Companies’ core competence lies in the ability to provide quality customer service and compliance with applicable laws and regulations.
Later on, December 28, 2021, the CAC and other relevant PRC governmental authorities jointly promulgated the Cybersecurity Review Measures Transfer (《网络安全审查办法》), which took effect on February 15, 2022.
Later on, December 28, 2021, the CAC and other relevant PRC governmental authorities jointly promulgated the Cybersecurity Review Measures ( 《网络安全审查办法》 ), which took effect on February 15, 2022.
To promote the long-term business growth, the Sentage Operating Companies’ technology team focuses on ensuring that the technology systems, operating centers, financial systems, and security protocols are well established, reviewed, tested and continuously strengthened. ● IT Infrastructure. We believe the Sentage Operating Companies have built a secure, efficient, and cost-effective infrastructure to provide strong computing ability in the system.
To promote the long-term business development, the Sentage Operating Companies’ technology team focuses on ensuring that the technology systems, operating centers, financial systems, and security protocols are well established, reviewed, tested and continuously strengthened. ● IT Infrastructure. We believe the Sentage Operating Companies have built a secure, efficient, and cost-effective infrastructure to provide strong computing ability in the system.
While the Sentage Operating Companies offer services nationwide, they strategically focused on strengthening their presence in second-tier and third-tier Chinese cities where they have observed a strong demand for consumer loans. The Sentage Operating Companies’ existing loan repayment and collection management engagements were fully completed by December 31, 2021.
While the Sentage Operating Companies offer services nationwide, they strategically focused on strengthening their presence in second-tier and third-tier Chinese cities where they observed a strong demand for consumer loans. The Sentage Operating Companies’ loan repayment and collection management engagements were fully completed by December 31, 2021.
Customer Services Leveraging the advanced technologies, the Sentage Operating Companies have established a lean and productive customer service team specialized in handling customer relationships. Customers can reach the customer service team through email, hotlines, social media accounts, and their website. Each customer request, enquiry or complaint is recorded and assigned a specific case reference.
Customer Services Leveraging the advanced technologies, the Sentage Operating Companies have established a lean and productive customer service team specialized in handling customer relationships. Customers can reach the customer service team through email, hotlines, social media accounts, and their website. Each customer request, inquiry or complaint is recorded and assigned a specific case reference.
The following diagram illustrates the transaction process through which the Sentage Operating Companies offer loan recommendation services: 65 Step 1: Screening Either through business contacts or word-of-mouth referral, a potential borrower applicant with needs for a mortgage may contact us over the phone and through email.
The following diagram illustrates the transaction process through which the Sentage Operating Companies offer loan recommendation services: 58 Step 1: Screening Either through business contacts or word-of-mouth referral, a potential borrower applicant with needs for a mortgage may contact us over the phone and through email.
NetsUnion does not charge any fees for payments it processes. (7) The merchant confirms receipt of the payment. 71 Customer Onboarding First, prospective merchant customers apply to open an account on the Sentage Operating Companies’ platform. After reviewing application materials, the Sentage Operating Companies onboard the customers and connect them to NetsUnion.
NetsUnion does not charge any fees for payments it processes. (7) The merchant confirms receipt of the payment. 64 Customer Onboarding First, prospective merchant customers apply to open an account on the Sentage Operating Companies’ platform. After reviewing application materials, the Sentage Operating Companies onboard the customers and connect them to NetsUnion.
Throughout the appraisal process, the management team constantly monitor the in-house appraisers’ performance and evaluate their performance based on the institutional finding partners’ feedback on the quality of the appraisal opinions. 67 The Sentage Operating Companies generally avoid lending on properties that are special purpose in nature.
Throughout the appraisal process, the management team constantly monitor the in-house appraisers’ performance and evaluate their performance based on the institutional finding partners’ feedback on the quality of the appraisal opinions. 60 The Sentage Operating Companies generally avoid lending on properties that are special purpose in nature.
The Sentage Operating Companies’ proprietary technology systems are critical to the growth of the prepaid payment network business, allowing the Operating Companies to process a large volume of transactions, achieve high level of stability, promote workflow automation, and build an easily scalable business model.
The Sentage Operating Companies’ proprietary technology systems are critical to the development of the prepaid payment network business, allowing the Operating Companies to process a large volume of transactions, achieve high level of stability, promote workflow automation, and build an easily scalable business model.
For details on the technology consulting and support services the Sentage Operating Companies charge, see “—Our Customers— Pricing .” 70 Prepaid Card Payment Services For any merchant customers who need prepaid card payment services, the Sentage Operating Companies collect and process information necessary for prepaid card issuance and authorize transaction requests after verifying transaction information.
For details on the technology consulting and support services the Sentage Operating Companies charge, see “—Our Customers— Pricing .” 63 Prepaid Card Payment Services For any merchant customers who need prepaid card payment services, the Sentage Operating Companies collect and process information necessary for prepaid card issuance and authorize transaction requests after verifying transaction information.
As of the date of the annual report, none of the customers to whom the Sentage Operating Companies have provided services has penalized us monetarily or rescinded contracts with the Sentage Operating Companies. 63 The Sentage Operating Companies take allegations seriously and have developed a systematic approach to avoid potential allegations.
As of the date of the annual report, none of the customers to whom the Sentage Operating Companies have provided services has penalized us monetarily or rescinded contracts with the Sentage Operating Companies. 56 The Sentage Operating Companies take allegations seriously and have developed a systematic approach to avoid potential allegations.
The Sentage Operating Companies consider the insurance coverage to be sufficient and in line with market practice for the business operations in China. 76 PRC REGULATIONS This section sets forth a summary of the principal PRC laws, regulations, and rules relevant to our business and operations in China.
The Sentage Operating Companies consider the insurance coverage to be sufficient and in line with market practice for the business operations in China. 70 PRC REGULATIONS This section sets forth a summary of the principal PRC laws, regulations, and rules relevant to our business and operations in China.
SAFE Circular No. 21 On May 10, 2013, the SAFE promulgated the Circular of the SAFE on Printing and Distributing the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors and Relevant Supporting Documents (《外国投资者境内直接投资外汇管理规定》) (“SAFE Circular No. 21”), which was amended on December 31, 2019.
SAFE Circular No. 21 On May 10, 2013, the SAFE promulgated the Circular of the SAFE on Printing and Distributing the Administrative Provisions on Foreign Exchange in Domestic Direct Investment by Foreign Investors and Relevant Supporting Documents ( 《外国投资者境内直接投资外汇管理规定》 ) (“SAFE Circular No. 21”), which was amended on December 30, 2019.
Since the inception, the Sentage Operating Companies have not experienced any material information breach or other system failure which could have led to the loss of confidential information. 75 Competition The industries in which the Sentage Operating Companies are operating are competitive and evolving.
Since the inception, the Sentage Operating Companies have not experienced any material information breach or other system failure which could have led to the loss of confidential information. 69 Competition The industries in which the Sentage Operating Companies are operating are competitive and evolving.
However, the Sentage Operating Companies cannot guarantee the success of such business plan. 64 Loan Recommendation Service Business Model and Recommendation Process As part of the strategy to diversify and expand the product and service offerings, the Sentage Operating Companies started the loan recommendation service in June 2019.
However, the Sentage Operating Companies cannot guarantee the success of such business plan. 57 Loan Recommendation Service Business Model and Recommendation Process As part of the strategy to diversify and expand the product and service offerings, the Sentage Operating Companies started the loan recommendation service in June 2019.
For fiscal years 2020, 2021 and 2022, approximately 90%, 100% and nil borrowers we recommended were accepted by the funding partners. Credit Assessment and Risk Management The Sentage Operating Companies have devised and implemented a systematic credit assessment model and an asset-driven, disciplined risk management approach to minimize a borrower’s default risk and mitigate the impact of default.
For fiscal years 2021, 2022 and 2023, approximately 100%, nil and nil borrowers we recommended were accepted by the funding partners. Credit Assessment and Risk Management The Sentage Operating Companies have devised and implemented a systematic credit assessment model and an asset-driven, disciplined risk management approach to minimize a borrower’s default risk and mitigate the impact of default.
Qiaoling Lu (the chairperson of the board of directors,the chief executive officer, and a major shareholder of the Company), Yiheng Guo (a director and a shareholder of the Company), Hua Wang (a beneficial shareholder of the Company), and Jianxiu Li (a beneficial shareholder of the Company), are the controlling shareholders of the following Sentage Operating Companies: (1) Daxin Wealth Investment Managem (ent (Shanghai) Co., Ltd.
Qiaoling Lu (the chairperson of the board of directors, the chief executive officer, and a major shareholder of the Company), Yiheng Guo (a director and a shareholder of the Company), Hua Wang (a beneficial shareholder of the Company), and Jianxiu Li (a beneficial shareholder of the Company), are the controlling shareholders of the following Sentage Operating Companies: (1) Daxin Wealth Investment Management (Shanghai) Co., Ltd.
SAFE Circular No. 16 In accordance with the Notice of the State Administration of Foreign Exchange on Policies for Reforming and Regulating the Control over Foreign Exchange Settlement under the Capital Account (《国家外汇管理局关于改革和规范资本项目结汇管理政策的通知》), which was released by SAFE on June 9, 2016, except financial institutions, domestic enterprises (including Chinese-funded enterprises and foreign-invested enterprises) may complete foreign exchange settlement for their foreign debts at their discretion.
SAFE Circular No. 16 In accordance with the Notice of the State Administration of Foreign Exchange on Policies for Reforming and Regulating the Control over Foreign Exchange Settlement under the Capital Account ( 《国家外汇管理局关于改革和规范资本项目结汇管理政策的通知》 ), which was released by SAFE on June 9, 2016, and amended on December 4, 2023, except financial institutions, domestic enterprises (including Chinese-funded enterprises and foreign-invested enterprises) may complete foreign exchange settlement for their foreign debts at their discretion.
Even after June 2022, due to the uncertainties caused by COVID-19, the demand from customers decreased sharply and the we were not able to generate any revenue for fiscal year 2022. For the prepaid payment network services, the revenue in 2022 declined sharply because decreased demand from customers due to the uncertainties caused by COVID-19.
Even after June 2022, due to the uncertainties caused by COVID-19, the demand from customers decreased sharply and we were not able to generate any revenue for fiscal years 2023 and 2022. For the prepaid payment network services, the revenue in fiscal years 2023 and 2022 declined sharply because decreased demand from customers due to the uncertainties caused by COVID-19.
For the consumer loan repayment and collection management business, due to the uncertainties caused by the COVID-19, our prospective business partners were not able to start new cooperation with us and we were not able to generate any revenue for fiscal year 2022.
For the consumer loan repayment and collection management business, due to the uncertainties caused by the COVID-19, our prospective business partners were not able to start new cooperation with us and we were not able to generate any revenue for fiscal years 2023 and 2022.
The Sentage Operating Companies are not involved in the process of repayment. 61 Quality Assurance We believe that quality assurance is critical to the success of our business.
The Sentage Operating Companies are not involved in the process of repayment. 54 Quality Assurance We believe that quality assurance is critical to the success of our business.
In light of the strong entry barriers, the Sentage Operating Companies’ payment license is a unique asset that distinguishes us from competitors. Without such license, a prepaid issuer can issue only single-purpose prepaid cards, which is limited to purchasing goods and services provided by the card issuer or companies related to the card issuer.
In light of the strong entry barriers, the Sentage Operating Companies’ payment license is a unique asset. Without such license, a prepaid issuer can issue only single-purpose prepaid cards, which is limited to purchasing goods and services provided by the card issuer or companies related to the card issuer.
