花旗发表报告指，伟易达2026财年中期业绩营业额和净利润分别按年下跌9%和14.5%至9.91亿美元和 7470万美元，略逊该行预期。该行指，公司管理层提供的2026财政年度指引与预期大致相符，因此将目 标价由62元上调至76港元，评级"买入"；将2027财政年度的市盈率预测上调至15倍，以反映更乐观的毛 利扩张趋势。若因业绩稍逊于预期而出现股价回落，该行认为是买入机会。 ...

Group 1 - The company VTech Holdings Limited (00303.HK) opened nearly 6% lower and is currently down 5.98%, trading at HKD 62.9 [1] - The trading volume for the company is reported at HKD 691,900 [1]

Group 1 - The core point of the article is that VTech Holdings Limited (00303) experienced a significant decline in its mid-term profits, with a year-on-year decrease of 14.53% and a nearly 6% drop in stock price following the announcement [1] Group 2 - For the six months ending September 30, 2025, the company reported revenue of $991 million, a decrease of 9.05% compared to the previous year [1] - The net profit attributable to shareholders was $74.7 million, reflecting a year-on-year decline of 14.53% [1] - Earnings per share were reported at 29.5 cents, and the company proposed an interim dividend of 17 cents per share [1] - The decline in profit was attributed to reduced revenue, an increase in the percentage of operating expenses relative to total revenue, and a rise in the effective tax rate [1] - The gross profit margin showed a slight improvement during the period [1]

消息面上，伟易达发布截至2025年9月30日止6个月业绩，该集团取得收入9.91亿美元，同比减少 9.05%；公司股东应占溢利7470万美元，同比减少14.53%；每股盈利29.5美仙，拟派发中期股息每股17 美仙。公告称，溢利下跌是由于收入减少、经营费用总额占集团收入的百分比增加，以及集团实际所得 税率上升。期内，毛利率取得轻微改善。 伟易达(00303)低开近6%，截至发稿，跌5.98%，报62.9港元，成交额69.19万港元。 ...

Revenue and Sales Performance - For the three months ended September 30, 2025, revenues were $12.2 million, an increase of 6.1% from $11.5 million in the same period of 2024[140] - Domestic sales accounted for approximately 68.9% of total revenues for the three months ended September 30, 2025, compared to 64.3% in the same period of 2024[134] - Revenue from sales to customers in Mainland China was $8.4 million, an increase of 13.5% compared to $7.4 million in the same period of 2024[143] - Revenue from overseas markets decreased to $3.8 million, a decline of 7.3% from $4.1 million in the same period of 2024[146] - Total revenue for the nine months ended September 30, 2025, was $39.9 million, an increase of $1.3 million or 3.4% compared to $38.6 million in the same period of 2024[156] - Revenue from sales to customers in the PRC increased by $2.4 million or 9.7% for the nine months ended September 30, 2025[158] Profitability - Gross profit for the same period was $4.0 million, a decrease of 9.1% from $4.4 million in the third quarter of 2024, resulting in a gross profit margin of 32.7% compared to 38.4%[140] - Net income for the three months ended September 30, 2025, was $2.5 million, a decrease of 7.4% from $2.7 million in the same period of 2024[140] - Gross profit for the nine months ended September 30, 2025, was $13.7 million, up from $12.6 million in the same period of 2024, an increase of 8.7%[163] - Net income for the nine months ended September 30, 2025, was $7.3 million, an increase from $5.9 million in the same period of 2024[171] Expenses - Selling expenses for Q3 2025 were $0.1 million, a decrease of 50.0% from $0.2 million in Q3 2024, attributed to reduced travel expenses[149] - General and administrative expenses increased to $0.8 million in Q3 2025 from $0.7 million in Q3 2024, a rise of 14.3% due to higher professional fees[150] - Research and development expenses were nil in Q3 2025, down from $43,859 in Q3 2024, marking a 100.0% decrease[151] - Selling expenses for the nine months ended September 30, 2025, were $0.4 million, a decrease of 55.6% from $0.9 million in the same period of 2024[164] - General and administrative expenses increased to $3.1 million for the nine months ended September 30, 2025, up from $2.2 million in 2024, representing a 40.9% increase[165] - Research and development expenses were nil for the nine months ended September 30, 2025, compared to $129,808 in the same period of 2024, a decrease of 100%[166] Cash Flow and Assets - As of September 30, 2025, the company had approximately $113.2 million in cash on hand to fund the new facility construction[137] - Cash and cash equivalents increased to $113.2 million as of September 30, 2025, compared to $103.8 million at December 31, 2024[180] - Net cash provided by operating activities was $8.5 million for the nine months ended September 30, 2025, compared to a negative cash flow of $0.7 million in 2024[175] - Current assets as of September 30, 2025, totaled $125.2 million, while current liabilities were $4.7 million[174] Production and Future Plans - The total volume