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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 — 2023 vs 2024

Top changes in Sentage Holdings Inc.'s 2024 20-F

315 paragraphs added · 653 removed · 251 edited across 5 sections

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

108 edited+33 added−103 removed438 unchanged
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.
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 Class A Ordinary Shares or to other regulatory investigations and civil or criminal sanctions.
From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights.
From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights.
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.
These risks and challenges include our ability to, among other things: ● offer competitive product and services; ● broaden our prospective customer bases across three business lines; ● increase the utilization of our products and services by existing customers as well as new customers; ● maintain and enhance our relationship and business collaboration with our partners, including, but not limited to, developing cooperative relationships with new funding partners to provide borrowers with sufficient, diversified, and cost-effective funding options and maintaining strategic partnerships with NetsUnion Clearing Corporation, or NetsUnion; 10 ● navigate a complex and evolving regulatory environment in China; ● improve our operational efficiency; ● attract, retain and motivate talented employees to support our business growth; ● enhance our technology infrastructure to support the growth of our business, maintain the security of our systems, and safeguard the confidentiality of the information provided and utilized across our systems; ● navigate economic conditions and fluctuation; and\or ● defend ourselves against legal and regulatory actions, such as actions involving intellectual property or privacy claims.
These risks and challenges include our ability to, among other things: ● offer competitive product and services; ● broaden our prospective customer bases across three business lines; ● increase the utilization of our products and services by existing customers as well as new customers; ● maintain and enhance our relationship and business collaboration with our partners, including, but not limited to, developing cooperative relationships with new funding partners to provide borrowers with sufficient, diversified, and cost-effective funding options and maintaining strategic partnerships with NetsUnion Clearing Corporation, or NetsUnion; ● navigate a complex and evolving regulatory environment in China; ● improve our operational efficiency; ● attract, retain and motivate talented employees to support our business growth; ● enhance our technology infrastructure to support the growth of our business, maintain the security of our systems, and safeguard the confidentiality of the information provided and utilized across our systems; ● navigate economic conditions and fluctuation; and\or ● defend ourselves against legal and regulatory actions, such as actions involving intellectual property or privacy claims.
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.
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. 21 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.
Risk Factors—Risks Related to Our Corporate Structure.” We face various legal and operational risks and uncertainties associated with having substantially all of our operations in China and with the complex and evolving PRC laws and regulations, and as a result these risks may result in material changes in the operations of our subsidiaries, the VIEs, and their subsidiaries, significant depreciation or a complete loss of the value of our Ordinary Shares, or a complete hindrance of our ability to offer, or continue to offer, our securities to investors.
Risk Factors—Risks Related to Our Corporate Structure.” We face various legal and operational risks and uncertainties associated with having substantially all of our operations in China and with the complex and evolving PRC laws and regulations, and as a result these risks may result in material changes in the operations of our subsidiaries, the VIEs, and their subsidiaries, significant depreciation or a complete loss of the value of our Class A Ordinary Shares, or a complete hindrance of our ability to offer, or continue to offer, our securities to investors.
If any of our operating entities undergoes a voluntary or involuntary liquidation proceeding, its equity owners or unrelated third-party creditors may claim rights relating to some or all of these assets, which would hinder our ability to operate our business and could materially and adversely affect our business, our ability to generate revenue and the market price of our Ordinary Shares.
If any of our operating entities undergoes a voluntary or involuntary liquidation proceeding, its equity owners or unrelated third-party creditors may claim rights relating to some or all of these assets, which would hinder our ability to operate our business and could materially and adversely affect our business, our ability to generate revenue and the market price of our Class A Ordinary Shares.
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 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 Class A Ordinary Shares to significantly decline or be worthless.
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.
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. 18 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.
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 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 Class A 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, 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.
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. Changes in China’s economic, political, or social conditions or government policies could have a material adverse effect on our business and operations.
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.
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. 16 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.
Since we sell a majority of the products of our brand partners in the U.S., the fluctuations in exchange rates would have a negative effect on our business and results of operations and financial condition. Our business is conducted in the PRC, and our books and records are maintained in RMB, which is the currency of the PRC.
Since we sell a majority of the products of our brand partners in the U.S., the fluctuations in exchange rates would have a negative effect on our business and results of operations and financial condition. 29 Our business is conducted in the PRC, and our books and records are maintained in RMB, which is the currency of the PRC.
Any failure by us to fully comply with the new regulatory requirements, including, but not limited to the failure to complete the filing procedures with the CSRC if required, may significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Class A Ordinary Shares to significantly decline in value or become worthless. 40 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 by us to fully comply with the new regulatory requirements, including, but not limited to the failure to complete the filing procedures with the CSRC if required, may significantly limit or completely hinder our ability to offer or continue to offer our Class A Ordinary Shares, cause significant disruption to our business operations, and severely damage our reputation, which would materially and adversely affect our financial condition and results of operations and cause our Class A Ordinary Shares to significantly decline in value or become worthless. 38 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.
Organizational Structure,” as a form of foreign investment, it contains a catch-all provision under the definition of “foreign investment,” which includes investments made by foreign investors in China through other means stipulated by laws or administrative regulations or other methods prescribed by the State Council without elaboration on the meaning of “other means.” However, the Implementing Regulations of the Foreign Investment Law still do not specify whether foreign investment includes contractual arrangements. 6 It is possible that future laws, administrative regulations or provisions prescribed by the State Council may regard contractual arrangements as a form of foreign investment, at which time it will be uncertain whether the contractual arrangements will be deemed to be in violation of the foreign investment access requirements and how the above-mentioned contractual arrangements will be handled.
Organizational Structure,” as a form of foreign investment, it contains a catch-all provision under the definition of “foreign investment,” which includes investments made by foreign investors in China through other means stipulated by laws or administrative regulations or other methods prescribed by the State Council without elaboration on the meaning of “other means.” However, the Implementing Regulations of the Foreign Investment Law still do not specify whether foreign investment includes contractual arrangements. 8 It is possible that future laws, administrative regulations or provisions prescribed by the State Council may regard contractual arrangements as a form of foreign investment, at which time it will be uncertain whether the contractual arrangements will be deemed to be in violation of the foreign investment access requirements and how the above-mentioned contractual arrangements will be handled.
However, because rules and regulations in China can change quickly, and the Chinese government may exert more oversight and control over foreign investment in China-based issuers, our listing or SEC reports may be subject to the scrutiny of regulatory bodies in the PRC with little advance notice. 37 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.
However, because rules and regulations in China can change quickly, and the Chinese government may exert more oversight and control over foreign investment in China-based issuers, our listing or SEC reports may be subject to the scrutiny of regulatory bodies in the PRC with little advance notice. 35 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.
There are uncertainties about potential future actions by the PRC government that could affect the enforceability of our contractual arrangements with the VIEs and, consequently, significantly affect our financial performance. The value of the Ordinary Shares may significantly decline or become worthless as a result.
There are uncertainties about potential future actions by the PRC government that could affect the enforceability of our contractual arrangements with the VIEs and, consequently, significantly affect our financial performance. The value of the Class A Ordinary Shares may significantly decline or become worthless as a result.
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.
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. 37 The Trial Measures and other relevant rules promulgated by the CSRC may subject us to additional compliance requirements in the future.
A majority of our assets, including the necessary licenses to conduct business, are held by the VIEs and their subsidiaries. Substantially all of our revenue is generated by the VIEs. The deconsolidation of the VIEs would have a material adverse effect on our operations and substantially diminish the value of our Ordinary Shares.
A majority of our assets, including the necessary licenses to conduct business, are held by the VIEs and their subsidiaries. Substantially all of our revenue is generated by the VIEs. The deconsolidation of the VIEs would have a material adverse effect on our operations and substantially diminish the value of our Class A Ordinary Shares.
You may not realize a return on your investment in our Ordinary Shares and you may even lose your entire investment in our Ordinary Shares. We may become a passive foreign investment company, which could result in adverse United States federal income tax consequences to United States investors.
You may not realize a return on your investment in our Class A Ordinary Shares and you may even lose your entire investment in our Class A Ordinary Shares. We may become a passive foreign investment company, which could result in adverse United States federal income tax consequences to United States investors.
If such a licensing regime were introduced, we cannot assure you that we would be able to obtain any newly required license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability to continue our operations. 16 If we are unable to provide customers with satisfactory experience, or otherwise fail to maintain or enlarge our customer base, the volume of transactions processed via our prepaid payment network services may decline and our results of operations may be adversely affected.
If such a licensing regime were introduced, we cannot assure you that we would be able to obtain any newly required license in a timely manner, or at all, which could materially and adversely affect our business and impede our ability to continue our operations. 14 If we are unable to provide customers with satisfactory experience, or otherwise fail to maintain or enlarge our customer base, the volume of transactions processed via our prepaid payment network services may decline and our results of operations may be adversely affected.
These risks could result in a material adverse change in our operations and the value of our Ordinary Shares, significantly limit or completely hinder our ability to offer or continue to offer such securities to investors, or cause the value of such securities to significantly decline.
These risks could result in a material adverse change in our operations and the value of our Class A Ordinary Shares, significantly limit or completely hinder our ability to offer or continue to offer such securities to investors, or cause the value of such securities to significantly decline.
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.
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. 36 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.
PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using financing activities to make loans or additional capital contributions to the PRC operating entities and operating entities, which could harm our liquidity and our ability to fund and expand our business. 8 As an offshore holding company of the PRC Operating Entities, we may (i) make loans to the PRC Operating Entities, (ii) make additional capital contributions to the PRC Operating Entities, (iii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, and (iv) acquire offshore entities with business operations in China in an offshore transaction.
PRC regulation of loans and direct investment by offshore holding companies to PRC entities may delay or prevent us from using financing activities to make loans or additional capital contributions to the PRC Operating Entities and operating entities, which could harm our liquidity and our ability to fund and expand our business. 10 As an offshore holding company of the PRC Operating Entities, we may (i) make loans to the PRC Operating Entities, (ii) make additional capital contributions to the PRC Operating Entities, (iii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, and (iv) acquire offshore entities with business operations in China in an offshore transaction.
Although we believe that our corporate structure and contractual arrangements comply with current applicable PRC laws and regulations, in the event that PRC government determines that the contractual arrangements constituting part of our VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to asset our contractual rights over the assets of the VIEs and their subsidiaries, and our Ordinary Shares may decline in value or become worthless.