The office space of the office in Qingdao City has an area of approximately 143 square meters (approximately 1,540 square feet). The term of the lease is from December 1, 2022 to November 30, 2023, and the monthly rental fee is approximately US$1,812.
The office space of the office in Qingdao City has an area of approximately 143 square meters (approximately 1,540 square feet). The term of the lease is from December 1, 2023 to November 30, 2024, and the monthly rental fee is approximately US$1,761.
Revenue from prepaid payment network service business accounted for 12%, 41% and 100% of the total revenue for the fiscal year ended December 31, 2020, 2021 and 2022, respectively.
Revenue from prepaid payment network service business accounted for, 41%, 100%, and 100% of the total revenue for the fiscal year ended December 31, 2021, 2022 and 2023, respectively.
Consumer Loan Repayment and Collection Management Service For the fiscal years 2022, 2021 and 2020, revenue generated from the Sentage Operating Companies’ consumer loan repayment and collection management services was nil, US$156,062 and US$1,074,734, respectively. Since the end of 2017, the Sentage Operating Companies have not charged any new fees for loan repayment and collection management.
Consumer Loan Repayment and Collection Management Service For the fiscal years 2023, 2022 and 2021, revenue generated from the Sentage Operating Companies’ consumer loan repayment and collection management services was nil, nil, and US$156,062, respectively. Since the end of 2017, the Sentage Operating Companies have not charged any new fees for loan repayment and collection management.
Revenue from the consumer loan repayment and collection management accounted for 29.9 %, 6.9%, and nil of the total revenue for the fiscal year ended December 31, 2020, 2021 and 2022, respectively. Revenue from the loan recommendation accounted for 58.1%, 52.1% and nil of the total revenue for the fiscal year ended December 31, 2020, 2021 and 2022, respectively.
Revenue from the consumer loan repayment and collection management accounted for 6.9%, nil, and nil of the total revenue for the fiscal year ended December 31, 2021, 2022 and 2023, respectively. Revenue from the loan recommendation accounted for 52.1%,nil, and nil of the total revenue for the fiscal year ended December 31, 2021, 2022 and 2023, respectively.
As of April 22, 2023, the information technology infrastructure included 15 servers, which form a strong server network with speedy processing capability. The infrastructure has been fully integrated with the computer environments and business requirements to serve as a powerful engine for the products and services. ● Information System.
As of the date of this report, the information technology infrastructure included 15 servers, which form a strong server network with speedy processing capability. The infrastructure has been fully integrated with the computer environments and business requirements to serve as a powerful engine for the products and services. ● Information System.
The Sentage Operating Companies believed this centralized management allowed them to streamline and standardize the payment and collection management process, effectively monitor compliance levels, and increase collection efficiency. 57 For fiscal years 2022, 2021 and 2020, the total amount repaid by borrowers and collected by the Sentage Operating Companies and third-party agencies reached RMB nil , RMB1.01million (approximately US$ 0.16million), and RMB 2.16 million (approximately US$ 0.31 million), respectively.
The Sentage Operating Companies believed this centralized management allowed them to streamline and standardize the payment and collection management process, effectively monitor compliance levels, and increase collection efficiency. 50 For fiscal years 2023, 2022 and 2021, the total amount repaid by borrowers and collected by the Sentage Operating Companies and third-party agencies reached RMB nil, RMB nil, and RMB1.01million (approximately US$ 0.16million), respectively.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Cash - 3,785,115 20,020 - 3,805,135 Total current assets 12,740,447 6,873,303 1,442,879 (6,715,249 ) 14,341,380 Total assets 12,740,447 7,035,573 1,598,063 (6,715,249 ) 14,658,834 Total liabilities 1,466,983 3,826,962 1,905,174 (6,715,249 ) 483,870 Total shareholders’ equity 11,273,464 3,208,611 (307,111 ) - 14,174,964 Total liabilities and shareholders’ equity 12,740,447 7,035,573 1,598,063 (6,715,249 ) 14,658,834 SELECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended December 31, 2020 USD Sentage Holdings Inc.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Cash - 3,785,115 20,020 - 3,805,135 Total current assets 12,740,447 6,873,303 1,442,879 (6,715,249 ) 14,341,380 Total assets 12,740,447 7,035,573 1,598,063 (6,715,249 ) 14,658,834 Total liabilities 1,466,983 3,826,962 1,905,174 (6,715,249 ) 483,870 Total shareholders’ equity 11,273,464 3,208,611 (307,111 ) - 14,174,964 Total liabilities and shareholders’ equity 12,740,447 7,035,573 1,598,063 (6,715,249 ) 14,658,834 As of December 31, 2023 USD Sentage Holdings Inc.
A payment institution shall obtain the “Payment License” issued and approved by the PBOC in order to engage in the business of “issuing and(or) accepting prepaid cards.” Payment institutions shall strictly implement regulatory provisions pertaining to managing payment institution clients’ funds and fulfill their obligations related to anti-money laundering and anti-terrorist financing. 79 Our Payment License issued by the PBOC satisfies the Payment License requirement of Announcement No. 12.
A payment institution shall obtain the “Payment License” issued and approved by the PBOC in order to engage in the business of “issuing and(or) accepting prepaid cards.” Payment institutions shall strictly implement regulatory provisions pertaining to managing payment institution clients’ funds and fulfill their obligations related to anti-money laundering and anti-terrorist financing.
Properties and Facilities The corporate headquarters is in Shanghai City, China, where we lease two office spaces with an area of approximately 170.59 square meters (approximately 1,836 square feet) and an area of approximately 185 square meters (approximately 1,991 square feet), as of December 31, 2022.
Properties and Facilities The corporate headquarters is in Shanghai City, China, where we lease two office spaces with an area of approximately 170.59 square meters (approximately 1,836 square feet) and an area of approximately 132 square meters (approximately 1,550 square feet), as of December 31, 2023.
As of April 22, 2023, all the mortgages borrowers have obtained through the Sentage Operating Companies’ recommendation had an initial loan term of 24 to 36 months with an interest rate of 6% to 8%. 68 Borrowers and Partners Borrowers The Sentage Operating Companies aim to serve individual business owners who are able to collateralize qualified properties.
As of the date of this report, all the mortgages borrowers have obtained through the Sentage Operating Companies’ recommendation had an initial loan term of 24 to 36 months with an interest rate of 6% to 8%. 61 Borrowers and Partners Borrowers The Sentage Operating Companies aim to serve individual business owners who are able to collateralize qualified properties.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Revenue - - 2,262,449 - 2,262,449 Net Income (loss) (1,748,643 ) (37,371 ) 692,775 - (1,093,241 ) Comprehensive Income (loss) (1,748,643 ) (36,328 ) 844,511 - (940,461 ) For the year ended December 31, 2022 USD Sentage Holdings Inc.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Revenue - - 2,262,449 - 2,262,449 Net Income (loss) (1,748,643 ) (37,372 ) 692,774 - (1,093,241 ) Comprehensive Income (loss) (1,748,643 ) (36,409 ) 844,511 - (940,541 ) For the year ended December 31, 2022 USD Sentage Holdings Inc.
For fiscal years 2020, 2021, and 2022, revenue generated from the prepaid payment network services, consisted of technology consulting and support fees, was US$432,958, US$928,565, and US$ 161,372 respectively.
For fiscal years 2021, 2022 and 2023, revenue generated from the prepaid payment network services, consisted of technology consulting and support fees, was US$928,565, US$ 161,372, and US$146,554, respectively.
Pursuant to the Law on Wholly Foreign-owned Enterprises of the PRC (《中华人民共和国外资企业法》) (the “Law on Wholly Foreign-owned Enterprises of the PRC”), which was promulgated by the SCNPC on April 12, 1986, last amended on September 3, 2016 and became effective on October 1, 2016, where the establishment of wholly foreign-owned enterprises does not involve the implementation of special access administrative measures prescribed by the state, the establishment, breakup, merger, or any other major change and the operation period of such enterprises are subject to record-filing administration. 83 The Implementing Rules for the Law on Wholly Foreign-owned Enterprises of the PRC (《中华人民共和国外资企业法实施细则》) (the “Implementing Rules on Wholly Foreign-owned Enterprises”) was promulgated by the State Council on December 12, 1990, then was amended on April 12, 2001 and February 19, 2014, and became effective on March 1, 2014.
Pursuant to the Law on Wholly Foreign-owned Enterprises of the PRC ( 《中华人民共和国外资企业法》 ) (the “Law on Wholly Foreign-owned Enterprises of the PRC”), which was promulgated by the SCNPC on April 12, 1986, last amended on September 3, 2016 and became effective on October 1, 2016, where the establishment of wholly foreign-owned enterprises does not involve the implementation of special access administrative measures prescribed by the state, the establishment, breakup, merger, or any other major change and the operation period of such enterprises are subject to record-filing administration.
On December 17, 2019, Shanghai Santeng Technology Co., Ltd. (“Sentage WFOE”) was incorporated pursuant to PRC laws as a wholly foreign owned enterprise. Sentage HK holds 100% of the equity interests in Sentage WFOE.
Sentage Hongkong Limited (“Sentage HK”) was incorporated on September 25, 2019 in Hong Kong as a wholly owned subsidiary of Sentage Holdings. On December 17, 2019, Shanghai Santeng Technology Co., Ltd. (“Sentage WFOE”) was incorporated pursuant to PRC laws as a wholly foreign owned enterprise. Sentage HK holds 100% of the equity interests in Sentage WFOE.
SAFE may adjust the aforesaid proportion in due time in light of the balance of payment. 85 SAFE Circular No. 19 The Notice of the State Administration of Foreign Exchange on Reforming the Mode of Management of Settlement of Foreign Exchange Capital of Foreign-Funded Enterprises(《国家外汇管理局关于改革外商投资企业外汇资本金结汇管理方式的通知》), or the SAFE Circular No.19, which was promulgated by the SAFE on March 30, 2015, and became effective on June 1, 2015, provides that a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests (or for which the bank has registered the injection of the monetary capital contribution into the account).
SAFE Circular No. 19 The Notice of the State Administration of Foreign Exchange on Reforming the Mode of Management of Settlement of Foreign Exchange Capital of Foreign-Funded Enterprises( 《国家外汇管理局关于改革外商投资企业外汇资本金结汇管理方式的通知》 ), or the SAFE Circular No.19, which was promulgated by the SAFE on March 30, 2015, and became effective on June 1, 2015, partially repealed on December 30, 2019, and last amended on March 23, 2023, provides that a foreign-invested enterprise may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests (or for which the bank has registered the injection of the monetary capital contribution into the account).
The Sentage Operating Companies’ agreement with NetsUnion does not have a term; instead, as long as the Sentage Operating Companies’ third-party payment license is valid and the Sentage Operating Companies conduct business activities related to payment services, the agreement with NetsUnion remains in effect.
The Sentage Operating Companies’ agreement with NetsUnion does not have a term; instead, as long as the Sentage Operating Companies’ third-party payment license is valid and the Sentage Operating Companies conduct business activities related to payment services, the agreement with NetsUnion remains in effect. 66 Risk Management and Internal Control The Sentage Operating Companies are subject to various risks in the operations.
Risk Factors—Risks Related to Our Business and Industries.” The Sentage Operating Companies have established a dynamic, technology-driven risk management system and adopted relevant policies and procedures, which we consider suitable for the business operation.
For details on risks the Sentage Operating Companies are subject to, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industries.” The Sentage Operating Companies have established a dynamic, technology-driven risk management system and adopted relevant policies and procedures, which we consider suitable for the business operation.