shipped was 597,470 units, an increase of 9.0% from 548,335 units in the third quarter of 2024[140] - The company plans to complete the construction of a new production facility by the end of 2025 and commence production in the second quarter of 2026[137] - The company has shifted its production mix towards high-end products, such as medical and automotive touchscreens, to meet stronger demand[147] Taxation - The effective income tax rate decreased to 28.9% for the nine months ended September 30, 2025, from 31.6% in 2024[170] Capital Expenditure - As of September 30, 2025, the company had a capital expenditure commitment of RMB4.6 million (approximately $0.7 million) for construction in progress[186]

Core Insights - WeTouch Technology Inc. reported its unaudited financial results for Q3 and the first nine months of fiscal year 2025, highlighting a total revenue of $39.9 million, which represents a 3.4% increase from $38.6 million in the same period of 2024 [1] Financial Performance - Total revenue for the first three quarters of fiscal year 2025 reached $39.9 million [1] - This figure shows a growth of 3.4% compared to the $38.6 million reported in the same period of the previous year [1]

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward%20Looking%20Statements) This report contains **forward-looking statements** subject to risks and uncertainties that could cause actual results to differ materially from expectations - **Key risks** include significant reliance on top customers, potential uncollectible accounts receivable, fines from the Chinese government, challenges in maintaining product quality, intense competition, need for additional financing, risks related to new facility construction, potential revocation of tax treatments, supply chain disruptions, raw material cost fluctuations, and reliance on key executives[10](index=10&type=chunk) - **Additional risks** involve the absence of long-term supplier contracts, failure to adopt new technologies, lack of business liability insurance, adverse regulatory developments in Mainland China, potential delisting under the HFCAA, and uncertainties in China's economic, political, social, and legal systems, as well as exchange rate fluctuations[13](index=13&type=chunk) [PART I FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including Balance Sheets, Income Statements, Equity Changes, and Cash Flows, along with detailed accounting policy notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets show an increase in total assets and stockholders' equity as of June 30, 2025, compared to December 31, 2024, driven primarily by an increase in cash and accounts receivable Condensed Consolidated Balance Sheet Highlights (in US$) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | **ASSETS** | | | | Cash | $110,452,470 | $103,760,324 | | Accounts receivable, net | $10,736,898 | $7,504,630 | | Total Current Assets | $123,159,576 | $114,139,861 | | Total Assets | $137,024,190 | $128,019,463 | | **LIABILITIES & EQUITY** | | | | Total Current Liabilities | $5,014,548 | $2,951,192 | | Total Liabilities | $5,219,006 | $3,433,798 | | Total Stockholders' Equity | $131,805,184 | $124,585,665 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Revenues slightly increased for Q2 2025, but gross profit and net income decreased, while for H1 2025, revenues, gross profit, and net income all increased Condensed Consolidated Statements of Income and Comprehensive Income Highlights (in US$) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $12,419,455 | $12,234,575 | $27,709,033 | $27,111,834 | | Gross Profit | $4,111,511 | $4,860,818 | $9,753,142 | $8,198,776 | | Income from Operations | $3,082,904 | $3,725,228 | $7,055,638 | $6,030,303 | | Net Income | $2,241,828 | $2,701,694 | $4,804,550 | $3,260,564 | | Basic EPS | $0.19 | $0.23 | $0.40 | $0.29 | | Diluted EPS | $0.19 | $0.23 | $0.40 | $0.29 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity increased from December 31, 2024, to June 30, 2025, driven by net income and positive foreign currency translation adjustments Stockholders' Equity Changes (in US$) | Metric | Balance as of Dec 31, 2024 | Net Income (Q1 2025) | FX Adjustment (Q1 2025) | Balance as of Mar 31, 2025 | Net Income (Q2 2025) | FX Adjustment (Q2 2025) | Balance as of Jun 30, 2025 | | :-------------------------- | :------------------------- | :------------------- | :---------------------- | :------------------------- | :------------------- | :---------------------- | :------------------------- | | Total Stockholders' Equity | $124,585,665 | $2,562,722 | $732,380 | $127,880,767 | $2,241,828 | $1,682,589 | $131,805,184 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company generated positive operating cash flow for H1 2025, with minimal investing and financing activities, resulting in a net increase in cash Condensed Consolidated Statements of Cash Flows Highlights (in US$) | Cash Flow Activity | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :--------------------------- | :--------------------------- | | Net cash provided by (used in) operating activities | $4,676,400 | $(5,335,907) | | Net cash used in investing activity | $- | $(114,762) | | Net cash provided by financing activities | $- | $7,852,960 | | Effect of changes of foreign exchange rates on cash | $2,015,746 | $(2,068,543) | | Net increase in cash | $6,692,146 | $333,748 | | Cash, end of period | $110,452,470 | $98,374,302 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations of financial statement figures, covering business, accounting policies, asset/liability accounts, related party transactions, income taxes, equity, and risks [NOTE 1 — BUSINESS DESCRIPTION](index=10&type=section&id=NOTE%201%20%E2%80%94%20BUSINESS%20DESCRIPTION) Wetouch Technology Inc., a Nevada holding company, operates through its PRC subsidiary Sichuan Vtouch, focusing on touchscreen display R&D, manufacturing, and distribution - Wetouch Technology Inc. (formerly Gulf West Investment Properties, Inc.) was incorporated in August 1992 in Nevada[24](index=24&type=chunk) - On **October 9, 2020**, the Company completed a reverse merger with BVI Wetouch, making BVI Wetouch a wholly-owned subsidiary[25](index=25&type=chunk) - Sichuan Wetouch (now Sichuan Vtouch) is **primarily engaged** in the R&D, manufacture, and distribution of touchscreen displays for financial terminals, automotive, POS, gaming, lottery, medical, HMI, and other specialized industries[26](index=26&type=chunk) - In March 2021, Sichuan Wetouch was under a government-directed relocation order, and Sichuan Vtouch took over its operating business. Sichuan Wetouch was deconsolidated on **March 30, 2023**[32](index=32&type=chunk)[33](index=33&type=chunk) [NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the basis of presentation, consolidation principles, use of estimates, significant accounting policies, and recent accounting pronouncements - The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP, with certain information condensed or omitted as permitted by SEC rules[37](index=37&type=chunk) - Sichuan Wetouch was deconsolidated on **March 30, 2023**, as the Company no longer operated or controlled it, resulting in nil gain or loss from deconsolidation[39](index=39&type=chunk)[40](index=40&type=chunk) - The Company adopted **ASU No. 2016-02**, Leases (Topic 842), recognizing right-of-use assets and lease liabilities on the balance sheet, and elected certain practical expedients for transition[43](index=43&type=chunk)[45](index=45&type=chunk) - The Company's Chief Executive Officer (CEO) is the CODM, who reviews consolidated results. The Company has only **one reporting segment**: the touchscreen business, as all assets are in the PRC[46](index=46&type=chunk)[47](index=47&type=chunk) - Recent accounting pronouncements, ASU 2023-07 (Segment Reporting) and ASU 2023-09 (Income Taxes), **did not have a material impact** on the Company's consolidated financial statements[48](index=48&type=chunk)[49](index=49&type=chunk) [NOTE 3 — ACCOUNTS RECEIVABLE](index=14&type=section&id=NOTE%203%20%E2%80%94%20ACCOUNTS%20RECEIVABLE) Accounts receivable, net, significantly increased from December 31, 2024, to June 30, 2025, particularly in current and 1-3 months past due categories Accounts Receivable, Net (in US$) | Metric | June 30, 2025 (Unaudited) | December 31, 2024 | | :---------------------- | :------------------------ | :------------------ | | Accounts receivable, net | $10,736,898 | $7,504,630 | Aging of Accounts Receivable (in US$) | Aging Category | June 30, 2025 (Unaudited) | December 31, 2024 | | :--------------- | :------------------------ | :------------------ | | Current | $5,997,500 | $3,726,124 | | 1-3 months past due | $4,739,398 | $2,536,815 | | 4-6 months past due | $- | $1,241,691 | | Total | $10,736,898 | $7,504,630 | [NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=15&type=section&id=NOTE%204%20%E2%80%94%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) Prepaid expenses and other current assets decreased due to the full amortization of prepaid consulting service fees by June 30, 2025 Prepaid Expenses and Other Current Assets (in US$) | Item | June 30, 