Although we believe that our corporate structure and contractual arrangements comply with current applicable PRC laws and regulations, in the event that PRC government determines that the contractual arrangements constituting part of our VIE structure do not comply with PRC regulations, or if these regulations change or are interpreted differently in the future, we may be unable to asset our contractual rights over the assets of the VIEs and their subsidiaries, and our Class A Ordinary Shares may decline in value or become worthless.
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.
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. 17 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.
Our issuance of additional Ordinary Shares or other equity securities of equal or senior rank would have the following effects: ● our existing shareholders’ proportionate ownership interest in us will decrease; ● the amount of cash available per share, including for payment of dividends in the future, may decrease; ● the relative voting strength of each previously outstanding share may be diminished; and ● the market price of our Ordinary Shares may decline.
Our issuance of additional Class A Ordinary Shares or other equity securities of equal or senior rank would have the following effects: ● our existing shareholders’ proportionate ownership interest in us will decrease; ● the amount of cash available per share, including for payment of dividends in the future, may decrease; ● the relative voting strength of each previously outstanding share may be diminished; and ● the market price of our Class A Ordinary Shares may decline.
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.
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. 22 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.
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
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. 43
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.
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. 15 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.
Since this announcement is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on companies like us and our Ordinary Shares.
Since this announcement is relatively new, uncertainties still exist in relation to how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on companies like us and our Class A Ordinary Shares.
We cannot assure you that we will not be a PFIC for our current taxable year or any future taxable year. 42 You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we were formed under Cayman Islands law.
We cannot assure you that we will not be a PFIC for our current taxable year or any future taxable year. 41 You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we were formed under Cayman Islands law.
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. 41 Risks Related to Our Ordinary Shares We may issue additional Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Ordinary Shares.
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. 39 Risks Related to Our Class A Ordinary Shares We may issue additional Class A Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Class A Ordinary Shares.
The VIE Agreements have not been tested in a court of law in China as of the date of this annual report. 5 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.
The VIE Agreements have not been tested in a court of law in China as of the date of this annual report. 7 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.
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.
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. 19 Our internal systems rely on software that is highly technical, and if it contains undetected errors, our business could be adversely affected.
See “Enforceability of Civil Liabilities.” 7 The VIE Agreements among Sentage WFOE and each of the Sentage Operating Companies may result in adverse tax consequences. PRC laws and regulations emphasize the requirement of an arm’s length basis for transfer pricing arrangements between related parties.
See “Enforceability of Civil Liabilities.” 9 The VIE Agreements among Sentage WFOE and each of the Sentage Operating Companies may result in adverse tax consequences. PRC laws and regulations emphasize the requirement of an arm’s length basis for transfer pricing arrangements between related parties.
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.
For more information regarding the relevant laws of the Cayman Islands and the PRC. 42 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.
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.
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, 2024, 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. 23 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. 20 We may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.
Accordingly, the return on your investment in our Ordinary Shares will likely depend entirely upon any future price appreciation of our Ordinary Shares. We cannot guarantee that our Ordinary Shares will appreciate in value or even maintain the price at which you purchased the Ordinary Shares.
Accordingly, the return on your investment in our Class A Ordinary Shares will likely depend entirely upon any future price appreciation of our Class A Ordinary Shares. We cannot guarantee that our Class A Ordinary Shares will appreciate in value or even maintain the price at which you purchased the Class A Ordinary Shares.
We may issue additional Ordinary Shares or other equity securities of equal or senior rank in the future for any reason or in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without shareholder approval.
We may issue additional Class A Ordinary Shares or other equity securities of equal or senior rank in the future for any reason or in connection with, among other things, future acquisitions or repayment of outstanding indebtedness, without shareholder approval.
These initiatives may have different impacts on our operation, including cannibalization of existing services. Failure to manage our expansion may have an unexpected material effect on our financial condition and results of operation. The industries we are in are still evolving, which makes it difficult to effectively assess our future prospects.
These initiatives may have different impacts on our operation, including cannibalization of existing services. Failure to manage our expansion may have an unexpected material effect on our financial condition and results of operation. 12 The industry we are in are still evolving, which makes it difficult to effectively assess our future prospects.
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.
These developments could add uncertainties to our continued listing or future offerings of our securities in the U.S (see page 36 of this annual report); ● 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 (see page 39 of this annual report); ● 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 Class A Ordinary Shares to significantly decline or be worthless (see page 37 of this annual report); ● The Trial Measures and other relevant rules promulgated by the CSRC may subject us to additional compliance requirements in the future (see page 38 of this annual report); ● 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 (see page 39 of this annual report); 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 (see page 39 of this annual report).
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.
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 (see page 30 of this annual report); ● 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 (see page 31 of this annual report); ● We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies (see page 31 of this annual report); ● Governmental control of currency conversion may affect the value of your investment and our payment of dividends (see page 32 of this annual report); ● 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 (see page 32 of this annual report); ● 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 (see page 33 of this annual report); ● 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 (see page 33 of this annual report); ● The VIE, Qingdao Buytop, may be subject to the Law on Combatting Telecom and Online Fraud; 5 ● Trade disputes or the imposition of tariffs on imports and exports could affect international trade, and therefore could adversely affect our business (see page 35 of this annual report); ● 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 (see page 35 of this annual report); ● 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 (see page 35 of this annual report); ● 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.
Furthermore, if the relevant authorities determine that Qingdao Buytop is in violation of the LCTOF or its operations falls within any of the following circumstances: (i) failure to establish the internal control mechanisms against telecom or online fraud, (ii) failure to perform the obligation of due diligence and relevant risk management measures, (iii) failure to perform the obligation of risk monitoring and management of abnormal accounts and suspicious transactions, or (iv) failure to transmit relevant transaction information in a complete and accurate manner in accordance with the LCTOF provisions, then Qingdao Buytop’s relevant business permit and license may be revoked, and Qingdao Buytop may be fined up to RMB 5 million, be ordered to stop any new businesses expansions, reduce its existing business scope, or suspend its relevant business operations for rectification.
Furthermore, if the relevant authorities determine that Qingdao Buytop is in violation of the LCTOF or its operations falls within any of the following circumstances: (i) failure to establish the internal control mechanisms against telecom or online fraud, (ii) failure to perform the obligation of due diligence and relevant risk management measures, (iii) failure to perform the obligation of risk monitoring and management of abnormal accounts and suspicious transactions, or (iv) failure to transmit relevant transaction information in a complete and accurate manner in accordance with the LCTOF provisions, then Qingdao Buytop’s relevant business permit and license may be revoked, and Qingdao Buytop may be fined up to RMB 5 million, be ordered to stop any new businesses expansions, reduce its existing business scope, or suspend its relevant business operations for rectification. 34 Trade disputes or the imposition of tariffs on imports and exports could affect international trade, and therefore could adversely affect our business.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE.
Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.
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.
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.
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.
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.
A sustained deterioration in the general economic conditions in China, including any turmoil in the economy, reductions in household disposable income, distresses in financial markets, or reduced market liquidity, as well as increased government intervention, may reduce the number of our customers.
Payment services depend upon the overall level of economic conditions and consumer spending in China. A sustained deterioration in the general economic conditions in China, including any turmoil in the economy, reductions in household disposable income, distresses in financial markets, or reduced market liquidity, as well as increased government intervention, may reduce the number of our customers.
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.
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. 24 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.
As a result, the dual class structure of our Ordinary Shares may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure.
Several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our Ordinary Shares may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure.
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.
Each of these risks is discussed more thoroughly in the succeeding section under the same title, starting on page 2 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 (see page 7 of this annual report); ● 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 (see page 8 of this annual report); ● 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 (see page 8 of this annual report); ● The Sentage Operating Companies Shareholders have potential conflicts of interest with us, which may adversely affect our business and financial condition (see page 9 of this annual report); ● 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 (see page 9 of this annual report); ● 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 (see page 9 of this annual report); ● The VIE Agreements among Sentage WFOE and each of the Sentage Operating Companies may result in adverse tax consequences; ● We rely on the approvals, certificates and business licenses held by the Sentage Operating Companies and any deterioration of the relationship between Sentage WFOE and any of the Sentage Operating Companies could materially and adversely affect our overall business operations; ● If any of our operating entities becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy assets held by such entity, which could materially and adversely affect our business, financial condition and results of operations.
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”).
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”).
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. 29 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.
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.
On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.
Since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, however, the interpretations of many laws, regulations, and rules are not always uniform and enforcement of these laws, regulations, and rules involve uncertainties. 26 On July 6, 2021, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued a document to crack down on illegal activities in the securities market and promote the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas, and to establish and improve the system of extraterritorial application of the PRC securities laws.
Unless we are able to pass on these increased labor costs to our customers by increasing prices for our services, our profitability and results of operations may be materially and adversely affected.
We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able to pass on these increased labor costs to our customers by increasing prices for our services, our profitability and results of operations may be materially and adversely affected.
They may ultimately prove to be more successful or more adaptable to new regulatory, technological and other developments. Some of our current and potential competitors have significantly more financial, technical, marketing and other resources than we do, and may be able to devote greater resources to the development, promotion, sale and support of their platforms.
Some of our current and potential competitors have significantly more financial, technical, marketing and other resources than we do, and may be able to devote greater resources to the development, promotion, sale and support of their platforms.
This situation will be costly and time consuming and distract our management from developing our business. If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our Ordinary Shares.
If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our Class A Ordinary Shares.
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 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.
The industries in which we operate through Sentage Operating Companies, including the consumer loan repayment and collection management industry, loan recommendation industry, and the third-party payment services industry in the PRC are still in evolving stages. The regulatory framework for these industries remains uncertain for the foreseeable future.
The industry in which we operate through Sentage Operating Companies, the third-party payment services industry in the PRC, is still in evolving stages. The regulatory framework for these industries remains uncertain for the foreseeable future.
According to Order No. 2 and the No. 7 Announcement, the VIE entity, Qingdao Buytop, is considered a payment institution, as it provides prepaid payment network services.
Order No. 2 was explicitly repealed under the Implementation Rules. According to the No. 7 Announcement, the Regulations, and the Implementation Rules, the VIE entity, Qingdao Buytop, is considered a non-bank payment institution, as it provides prepaid payment network services.
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.
We are not expected to pay dividends on our Class A Ordinary Shares in the foreseeable future. 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 Class A Ordinary Shares.
Unexpected technical, distribution or other problems could delay or prevent the introduction of our new products and services. If we are unable to provide enhancements and new features for our prepaid payment network services or keep pace with rapid technological developments and evolving industry standards, our business, results of operations, and financial condition would be materially and adversely affected.