Any violation of laws and regulations detected shall be reported to the relevant authorities in a timely manner. The company should not provide any service in accordance with virtual currency. Data Security Law of the People’s Republic of China Regulations relating to Information Security and Privacy Protection Internet content in China is regulated and restricted from a state security standpoint.
The company should not provide any service in accordance with virtual currency. 75 Data Security Law of the People’s Republic of China Regulations relating to Information Security and Privacy Protection Internet content in China is regulated and restricted from a state security standpoint.
On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), (《境内企业境外发行证券和上市管理试行办法》), and five supporting guidelines (collectively, the “Overseas Listings Rules”), which has become effective on March 31, 2023.
Qingdao Buytop has obtained the certificate for its domain name. 83 Regulations Relating to Overseas Listings and Offerings On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”), ( 《境内企业境外发行证券和上市管理试行办法》 ), and five supporting guidelines (collectively, the “Overseas Listings Rules”), which has become effective on March 31, 2023.
Through comprehensive merchant profiling, the Sentage Operating Companies are able to quickly and accurately identify risks associated with potential clients, captures fraud signals from a massive amount of data regarding user behaviors, analyze them in real time, and intercepts abnormal transactions at an early stage.
Leveraging the behavior analytics capabilities, the Sentage Operating Companies are able to consolidate and analyze information of each profile to estimate borrowers’ credit needs and assess delinquency risk. 68 Through comprehensive merchant profiling, the Sentage Operating Companies are able to quickly and accurately identify risks associated with potential clients, captures fraud signals from a massive amount of data regarding user behaviors, analyze them in real time, and intercepts abnormal transactions at an early stage.
As of the date of this annual report, the Sentage Operating Companies’ systems have not encountered any major system interruption. 60 Loan Repayment and Collection Management Service The Sentage Operating Companies’ Repayment and Collection Management Service The Sentage Operating Companies provided consumer loan repayment and collection management services to customers by leveraging the in-house team’s years of industry knowledge, strategic partnerships with third parties, standard and streamlined repayment and collection management process, centralized management, and proprietary IT infrastructure.
Loan Repayment and Collection Management Service The Sentage Operating Companies’ Repayment and Collection Management Service The Sentage Operating Companies provided consumer loan repayment and collection management services to customers by leveraging the in-house team’s years of industry knowledge, strategic partnerships with third parties, standard and streamlined repayment and collection management process, centralized management, and proprietary IT infrastructure.
We have obtained qualifications necessary for providing prepaid payment network services, which is a subcategory of third-party payment services, in accordance with existing laws, regulations and regulatory requirements regarding third-party payment services in China.
Our Payment License issued by the PBOC satisfies the Payment License requirement of Announcement No. 12. We have obtained qualifications necessary for providing prepaid payment network services, which is a subcategory of third-party payment services, in accordance with existing laws, regulations and regulatory requirements regarding third-party payment services in China.
SAFE Circular No. 59 Pursuant to the Circular of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment (《国家外汇管理局关于进一步改进和调整直接投资外汇管理政策的通知》), promulgated by SAFE on November 19, 2012, which became effective on December 17, 2012, and was further amended on May 4, 2015, approval is not required for opening a foreign exchange account and depositing foreign exchange into the accounts relating to the direct investments.
It provided for and simplified the operational steps and regulations on foreign exchange matters related to direct investment by foreign investors, including foreign exchange registration, account opening and use, receipt and payment of funds, and settlement and sales of foreign exchange. 81 SAFE Circular No. 59 Pursuant to the Circular of the SAFE on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment ( 《国家外汇管理局关于进一步改进和调整直接投资外汇管理政策的通知》 ), promulgated by SAFE on November 19, 2012, which became effective on December 17, 2012, and was further amended on May 4, 2015, approval is not required for opening a foreign exchange account and depositing foreign exchange into the accounts relating to the direct investments.
The term of the two leases are from November 1, 2022 to October 31, 2024, and from July 20, 2022 to March 19, 2023, respectively. The monthly rental fee is approximately US$8,426 and US$ 3,292.06, correspondingly.
The term of the two leases are from November 1, 2022 to October 31, 2024, and from March 24, 2023 to March 31, 2024, respectively. The monthly rental fee is approximately US$8,185 and US$1,620, correspondingly.
Regulations relating to Foreign-Owned Enterprises The establishment, operation and management of corporate entities in China are governed by the Company Law of the PRC (《中华人民共和国公司法》) (the “PRC Company Law”), which was promulgated by the SCNPC on December 29, 1993 and last amended and became effective on October 26, 2018.
Regulations relating to Foreign-Owned Enterprises The establishment, operation and management of corporate entities in China are governed by the Company Law of the PRC ( 《中华人民共和国公司法》 ) (the “PRC Company Law”), which was promulgated by the SCNPC on December 29, 1993 and last amended on December 29, 2023, which amendment will come into effect on July 1, 2024.
We currently report our operating revenue from three main revenue streams, namely, (i) consumer loan repayment and collection management service, (ii) loan recommendation service, and (iii) prepaid payment network service. For fiscal years 2022, 2021 and 2020, our revenue was $161,372, $2,262,449 and $3,595,409, respectively, and our net profit (loss) was $(2,561,907), ($835,897) and $2,180,076, respectively.
We currently report our operating revenue from three main revenue streams, namely, (i) consumer loan repayment and collection management service, (ii) loan recommendation service, and (iii) prepaid payment network service. For fiscal years 2023, 2022 and 2021, our revenue was $146,554, $161,372, and $2,262,449, respectively, and our net loss was $1,903,277, $2,561,907, and $1,093,241, respectively.
Value-Added Tax (the “VAT”) and Business Tax Pursuant to the Provisional Regulations on Value-Added Tax of the PRC (《中华人民共和国增值税暂行条例》), or the VAT Regulations, which were promulgated by the State Council on December 13, 1993, and amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively, and the Implementation Rules of the Provisional Regulations on Value Added Tax of the PRC (《中华人民共和国增值税暂行条例实施细则》) promulgated by the Ministry of Finance of the People’s Republic of China (“MOF”) on December 25, 1993 and amended on December 15, 2008 and October 28, 2011, respectively, entities and individuals that sell goods or labor services of processing, repair or replacement, sell services, intangible assets, or immovables, or import goods within the territory of the People’s Republic of China are taxpayers of value-added tax.
Value-Added Tax (the “VAT”) and Business Tax Pursuant to the Provisional Regulations on Value-Added Tax of the PRC ( 《中华人民共和国增值税暂行条例》 ), or the VAT Regulations, which were promulgated by the State Council on December 13, 1993, and amended on November 10, 2008, February 6, 2016, and November 19, 2017, respectively, and the Implementation Rules of the Provisional Regulations on Value Added Tax of the PRC ( 《中华人民共和国增值税暂行条例实施细则》 ) promulgated by the Ministry of Finance of the People’s Republic of China (“MOF”) on December 25, 1993 and amended on December 15, 2008 and October 28, 2011, respectively, entities and individuals that sell goods or labor services of processing, repair or replacement, sell services, intangible assets, or immovables, or import goods within the territory of the People’s Republic of China are taxpayers of value-added tax. 80 In accordance with the Notice of the Ministry of Finance and the State Administration of Taxation on Full Launch of the Pilot Scheme on Levying Value-added Tax in Place of Business Tax ( 《财政部、国家税务总局关于全面推开营业税改征增值税试点的通知》 ), which was released by MOF and State Administration of Taxation of People’s Republic of China (“SAT”) on March 23, 2016 and became effective on May 1, 2016, the pilot scheme on levying value-added tax in place of business tax shall be launched nation-wide.
Vocational training funds shall be set aside and used in accordance with national regulations, and vocational training for employees shall be carried out systematically based on the actual conditions of the Company. 82 The Labor Contract Law of the PRC, which was promulgated by the SCNPC on June 29, 2007, amended on December 28, 2012, and came into effect on July 1, 2013, combined with the Implementation Regulations on Labor Contract Law, which was promulgated and became effective September 18, 2008, regulate the parties to labor contracts, namely employers and employees, and contain specific provisions relating to the terms of labor contracts.
The Labor Contract Law of the PRC, which was promulgated by the SCNPC on June 29, 2007, amended on December 28, 2012, and came into effect on July 1, 2013, combined with the Implementation Regulations on Labor Contract Law, which was promulgated and became effective September 18, 2008, regulate the parties to labor contracts, namely employers and employees, and contain specific provisions relating to the terms of labor contracts.
We believe the guidelines and procedures are key differentiators compared to our peers, as they facilitate both speed and consistency of execution. 66 Information Collection, Verification, and Fraud Detection The Sentage Operating Companies utilize a proprietary information system to store and process comprehensive information gathered through various sources, including the database, government and Internet sources, and third-party data providers, supplemented by the manual input of data collected through on-site inspections and other means of offline verification.
Information Collection, Verification, and Fraud Detection The Sentage Operating Companies utilize a proprietary information system to store and process comprehensive information gathered through various sources, including the database, government and Internet sources, and third-party data providers, supplemented by the manual input of data collected through on-site inspections and other means of offline verification.
Regulations on Anti-Money Laundering and Anti-Terrorism Financing The Anti-Money Laundering Law of the People’s Republic of China (“Anti-Money Laundering Law”)(《中华人民共和国反洗钱法》) was promulgated by the Standing Committee of the National People’s Congress on October 31, 2006 and came into force on January 1, 2007.
The certification is in progress of being renewed, which is expected to be completed by June 2024. 74 Regulations on Anti-Money Laundering and Anti-Terrorism Financing The Anti-Money Laundering Law of the People’s Republic of China (“Anti-Money Laundering Law”)( 《中华人民共和国反洗钱法》 ) was promulgated by the Standing Committee of the National People’s Congress on October 31, 2006 and came into force on January 1, 2007.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Revenue - - 161,372 - 161,372 Net Income (1,470,635 ) (130,766 ) (960,506 ) - (2,561,907 ) Comprehensive Income (1,470,635 ) (183,036 ) (994,319 ) - (2,647,990 ) 55 SELECTED CONDENSED CONSOLIDATED BALANCE SHEETS As of December 31, 2021 USD Sentage Holdings Inc.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Revenue - - 161,372 - 161,372 Net loss (1,470,635 ) (130,766 ) (960,506 ) - (2,561,907 ) Comprehensive loss (1,470,635 ) (183,036 ) (994,319 ) - (2,647,990 ) For the year ended December 31, 2023 USD Sentage Holdings Inc.
However, there can be no guarantee that the Sentage Operating Companies will be successful in their efforts to continue their consumer loan repayment and collection management business. Loan Recommendation Service As part of the strategy to diversify and expand product and service offering, the Sentage Operating Companies started the loan recommendation business in June 2019.
However, as of the date of this annual report, the Sentage Operating Companies have not been successful in their efforts to continue their consumer loan repayment and collection management business. Loan Recommendation Service As part of the strategy to diversify and expand product and service offering, the Sentage Operating Companies started the loan recommendation business in June 2019.
If a private lending lawsuit is filed after August 20, 2020, the lending activity is before August 20, 2020, and the interest from the date of the lending act to August 19, 2020 shall be calculated according to the judicial interpretation at the time of the lending act; the interest portion from August 20, 2020 to the date of loan repayment shall be capped at four times the one-year loan market quoted interest rate at the time of the lawsuit.
If a private lending lawsuit is filed after August 20, 2020, the lending activity is before August 20, 2020, and the interest from the date of the lending act to August 19, 2020 shall be calculated according to the judicial interpretation at the time of the lending act; the interest portion from August 20, 2020 to the date of loan repayment shall be capped at four times the one-year loan market quoted interest rate at the time of the lawsuit. 71 Our loan recommendation business of connecting borrowers and lenders constitutes an intermediary service, and our contracts with lenders and borrowers are intermediary contracts defined under the PRC Civil Code.