2025 (Unaudited) | December 31, 2024 | | :---------------------------------- | :------------------------ | :------------------ | | Advance to suppliers | $213,551 | $252,618 | | Prepayment for land use right | $547,941 | $537,755 | | Security deposit | $54,861 | $53,840 | | Prepaid consulting service fees | $- | $884,687 | | Prepaid market research fees | $955,000 | $955,000 | | Others receivable | $53,191 | $78,680 | | Total Prepaid expenses and other current assets | $1,824,544 | $2,762,580 | - Prepaid consulting service fees of **$884,687** as of December 31, 2024, have been **fully amortized** by June 30, 2025[55](index=55&type=chunk)[56](index=56&type=chunk) - The Company has a prepayment for land use rights (**$547,941**) for a new facility, expected to be reclassified to intangible assets by H2 2026, and a security deposit (**$54,861**) for a construction license, expected to be refunded by H2 2025[56](index=56&type=chunk) [NOTE 5 — PROPERTY, PLANT AND EQUIPMENT, NET](index=16&type=section&id=NOTE%205%20%E2%80%94%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) Net property, plant, and equipment increased slightly, primarily due to ongoing construction in progress for the new facility Property, Plant and Equipment, Net (in US$) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Buildings | $12,022 | $11,798 | | Machinery and equipment | $7,817 | $7,672 | | Vehicles | $40,875 | $40,114 | | Construction in progress | $12,997,423 | $12,755,791 | | Subtotal | $13,058,137 | $12,815,375 | | Less: accumulated depreciation | $(38,010) | $(32,378) | | Property, plant and equipment, net | $13,020,127 | $12,782,997 | - Depreciation expense for the six months ended June 30, 2025, was **$4,957**, up from **$4,798** in the prior year[57](index=57&type=chunk) - As of June 30, 2025, the Company had a commitment of **$0.7 million** for construction in progress of its new facility[58](index=58&type=chunk) [NOTE 6 — OPERATING LEASE](index=16&type=section&id=NOTE%206%20%E2%80%94%20OPERATING%20LEASE) The Company continues to lease property due to new facility construction delays, recognizing operating lease expenses and liabilities per ASU 2016-02 - The Company is under a government-directed relocation order and is constructing a new facility, with completion rescheduled to end of **December 31, 2025**, and production commencing in **Q2 2026**[59](index=59&type=chunk)[61](index=61&type=chunk) - The lease for the current property has been renewed multiple times, with the latest extension to **October 31, 2025**, at a monthly rent of **RMB 400,000 ($55,837)**[60](index=60&type=chunk) Lease Expense and Liabilities (in US$) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Operating lease expense | $156,869 | $- | $308,244 | $- | | Short-term lease expense | $- | $146,643 | $- | $294,372 | | Total lease expense | $156,869 | $146,643 | $308,244 | $294,372 | | Operating lease right-of-use assets (June 30, 2025) | $813,516 | | | | | Operating lease right-of-use assets (Dec 31, 2024) | | | | $1,055,208 | | Total operating lease liabilities (June 30, 2025) | $813,517 | | | | | Total operating lease liabilities (Dec 31, 2024) | | | | $1,054,145 | [NOTE 7 — RELATED PARTY TRANSACTIONS](index=18&type=section&id=NOTE%207%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) Amounts due to related party Chengdu Wetouch Intelligent Optoelectronics Co., Ltd. significantly increased from December 31, 2024, to June 30, 2025 Amounts Due to Related Party (in US$) | Related Party | Relationship | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------------------------------------------ | :------------ | :---------------- | | Chengdu Wetouch Intelligent Optoelectronics Co., Ltd. | An affiliate of Ms. Jiaying Cai, director of the Company | $642,634 | $149,211 | [NOTE 8 — INCOME TAXES](index=18&type=section&id=NOTE%208%20%E2%80%94%20INCOME%20TAXES) Company subsidiaries are subject to varying income tax rates across jurisdictions, with a **32.8%** effective tax rate for H1 2025 - Wetouch is subject to a **21%** U.S. federal income tax rate, BVI Wetouch is not subject to income tax, and HK Wetouch is subject to a **16.5%** profit tax in Hong Kong[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - PRC subsidiaries (Sichuan Wetouch and Sichuan Vtouch) are generally subject to a **25%** CIT rate, though Sichuan Wetouch previously qualified for a **15% HNTE rate** until October 20, 2023[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) Income Tax Provision (in US$) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | PRC income tax provision | $860,267 | $1,099,331 | $2,336,755 | $1,761,179 | | Deferred income tax expenses | $16,455 | $- | $11,073 | $- | | Total Income tax provision | $876,722 | $1,099,331 | $2,347,828 | $1,761,179 | Effective Tax Rate Reconciliation | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | PRC statutory income tax rate | 25.0% | 25.0% | 25.0% | 25.0% | | Income tax computed at PRC statutory corporate income tax rate of 25% | 28.0% | 28.9% | 30.0% | 35.3% | | Effective tax rate | 28.1% | 28.9% | 32.8% | 35.1% | Deferred Tax Assets, Net (in US$) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total gross deferred tax assets | $231,474 | $305,199 | | Deferred tax liabilities | $(200,883) | $(263,802) | | Deferred tax assets, net | $30,591 | $41,397 | [NOTE 9 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=21&type=section&id=NOTE%209%20%E2%80%94%20ACCURRED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses and other current liabilities significantly increased, driven by higher other payables to third parties and other tax payables Accrued Expenses and Other Current Liabilities (in US$) | Item | June 30, 2025 | December 31, 2024 | | :---------------------------------- | :------------ | :---------------- | | Advance from customers | $- | $166,535 | | Accrued payroll and employee benefits | $82,340 | $81,837 | | Accrued legal compensation charges | $- | $35,356 | | Accrued professional fees | $148,199 | $57,173 | | Accrued director fees | $58,417 | $66,734 | | Other payable to third parties | $629,694 | $147,102 | | Other tax payables | $344,175 | $162,888 | | Others | $145,245 | $248,836 | | Total Accrued expenses and other current liabilities | $1,408,070 | $966,461 | [NOTE 10 — CONVERTIBLE PROMISSORY NOTES PAYABLE](index=21&type=section&id=NOTE%2010%20%E2%80%94%20CONVERTIBLE%20PROMISSORY%20NOTES%20PAYABLE) Convertible promissory notes issued in 2021 were fully repaid by February 2024, and most associated warrants expired or were exercised by June 2024 - In 2021, the Company issued **seven convertible promissory notes totaling $2.25 million**, bearing **8.0% interest**, with a default rate of **16%**[78](index=78&type=chunk)[79](index=79&type=chunk) - The notes were convertible into common stock at a price based on an Uplist Offering or **$15.0 per share**[80](index=80&type=chunk) - On February 23, 2024, the Company made a **full payment of $2,586,960** for the remaining five outstanding promissory notes, including principal and accrued interest/default charges[87](index=87&type=chunk) - The Company also issued three-year warrants to purchase **90,000 shares** of common stock to lenders, with an exercise price of **$25 per share** (subject to adjustment)[89](index=89&type=chunk)[90](index=90&type=chunk) - During the six months ended June 30, 2024, one lender exercised warrants for **2,725 shares**, and the remaining **38,430 Note Warrants expired**[95](index=95&type=chunk) [NOTE 11 — STOCKHOLDERS' EQUITY](index=23&type=section&id=NOTE%2011%20%E2%80%94%20STOCKHOLDERS'%20EQUITY) This note details common stock changes, including issuances, reverse stock splits, the 2024 Public Offering, and statutory reserve requirements - As of June 30, 2025, there were **11,931,534 shares** of common stock issued and outstanding, with a par value of **$0.001**[101](index=101&type=chunk) - The Company effected a **1-for-20 reverse stock split** on **September 12, 2023**, retrospectively adjusting all share information[103](index=103&type=chunk) - On February 23, 2024, the Company closed a public offering of **2,160,000 shares at $5.00 per share**, generating **$10.8 million** gross proceeds, with **$1,810,246** in issuance costs charged to additional paid-in capital[104](index=104&type=chunk)[105](index=105&type=chunk) - Under PRC rules, companies must appropriate **10% of net income** to a statutory surplus reserve until it reaches **50% of registered capital**; this reserve is non-distributable as cash dividends[106](index=106&type=chunk)[107](index=107&type=chunk) [NOTE 12 — SHARE BASED COMPENSATION](index=24&type=section&id=NOTE%2012%20%E2%80%94%20SHARE%20BASED%20COMPENSATION) Share-based compensation is accounted for using ASC 718, with warrants for services exercised or expired by June 30, 2024 - The Company uses the Black-Scholes model to estimate the fair value of share-based compensation awards[109](index=109&type=chunk)[111](index=111&type=chunk)[113](index=113&type=chunk) - Warrants for **35,861 shares** related to consulting services were exercised during the six months ended June 30, 2024, with no remaining warrants related to services