If we are unable to provide enhancements and new features for our prepaid payment network services or keep pace with rapid technological developments and evolving industry standards, our business, results of operations, and financial condition would be materially and adversely affected. Market, economic and other conditions in China may adversely affect the demand for our products and services.
ITEM 3. KEY INFORMATION A. [Reserved] B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Summary of Risk Factors Investing in our Ordinary Shares involves significant risks. You should carefully consider all of the information in this annual report before making an investment in our Ordinary Shares.
ITEM 3. KEY INFORMATION A. [Reserved] B. Capitalization and Indebtedness Not applicable. C. Reasons for the Offer and Use of Proceeds Not applicable. D. Risk Factors Summary of Risk Factors Investing in our Class A Ordinary Shares involves significant risks.
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.
Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. 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.
If such licensing requirements were introduced, we cannot assure you that we would be able to obtain any newly required license promptly, or at all, which could materially and adversely affect our business.
If such licensing requirements were introduced, we cannot assure you that we would be able to obtain any newly required license promptly, or at all, which could materially and adversely affect our business. The discontinuation of our operations in the consumer loan repayment and collection management and loan recommendation business affected our business operation and financial performance.
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.
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. 32 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.
However, the VIE Agreements have not been tested in a court of law in China as of the date of this annual report. Investors of our Ordinary Shares, thus, do not own any equity interest in the Sentage Operating Companies, or the VIEs, in China, but instead own an equity interest in a Cayman Islands holding company.
Investors of our Class A Ordinary Shares, thus, do not own any equity interest in the Sentage Operating Companies, or the VIEs, in China, but instead own an equity interest in a Cayman Islands holding company.
The planned timing for introduction of new products and services is subject to risks and uncertainties. We cannot assure you that any of our new payment products and services will achieve widespread market acceptance and generate incremental revenue. Moreover, actual timing may differ materially from original plans.
We cannot assure you that any of our new payment products and services will achieve widespread market acceptance and generate incremental revenue. Moreover, actual timing may differ materially from original plans. Unexpected technical, distribution or other problems could delay or prevent the introduction of our new products and services.
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.
Any settlements or judgments against us could have a material adverse impact on our financial condition, results of operations and cash flows.
In addition, data processors that process important data or are listed overseas shall carry out an annual data security assessment on their own or by engaging a data security services institution, and the data security assessment report for the prior year should be submitted to the local cyberspace affairs administration department before January 31 of each year.
In addition, data processors that process important data or are listed overseas shall carry out an annual data security assessment on their own or by engaging a data security services institution, and the data security assessment report for the prior year should be submitted to the local cyberspace affairs administration department before January 31 of each year. 33 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.
Risks Related to Our Ordinary Shares Risks and uncertainties related to our Ordinary Shares include, but are not limited to, the following: ● We may issue additional Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Ordinary Shares; ● We are not expected to pay dividends on our Ordinary Shares in the foreseeable future; and ● You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we were formed under Cayman Islands law. 4 Risks Related to Our Corporate Structure 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.
Risks Related to Our Class A Ordinary Shares Risks and uncertainties related to our Class A Ordinary Shares include, but are not limited to, the following: ● We may issue additional Class A Ordinary Shares or other equity securities without your approval, which would dilute your ownership interests and may depress the market price of our Class A Ordinary Shares (see page 40 of this annual report); ● Our dual class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A Ordinary Shares may view as beneficial (see page 40 of this annual report); ● The dual-class structure of our Ordinary Shares may adversely affect the trading market, the value and liquidity of our Class A Ordinary Shares (see page 40 of this annual report); ● We are not expected to pay dividends on our Class A Ordinary Shares in the foreseeable future (see page 41 of this annual report); ● You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we were formed under Cayman Islands law (see page 42 of this annual report); and ● Certain judgments obtained against us by our shareholders may not be enforceable. 6 Risks Related to Our Corporate Structure 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.
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.
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.
China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow. The average wage level for our employees has also increased in recent years. We expect that our labor costs, including wages and employee benefits, will continue to increase.
Increases in labor costs in the PRC may adversely affect our business and our profitability. China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow. The average wage level for our employees has also increased in recent years.
If we fail to receive such registrations or approvals, our ability to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business. 9 Risks Related to Our Business and Industries We have a limited operating history, which makes it difficult to evaluate our future prospects .
If we fail to receive such registrations or approvals, our ability to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business. 11 Risks Related to Our Business and Industries We have incurred substantial losses in the past and may incur losses in the future.
In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency.
In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.
As of the date of this annual report, Sentage Holdings has not been notified or informed by the PRC tax authorities that it has been deemed to be a resident enterprise for the purpose of the EIT Law, however we cannot assure you that it will not be deemed to be a resident enterprise in the future.
As of the date of this annual report, Sentage Holdings has not been notified or informed by the PRC tax authorities that it has been deemed to be a resident enterprise for the purpose of the EIT Law, however we cannot assure you that it will not be deemed to be a resident enterprise in the future. 30 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.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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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.
A paying institution may not assign, lease, or lend the “Payment License.” According to our Payment License and the approved business scope of the Payment License, we are allowed to provide prepaid cards payment services and related business services. Our Payment License was issued by the PBOC on July 20, 2017.
A paying institution may not assign, lease, or lend the “Payment Business License.” According to our Payment Business License and the approved business scope of the Payment Business License, we are allowed to provide prepaid cards payment services and related business services. Our Payment Business License was issued by the PBOC on July 20, 2017.
Depository Measures for Clients’ Provisions of Non-bank Payment Institutions On January 19, 2021, People’s Bank of China promulgated “Depository Measures for Clients’ Provisions of Non-bank Payment Institutions”, which became effective on March 1, 2021. This measure regulates the centralized depository of customer reserves after the centralized deposit of reserves.
Depository Measures for Clients’ Provisions of Non-bank Payment Institutions On January 19, 2021, the People’s Bank of China promulgated “Depository Measures for Clients’ Provisions of Non-bank Payment Institutions”, which became effective on March 1, 2021. This measure regulates the centralized depository of customer reserves after the centralized deposit of reserves.
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.
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.
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. 68 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.
For details on the technology consulting and support services the Sentage Operating Companies charge, see “—Our Customers— Pricing .” The Sentage Operating Companies’ Role in the Prepaid Card Payment Value Chain From the front end, non-cash transactions involving prepaid cards between merchants and consumers seem simple and direct as consumers pay for the goods and/or services while merchants accept consumers’ payment and offer such goods and/or services.
For details on the technology consulting and support services the Sentage Operating Companies charge, see “—Our Customers— Pricing .” 51 The Sentage Operating Companies’ Role in the Prepaid Card Payment Value Chain From the front end, non-cash transactions involving prepaid cards between merchants and consumers seem simple and direct as consumers pay for the goods and/or services while merchants accept consumers’ payment and offer such goods and/or services.
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.
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. 66 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.
However, the VIE Agreements have not been tested in a court of law in China as of the date of this annual report. Investors of our Ordinary Shares, thus, do not own any equity interest in the Sentage Operating Companies, or the VIEs, in China, but instead own equity interest in a Cayman Islands holding company.
However, the VIE Agreements have not been tested in a court of law in China as of the date of this annual report. Investors of our Class A Ordinary Shares, thus, do not own any equity interest in the Sentage Operating Companies, or the VIEs, in China, but instead own equity interest in a Cayman Islands holding company.
We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations and, as a result, the value of our Ordinary Shares may depreciate significantly or become worthless.
We are also subject to the risk that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations and, as a result, the value of our Class A Ordinary Shares may depreciate significantly or become worthless.
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.
For details on the technology consulting and support services the Sentage Operating Companies charge, see “—Our Customers— Pricing .” 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.
According to the Announcement No. 7 of the People’s Bank of China (2018) ( 中国人民银行公告 (2018) 第 7 号《关于外商投资支付机构有关事宜公告》 ) (“No. 7 Announcement”), which was issued by the PBOC and became effective on March 19, 2018, upon the State Council’s approval, the relevant requirements of the foreign-invested payment institutions include the following: (I) An overseas institution intending to provide electronic payment services for domestic transactions and cross-border transactions of domestic entities in the PRC shall establish a foreign-invested enterprise in the PRC and obtain a Payment License in accordance with the criteria and procedures stipulated in Order No. 2 of the PBOC.
Regulations on Foreign Investment in the Payment Services According to the Announcement No. 7 of the People’s Bank of China (2018) (中国人民银行公告(2018)第7号《关于外商投资支付机构有关事宜公告》) (“No. 7 Announcement”), which was issued by the PBOC and became effective on March 19, 2018, upon the State Council’s approval, the relevant requirements of the foreign-invested payment institutions include the following: (I) An overseas institution intending to provide electronic payment services for domestic transactions and cross-border transactions of domestic entities in the PRC shall establish a foreign-invested enterprise in the PRC and obtain a Payment License in accordance with the criteria and procedures stipulated in Order No. 2 of the PBOC.
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.
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. 67 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.
An enterprise must provide social insurance by going through social insurance registration with local social insurance authorities or agencies, and shall pay or withhold relevant social insurance premiums for or on behalf of employees. 78 Housing Provident Fund According to the Administrative Regulations on the Administration of the Housing Provident Fund, which was promulgated and became effective on April 3, 1999, and was amended on March 24, 2002 and March 24, 2019, housing provident fund contributions paid and deposited both by employees and their unit employer shall be owned by the employees.
An enterprise must provide social insurance by going through social insurance registration with local social insurance authorities or agencies, and shall pay or withhold relevant social insurance premiums for or on behalf of employees. 64 Housing Provident Fund According to the Administrative Regulations on the Administration of the Housing Provident Fund, which was promulgated and became effective on April 3, 1999, and was amended on March 24, 2002 and March 24, 2019, housing provident fund contributions paid and deposited both by employees and their unit employer shall be owned by the employees.
According to the Implementing Rules on Wholly Foreign-owned Enterprises, industries in which the establishment of wholly foreign-owned enterprises is prohibited or restricted shall be regulated in accordance with the provisions of the State about foreign investment orientation and the Catalogue. 79 The Law on Wholly Foreign-owned Enterprises of the PRC and the Implementing Rules on Wholly Foreign-owned Enterprises have been repealed by the Foreign Investment Law of the PRC ( 《中华人民共和国外商投资法》 (the “Foreign Investment Law”), which was adopted by the National People’s Congress on March 15, 2019 and came into effect on January 1, 2020.