The PBOC shall, under the supervision of the State Council, implement monetary policies, perform its functions, take precautions against systematic financial risks, and maintain financial stability of the general economic environment in China.
Non-financial institutions and individuals shall not engage in any kind of third-party payment business without the approval of the PBOC. The PBOC shall, under the supervision of the State Council, implement monetary policies, perform its functions, take precautions against systematic financial risks, and maintain financial stability of the general economic environment in China.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company Sentage Holdings Inc. (“Sentage Holdings”) was incorporated on September 16, 2019, under the laws of the Cayman Islands. Sentage Hongkong Limited (“Sentage HK”) was incorporated on September 25, 2019 in Hong Kong as a wholly owned subsidiary of Sentage Holdings.
ITEM 4. INFORMATION ON THE COMPANY A. History and Development of the Company Sentage Holdings Inc. (“Sentage Holdings”) was incorporated on September 16, 2019, as an exempted company with with limited liability under the laws of the Cayman Islands.
The number of borrowers who have used the loan recommendation services has been growing rapidly. The Sentage Operating Companies’ value proposition to individual business owners is convenient access to various mortgage products offered by the Sentage Operating Companies’ network of funding partners.
The Sentage Operating Companies’ value proposition to individual business owners is convenient access to various mortgage products offered by the Sentage Operating Companies’ network of funding partners.
Offshore Investment Circular No.37 Under the Circular of the State Administration of Foreign Exchange on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles (《关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》), or the SAFE Circular 37, issued by the SAFE and effective on July 4, 2014, PRC residents are required to register with the local SAFE branch prior to the establishment or control of an offshore special purpose vehicle, or SPV, which is defined as offshore enterprises directly established or indirectly controlled by PRC residents for offshore equity financing of the enterprise assets or interests they hold in China.
If we intend to provide funding to our WFOE through capital injection at or after their establishment, we shall register the establishment of and any follow-on capital increase in our wholly foreign owned subsidiaries, or the VIEs to operate in China, with the State Administration for Industry and Commerce or its local counterparts, file such via the Foreign Investment Comprehensive Management Information System (the “FICMIS”) and register such with the local banks for the foreign exchange related matters. 82 Offshore Investment Circular No.37 Under the Circular of the State Administration of Foreign Exchange on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment by Domestic Residents via Special Purpose Vehicles ( 《关于境内居民通过特殊目的公司境外投融资及返程投资外汇管理有关问题的通知》 ), or the SAFE Circular 37, issued by the SAFE and effective on July 4, 2014, PRC residents are required to register with the local SAFE branch prior to the establishment or control of an offshore special purpose vehicle, or SPV, which is defined as offshore enterprises directly established or indirectly controlled by PRC residents for offshore equity financing of the enterprise assets or interests they hold in China.
Regulations on Prepaid Cards Business of Payment Institutions Order No. 2 regulates the prepaid cards (issued by magnetic stripe, chip and other technologies in the form of cards, passwords, etc.) issued by non-financial institutions for profit purpose and used by card owners to purchase goods and(or) services provided by parties other than the card issuer into the regulatory scope of the payment system.
Although we believe that No.7 Announcement does not have any material adverse impact on the overall business of Qingdao Buytop, there are uncertainties as to how Announcement No.7 will be interpreted and implemented. 73 Regulations on Prepaid Cards Business of Payment Institutions Order No. 2 regulates the prepaid cards (issued by magnetic stripe, chip and other technologies in the form of cards, passwords, etc.) issued by non-financial institutions for profit purpose and used by card owners to purchase goods and(or) services provided by parties other than the card issuer into the regulatory scope of the payment system.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Investing Activities Net cash used in investing activities amounted to $34,346 for the fiscal year ended December 31, 2022, mainly includes to consisting primarily of purchases of software products. Net cash used in investing activities amounted to $5,519,977 for the fiscal year ended December 31, 2021, mainly includes to purchase a one-year note with principal of $5.5 million.
Net cash used in investing activities amounted to $34,346 for the fiscal year ended December 31, 2022, mainly includes to consisting primarily of purchases of software products. Net cash used in investing activities amounted to $5,519,977 for the fiscal year ended December 31, 2021, mainly includes to purchase a one-year note with principal of $5.5 million.
The decrease in our revenues was primarily due to the following reasons: a) the servicing agreements under the consumer loan repayment and collection management business were fully completed in fiscal 2021 and no related revenue was generated in fiscal year 2022; b) the Company didn’t generate any revenue from the loan recommendation services in fiscal year 2022 because the Company was not able to engage any new customers in the peak season of this type of business during the COVID-19 lock down starting from April to June 2022; and c) the revenue from prepaid payment network services decreased sharply due to the decreased demand by customers caused by the uncertainties COVID-19.
The decrease in our revenues was primarily due to the following reasons: a) the servicing agreements under the consumer loan repayment and collection management business were fully completed in fiscal 2021 and no related revenue was generated in fiscal year 2022; b) the Company didn’t generate any revenue from the loan recommendation services in fiscal year 2022, because the Company was not able to engage any new customers in the peak season of this type of business during the COVID-19 lock down starting from April to June 2022; and c) the revenue from prepaid payment network services decreased sharply, due to the decreased demand by customers caused by the uncertainties attributed to COVID-19.
During the year ended December 31, 2022, the Sentage Operating Companies was not able to provide Loan recommendation Services and was not able to generate revenue because the temporary COVID-19 lock down from April 2022 to June 2022 prevented the Sentage Operating Companies from face-to-face interactions with prospective customers during the peak season of this type of business. (3).
During the year ended December 31, 2022, the Sentage Operating Companies was not able to provide Loan recommendation Services and was not able to generate revenue because the temporary COVID-19 lock down from April 2022 to June 2022 prevented the Sentage Operating Companies from face-to-face interactions with prospective customers during the peak season of this type of business.
E. Critical Accounting Estimates We prepare our financial statements in accordance with U.S. GAAP, which requires our management to make judgment, estimates and assumptions that affect our reporting of, among other things, assets and liabilities, contingent assets and liabilities and revenue and expenses.
Critical Accounting Estimates We prepare our financial statements in accordance with U.S. GAAP, which requires our management to make judgment, estimates and assumptions that affect our reporting of, among other things, assets and liabilities, contingent assets and liabilities and revenue and expenses.
However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we will continue to monitor our tax status. 100 The implementation rules of the EIT Law provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or gains are treated as China-sourced income.
However, as the tax residency status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable to our offshore entities, we will continue to monitor our tax status. 93 The implementation rules of the EIT Law provide that, (i) if the enterprise that distributes dividends is domiciled in the PRC or (ii) if gains are realized from transferring equity interests of enterprises domiciled in the PRC, then such dividends or gains are treated as China-sourced income.
If the Sentage Operating Companies are unable to attract qualified borrowers or if borrowers do not continue to use our loan recommendation services at the current rates and/or the Sentage Operating Companies are unable to increase the overall loan volume as we expect, the Sentage Operating Companies’ business and results of operations may be adversely affected. 93 Ability to Expand the Prepaid Payment Network Services We started to generate revenue from the Sentage Operating Companies’ prepaid payment network services in August 2019.
If the Sentage Operating Companies are unable to attract qualified borrowers or if borrowers do not continue to use our loan recommendation services at the current rates and/or the Sentage Operating Companies are unable to increase the overall loan volume as we expect, the Sentage Operating Companies’ business and results of operations may be adversely affected. 87 Ability to Expand the Prepaid Payment Network Services We started to generate revenue from the Sentage Operating Companies’ prepaid payment network services in August 2019.
Therefore, Dentons believes that it is possible but highly unlikely that the income received by our overseas shareholders will be regarded as China-sourced income. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes.
Therefore, Dacheng believes that it is possible but highly unlikely that the income received by our overseas shareholders will be regarded as China-sourced income. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes.
There was no revenue generated in the loan repayment and collection management services in fiscal year 2022, and the Sentage Operating Companies continue to explore new opportunities to engage new customers in 2023. These loans were consumer loan products ranging from 30,000 RMB (approximately $4,342) to 80,000 RMB (approximately US$11,579), with terms ranging from one year to four years.
There was no revenue generated in the loan repayment and collection management services in fiscal year 2023, and the Sentage Operating Companies continue to explore new opportunities to engage new customers in 2024. These loans were consumer loan products ranging from 30,000 RMB (approximately $4,342) to 80,000 RMB (approximately US$11,579), with terms ranging from one year to four years.
Dentons, our PRC counsel, is unable to provide a “will” opinion because it believes that it is more likely than not that we and our offshore subsidiaries would be treated as non-resident enterprises for PRC tax purposes because we do not meet some of the conditions outlined in SAT Notice 82.
Dacheng, our PRC counsel, is unable to provide a “will” opinion because it believes that it is more likely than not that we and our offshore subsidiaries would be treated as non-resident enterprises for PRC tax purposes because we do not meet some of the conditions outlined in SAT Notice 82.
In addition, Dentons is not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities as of the date of this annual report.
In addition, Dacheng is not aware of any offshore holding companies with a corporate structure similar to ours that has been deemed a PRC “resident enterprise” by the PRC tax authorities as of the date of this annual report.
If all or a part of the loan is still not repaid after all collection management efforts are exhausted within such required service period, the Sentage Operating Companies’ service obligation related to such loan is satisfied and the Sentage Operating Companies are not responsible for any loss from an uncollectible. 104 The Sentage Operating Companies’ loan repayment and collection management services primarily include reconciling borrower repayment record and sending payment reminder and notice periodically facilitating repayment upon maturity and collaborating with third-party collection agents and law firms in the event of delinquency, etc.
If all or a part of the loan is still not repaid after all collection management efforts are exhausted within such required service period, the Sentage Operating Companies’ service obligation related to such loan is satisfied and the Sentage Operating Companies are not responsible for any loss from an uncollectible. 97 The Sentage Operating Companies’ loan repayment and collection management services primarily included reconciling borrower repayment record and sending payment reminder and notice periodically facilitating repayment upon maturity and collaborating with third-party collection agents and law firms in the event of delinquency, etc.
We currently report our operating revenue, through the Sentage Operating Companies, from three main revenue streams, namely, (i) consumer loan repayment and collection management service fees, (ii) loan recommendation service fees, and (iii) prepaid payment network service fees. 92 A.
We currently report our operating revenue, through the Sentage Operating Companies, from three main revenue streams, namely, (i) consumer loan repayment and collection management service fees, (ii) loan recommendation service fees, and (iii) prepaid payment network service fees. 86 A.
This was due to an additional asset impairment loss in fiscal 2021. Provision for Income Taxes Our provision for income taxes was nil in fiscal year ended December 31, 2022, a decrease of $257,343, or 100.0%, from $257,343 in fiscal year ended December 31, 2021.
This was due to an additional asset impairment loss in fiscal 2021. Provision for Income Taxes Our provision for income taxes was nil in fiscal year ended December 31, 2022, a decrease of $257,344, or 100.0%, from $257,344 in fiscal year ended December 31, 2021.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2022 to December 31, 2022 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.
Trend Information Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2023 to December 31, 2023 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions. 96 E.
This is primarily due to a deposit of $3,570,000 paid by the Company in fiscal year 2022 for the commissioned acquisition of an e-commerce technology services business. 102 Net cash used in operating activities was $385,664 for the fiscal year ended December 31, 2021, which primarily consisted of the following: ● Net loss of $1,093,241 for the fiscal year. ● A decrease in accounts receivable of $763,240.
