Sentage Holdings Inc.

Sentage Holdings is a Cayman Islands holding company that conducts its operations through Sentage Operating Companies, also known as VIEs, based in China. These Sentage Operating Companies provide prepaid payment network services. The company uses a Variable Interest Entity (VIE) structure due to the unclear nature of Chinese laws and regulations affecting its businesses. While the People's Bank of China (PBOC) has eased requirements for foreign-invested enterprises to hold third-party payment licenses, the review process remains strict. Additionally, Chinese authorities have not clarified whether foreign-invested enterprises are permitted to engage in prepaid network services, posing a risk of prohibition. Sentage Holdings does not hold equity interests in the Sentage Operating Companies. However, their financial results are consolidated in accordance with U.S. GAAP because Sentage Holdings is considered to have effective control and be the primary beneficiary through the VIE Agreements, for accounting purposes only. As of the date of this annual report, the VIE Agreements have not been legally tested in a Chinese court. Investors in Sentage Holdings' Class A Ordinary Shares own equity interest in the Cayman Islands holding company, not directly in the Sentage Operating Companies in China.