According to the Implementing Rules on Wholly Foreign-owned Enterprises, industries in which the establishment of wholly foreign-owned enterprises is prohibited or restricted shall be regulated in accordance with the provisions of the State about foreign investment orientation and the Catalogue. 65 The Law on Wholly Foreign-owned Enterprises of the PRC and the Implementing Rules on Wholly Foreign-owned Enterprises have been repealed by the Foreign Investment Law of the PRC (《中华人民共和国外商投资法》 (the “Foreign Investment Law”), which was adopted by the National People’s Congress on March 15, 2019 and came into effect on January 1, 2020.
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.
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, 2025.
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.
Therefore, we currently do not need to conduct security assessments or seek approval from relevant authorities under the Data Security Law. 62 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.
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.
Qingdao Buytop has obtained the certificate for its domain name. 69 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.
See “ITEM 3.C Risk Factors – Risks Related to Our Corporate Structure.” For details of each VIE Agreements, please see “Introduction – The VIE Agreements”. 85 Corporate Information Our principal executive offices are located at 501, Platinum Tower, 233 Taicang Rd, HuangPu, Shanghai City, the PRC, and our phone number is +86-21 5386 0209.
See “ITEM 3.C Risk Factors – Risks Related to Our Corporate Structure.” For details of each VIE Agreements, please see “Introduction – The VIE Agreements”. 71 Corporate Information Our principal executive offices are located at 501, Platinum Tower, 233 Taicang Rd, HuangPu, Shanghai City, the PRC, and our phone number is +86-21 5386 0209.
Prepaid Payment Network Service The Sentage Operating Companies started providing prepaid payment network services in August 2019, offering seamless, convenient, and reliable payment services to merchants across different industries.
Prepaid Payment Network Services The Sentage Operating Companies started providing prepaid payment network services in August 2019, offering seamless, convenient, and reliable payment services to merchants across different industries.
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.
Each party reserves the right to terminate the agreement at any time with 30 days’ written notice to the other party. 53 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.
Ltd (“Zhengyi”), formed in Shanghai City, China on August 29, 2017. Daxin Wealth, Daxin Zhuohui, Qingdao Buytop, and Zhenyi were all formed as limited companies pursuant to PRC laws. 84 The following diagram illustrates our corporate structure, including our subsidiaries and the VIEs, as of the date of this annual report.
Ltd (“Zhengyi”), formed in Shanghai City, China on August 29, 2017. Daxin Wealth, Daxin Zhuohui, Qingdao Buytop, and Zhenyi were all formed as limited companies pursuant to PRC laws. 70 The following diagram illustrates our corporate structure, including our subsidiaries and the VIEs, as of the date of this annual report.
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.
NetsUnion does not charge any fees for payments it processes. (7) The merchant confirms receipt of the payment. 52 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.
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.
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. 54 Risk Management and Internal Control The Sentage Operating Companies are subject to various risks in the operations.
Industries listed in the Negative List 2021 are divided into two categories with respect to foreign investment: restricted and prohibited. Industries not listed in the Negative List are generally deemed as falling under a third “permitted” category and are generally open to foreign investment unless otherwise specifically restricted by other PRC regulations.
Industries listed in the Negative List 2024 are divided into two categories with respect to foreign investment: restricted and prohibited. Industries not listed in the Negative List are generally deemed as falling under a third “permitted” category and are generally open to foreign investment unless otherwise specifically restricted by other PRC regulations.
On December 7, 2023, at our annual shareholders meeting, the shareholders approved a share capital reorganization to re-designate and re-classify our Ordinary Shares into Class A Ordinary Shares and Class B Ordinary Shares. 45 As of the date of this annual report, the Company has not yet issued any Class B Ordinary Shares.
On December 7, 2023, at our annual shareholders meeting, the shareholders approved a share capital reorganization to re-designate and re-classify our Ordinary Shares into Class A Ordinary Shares and Class B Ordinary Shares. 44 As of the date of this annual report, the Company has not yet issued any Class B Ordinary Shares.
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.
The company should not provide any service in accordance with virtual currency. 61 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 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.
The Sentage Operating Companies consider the insurance coverage to be sufficient and in line with market practice for the business operations in China. 58 PRC REGULATIONS This section sets forth a summary of the principal PRC laws, regulations, and rules relevant to our business and operations in China.
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.
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. 57 Competition The industries in which the Sentage Operating Companies are operating are competitive and evolving.
These aforementioned regulations apply to our direct and indirect shareholders who are PRC residents and apply to any offshore acquisitions and share transfer that we may make in the future if our Ordinary Shares are issued to PRC residents.
These aforementioned regulations apply to our direct and indirect shareholders who are PRC residents and apply to any offshore acquisitions and share transfer that we may make in the future if our Class A Ordinary Shares are issued to PRC residents.
Risk Factors – Risks Related to Our Corporate Structure”. 46 Selected Condensed Consolidated Financial Schedule of Sentage Holdings Inc., its subsidiaries, and the VIEs The following tables present selected condensed consolidated financial data of Sentage Holdings Inc. and its subsidiaries and VIEs for the fiscal years ended December 31, 2023, 2022, and 2021, and balance sheet data as of December 31, 2023, 2022 and 2022, which have been derived from our audited consolidated financial statements for those years.
Risk Factors – Risks Related to Our Corporate Structure”. 45 Selected Condensed Consolidated Financial Schedule of Sentage Holdings Inc., its subsidiaries, and the VIEs The following tables present selected condensed consolidated financial data of Sentage Holdings Inc. and its subsidiaries and VIEs for the fiscal years ended December 31, 2024, 2023, and 2022, and balance sheet data as of December 31, 2024, 2023 and 2022, which have been derived from our audited consolidated financial statements for those years.
During fiscal year 2021, the revenue generated from the payment services consisted of technology consulting and support fees and amounted to US$928,565. During fiscal year 2022, the revenue generated from the payment services consisted of technology consulting and support fees and amounted to US$161,372, which decrease was due to decreased demand due to the uncertainties of COVID-19.
During fiscal year 2022, the revenue generated from the payment services consisted of technology consulting and support fees and amounted to US$161,372, which decrease was due to decreased demand due to the uncertainties of COVID-19.
SELECTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE LOSS For the year ended December 31, 2021 USD Sentage Holdings Inc.
SELECTED CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE LOSS For the year ended December 31, 2022 USD Sentage Holdings Inc.
Our principal businesses are precluded from the Negative List 2021 and is thus within a permitted industry for foreign investment.
Our principal businesses are precluded from the Negative List 2024 and is thus within a permitted industry for foreign investment.
During fiscal year 2023, the revenue generated from the payment services consisted of technology consulting and support fees and amounted to US$146,554, and the slight decrease in the revenue from fiscal year 2022 was due to a slightly reduced provision of technical consulting services in fiscal year 2023. 52 For merchant customers who need payment-related technical consulting and support, the Sentage Operating Companies charge service fees for designing tailored payment solutions, interfacing their internal systems with the Sentage Operating Companies’ prepaid card payment system, and providing their staff with relevant operation training.
During fiscal year 2024, the revenue generated from the payment services consisted of technology consulting and support fees and amounted to US$107,507, and the slight decrease in the revenue from fiscal year 2023 was due to a slightly reduced provision of technical consulting services in fiscal year 2024. 49 For merchant customers who need payment-related technical consulting and support, the Sentage Operating Companies charge service fees for designing tailored payment solutions, interfacing their internal systems with the Sentage Operating Companies’ prepaid card payment system, and providing their staff with relevant operation training.
We currently operate three lines of business in loan repayment and collection management, loan recommendation, and prepaid payment network through three of the Sentage Operating Companies, Daxin Wealth, Daxin Zhuohui, and Qingdao Buytop, pursuant to a series of contractual arrangements, also known as VIE Agreements.
Prior to 2024, we operated three lines of business in loan repayment and collection management, loan recommendation, and prepaid payment network through three of the Sentage Operating Companies, Daxin Wealth, Daxin Zhuohui, and Qingdao Buytop, pursuant to a series of contractual arrangements, also known as VIE Agreements.
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 engages in prepaid payment network service.
At the same time, Chinese authorities have not yet made it clear whether to permit or prohibit foreign-invested enterprises to engage in prepaid network services, loan collection management and loan recommendation services, and there is a risk that Chinese authorities may prohibit direct foreign investment of such businesses.
At the same time, Chinese authorities have not yet made it clear whether to permit or prohibit foreign-invested enterprises to engage in prepaid network services, and there is a risk that Chinese authorities may prohibit direct foreign investment of such business.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Cash - 2,199,879 63,002 - 2,262,881 Total current assets 10,274,640 5,250,465 1,381,679 (5,214,239 ) 11,692,545 Total assets 11,274,640 5,323,404 1,525,334 (5,214,239 ) 12,909,139 Total liabilities 962,703 2,312,015 2,618,766 (5,214,239 ) 679,245 Total shareholders’ equity 10,311,937 3,011,389 (1,093,432 ) - 12,229,894 Total liabilities and shareholders’ equity 11,274,640 5,323,404 1,525,334 (5,214,239 ) 12,909,139 48 SELECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended December 31, 2021 USD Sentage Holdings Inc.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Cash - 2,199,879 63,002 - 2,262,881 Total current assets 10,274,640 5,250,465 1,381,679 (5,214,239 ) 11,692,545 Total assets 11,274,640 5,323,404 1,525,334 (5,214,239 ) 12,909,139 Total liabilities 962,703 2,312,015 2,618,766 (5,214,239 ) 679,245 Total shareholders’ equity 10,311,937 3,011,389 (1,093,432 ) - 12,229,894 Total liabilities and shareholders’ equity 11,274,640 5,323,404 1,525,334 (5,214,239 ) 12,909,139 As of December 31, 2024 USD Sentage Holdings Inc.
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.
For fiscal years 2024, 2023 and 2022, revenue generated from the prepaid payment network services, consisted of technology consulting and support fees, was $107,507, $146,554, and $161,372, respectively.
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.
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.
Theses abilities are crucial in reducing the transaction loss rate and gaining valuable insights into the clients’ businesses. ● Internal Management System. The Sentage Operating Companies aim to leverage the proprietary internal management system, which is currently used for the loan repayment and collection management business, to optimize the operational efficiency and achieve workflow automation.
Theses abilities are crucial in reducing the transaction loss rate and gaining valuable insights into the clients’ businesses. ● Internal Management System. The Sentage Operating Companies aim to leverage the proprietary internal management system, to optimize the operational efficiency and achieve workflow automation.