This is primarily due to a deposit of $3,570,000 paid by the Company in fiscal year 2022 for the commissioned acquisition of an e-commerce technology services business. 95 Net cash used in operating activities was $382,664 for the fiscal year ended December 31, 2021, which primarily consisted of the following: ● Net loss of $1,093,241 for the fiscal year. ● A decrease in accounts receivable of $763,240.
The Sentage Operating Companies plans to find new business directions by adjusting business plan accordingly. 96 Operating expenses Our operating expenses primarily consist of the Sentage Operating Companies’ selling and marketing expenses and general and administrative expenses.
The Sentage Operating Companies plan to find new business directions by adjusting business plan accordingly. Operating expenses Our operating expenses primarily consist of the Sentage Operating Companies’ selling and marketing expenses and general and administrative expenses.
Accounts receivable of approximately $0.4 million associated with services rendered for our prepaid payment network business and loan recommendation business has been billed to our customers but has not been collected as of the balance sheet dates. We also borrowed approximately $ 4,709, which was provided by our controlling shareholder, Ms. Qiaoling Lu, to support our working capital need. Ms.
Accounts receivable of approximately $0.5 million associated with services rendered for our prepaid payment network business and loan recommendation business has been billed to our customers but has not been collected as of the balance sheet dates. We also borrowed approximately $344,235, which was provided by our controlling shareholder, Ms. Qiaoling Lu, to support our working capital need. Ms.
Loan Repayment and Collection Management Services Revenue from consumer loan repayment and collection management business accounted for 0%, 6.9% and 29.9% of the total revenue for the fiscal years ended December 31, 2022, 2021 and 2020, respectively.
Loan Repayment and Collection Management Services Revenue from consumer loan repayment and collection management business accounted for 0%, 0% and 6.9% of the total revenue for the fiscal years ended December 31, 2023, 2022 and 2021, respectively.
In assessing our liquidity, our management monitors and analyzes our cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of December 31, 2022, we had cash and restricted cash of approximately $3.8 million.
In assessing our liquidity, our management monitors and analyzes our cash on-hand, our ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of December 31, 2023, we had cash and restricted cash of approximately $2.3 million.
Interest and penalties recognized related to an unrecognized tax benefits are classified as income tax expense in the consolidated statements of comprehensive income.
Interest and penalties recognized related to an unrecognized tax benefit are classified as income tax expense in the consolidated statements of comprehensive income. 98
Liquidity and Capital Resources Cash Flows and Working Capital The principal sources of liquidity have been from cash generated from operating and financing activities . As of December 31, 2020, 2021 and 2022, we had $140,382, $10,783,387 and $3,828,224 for cash, cash equivalents and restricted cash, respectively. Our cash and cash equivalents are primarily denominated in Renminbi and US dollars.
Liquidity and Capital Resources Cash Flows and Working Capital The principal sources of liquidity have been from cash generated from operating and financing activities. As of December 31, 2021, 2022 and 2023, we had $$10,783,387, $3,828,224 and $2,289,008 for cash, cash equivalents and restricted cash, respectively. Our cash and cash equivalents are primarily denominated in Renminbi and US dollars.
Prepaid Payment Network Services Revenue from the prepaid payment network service business accounted for 100 %, 41.0% and 12.0% of our total revenue for the fiscal years ended December 31, 2022,2021 and 2020, respectively. The Sentage Operating Companies started this service in August 2019 and only provided prepaid payment network consulting services to four customers in the fiscal year 2020.
Prepaid Payment Network Services Revenue from the prepaid payment network service business accounted for 100%, 100% and 41.0%% of our total revenue for the fiscal years ended December 31, 2023,2022 and 2021, respectively. The Sentage Operating Companies started this service in August 2019. During fiscal year 2021, the Sentage Operating Companies provided prepaid payment network consulting services to seven customers.
Results of Operations The following table sets forth a summary of our consolidated results of operations, for the period indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.
This represents an increase of $38,519. 90 Results of Operations The following table sets forth a summary of our consolidated results of operations, for the period indicated. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.
Qiaoling Lu will not seek repayment of her related party balance of $ 4,709 as of December 31, 2022 until at least 12 months from the issuance of the financial statements. 101 Currently, we improve our liquidity and capital sources primarily through cash flows from operation and financial support from our principal shareholders.
Qiaoling Lu will not seek repayment of her related party balance of $344,235 as of December 31, 2023 until at least 12 months from the issuance of the financial statements. 94 Currently, we improve our liquidity and capital sources primarily through cash flows from operation and financial support from our principal shareholders.
For the fiscal years ended December 31, 2022 and 2021, we earned $161,372 and $928,565 in revenue from providing technology consulting and support service to customers, respectively. 105 Income Taxes Income taxes are accounted for under the asset and liability method.
For the fiscal years ended December 31, 2023 and 2022, we earned $146,554 and $161,372 in revenue from providing technology consulting and support service to customers, respectively. Income Taxes Income taxes are accounted for under the asset and liability method.
The service agreements were fully completed in the year ended December 31, 2021. During fiscal year 2022, due the uncertainties caused by the COVID-19, our prospective business partners was not able to start new cooperation with us, resulting in the loss of revenue, which had an adverse impact on our business, results of operation, and financial condition. (2).
During fiscal year 2022, due to the uncertainties caused by the COVID-19, our prospective business partners were not able to start new cooperations with us, resulting in the loss of revenue, which had an adverse impact on our business, results of operation, and financial condition.
Net Income/(Loss) As a result of the foregoing, we reported a net loss of $2,561,907 for the fiscal year ended December 31, 2022, representing a $1,468,666 decrease from the net income of $1,093,241 for the fiscal year ended December 31, 2021.
Net Loss As a result of the foregoing, we reported a net loss of $2,561,907 for the fiscal year ended December 31, 2022, representing a $1,468,666 increase from the net income of $1,093,241 for the fiscal year ended December 31, 2021. 92 Taxation Cayman Islands We are incorporated and registered in the Cayman Islands.
There was no cash used in investing activities in 2020 fiscal year. Financing Activities Net cash provided by financing activities amounted to $173,162 for the fiscal year ended December 31, 2022, primarily the repayment of working capital of related parties $ 156,311.
Financing Activities Net cash provided by financing activities amounted to $339,526 for the fiscal year ended December 31, 2023, primarily the proceeds from working capital of related parties $ 339,526. Net cash used in financing activities amounted to $156,311 for the fiscal year ended December 31, 2022, primarily the repayment of working capital of related parties $ 156,311.
If all or a part of the loan was still not repaid after all collection management efforts were exhausted within such required service period, our service obligation related to such loan was satisfied and the Sentage Operating Companies were not responsible for any loss from uncollectible loan. 95 At the beginning of the 2020 fiscal year, the Sentage Operating Companies had a total of 5,229 outstanding service agreements from customers.
If all or a part of the loan was still not repaid after all collection management efforts were exhausted within such required service period, our service obligation related to such loan was satisfied and the Sentage Operating Companies were not responsible for any loss from uncollectible loan. The service agreements were fully completed in the year ended December 31, 2021.
In light of the effects of the COVID-19 pandemic as discussed above, if we are required to operate in a challenging economic environment in China, if we incur unanticipated capital expenditures, or if we decide to accelerate our growth, we may need additional financing.
In order to fully implement our business plan, we may also need to raise capital from outside investors. In light of the effects of the COVID-19 pandemic as discussed above, if we are required to operate in a challenging economic environment in China, if we incur unanticipated capital expenditures, we may need additional financing.
The EIT Law and its implementation rules provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption. 99 Under the EIT Law, an enterprise established outside of China with a “de facto management body” within China is considered a “resident enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes.
The EIT Law and its implementation rules provide that China-sourced income of foreign enterprises, such as dividends paid by a PRC subsidiary to its equity holders that are non-resident enterprises, will normally be subject to PRC withholding tax at a rate of 10%, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential tax rate or a tax exemption.
Net cash provided by financing activities amounted to $16,401,297 for the fiscal year ended December 31, 2021, primarily consisting of the proceeds from IPO in the amount of $16,912,053 and the repayment of working capital of related parties $ 1,276,641.
Net cash provided by financing activities amounted to $16,401,297 for the fiscal year ended December 31, 2021, primarily consisting of the proceeds from IPO in the amount of $16,912,053 and the repayment of working capital of related parties $ 1,276,641. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business—Intellectual Property.” D.
The following table sets forth a summary of our cash flows for the periods presented: Years Ended December 31, 2020 2021 2022 Net cash provided by (used in) operating activities $ 465,210 ) $ (382,664 ) $ (6,662,609 ) Net cash provided by (used in) investing activities - (5,519,977 ) (34,346 ) Net cash provided by (used in) financing activities (585,859 ) 16,401,297 (173,162 ) Effect of exchange rate change on cash and restricted cash 10,000 144,349 (85,046 ) Net increase (decrease) in cash and restricted cash $ (110,649 ) $ 10,643,005 $ (6,955,163 ) Cash and restricted cash, beginning of year 251,031 140,382 10,783,387 Cash and restricted cash, end of year $ 140,382 $ 10,783,387 $ 3,828,224 Operating Activities Net cash used in operating activities was $6,662,609 for the fiscal year ended December 31, 2022, which primarily consisted of the following: ● Net loss of $ 2,561,907 for the fiscal year. ● A decrease in Prepaid expenses and other current assets of $4,064,584.
The following table sets forth a summary of our cash flows for the periods presented: Years Ended December 31, 2021 2022 2023 Net cash used in operating activities $ (382,664 ) $ (6,679,460 ) $ (1,826,944 ) Net cash used in investing activities (5,519,977 ) (34,346 ) (23,433 ) Net cash provided by (used in) financing activities 16,401,297 (156,311 ) 339,526 Effect of exchange rate change on cash and restricted cash 144,349 (85,046 ) (28,365 ) Net increase (decrease) in cash and restricted cash $ 10,643,005 $ (6,955,163 ) $ (1,539,216 ) Cash and restricted cash, beginning of year 140,382 10,783,387 3,828,224 Cash and restricted cash, end of year $ 10,783,387 $ 3,828,224 $ 2,289,008 Operating Activities Net cash used in operating activities was $1,826,944 for the fiscal year ended December 31, 2023, which primarily consisted of the following: ● Net loss of $1,903,277 for the fiscal year. ● A decrease in Accrued expenses and other current liabilities of $ 54,868.
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 Revenues Total operating revenue decreased by $1,332,960, or 37.1%, to $2,262,449 for the fiscal year ended December 31, 2021 from $3,595,409 for the fiscal year ended December 31, 2020.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenues Total operating revenue decreased by $2,101,077, or 92.9%, to $161,372 for the fiscal year ended December 31, 2022, from $2,262,449 for the fiscal year ended December 31, 2021.
The decrease was due to the recognition of such amount as revenue when our performance obligation associated with our consumer loan repayment and collection management services had been satisfied during the 2020 fiscal year.
The decrease was due to the recognition of such amount as revenue when our performance obligation associated with our consumer loan repayment and collection management services had been satisfied during the 2021 fiscal year Investing Activities Net cash used in investing activities amounted to $23,433 for the fiscal year ended December 31, 2023, mainly includes to consisting primarily of purchases of software products.
Key Components of Results of Operations Revenues 2020 2021 2022 Amount % Amount % Amount % Consumer loan repayment and collection management fees 1,074,734 29.9 156,062 6.9 - - Loan recommendation service fees 2,087,717 58.1 1,177,822 52.1 - - Prepaid payment network service fees 432,958 12.0 928,565 41.0 161,372 100.0 Total operating revenue 3,595,409 100.0 2,262,449 100.0 161,372 100.0 (1).