The Sentage Operating Companies plan to work with midsized supermarkets, shopping malls, and online platforms. The Sentage Operating Companies believe that by reaching corporate customers of various sizes, the Sentage Operating Companies can build a solid foundation to expand the service base and provide more diversified financial solutions that fit into more payment scenarios.
The Sentage Operating Companies believe that by reaching corporate customers of various sizes, the Sentage Operating Companies can build a solid foundation to expand the service base and provide more diversified financial solutions that fit into more payment scenarios.
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.
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. Sentage Hongkong Limited (“Sentage HK”) was incorporated on September 25, 2019 in Hong Kong as a wholly-owned subsidiary of Sentage Holdings.
A paying institution shall conduct operation activities within the business scope approved in the “Payment License” and may not carry out any business beyond the approved scope nor outsource its payment business to other parties.
Pursuant to the Regulations, to provide payment services, a non-bank payment shall obtain a “Payment Business License” to qualify as a paying institution. A paying institution shall conduct operation activities within the business scope approved in the “Payment Business License” and may not carry out any business beyond the approved scope nor outsource its payment business to other parties.
According to Order No. 2 of PBOC, a payment institution that has obtained the Payment License, such as the VIE entity, Qingdao Buytop, shall comply with applicable regulations in the Anti-Money Laundering Law and fulfill its anti-money laundering obligations.
According to Regulations on the Supervision and Administration of Non-Bank Payment Institutions, a non-bank payment institution that has obtained the Payment License, such as the VIE entity, Qingdao Buytop, shall comply with applicable regulations in the Anti-Money Laundering Law and fulfill its anti-money laundering obligations.
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.
Yiheng Guo (a director and a shareholder of the Company), Hua Wang (a beneficial shareholder of the Company), and Mr. 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.
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.
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.
On April 13, 2020, the Cyberspace Administration of China and other departments issued Cybersecurity Review Measures ( 《网络安全审查办法》 ), which took effect on June 1, 2020, to provide for more detailed rules regarding cybersecurity review requirements. On July 10, 2021, the CAC issued the Circular on Seeking Comments on Cybersecurity Review Measures (Revised Draft for Comments) (the “Review Measures Draft”).
On April 13, 2020, the Cyberspace Administration of China and other departments issued Cybersecurity Review Measures (《网络安全审查办法》), which took effect on June 1, 2020, to provide for more detailed rules regarding cybersecurity review requirements.
Regulations relating to Foreign Investment On December 27, 2021, the Special Administrative Measures for the Access of Foreign Investment (Negative List) ( 外商投资准入特别管理措施 ( 负面清单 ) (2021 年版 )) (the “Negative List 2021”), which was promulgated by NDRC and MOFCOM and became effective on January 1, 2022, replaced the Negative List 2020.
Regulations relating to Foreign Investment On September 6, 2024, the Special Administrative Measures for the Access of Foreign Investment (Negative List) (外商投资准入特别管理措施(负面清单) (2024年版)) (the “Negative List 2024”), which was promulgated by NDRC and MOFCOM and became effective on November 1, 2024, replaced the Negative List 2020.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Revenue - - 146,554 - 146,554 Net loss (959,981 ) (146,073 ) (797,223 ) - (1,903,277 ) Comprehensive loss (959,981 ) (198,768 ) (786,321 ) - (1,945,070 ) 47 SELECTED CONDENSED CONSOLIDATED BALANCE SHEETS As of December 31, 2022 USD Sentage Holdings Inc.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Revenue - - 146,554 - 146,554 Net loss (959,981 ) (146,073 ) (797,223 ) - (1,903,277 ) Comprehensive loss (959,981 ) (198,768 ) (786,321 ) - (1,945,070 ) For the year ended December 31, 2024 USD Sentage Holdings Inc.
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.
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.
On December 17, 2019, Shanghai Santeng Technology Co., Ltd. (“Sentage WFOE”) was incorporated pursuant to PRC laws as a wholly foreign owned enterprise of Sentage HK. Ms.
On December 17, 2019, Shanghai Santeng Technology Co., Ltd. (“Sentage WFOE”) was incorporated pursuant to PRC laws as a wholly foreign owned enterprise of Sentage HK. Ms. Qiaoling Lu (the chairperson of the board of directors, the chief executive officer, and a major shareholder of the Company), Mr.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Net cash used in operating activities - (1,572,682 ) (254,262 ) - (1,826,944 ) Net cash used in investing activities - - (23,433 ) - (23,433 ) Net cash provided by financing activities - 40,141 299,385 - 339,526 49 Business Through the Sentage Operating Companies, we are a financial service provider that offers a range of financial services across consumer loan repayment and collection management, loan recommendation, and prepaid payment network services in China.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Net cash used in operating activities - (1,036,740 ) (711,635 ) - (1,748,375 ) Net cash provided by financing activities - 127,820 604,461 - 732,281 48 Business Through the Sentage Operating Companies, we are a financial service provider that offers a range of financial services across consumer loan repayment and collection management, loan recommendation, and prepaid payment network services in China.
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.
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.
The Sentage Operating Companies do not maintain business interruption insurance or general third-party liability insurance, nor do the Sentage Operating Companies maintain product liability insurance or key-man insurance.
Insurance The Sentage Operating Companies provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for the employees. The Sentage Operating Companies do not maintain business interruption insurance or general third-party liability insurance, nor do the Sentage Operating Companies maintain product liability insurance or key-man insurance.
The Sentage Operating Companies are not substantially dependent upon any agreements with any of these service providers. Prepaid Payment Network Services The Sentage Operating Companies’ Business Model The Sentage Operating Companies started providing prepaid payment network services in August 2019, offering seamless, convenient and reliable payment services to merchants across different industries.
As of the date of this annual report, the Sentage Operating Companies’ systems have not encountered any major system interruption. 50 Business Model of Prepaid Payment Network Services The Sentage Operating Companies started providing prepaid payment network services in August 2019, offering seamless, convenient and reliable payment services to merchants across different industries.
The Sentage Operating Companies’ internal management system is copyrighted and its registration was completed on April 26, 2020. As of the date of this report, the Sentage Operating Companies had a team of 3 full-time employees to monitor and maintain the information technology and infrastructure.
As of the date of this report, the Sentage Operating Companies had a team of one full-time employees to monitor and maintain the information technology and infrastructure.
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.
Daxin Zhuohui owns the copyrighted internal management system, which became effective on April 26, 2020. Properties and Facilities The corporate headquarter is in Shanghai City, China, where we lease one office spaces with an area of approximately 170.59 square meters (approximately 1,836 square feet) as of December 31, 2024.
As of the date of this annual report, the Sentage Operating Companies have not encountered any incident where the Sentage Operating Companies failed to screen and report merchants identified as suspected money launderer to the PBOC. 67 Infrastructure and Information Technology The Sentage Operating Companies are currently applying for copyrights in the PRC for the proprietary technology systems, which include the information system and account management system.
As of the date of this annual report, the Sentage Operating Companies have not encountered any incident where the Sentage Operating Companies failed to screen and report merchants identified as suspected money launderer to the PBOC. 55 Infrastructure and Information Technology The Sentage Operating Companies’ internal management system is copyrighted and its registration was completed on April 26, 2020.
Customers The Sentage Operating Companies connect the corporate customers with their consumers in various industries. As of the date of this annual report, the Sentage Operating Companies have 3 customers, which are Shandong Ciyun Information Technology Co., Ltd., Qingdao Kece Innovation Consulting Service Co. and Qingdao Nuolizhi Enterprise Management Co., Ltd.
Customers The Sentage Operating Companies connect the corporate customers with their consumers in various industries. As of the date of this annual report, the Sentage Operating Companies have one customers, which is Qingdao Jinpeng Yuntian Technology Co., Ltd. The Sentage Operating Companies plan to work with midsized supermarkets, shopping malls, and online platforms.
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.
The term of the lease is from November 1, 2024 to October 31, 2026. The monthly rental fee is approximately US$8,185, correspondingly. The headquarters serve as the center of management, human resources, and administrative activities.
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.
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.
We believe that the Sentage Operating Companies will be able to obtain adequate facilities, principally through leasing, to accommodate the future expansion plans. Seasonality The Sentage Operating Companies’ businesses are not affected by seasonality. Insurance The Sentage Operating Companies provide social security insurance including pension insurance, unemployment insurance, work-related injury insurance and medical insurance for the employees.
The term of the lease is from December 1, 2024 to November 30, 2025, and the monthly rental fee is approximately US$1,761. We believe that the Sentage Operating Companies will be able to obtain adequate facilities, principally through leasing, to accommodate the future expansion plans. Seasonality The Sentage Operating Companies’ businesses are not affected by seasonality.
Under the system, the operating portal digitizes and standardizes the repayment and collection management process by consolidating skip tracing tools, borrower profiles, repayment records, and other functions under one platform. The Sentage Operating Companies use the operating portal for, among other things, case assignment, portfolio management, collection activity management, and repayment management.
Under the system, the operating portal digitizes and standardizes the management process by consolidating skip tracing tools and other functions under one platform. The Sentage Operating Companies use the operating portal for, among other things. We believe that the system affords the in-house team sufficient operational support to efficiently perform tasks related to management process. 56 ● Account Management System.
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.
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Net cash used in operating activities - (1,572,682 ) (254,262 ) - (1,826,944 ) Net cash used in investing activities - - (23,433 ) - (23,433 ) Net cash provided by financing activities - 40,141 299,385 - 339,526 For the year ended December 31, 2024 USD Sentage Holdings Inc.
The headquarters serve as the center of management, human resources, and administrative activities, as well as the operation center of the loan repayment and collection management and loan recommendation businesses. In addition to the headquarters in Shanghai, the Sentage Operating Companies also lease office space in Qingdao City, Shandong Province, China for the prepaid payment network operations.
In addition to the headquarter in Shanghai, the Sentage Operating Companies also lease office space in Qingdao City, Shandong Province, China for the prepaid payment network operations. The office space of the office in Qingdao City has an area of approximately 143 square meters (approximately 1,540 square feet).
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.
Through the VIE entity, Qingdao Buytop, we currently own the Technical Certification of Payment Service Facilities of Non-banking Payment Institutions (registration number: NFTC202401370623), issued by Beijing National Fintech Certification Center Co., Ltd. on May 24, 2024, and valid until May 23, 2027. 60 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.
However, in light of the evolving and developing nature of the regulatory regime regarding loan recommendation services, it is probable that the Chinese government will adopt regulations and policies that may temporarily restrain the scale and growth of our loan recommendation services in the future. 72 Regulations on Third-Party Payment Services, which Include Prepaid Payment Network Services Overview In China, a payment institution shall be subject to the supervision and management by PBOC in accordance with relevant law and regulations.
Regulations on Third-Party Payment Services, which Include Prepaid Payment Network Services Overview In China, a payment institution shall be subject to the supervision and management by PBOC in accordance with relevant law and regulations. Non-financial institutions and individuals shall not engage in any kind of third-party payment business without the approval of the PBOC.
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.
For fiscal years 2024, 2023 and 2022, our revenue was $107,507, $146,554, and $161,372, respectively, and our net loss was $2,004,831, $1,903,277, and $2,561,907, respectively.
Removed
As of the date of this annual report, Zhenyi, another VIE and Sentage Operating Company, is not engaged in active business operation but is expected to provide us with technical and system development and support in the future. All the Sentage Operating Companies were incorporated as limited companies pursuant to PRC laws.
Added
In 2024, we discontinued the operations of loan repayment and collection management, and loan recommendation. All the Sentage Operating Companies were incorporated as limited companies pursuant to PRC laws.
Removed
Specifically, Daxin Wealth and Daxin Zhuohui are engaged in the loan repayment and collection management business, Daxin Zhuohui provides loan recommendation services, and Qingdao Buytop provides prepaid payment network services.
Added
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Revenue - - 107,507 - 107,507 Net loss (950,365 ) (137,412 ) (917,054 ) - (2,004,831 ) Comprehensive loss (950,365 ) (137,350 ) (915,677 ) - (2,003,392 ) 46 SELECTED CONDENSED CONSOLIDATED BALANCE SHEETS As of December 31, 2023 USD Sentage Holdings Inc.
Removed
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.
Added
Subsidiaries VIE and its Subsidiaries Eliminations Consolidated Total Cash - 1,249,513 8,488 - 1,258,001 Total current assets 1,249,275 4,231,786 1,065,338 (4,204,396 ) 2,342,003 Total assets 10,324,275 4,380,376 1,180,164 (4,204,396 ) 11,680,419 Total liabilities 946,712 1,563,836 3,147,765 (4,204,396 ) 1,453,917 Total shareholders’ equity 9,377,563 2,816,540 (1,967,601 ) - 10,226,502 Total liabilities and shareholders’ equity 10,324,275 4,380,376 1,180,164 (4,204,396 ) 11,680,419 47 SELECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended December 31, 2022 USD Sentage Holdings Inc.
Removed
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.
Added
We currently report our operating revenue from one main revenue stream, namely, prepaid payment network services. In 2024, we discontinued our operations in two legacy lines of businesses, namely, (i) consumer loan repayment and collection management, and (2) loan recommendation, due to continued deteriorating market conditions.
Removed
The reason for the decrease in revenues and the net losses is that, due to the ongoing impact of COVID-19, we did not generat any revenue from the consumer loan repayment and collection management service, and loan recommendation service in fiscal years 2022 and 2023, and the demand for our prepaid payment network service declined sharply in fiscal years 2022 and 2023.
Added
The reason for the decrease in revenues and the net losses was due to the sharp decline in the demand for our prepaid payment network services, attributable to intense competition from larger and well-known competitors in China, such as Alipay and WeChat Pay dominate the mobile.

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Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

45 edited+15 added−53 removed60 unchanged
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.
Payments of dividends and capital in respect of our Class A 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 Class A Ordinary Shares, as the case may be, nor will gains derived from the disposal of our Class A Ordinary Shares be subject to Cayman Islands income or corporation tax.
As a result, the Sentage Operating Companies’ business, results of operations, and financial condition may be adversely affected. Ability to Improve Operating Efficiency Our business growth is dependent on the Sentage Operating Companies’ ability to improve their operating efficiency, which is determined by the Sentage Operating Companies’ abilities to monitor and adjust costs and expenses.
As a result, the Sentage Operating Companies’ business, results of operations, and financial condition may be adversely affected. 73 Ability to Improve Operating Efficiency Our business growth is dependent on the Sentage Operating Companies’ ability to improve their operating efficiency, which is determined by the Sentage Operating Companies’ abilities to monitor and adjust costs and expenses.
In addition, non-resident enterprise shareholders may be subject to a 10% PRC withholding tax on gains realized on the sale or other disposition of our Ordinary Shares, if such income is treated as sourced from within the PRC.
In addition, non-resident enterprise shareholders may be subject to a 10% PRC withholding tax on gains realized on the sale or other disposition of our Class A Ordinary Shares, if such income is treated as sourced from within the PRC.
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.
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.
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.
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. 79 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.
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.
The Sentage Operating Companies plan to find new business directions by adjusting business plan accordingly. 75 Operating expenses Our operating expenses primarily consist of the Sentage Operating Companies’ selling and marketing expenses and general and administrative expenses.
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.
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), an increase of $(148,822) from net other income of $9,100 in fiscal year 2022.
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.
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, 2024 to December 31, 2024 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.
Interest and penalties recognized related to an unrecognized tax benefit are classified as income tax expense in the consolidated statements of comprehensive income. 98
Interest and penalties recognized related to an unrecognized tax benefit are classified as income tax expense in the consolidated statements of comprehensive income. 83
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.
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 environment of competition 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.
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.
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, 2024, we had cash and restricted cash of approximately $1.3 million.
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.
Prepaid Payment Network Services The Sentage Operating Companies started this service in August 2019. 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.
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.
Accounts receivable of approximately $0.5 million associated with services rendered for our prepaid payment network business has been billed to our customers but has not been collected as of the balance sheet dates. We also borrowed approximately $732,281, which was provided by our controlling shareholder, Ms. Qiaoling Lu, to support our working capital need. Ms.
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.
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, 2022, 2023 and 2024, we had $3,828,224, $2,289,008 and $1,277,962 for cash, cash equivalents and restricted cash, respectively. Our cash and cash equivalents are primarily denominated in Renminbi and US dollars.
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.
For the fiscal years ended December 31, 2023 and 2024, we earned $146,554 and $107,507 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.
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.
Qiaoling Lu will not seek repayment of her related party balance of $1,076,516 as of December 31, 2024 until at least 12 months from the issuance of the of her related party balance of $1,076,516 as of December 31, 2024 until at least 12 months from the issuance of the financial statements. 80 Currently, we improve our liquidity and capital sources primarily through cash flows from operation and financial support from our principal shareholders.
Revenue from prepaid payment network services In 2012, Qingdao Buytop, was granted a third-party payment service license by the relevant authority in China. Qingdao Buytop started to provide prepaid payment network services to merchant customers in August 2019.
The primary sources of our revenues are as follows: Revenue from prepaid payment network services In 2012, Qingdao Buytop, was granted a third-party payment service license by the relevant authority in China. Qingdao Buytop started to provide prepaid payment network services to merchant customers in August 2019.
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.
The following table sets forth a summary of our cash flows for the periods presented: Years Ended December 31, 2022 2023 2024 Net cash used in operating activities $ (6,679,460 ) $ (1,826,944 ) $ (1,748,375 ) Net cash used in investing activities (34,346 ) (23,433 ) - Net cash (used in) provided by financing activities (156,311 ) 339,526 732,281 Effect of exchange rate change on cash and restricted cash (85,046 ) (28,365 ) 5,048 Net decrease in cash and restricted cash $ (6,955,163 ) $ (1,539,216 ) $ (1,011,046 ) Cash and restricted cash, beginning of year 10,783,387 3,828,224 2,289,008 Cash and restricted cash, end of year $ 3,828,224 $ 2,289,008 $ 1,277,962 Operating Activities Net cash used in operating activities was $1,748,375 for the fiscal year ended December 31, 2024, which primarily consisted of the following: ● Net loss of $2,004,831 for the fiscal year. ● A decrease in Accrued expenses and other current liabilities of $ 31,978.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Overview We, through the Sentage Operating Companies, are a financial service provider that offers a range of financial services across consumer loan repayment and collection management services, loan recommendation services, and prepaid payment network services in the PRC.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS Overview We, through the Sentage Operating Companies, are a financial service provider that offers prepaid payment network services in the PRC.
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.
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 ● An increase in Allowance for credit losses of $361,771.
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.
Financing Activities Net cash provided by financing activities amounted to $732,281 for the fiscal year ended December 31, 2024, primarily the proceeds from working capital of related party $732,281. 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 party $339,526.
The competitors operate with different business models, have different cost structures or participate selectively in different market segments. They may ultimately prove to be more successful or more adaptable to new regulatory, technological and other developments.
With respect to prepaid payment network services, the Sentage Operating Companies primarily compete with other third-party payment service providers in China. The competitors operate with different business models, have different cost structures or participate selectively in different market segments. They may ultimately prove to be more successful or more adaptable to new regulatory, technological and other developments.
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.
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. 78 Taxation Cayman Islands We are incorporated and registered in the Cayman Islands.
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.
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.
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.
Revenue generated from services provided decreased by approximately $39,000 compared to fiscal year 2023. As of the date of this annual report, we anticipate that all aspects of the market will gradually stabilize.
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 $23,433 for the fiscal year ended December 31, 2023, mainly includes to consisting primarily of purchases of software products. 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 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.
This is mainly because, in the fiscal year 2024, the company made provisions for Allowances for accounts receivable and other receivables under the CECL model, resulting in an increase in allowances of credit losses. 81 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.
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.
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 party $156,311. C. Research and Development, Patents and Licenses, etc. See “Item 4. Information on the Company—B. Business—Intellectual Property.” D.
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%.
The operating results in any period are not necessarily indicative of the results that may be expected for any future period. 2022 2023 2024 Amount % Amount % Amount % Summary Consolidated Statements of Operations: Operating revenue Prepaid payment network service fees 161,372 100.0 146,554 100.0 107,507 100.0 Total operating revenue 161,372 100.0 146,554 100.0 107,507 100.0 Cost of revenue Cost of revenue 17,833 11.1 12,597 8.6 8,074 7.5 Total cost of revenue 17,833 11.1 12,597 8.6 8,074 7.5 GROSS PROFIT 143,539 88.9 133,957 91.4 99,433 92.5 Operating expenses: Selling, general and administrative expenses 2,714,546 1,682.2 1,897,512 1,294.8 1,835,936 1,707.7 Total operating expenses 2,714,546 1,682.2 1,897,512 1,294.8 1,835,936 1,707.7 Income from operations (2,571,007 ) (1,593.2 ) (1,763,555 ) (1,203.3 ) (1,736,503 ) (1,615.2 ) Other income (expenses) 9,100 5.6 (139,722 ) (95.3 ) (268,328 ) (249.6 ) Loss before income tax provision (2,561,907 ) (1,587.6 ) (1,903,277 ) (1,298.7 ) (2,004,831 ) (1,864.8 ) Income tax expense - - - - - - Net loss (2,561,907 ) (1,587.6 ) (1,903,277 ) (1,298.7 ) (2,004,831 ) (1,864.8 ) * Denotes percentages between (0.1%) and 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).