In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs. 88 Key Components of Results of Operations Revenues 2021 2022 2023 Amount % Amount % Amount % Consumer loan repayment and collection management fees 156,062 6.9 - - - - Loan recommendation service fees 1,177,822 52.1 - - - - Prepaid payment network service fees 928,565 41.0 161,372 100.0 146,554 100.0 Total operating revenue 2,262,449 100.0 161,372 100.0 146,554 100.0 (1).
Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands. Hong Kong Entities incorporated in Hong Kong are subject to profits tax in Hong Kong at the rate of 16.5%.
Hong Kong Entities incorporated in Hong Kong are subject to profits tax in Hong Kong at the rate of 16.5%.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 2020 2021 2022 Amount % Amount % Amount % Summary Consolidated Statements of Operations: Operating revenue Consumer loan repayment and collection management fees 1,074,734 29.9 156,062 6.9 - - Loan recommendation service fees 2,087,717 58.1 1,177,822 52.1 - - Prepaid payment network service fees 432,958 12.0 928,565 41.0 161,372 100.0 Total operating revenue 3,595,409 100.0 2,262,449 100.0 161,372 100.0 Operating expenses: Selling, general and administrative expenses 1,414,979 39.4 3,041,415 134.4 2,732,379 1,693.2 Total operating expenses 1,414,979 39.4 3,041,415 134.4 2,732,379 1,693.2 Income from operations 2,180,430 60.6 (778,966 ) (34.4 ) (2,571,007 ) (1,593.2 ) Other income (expenses) (354 ) * (56,931 ) (2.5 ) 9,100 5.6 Income before income tax provision 2,180,076 60.6 (835,897 ) (36.9 ) (2,561,907 ) (1,587.6 ) Provision for income taxes 592,701 16.5 257,344 11.4 - - Net (loss)/income 1,587,375 44.2 (1,093,241 ) (48.3 ) (2,561,907 ) (1,587.6 ) * Denotes percentages between (0.1%) and 0.1%. 97 Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenues Total operating revenue decreased by $2,101,077, or 92.9%, to $161,372 for the fiscal year ended December 31, 2022 from $2,262,449 for the fiscal year ended December 31, 2021.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 2021 2022 2023 Amount % Amount % Amount % Summary Consolidated Statements of Operations: Operating revenue Consumer loan repayment and collection management fees 156,062 6.9 - - - - Loan recommendation service fees 1,177,822 52.1 - - - - Prepaid payment network service fees 928,565 41.0 161,372 100.0 146,554 100.0 Total operating revenue 2,262,449 100.0 161,372 100.0 146,554 100.0 Cost of revenue and related tax Cost of revenue 34,092 1.5 17,833 11.1 12,597 8.6 Business and sales related tax 464 * - - - - Total cost of revenue and related tax 34,556 1.5 17,833 11.1 12,597 8.6 GROSS PROFIT 2,227,893 98.5 143,539 88.9 133,957 91.4 Operating expenses: Selling, general and administrative expenses 3,006,859 132.9 2,714,546 1,682.2 1,897,512 1,294.8 Total operating expenses 3,006,859 132.9 2,714,546 1,682.2 1,897,512 1,294.8 Income from operations (778,966 ) (34.4 ) (2,571,007 ) (1,593.2 ) (1,763,555 ) (1,203.3 ) Other income (expenses) (56,931 ) (2.5 ) 9,100 5.6 (139,722 ) (95.3 ) Loss before income tax provision (835,897 ) (36.9 ) (2,561,907 ) (1,587.6 ) (1,903,277 ) (1,298.7 ) Income tax expense 257,344 11.4 - - - - Net loss (1,093,241 ) (48.3 ) (2,561,907 ) (1,587.6 ) (1,903,277 ) (1,298.7 ) * Denotes percentages between (0.1%) and 0.1%.
Loan Recommendation Services Revenue from the loan recommendation business accounted for 0%, 52.1% and 58.1% of our total revenue for the fiscal years ended December 31, 2022, 2021 and 2020, respectively. During the fiscal year 2020, the Sentage Operating Companies successfully recommended 115 borrowers to the funding partners.
It has also had an adverse impact on our business, operational performance, and financial condition in fiscal year 2023. (2). Loan Recommendation Services Revenue from the loan recommendation business accounted for 0%, 0% and 52.1% of our total revenue for the fiscal years ended December 31, 2023, 2022 and 2021, respectively.
During the fiscal year 2021, the Sentage Operating Companies provided prepaid payment network consulting services to seven customers. During the year ended December 31, 2022, the Sentage Operating Companies provided prepaid payment network consulting services to four customers.
During the year ended December 31, 2022, the Sentage Operating Companies provided prepaid payment network consulting services to four customers. Due to great changes in market orientation and demand, the Sentage Operating Companies’ business is also undergoing rapid adjustment along with changes in national policies.
This increase was mainly due to the fees incurred in connection with our initial public offering. Other income (expenses) Our other income (expense) consists primarily of bank fees, penalties, impairment losses on assets, and gains and losses on the disposal of fixed assets.
Other income (expenses) Our other income (expense) consists primarily of bank fees, foreign exchange gain or loss, impairment losses on assets, and gains and losses on the disposal of fixed assets. In fiscal year 2023, our net other expense was $(139,722), a increase of $148,822 from net other income of $9,100 in fiscal year 2022.
For the fiscal years ending December 31, 2022 and 2021, our selling, general and administrative expenses amounted to $2,732,379 and $3,041,415, respectively, a decreased of $ 309,036 or 10%. This decrease was primarily due to expenses related to our initial public offering incurred in fiscal 2021 while none incurred in fiscal year 2022.
Selling, general and administrative expenses For the fiscal years ended December 31, 2022 and 2021, our selling, general and administrative expenses amounted to $2,714,546 and $3,006,859, respectively. For fiscal year 2022, there was a decrease of $292,313, or 9.7%, as compared with fiscal year 2021.
Net Income/(Loss) As a result of the foregoing, we reported a net loss of $1,093,241 for the fiscal year ended December 31, 2021, representing a $2,680,616 decrease from the net income of $1,587,375 for the fiscal year ended December 31, 2020. Taxation Cayman Islands We are incorporated in the Cayman Islands.
This was due to an asset impairment loss in fiscal 2023. 91 Net Loss As a result of the foregoing, we reported a net loss of $1,903,277 for the fiscal year ended December 31, 2023, representing a $658,630 decrease from a net loss of $2,561,907 for the fiscal year ended December 31, 2022.
Removed
In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs. 94 Impact of the COVID-19 Pandemic In December 2019, a novel strain of coronavirus was reported in Wuhan, China. On March 11, 2020, the World Health Organization categorized it as a pandemic.
Added
In fiscal year 2023, the ongoing impact of COVID-19 led to a decrease in market demand, prompting the Company to adjust and improve its Loan Repayment and Collection Management Services to align with market needs. This adjustment may require more time to implement, thus continuing to affect the company’s revenue.
Removed
The COVID-19 outbreak has caused lockdowns, travel restrictions, and closures of businesses across the globe. I n early 2022, the Omicron variant of COVID-19 made its presence felt in China, especially in Jilin Province, Shenzhen and Shanghai where strict lockdowns were imposed.
Added
During the year ended 31 December 2023, due to the diversified needs of the market and customers, the Company is in the process of adapting and improving its products and services to meet the market demand, this adjustment may take more time to implement and has impacted the Company’s financial results for fiscal year 2023. 89 (3).
Removed
Sentage Operating Company’s business facility in Shanghai, China, was temporarily closed in April 2022 and resumed operation in the first week of June 2022.
Added
During the year ended December 31, 2023, the Sentage Operating Companies provided prepaid payment network consulting services to three customers. Revenue generated from services provided decreased by approximately $15,000 compared to fiscal year 2022. As of the date of this annual report, we anticipate that all aspects of the market will gradually stabilize.
Removed
For the consumer loan repayment and collection management business, due to the uncertainties caused by the COVID-19, our prospective business partners were not able to start new cooperation with us and we were not able to generate any revenue for fiscal year 2022.
Added
Our selling, general and administrative expenses mainly consisted of professional expenses (including audit expense, legal expense, printer expense, Nasdaq annual fees, etc.), employee compensations, rental expenses, and other expenses such as travel expenses, entertainment expenses, etc. 2023 2022 Fluctuation Amount % Amount % Amount % Summary selling, general and administrative expenses: Professional expenses 893,137 47.1 1,567,007 57.7 (673,870 ) (43.0 ) Employee compensations 722,938 38.1 920,739 33.9 (197,801 ) (21.5 ) Rental expenses 156,782 8.3 140,664 5.2 16,118 11.5 Other expenses 124,655 6.5 86,136 3.2 38,519 44.7 Total selling, general and administrative expenses 1,897,512 100 2,714,546 100 (817,034 ) (30.1 ) For the fiscal years ended December 31, 2023 and 2022, our selling, general and administrative expenses amounted to $1,897,512 and $2,714,546, respectively.
Removed
For the loan recommendation services, which requires face-to-face interaction with potential customers, the temporary lock down from April 2022 to June 2022 severely impacted our ability to generate new business.
Added
For fiscal year 2023, there was a decrease of $817,034, or 30.1%, as compared with fiscal year 2022.
Removed
Even after June 2022, due to the uncertainties caused by COVID-19, the demand from customers decreased sharply and the we were not able to generate any revenue for fiscal year 2022. For the prepaid payment network services, the revenue in 2022 declined sharply because decreased demand from customers due to the uncertainties caused by COVID-19.
Added
The decrease was primarily due to the following (i) professional fees decreased by $673,870 from $1,567,007 in fiscal 2023 to $893,137 in fiscal 2022 due to a decrease in consulting services paid to third-party professionals, as the need for consulting services diminished following the Company’s initial public offering; (ii) employee compensation decreased by $197,801 from $920,739 in fiscal year 2022 to $722,938 in fiscal 2023, primarily due to a reduction in the Company’s headcount, which resulted in a reduction in base salaries and social security; (iii) an increase in rental expenses of $16,118 from $140,664 in fiscal year 2022 to $156,782 in fiscal year 2023, due to the new lease contracts signed in March 2023; and (iv) an increase in other expenses, such as office expenses and travel, from $86,136 in fiscal year 2022 to $124,655 in fiscal year 2023, due to increased business activities as a result of no longer being subject to the impacts of COVID-19 in fiscal year 2023.
Removed
Although China relaxed the COVID-19 restrictions at the end of 2022, because the COVID-19 has deeply affected businesses and economy in China from 2020 to 2022, the extent of any future impact of COVID-19 on our operations remains highly uncertain and unpredictable.
Added
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Revenues Total operating revenue decreased by $14,818, or 9.2%, to $146,554 for the fiscal year ended December 31, 2023, from $161,372 for the fiscal year ended December 31, 2022.The modest change in revenue is due to a slight reduction in the services provided by the Company’s Prepaid payment network service fees in fiscal 2023.
Removed
During the fiscal year ended December 31, 2020, the Sentage Operating Companies completed another 4,438 outstanding service agreements based on the contract terms, which brought the total number of outstanding service agreements as of December 31, 2020 to 791. During the fiscal year 2021, we completed another 791 outstanding service agreements based on the contract terms.
Added
There was no revenue generated from Consumer Loan Repayment and Collection Management Fees and Loan Recommendation Service Fees in both the 2023 and 2022 fiscal years. This was due to changes in the market environment following the end of COVID-19, prompting the Company to adjust and improve its products and services. However, these improvements will take time to complete.