In addition, continued turbulence in the international markets may adversely affect our ability to access capital markets to meet liquidity needs. 74 Key Components of Results of Operations Revenues 2022 2023 2024 Amount % Amount % Amount % Prepaid payment network service fees 161,372 100.0 146,554 100.0 107,507 100.0 Total operating revenue 161,372 100.0 146,554 100.0 107,507 100.0 (1).
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.
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.
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.
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. Investing Activities Net cash used in investing activities amounted to $nil for the fiscal year ended December 31, 2024.
We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements. You should read the following description of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included in this annual report.
We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.
For fiscal year 2023, there was a decrease of $817,034, or 30.1%, as compared with fiscal year 2022.
For fiscal year 2024, there was a decrease of $61,576, or 3.2%, as compared with fiscal year 2023.
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.
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. 2024 2023 Fluctuation Amount % Amount % Amount % Summary selling, general and administrative expenses: Professional expenses 963,682 52.5 893,137 47.1 70,545 7.9 Employee compensations 548,694 29.9 722,938 38.1 (174,244 ) (24.1 ) Rental expenses 121,201 6.6 156,782 8.3 (35,581 ) (22.7 ) Other expenses 202,359 11.0 124,655 6.5 (77,704 ) (62.3 ) Total selling, general and administrative expenses 1,835,936 100.0 1,897,512 100.0 (61,576 ) (3.2 ) For the fiscal years ended December 31, 2023 and 2024, our selling, general and administrative expenses amounted to $1,897,512 and $1,835,936, respectively.
For the consumer loan repayment and collection management services and loan recommendation services, the Sentage Operating Companies outsource certain tasks to third-party loan collection agencies or law firms and they collaborate with funding partners. As a result, the cost of third-party business partnership is likely to rise as the Sentage Operating Companies grow their business and expand the partnership network.
As a result, the cost of third-party business partnership is likely to rise as the Sentage Operating Companies grow their business and expand the partnership network.
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.
Net Loss As a result of the foregoing, we reported a net loss of $2,004,831 for the fiscal year ended December 31, 2024, representing a $101,554 increase from a net loss of $1,903,277 for the fiscal year ended December 31, 2023.
The VIE Agreements have not been tested in a court of law in China as of the date of this annual report.
The VIE Agreements have not been tested in a court of law in China as of the date of this annual report. We currently report our operating revenue, through the Sentage Operating Companies, from one revenue stream, namely, prepaid payment network service. 72 A.
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.
This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report.
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.
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenues Total operating revenue decreased by $39,047, or 27%, to $107,507 for the fiscal year ended December 31, 2024, from $146,554 for the fiscal year ended December 31, 2023. The prepaid payment network services, have witnessed a decrease in the quantity and scope of the services provided.
Operating Results Major Factors Affecting Results of Operations We believe the following key factors may affect the Sentage Operating Companies’ financial condition and results of operations: Effectiveness of Risk Management The success of the Sentage Operating Companies’ loan recommendation business relies heavily on their ability to effectively evaluate borrowers’ credit profiles, the likelihood of default, and the value of borrowers’ collateralized properties.
Operating Results Major Factors Affecting Results of Operations We believe the following key factors may affect the Sentage Operating Companies’ financial condition and results of operations: Effectiveness of Risk Management The success of Sentage Operating Companies’ prepaid payment network service business depends largely on a successful and effective risk management strategy.
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.
The decrease was primarily due to the following (i) professional fees increased by $70,545 from $893,137 in fiscal 2023 to $963,682 in fiscal 2024 due to an increase in consulting services paid to third-party professionals, as the need for financial consulting services; (ii) employee compensation decreased by $174,244 from $722,938 in fiscal year 2023 to $548,694 in fiscal 2024, primarily due to a reduction in the Company’s headcount, which resulted in a reduction in base salaries and social security; (iii) rental expenses decreased by $35,581 from $156,782 in fiscal year 2023 to $121,201 in fiscal 2024, primarily due to the expiration of a lease contract and failure to renew it; and (iv) an increase in other expenses, such as office, travel allowance and bad debt expenses, from $124,655 in fiscal year 2023 to $202,359 in fiscal year 2024, due to the company’s adoption of the Current Expected Credit Losses model to make provisions for allowances and bad debts of accounts receivable and other receivable in fiscal year 2024. 76 Results of Operations The following table sets forth a summary of our consolidated results of operations, for the period indicated.
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.
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. During the year ended December 31, 2024, the Sentage Operating Companies provided prepaid payment network consulting services to one customer.
For merchant customers who need prepaid card payment services such as collecting and processing information necessary for prepaid card issuance and authorizing transaction requests after verifying transaction information, Qingdao Buytop charge service fee equal to 0.3% to 0.5% of each transaction amount and recognize revenue at the point when the prepaid cards issued by merchant customers are used by their end user card holders.
For merchant customers who require prepaid card payment services, which include activities such as collecting and processing information necessary for prepaid card issuance and authorizing transaction requests after verifying transaction information, these services are often bundled together as part of a comprehensive prepaid card service offering.
Revenue Recognition We adopted ASC 606, “Revenue from Contracts with Customers” for all periods presented.
You should read the following description of critical accounting policies, judgments and estimates in conjunction with our consolidated financial statements and other disclosures included in this annual report. 82 Revenue Recognition We adopted ASC 606, “Revenue from Contracts with Customers” for all periods presented.
Removed
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.
Added
Subject to various regulations, such as anti-money laundering requirements, the prepaid payment network must properly retain cardholders' transaction records and identity information and report any suspicious activities to the relevant authorities. An effective risk management system within the prepaid payment network will continuously monitor transactions to detect suspicious behaviors.
Removed
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.
Added
For example, if a prepaid card suddenly conducts a large number of high-value transactions within a short period of time and the transaction locations are far from the cardholder's usual areas, the system can flag these transactions.
Removed
Specifically, the Sentage Operating Companies’ assessment model and risk management capabilities not only enable them to select high-quality borrowers whose financial conditions and personal background meet the selection criteria, but also protect the funding partners against lending more than they might be able to recover in the case of default.
Added
By using advanced analytical technologies, the prepaid payment network is able to quickly detect and block potential fraudulent transactions, protecting both cardholders and operators from financial losses. 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.
Removed
There can be no assurance that the risk management measures will allow the Sentage Operating Companies to identify or appropriately assess whether interest and principal payments due on a loan will be repaid when due, or at all, or whether the value of the mortgaged property will be sufficient to otherwise provide for recovery of such amounts.
Added
The reasons for the decrease included a slowdown in the market demand for specific services offered and the intensively competitive business environment within the prepaid payment network.
Removed
If the risk management approach is ineffective, or if the Sentage Operating Companies otherwise fail or are perceived to fail to manage the impact of default, the Sentage Operating Companies’ reputation and market share could be materially and adversely affected, which would severely impact their business and results of operations.
Added
The impact of the revenue decline is reflected in various aspects of the company's financial performance, including but not limited to a decrease in the gross profit margin and potential changes in the cash flow forecast. 77 Other income (expenses) Our other income (expense) consists primarily of bank fees, impairment losses on assets and gains and losses on the exchange rate.
Removed
The Sentage Operating Companies’ Ability to Provide Consumer Loan Repayment and Collection Management Services Efficiently The success of the Sentage Operating Companies’ consumer loan repayment and collection management business depends on their ability to manage the loan repayment and collection process efficiently. The existing consumer loan repayment and collection management services were all completed by the end of 2021.
Added
In fiscal year 2024, our net other expense was $(268,328), an increase of $(128,606) from net other expense of $(139,722) in fiscal year 2023. This was due to the additional asset impairment losses in fiscal 2024.
Removed
We plan to provide loan repayment and collection management services, through the Sentage Operating Companies, to other online consumer finance companies and major commercial banks in China.
Added
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. 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.
Removed
As of the date of this annual report, although the Sentage Operating Companies are in active conversation with a number of prospective clients, they have not secured a new source of revenue to replace the loss of our current engagements.
Added
This was due to an asset impairment loss in fiscal 2023.
Removed
If the Sentage Operating Companies are unable to maintain, develop, and expand their business or adapt to changing market needs as well as the current or future competitors are able to, or if the Sentage Operating Companies are unable to acquire a sufficient number of customers who need their services, they may not be able to generate the same amount of revenue and/or profits to sustain the operation of the consumer loan repayment and collection management business.
Added
This is mainly due to the decrease in the number of employees in the company during the 2024 fiscal year, resulting in a decrease in the amount of wages payable. ● An increase in Allowance for credit losses of $361,771.
Removed
As a result, the Sentage Operating Companies’ business and results of operations may be adversely affected. The following are some of the main factors that may affect the results of our operations. Ability to Acquire Prospective Borrowers Effectively and Increase Overall Loan Volume The Sentage Operating Companies started the loan recommendation services in June 2019.
Added
This is mainly because, in the fiscal year 2024, the company made provisions for Allowances for accounts receivable and other receivables under the CECL model, resulting in an increase in allowances of credit losses.
Removed
The revenue growth in this business largely depends on our ability to acquire prospective borrowers effectively and increase the overall loan volume funded by the funding partners. We intend to continue to dedicate significant resources to the Sentage Operating Companies’ borrower acquisition efforts.
Added
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.
Removed
If there are insufficient qualified loan requests, the funding partners may not want to collaborate with the Sentage Operating Companies further, which may result in borrowers being unable to obtain capital through the loan recommendation services and turning to other sources for their borrowing needs.
Added
Technology consulting and support services are short-term in nature, with a service period ranging from three to eight months. These services are distinct deliverables, as they involve customized advice, problem - solving, and support tailored specifically to the client's needs, rather than being bundled with other services.
Removed
In addition to the size of the prospective borrower base, the overall loan volume may be affected by several factors, including the Sentage Operating Companies’ brand recognition and reputation, the interest rates offered to borrowers relative to the market rates, the efficiency of the credit assessment process, the availability of our funding partners, the macroeconomic environment, and other factors.
Added
The Company acts as the principal in providing these services, taking on the primary obligation to deliver the consulting and support and bearing the associated risks and rewards. Related service fees are recognized as revenue over time, based on the progress of service delivery, which aligns with the nature of the services being provided continuously during the service period.
Removed
In connection with the introduction of new services or in response to general economic conditions, the Sentage Operating Companies may also impose more stringent borrower qualifications to ensure the quality of the recommended borrowers, which may negatively affect loan volume.
Added
The Company is considered the agent in this scenario, as it facilitates the prepaid card transactions on behalf of the merchant customers. The Company charges a service fee equal to 0.3% to 0.5% of each transaction amount.
Removed
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.
Added
Revenue from these services is recognized at a point in time, specifically when the prepaid cards issued by merchant customers are used by their end - user cardholders. This is because the Company's performance obligation is satisfied when the end - user uses the card, and the amount of revenue can be reliably measured at that specific moment.
Removed
With respect to consumer loan repayment and collection management services and loan recommendation services, they compete with market players such as traditional financial institutions, small loan companies, e-commerce driven installment platforms, and other consumer finance platforms. With respect to prepaid payment network services, the Sentage Operating Companies primarily compete with other third-party payment service providers in China.
Removed
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.
Removed
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.
Removed
All the clients are individual customers who entered into service agreements with the Sentage Operating Companies. All these loans were facilitated through the offline loan recommendation services before November 2017. Since November 2017, the Sentage Operating Companies have not provided any intermediary services for any new customers due to changes in related governing regulations in China.
Removed
Pursuant to the service agreements entered with individual customers, customers authorized the Sentage Operating Companies to monitor and manage the repayment and collection process of outstanding loans for a fixed service fee, which was paid upfront by customers. The Sentage Operating Companies were required to monitor loans within loan term to ensure timely repayment of loans when they become due.

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Item 6. [Reserved]

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

25 edited+6 added−4 removed36 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.
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.
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.
Qiaoling Lu has been our chief executive officer, chairman of the board of directors, and director since incorporation. Ms. Lu has served as the general manager of Daxin Wealth since March 2015.
Qiaoling Lu has been our Chief Executive Officer, chairman of the board of directors, and director since the incorporation of the Company. Ms. Lu has served as the general manager of Daxin Wealth since March 2015.
(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.
(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 Class A Ordinary Shares beneficially owned represents 1,650,000 Class A Ordinary Shares held by Unit Giant Limited, a British Virgin Islands company, which is 100% owned by Ms. Qiaoling Lu.
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.
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. 84 Mr. Shengsong Wang is our Independent Director, within the meaning of the Nasdaq Listing Rules. Mr.
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.
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. 85 B.
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. 89
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.
We have the right to seek damages where certain duties owed by any of our directors are breached. 86 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.
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.
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 has been our Chief Financial Officer since September 1, 2020. He has served as the finance director of Daxin Wealth since June 2016.
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.
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 % Yingxin Bi - - 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.
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.
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 2 3 0 0 Part II: Demographic Background Underrepresented Individual in Home Country Jurisdiction 0 LGBTQ+ 0 Did Not Disclose Demographic Background 0 Family Relationships Ms.
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.
We believe that we maintain a good working relationship with our employees and to date, we have not experienced any significant labor disputes. 88 E.
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.
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. 87 Nominating and Corporate Governance Committee Our nominating and corporate governance committee consists of Mr.
Our board also has determined that Angel Colon qualifies as an audit committee financial expert within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq listing rules. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
Angel Colon qualifies as an audit committee financial expert within the meaning of the SEC rules or possesses financial sophistication within the meaning of the Nasdaq listing rules. The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.
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.
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 Mr. Angel Colon, Mr. Shengsong Wang, and Ms. Yingxin Bi. Mr. Angel Colon is the chairperson of our audit committee.
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.
The following table sets forth the numbers of our employees categorized by function as of December 31, 2024: 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 11.1 % Finance Department 3 33.4 % Risk control center 1 11.1 % Business Department 1 11.1 % Operating department 1 11.1 % Technical department 1 11.1 % Integrated department 1 11.1 % Total 9 100 % 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.
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.
Compensation Committee Our compensation committee consists of Ms. Yingxin Bi, Mr. Angel Colon, and Mr. Shengsong Wang. Ms. Yingxin Bi is the chairperson of our compensation committee. We have determined that Ms. Yingxin Bi, Mr. Angel Colon, and Mr. Shengsong Wang satisfy the “independence” requirements of the Nasdaq listing rules and Rule 10C-1 under the Securities Exchange Act.
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.
Compensation of Directors and Executive Officers For the fiscal year ended December 31, 2024, we, our subsidiaries and the VIEs, paid in aggregate cash compensation of approximately US$212,423 to our directors and executive officers as a group.
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.
D. Employees As of the date of this annual report, we employed 4 employees in Shanghai, China, and 4 employees in Qingdao Province, China. As of December 31, 2022, 2023, and 2024, we had 21, 14, and 9 employees, respectively.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth the name, age and position of each of our directors and executive officers as of the date of this annual report.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES A. Directors and Senior Management The following table sets forth the name, age and position of each of our directors and executive officers as of the date of this annual report. Name Age Position Ms. Qiaoling Lu 45 Chief Executive Officer, Chairman of the Board of Directors, and Director Mr.
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 Mr. Angel Colon, Mr. Shengsong Wang, and Ms. Yingxin Bi satisfy the “independence” requirements of the Nasdaq listing rules under and Rule 10A-3 under the Securities Exchange Act. Our board also has determined that Mr.
Chen obtained his bachelor’s degree in Accounting from Shanghai Ocean University in Shanghai City, China in 1998. Mr. Yiheng Guo has served as a director of Daxin Wealth from March 2015 to present. Mr. Guo obtained his master’s degree in Real Estate Investment and Finance from Henley Business School at University of Reading in the United Kingdom in 2007. Mr.
Chen obtained his bachelor’s degree in Accounting from Shanghai Ocean University in Shanghai City, China in 1998. Mr. Yiheng Guo has served as our director since the incorporation of the Company and a director of Daxin Wealth since March 2015. Mr.
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.
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.
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.
Jianhua Chen 49 Chief Financial Officer Mr. Yiheng Guo 41 Director Ms. Yingxin Bi (1)(2)(3) 42 Independent Director Mr. Angel Colon (1)(2)(3) 51 Independent Director Mr. Shengsong Wang (1)(2)(3) 69 Independent Director (1) Member of the Audit Committee (2) Member of the Nominating and Corporate Governance Committee (3) Member of the Compensation Committee Ms.
Guo obtained his bachelor’s degree in International Securities Investment & Banking from University of Reading in the United Kingdom in 2006. Mr. Michael John Viotto is our Independent Director, within the meaning of the Nasdaq Listing Rules.
Guo obtained his master’s degree in Real Estate Investment and Finance from Henley Business School at University of Reading in the United Kingdom in 2007. Mr. Guo obtained his bachelor’s degree in International Securities Investment & Banking from University of Reading in the United Kingdom in 2006. Ms.
Removed
Michael Viotto currently serves as the Chief Financial Officer and a Board member for Fuse Group Holdings Inc., an OTC OB Market listed company (trading symbol: FUST). Mr. Viotto has been serving as a Board member for Fuse Group Holding Inc. since August 2017, supervising finance aspects of the Company. Mr.
Added
Yingxin Bi, has been our Independent Director, within the meaning of the Nasdaq Listing Rules, since December 13, 2024. Since January 2021, Ms. Bi has worked as an independent consultant, actively involved in financing projects for prominent companies such as Alibaba Intime, Greenland Group, and Shimao Group, serving institutional investors, corporations, and other clients.
Removed
Viotto has been the President of MJV Consulting since October 2014, and has also been serving as an Independent Director for Dunxin Financial Holding Limited, an NYSE market listed company (trading symbol: DXF), serving as the Chairman of the company’s Compensation Committee and a member of the company’s Nomination Committee as well as its Audit Committee since December, 2017.
Added
From June 2019 to December 2020, she served as the general manager of Lupu Investment Group, where she was responsible for building and enhancing a real estate investment and management platform. From August 2013 to May 2019, Ms. Bi held the position of managing director in the real estate investment department at Ping An Trust.
Removed
In addition, Mr. Viotto also served as an Independent Director for Future World Financial Holdings Inc. from September 2016 to January 2017, which is a financial company based in Hong Kong, China. He served as the Chairman for the company’s Nominating and Remuneration Committee and as a member of the company’s Audit Committee. Mr.
Added
In this role, she initiated and executed a range of key projects, including structured financing, land acquisition funds, and mezzanine funds. From September 2011 to August 2013, she held the position of managing director in the fund department at Fosun Property Holdings.
Removed
Viotto received his Bachelor of Science Degree in Business Administration from California Polytechnic University located in Pomona, California in March 1985. Mr. Angel Colon is our Independent Director, within the meaning of the Nasdaq Listing Rules. Mr.
Added
From October 2009 to August 2011, she served as an Investment Manager in the Real Estate Investment Department at Ping An Trust. From July 2007 to May 2009, Ms. Bi served as an analyst at Lehman Brothers, where she developed a strong foundation in financial analysis.
Added
She obtained a Bachelor’s degree co-majoring in Commerce and Property from University of Auckland University in New Zealand in 2005, and a Master’s degree in Real Estate Finance and Investment from Reading University in United Kingdom in 2007. Mr. Angel Colon is our Independent Director, within the meaning of the Nasdaq Listing Rules. Mr.
Added
Shengsong Wang, Ms. Yingxin Bi, and Mr. Angel Colon. Mr. Shengsong Wang is the chairperson of our nominating and corporate governance committee. Mr. Shengsong Wang, Ms. Yingxin Bi, and Mr. Angel Colon satisfy the “independence” requirements of the Nasdaq listing rules.

Item 7. Management's Discussion & Analysis

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

3 edited+0 added−0 removed1 unchanged
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.
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, 2024. C.
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.
Directors and Senior Management—Employment Agreements and Indemnification Agreements.” Other Transactions with Related Parties Amount due from related parties As of the date of this annual report and as of December 31, 2024, 2023, and 2022, we had no amounts due from related parties.
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.
Amount due to related parties As of the date of this annual report, and as of December 31, 2024, 2023, and 2022, the balance due to a related party was in the amount of $1,076,516, $344,235 and $4,709, respectively, as loan advances from the Company’s controlling shareholder, Ms.

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