Removed
Due to great changes in market orientation and demand, the company’s business is also undergoing rapid adjustment along with national policies, and the changes in the market. At present, all aspects of the market are gradually stabilizing.
Added
The decrease was primarily attributable to the following: (i) a decrease in the professional fees of $543,894 from $2,110,901 in fiscal year 2021 to $1,567,007 in fiscal year 2022, due to the fact that the Company incurred a one-time professional fees in relation to its initial public offering in fiscal year 2021; (ii) an increase of $161,184 from $759,555 in fiscal year 2021 to $920,739 in fiscal year 2022 in employee compensation, such as basic salaries, social insurance, and remuneration for the Company’s directors, which the Company did not incur prior to its initial public offering in fiscal year 2021; (iii) an increase in rental expenses of $119,269 from $21,395 in fiscal year 2021 to $140,664 in fiscal year 2022, due to the new lease contracts signed in October 2021; (iv) a decrease of $28,872 from $115,008 in fiscal year 2021 to $86,136 in fiscal year 2022 in the other expenses, such as office expense, R&D expenditure, and travel expense, as a result of decreased business activities, due to COVID-19 lock-downs in fiscal year 2022.
Removed
Our selling expense primarily include expenses incurred for business travel, meals, outsourced collection agent fees and other expenses related to the sales and marketing activities.
Added
The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains, or appreciation and there is no taxation in the nature of inheritance tax or estate duty.
Removed
Our general and administrative expenses primarily include the legal fee, audit fee, employee salaries, welfare, and insurance expenses, business consulting expenses, travel and transportation expenses for our management team, meals and entertainment expenses, office rental expense, depreciation expenses, and office supply and utility expenses.
Added
There are no other taxes likely to be material to us levied by the Government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or, after execution, brought within the jurisdiction of the Cayman Islands.
Removed
The decrease in our revenues was primarily due to the fact that the outstanding servicing agreements under the consumer loan repayment and collection management business were fully completed in fiscal 2021 and revenues from this business were significantly reduced in 2021. 98 Selling, general and administrative expenses For the fiscal years ending December 31, 2021 and 2020, our selling, general and administrative expenses amounted to $3,041,415 and $1,414,979, respectively, an increase of $1,626,436 or 115%.
Added
No stamp duty is payable in the Cayman Islands on the issue of shares by, or any transfers of shares of, Cayman Islands companies (except those which hold interests in land in the Cayman Islands). There are no exchange control regulations or currency restrictions in the Cayman Islands.
Removed
In fiscal year 2021, our net other expense was $56,931, an increase of $56,577 from net other expense of $354 in fiscal year 2020. This is due to an additional asset impairment loss in fiscal 2021.
Added
Payments of dividends and capital in respect of our Ordinary Shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Ordinary Shares be subject to Cayman Islands income or corporation tax.
Removed
Provision for Income Taxes Our provision for income taxes was $257,344 in fiscal year ended December 31, 2021, a decrease of $ 335,357, or 56.6%, from $592,701 in fiscal year ended December 31, 2020 due to our decreased taxable income.
Added
Under the EIT Law, an enterprise established outside of China with a “de facto management body” within China is considered a “resident enterprise,” which means that it is treated in a manner similar to a Chinese enterprise for enterprise income tax purposes.
Removed
In order to fully implement our business plan and sustain continued growth, we may also need to raise capital from outside investors.
Added
This is mainly due to the decrease in the number of employees in the company during the 2023 fiscal year, resulting in a decrease in the amount of wages payable.
Removed
The decrease was due to the recognition of such amount as revenue when our performance obligation associated with our consumer loan repayment and collection management services had been satisfied during the 2021 fiscal year Net cash provided by operating activities was $465,210 for the fiscal year ended December 31, 2020, which primarily consisted of the following: ● Net income of $1,587,375 for the fiscal year. ● An increase in accounts receivable of $918,303.
Added
Net cash used in operating activities was $6,679,460 for the fiscal year ended December 31, 2022, which primarily consisted of the following: ● Net loss of $2,561,907 for the fiscal year. ● A decrease in Prepaid expenses and other current assets of $4,064,584.
Removed
The increase was due to our provision of loan recommendation services and prepaid payment network services and, in connection with the two business lines, our performance obligation under our service agreements with clients had been fully satisfied. We had fully collected our accounts receivable by April 2021.
Removed
The collected accounts receivable is available cash, which can be used as working capital for our business operation, if necessary. ● A decrease in deferred revenue of $1,056,406.
Removed
Net cash used in financing activities amounted to $585,859 for the fiscal year ended December 31, 2020, primarily consisting of deferred initial public offering cost of $765,885 in connection with our intended IPO, and proceeds of $180,026 provided by related party as working capital. 103 C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B.
Removed
For the fiscal years ended December 31, 2022 and 2021, we generated nil and $1,177,822 in revenue from the loan recommendation service, respectively. Contract fulfillment costs associated with loan recommendation services primarily consist of employee salary, bonus and business travel costs incurred by the Sentage Operating Companies to fulfill their performance obligations.
Removed
Contract fulfillment costs are only capitalized when the costs generate or enhance resources that will be used in satisfying future performance obligations of the contract and the costs are expected to be recovered. For fiscal years ended December 31, 2022 and 2021,contract fulfillment costs were not capitalized and were expensed as incurred, due to immateriality of such costs.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

26 edited+11 added−2 removed28 unchanged
Our directors are not subject to a set term of office and hold office until the next general meeting called for the election of directors and until their successor is duly appointed or such time as they die, resign or are removed from office by a shareholders’ ordinary resolution.
Our directors are not subject to a set term of office and hold office until the next general meeting called for the election of directors and until their successor is duly appointed or such time as they die, resign or are removed from office by a shareholders’ ordinary resolution.
Colon received a Bachelor of Science in International Business; minor in Languages and Economics from St. John Fisher College in 1996. He currently holds FINRA Series 7, Series 63 and Series 65 and is a licensed broker with FINRA. Mr. Shengsong Wang is our Independent Director, within the meaning of the Nasdaq Listing Rules. Mr.
Colon received a Bachelor of Science in International Business; minor in Languages and Economics from St. John Fisher College in 1996. He currently holds FINRA Series 7, Series 63 and Series 65 and is a licensed broker with FINRA. 99 Mr. Shengsong Wang is our Independent Director, within the meaning of the Nasdaq Listing Rules. Mr.
Lu obtained her bachelor’s degree in International Economics from Shandong University of Finance and Economics in Jinan City, Shandong Province, China in 2002. 106 Mr. Jianhua Chen was appointed as our Chief Financial Officer September 1, 2020. He has served as the finance director of Daxin Wealth since June 2016.
Lu obtained her bachelor’s degree in International Economics from Shandong University of Finance and Economics in Jinan City, Shandong Province, China in 2002. Mr. Jianhua Chen was appointed as our Chief Financial Officer September 1, 2020. He has served as the finance director of Daxin Wealth since June 2016.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. B.
We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company. 100 B.
The nominating and corporate governance committee is responsible for, among other things: ● identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy; ● reviewing annually with our board of directors its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us; ● identifying and recommending to our board the directors to serve as members of committees; ● advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to our board of directors on all matters of corporate governance and on any corrective action to be taken; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 110 D.
The nominating and corporate governance committee is responsible for, among other things: ● identifying and recommending nominees for election or re-election to our board of directors or for appointment to fill any vacancy; ● reviewing annually with our board of directors its current composition in light of the characteristics of independence, age, skills, experience and availability of service to us; ● identifying and recommending to our board the directors to serve as members of committees; ● advising the board periodically with respect to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to our board of directors on all matters of corporate governance and on any corrective action to be taken; and ● monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
Wang also received a Master Degree from Harbin Normal University in 1986 and a Doctorate Degree in Law Jurisprudence from China University of Political Science and law in 2005. 107 Our officers are appointed by and serve at the discretion of our board of directors and the shareholders voting by ordinary resolution.
Wang also received a Master Degree from Harbin Normal University in 1986 and a Doctorate Degree in Law Jurisprudence from China University of Political Science and law in 2005. Our officers are appointed by and serve at the discretion of our board of directors and the shareholders voting by ordinary resolution.
Michael John Viotto is the chairperson of our compensation committee. We have determined that Michael John Viotto, Angel Colon, and Shengsong Wang satisfy the “independence” requirements of the Nasdaq listing rules and Rule 10C-1 under the Securities Exchange Act.
Compensation Committee Our compensation committee consists of Michael John Viotto, Angel Colon, and Shengsong Wang. Michael John Viotto is the chairperson of our compensation committee. We have determined that Michael John Viotto, Angel Colon, and Shengsong Wang satisfy the “independence” requirements of the Nasdaq listing rules and Rule 10C-1 under the Securities Exchange Act.
We believe that we maintain a good working relationship with our employees and to date, we have not experienced any significant labor disputes. E.
We believe that we maintain a good working relationship with our employees and to date, we have not experienced any significant labor disputes. 103 E.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2022: The following table sets forth the breakdown of our employees by function as of the date of this annual report: Function Number of Employees % of Total General Manager’s Office 1 4.8 % Finance Department 3 14 % Risk control center 9 42.9 % Business Department 1 4.8 % Operating department 1 4.8 % Marketing department 1 4.8 % Technical department 3 14.3 % Non-performing Assets Department 1 4.8 % Integrated department 1 4.8 % As required by regulations in China, we participate in various employee social security plans that are organized by local governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2023: The following table sets forth the breakdown of our employees by function as of the date of this annual report: Function Number of Employees % of Total General Manager’s Office 1 7.1 % Finance Department 3 21.4 % Risk control center 2 14.3 % Business Department 1 7.1 % Operating department 1 7.1 % Marketing department 1 7.1 % Technical department 3 21.4 % Non-performing Assets Department 1 7.1 % Integrated department 1 7.1 % As required by regulations in China, we participate in various employee social security plans that are organized by local governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance.
Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers. Pursuant to employment agreements, we agreed to employ each of our executive officers for a specified time period, which may be renewed upon both parties’ agreement 30 days before the end of the current employment term, and payment of cash compensation.
Pursuant to employment agreements, we agreed to employ each of our executive officers for a specified time period, which may be renewed upon both parties’ agreement 30 days before the end of the current employment term, and payment of cash compensation.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; and ● meeting separately and periodically with management and the independent auditors; and monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. 109 Compensation Committee Our compensation committee consists of Michael John Viotto, Angel Colon, and Shengsong Wang.
The audit committee is responsible for, among other things: ● appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; ● reviewing with the independent auditors any audit problems or difficulties and management’s response; ● discussing the annual audited financial statements with management and the independent auditors; ● reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; ● reviewing and approving all proposed related party transactions; and ● meeting separately and periodically with management and the independent auditors; and monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance.
The compensation committee is responsible for, among other things: ● reviewing and approving the total compensation package for our most senior executive officers; ● approving and overseeing the total compensation package for our executives other than the most senior executive officers; ● reviewing and recommending to the board with respect to the compensation of our directors; ● reviewing periodically and approving any long-term incentive compensation or equity plans; ● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and ● reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans.
The compensation committee is responsible for, among other things: ● reviewing and approving the total compensation package for our most senior executive officers; ● approving and overseeing the total compensation package for our executives other than the most senior executive officers; ● reviewing and recommending to the board with respect to the compensation of our directors; ● reviewing periodically and approving any long-term incentive compensation or equity plans; ● selecting compensation consultants, legal counsel or other advisors after taking into consideration all factors relevant to that person’s independence from management; and ● reviewing programs or similar arrangements, annual bonuses, employee pension and welfare benefit plans. 102 Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Shengsong Wang, Michael John Viotto, and Angel Colon.
Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2022, we, our subsidiaries and the VIEs, paid in aggregate cash compensation of approximately US$229,370.12 to our directors and executive officers as a group.
Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2023, we, our subsidiaries and the VIEs, paid in aggregate cash compensation of approximately US$229,939.34 to our directors and executive officers as a group.
Audit Committee Our audit committee consists of Angel Colon, Shengsong Wang, and Michael John Viotto. Angel Colon is the chairperson of our audit committee. We have determined that Angel Colon, Shengsong Wang, and Michael John Viotto satisfy the “independence” requirements of the Nasdaq listing rules under and Rule 10A-3 under the Securities Exchange Act.
We have determined that Angel Colon, Shengsong Wang, and Michael John Viotto satisfy the “independence” requirements of the Nasdaq listing rules under and Rule 10A-3 under the Securities Exchange Act.
Name and Address of Beneficial Owner Amount and nature of beneficial ownership Percentage of outstanding ordinary shares Directors and Executive Officers (1) Qiaoling Lu 1,650,000 58.93 % Jianhua Chen - - % Yiheng Guo 96,000 3.43 % Michael John Viotto - - Angel Colon - - Shengsong Wang - - All directors and executive officers as a group 1,746,000 62.36 % 5% or Greater Shareholders (2) Unit Giant Limited (3) 1,650,000 58.93 % Notes: (1) Unless otherwise indicated, the business address of each of the individuals is 501, Platinum Tower, 233 Taicang Rd, HuangPu, Shanghai, PRC. 111 (2) Unless otherwise indicated, the business address of the following shareholders is Ritter House, Wickhams Cay II, PO Box 3170, Road Town, Tortola, British Virgin Islands.
Name and Address of Beneficial Owner Class A Ordinary Shares Percentage of outstanding Class A Ordinary Shares Directors and Executive Officers (1) Qiaoling Lu 1,650,000 58.93 % Jianhua Chen - - Yiheng Guo 96,000 3.43 % Michael John Viotto - - Angel Colon - - Shengsong Wang - - All directors and executive officers as a group 1,746,000 62.36 % 5% or Greater Shareholders (2) Unit Giant Limited (3) 1,650,000 58.93 % Notes: (1) Unless otherwise indicated, the business address of each of the individuals is 501, Platinum Tower, 233 Taicang Rd, HuangPu, Shanghai, PRC.
The office of a director will be vacated automatically if, among other things, the directors resigns in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally or is found to be or becomes of unsound mind. Family Relationships Ms. Qiaoling Lu and Mr. Yiheng Guo are wife and husband.
The office of a director will be vacated automatically if, among other things, the directors resigns in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally or is found to be or becomes of unsound mind.
Employees As of the date of this annual report, we employed 13 employees in Shanghai, China, and 8 employees in Qingdao, China. At December 31, 2020, 2021 and 2022, we had 26, 23, and 21 employees, respectively.
D. Employees As of the date of this annual report, we employed 9 employees in Shanghai, China, and 5 employees in Qingdao, China. At December 31, 2021, 2022, and 2023, we had 23, 21, and 14 employees, respectively.
Name Age Position Qiaoling Lu 43 Chief Executive Officer, Chairman of the Board of Directors, and Director Jianhua Chen 47 Chief Financial Officer Yiheng Guo 39 Director Michael JohnViotto (1)(2)(3) 71 Independent Director Angel Colon (1)(2)(3) 49 Independent Director Shengsong Wang (1)(2)(3) 67 Independent Director (1) Member of the Audit Committee (2) Member of the Nominating and Corporate Governance Committee (3) Member of the Compensation Committee Ms.
Name Age Position Qiaoling Lu 44 Chief Executive Officer, Chairman of the Board of Directors, and Director Jianhua Chen 48 Chief Financial Officer Yiheng Guo 40 Director Michael John Viotto (1)(2)(3) 72 Independent Director Angel Colon (1)(2)(3) 50 Independent Director Shengsong Wang (1)(2)(3) 68 Independent Director (1) Member of the Audit Committee (2) Member of the Nominating and Corporate Governance Committee (3) Member of the Compensation Committee Ms.
None of our other directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K. Involvement in Certain Legal Proceedings None of our directors or executive officers has, during the past 10 years, was involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K.
Involvement in Certain Legal Proceedings None of our directors or executive officers has, during the past 10 years, was involved in any legal proceedings described in subparagraph (f) of Item 401 of Regulation S-K. Employment Agreements and Indemnification Agreements We have entered into employment agreements with each of our executive officers.
The office of a director will be vacated automatically if, among other things, the directors resigns in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally or is found to be or becomes of unsound mind. 108 Duties of Directors Under Cayman Islands law, all of our directors owe three types of duties to us: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties.
The office of a director will be vacated automatically if, among other things, the directors resigns in writing, becomes bankrupt or makes any arrangement or composition with his/her creditors generally or is found to be or becomes of unsound mind.
Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Shengsong Wang, Michael John Viotto, and Angel Colon. Shengsong Wang is the chairperson of our nominating and corporate governance committee. Shengsong Wang, Michael John Viotto, and Angel Colon satisfy the “independence” requirements of the Nasdaq listing rules.
Shengsong Wang is the chairperson of our nominating and corporate governance committee. Shengsong Wang, Michael John Viotto, and Angel Colon satisfy the “independence” requirements of the Nasdaq listing rules. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
Committees of the Board of Directors We have established three fully independent committees under the board of directors: the audit committee, the nominating and corporate governance committee and the compensation committee. We have adopted a charter for each of the three committees. The committee charters are available on our website at www.sentageholdings.com. Each committee’s members and functions are described below.
We have adopted a charter for each of the three committees. The committee charters are available on our website at www.sentageholdings.com. Each committee’s members and functions are described below. Audit Committee Our audit committee consists of Angel Colon, Shengsong Wang, and Michael John Viotto. Angel Colon is the chairperson of our audit committee.
Share Ownership The following table sets forth information regarding the beneficial ownership based on 2,805,325 of our Ordinary Shares outstanding as of May 1, 2023 based on information obtained from the persons named below, with respect to the beneficial ownership of our shares by: ● each person known by us to be the beneficial owner of more than 5% of our outstanding shares; ● each of our officers and directors; and ● all our officers and directors as a group.
Share Ownership The following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under the Exchange Act, of our Class A Ordinary Shares and Class B Ordinary Shares as of the date of this annual report for: ● each person known by us to be the beneficial owner of more than 5% of our outstanding shares; ● each of our officers and directors; and ● all our officers and directors as a group.
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all Ordinary Shares beneficially owned by them.
Beneficial ownership includes voting or investment power with respect to the securities. Except as indicated below, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Class A Ordinary Shares or Class B Ordinary Shares shown as beneficially owned by them.
(3) The number of Ordinary Shares beneficially owned represents 1,650,000 Ordinary Shares held by Unit Giant Limited, a British Virgin Islands company, which is 100% owned by Qiaoling Lu. * less than 1% We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company.
We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our Company.
The Companies Act (2021 Revision) of the Cayman Islands imposes a number of statutory duties on a director.
Under Cayman Islands law, all of our directors owe three types of duties to us: (i) statutory duties, (ii) fiduciary duties, and (iii) common law duties. The Companies Act imposes a number of statutory duties on a director.
Removed
The functions and powers of our board of directors include, among others: ● appointing officers and determining the term of office of the officers; ● authorizing the payment of donations to religious, charitable, public, or other bodies, clubs, funds, or associations as deemed advisable; ● exercising the borrowing powers of the company and mortgaging the property of the company; ● executing checks, promissory notes, and other negotiable instruments on behalf of the company; and ● maintaining or registering a register of mortgages, charges, or other encumbrances of the company.
Added
Board Diversity The table below provides certain information regarding the diversity of our board of directors as of the date of this annual report.
Removed
The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees.
Added
Board Diversity Matrix Country of Principal Executive Offices: China Foreign Private Issuer Yes Disclosure Prohibited under Home Country Law No Total Number of Directors 5 Female Male Non- Binary Did Not Disclose Gender Part I: Gender Identity Directors 1 4 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 Family Relationships Ms.
Added
Qiaoling Lu and Mr. Yiheng Guo are wife and husband. None of our other directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
Added
Duties of Directors Subject to the provisions of the Companies Act and the Company’s amended and restated memorandum and articles of association, the business of the Company shall be managed by the directors who may for that purpose exercise all the powers of the Company.
Added
In fulfilling their duty of care to us, our directors must ensure compliance with our amended articles of association, as amended and restated from time to time.
Added
We have the right to seek damages where certain duties owed by any of our directors are breached. 101 Committees of the Board of Directors We have established three fully independent committees under the board of directors: the audit committee, the nominating and corporate governance committee and the compensation committee.
Added
Percentage of beneficial ownership of each listed person is based on 2,805,325 Class A Ordinary Shares outstanding and 0 Class B Ordinary Shares outstanding as of the date of this annual report.
Added
Information with respect to beneficial ownership has been furnished by each director, officer, or beneficial owner of 5% or more of Class A Ordinary Shares or Class B Ordinary Shares. Beneficial ownership is determined in accordance with the rules of the SEC and generally requires that such person have voting or investment power with respect to securities.
Added
In computing the number of shares beneficially owned by a person listed below and the percentage ownership of such person, shares underlying options, warrants, or convertible securities held by each such person that are exercisable or convertible within 60 days of the date of this annual report are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person.
Added
Except as otherwise indicated in the footnotes to this table, or as required by applicable community property laws, all persons listed have sole voting and investment power for all Class A Ordinary Shares or Class B Ordinary Shares shown as beneficially owned by them.
Added
(2) Unless otherwise indicated, the business address of the following shareholders is Ritter House, Wickhams Cay II, PO Box 3170, Road Town, Tortola, British Virgin Islands. (3) The number of Ordinary Shares beneficially owned represents 1,650,000 Ordinary Shares held by Unit Giant Limited, a British Virgin Islands company, which is 100% owned by Qiaoling Lu.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

3 edited+0 added−1 removed1 unchanged
Directors and Senior Management—Employment Agreements and Indemnification Agreements.” Other Transactions with Related Parties Amount due from related parties As of December 31, 2021 and 2022, and as of the date of this annual report, we had no Amounts due from related parties.
Directors and Senior Management—Employment Agreements and Indemnification Agreements.” 104 Other Transactions with Related Parties Amount due from related parties As of the date of this annual report and as of December 31, 2023, 2022, and 2021, we had no amounts due from related parties.
Qiaoling Lu, and was used as working capital during the Company’s normal course of business. Such advance was non-interest bearing and due on demand. Ms. Qiaoling Lu will not seek repayment of her related party balance until at least 12 months from the issuance of the consolidated financial statements for the year ended December 31, 2022. C.
Qiaoling Lu to be used as working capital during the Company’s normal course of business. Such advances were non-interest bearing and due on demand. Ms. Qiaoling Lu will not seek repayment of her related party balance until at least 12 months from the issuance of the consolidated financial statements for the year ended December 31, 2023. C.
Amount due to related parties As of December 31, 2022, 2021, and 2020, and as of the date of this annual report, the balance due to a related party in the amount of $ 4,709 and $161,020, and $1,437,661, respectively, was loan advance from the Company’s controlling shareholder, Ms.
Amount due to related parties As of the date of this annual report, and as of December 31, 2023, 2022, and 2021, the balance due to a related party was in the amount of $344,235; $344,235 $4,709 and $161,020, respectively, as loan advances from the Company’s controlling shareholder, Ms.
Removed
Interests of Experts and Counsel Not applicable. 112

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