as of that date[114](index=114&type=chunk) [NOTE 13 — WEIGHTED AVERAGE NUMBER OF SHARES](index=26&type=section&id=NOTE%2013%20%E2%80%94%20WEIGHTED%20AVERAGE%20NUMBER%20OF%20SHARES) Weighted-average shares outstanding are computed per ASC 260, with retrospective adjustments for the reverse merger - The weighted-average number of shares outstanding is computed based on ASC 260, adjusting for the reverse merger by using the legal acquiree's shares multiplied by the exchange ratio for the pre-acquisition period[115](index=115&type=chunk) [NOTE 14 — RISKS AND UNCERTAINTIES](index=26&type=section&id=NOTE%2014%20%E2%80%94%20RISKS%20AND%20UNCERTAINTIES) The Company faces financial risks including credit, interest rate, currency, and significant customer and supplier concentration - The Company's cash is primarily held in PRC state-owned banks, which are insured up to **RMB500,000**[117](index=117&type=chunk) - A majority of the Company's revenue and expenses are denominated in RMB, which is not freely convertible, exposing the Company to currency risk[119](index=119&type=chunk) Customer Concentration (Revenue) | Period | Top 5 Customers (% of Revenue) | Top 10 Customers (% of Revenue) | | :--------------------------- | :----------------------------- | :------------------------------ | | 3 Months Ended June 30, 2025 | 22.0%, 16.2%, 15.7%, 14.5%, 12.0% | 99.6% | | 3 Months Ended June 30, 2024 | 21.2%, 19.5%, 16.0%, 14.5%, 12.1% | 100.0% | | 6 Months Ended June 30, 2025 | 21.5%, 16.6%, 15.8%, 14.9%, 12.2% | 99.4% | | 6 Months Ended June 30, 2024 | 21.9%, 20.0%, 15.2%, 13.9%, 11.6% | 99.3% | Supplier Concentration (Raw Material Purchases) | Period | Top Suppliers (% of Total Purchases) | | :--------------------------- | :----------------------------------- | | 3 Months Ended June 30, 2025 | 50.1% (four suppliers) | | 3 Months Ended June 30, 2024 | 27.1% (two suppliers) | | 6 Months Ended June 30, 2025 | 49.6% (four suppliers) | | 6 Months Ended June 30, 2024 | 40.3% (three suppliers) | [NOTE 15 — COMMITMENTS AND CONTINGENCIES](index=26&type=section&id=NOTE%2015%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) The Company has no material legal proceedings but a capital expenditure commitment for new facility construction - As of the report date, the Company is not aware of any material, active, pending, or threatened legal or administrative proceedings[125](index=125&type=chunk) - As of June 30, 2025, the Company had a capital expenditure commitment of **RMB5.0 million (equivalent to $0.7 million)** for construction in progress[126](index=126&type=chunk) [NOTE 16 — SEGMENT REPORTING](index=28&type=section&id=NOTE%2016%20%E2%80%94%20SEGMENT%20REPORTING) The Company operates a single touchscreen business segment with all long-lived assets in the PRC, generating revenue from both domestic and overseas markets - The Company's Chief Executive Officer (CEO) is the chief operating decision maker (CODM), and the Company operates in one operating segment: the touchscreen business[127](index=127&type=chunk) - All of the Company's long-lived assets are located in the People's Republic of China (PRC)[128](index=128&type=chunk) Geographical Revenue Information (in US$) | Region | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Sales in PRC | $8,414,927 | $7,867,625 | $18,715,995 | $17,242,097 | | Sales in Overseas | $4,004,528 | $4,366,950 | $8,993,038 | $9,869,737 | | Total Revenue | $12,419,455 | $12,234,575 | $27,709,033 | $27,111,834 | [NOTE 17 — SUBSEQUENT EVENTS](index=28&type=section&id=NOTE%2017%20%E2%80%94%20SUBSEQUENT%20EVENTS) No subsequent events requiring accrual or disclosure were identified through the financial statement issuance date - No subsequent events occurred that require accrual or disclosure after the balance sheet date through the date the consolidated financial statements were issued[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews the Company's business, financial condition, and operating results for the three and six months ended June 30, 2025, including liquidity and critical accounting policies [Overview](index=29&type=section&id=Overview) Wetouch Technology Inc. operates its touchscreen business through its PRC subsidiary, Sichuan Vtouch, facing regulatory risks and funding new facility construction with existing cash - Wetouch is a Nevada holding company with operations primarily in mainland China through its subsidiary, Sichuan Vtouch, engaged in R&D, manufacturing, sales, and servicing of medium- to large-sized projected capacitive touchscreens[131](index=131&type=chunk)[132](index=132&type=chunk) - The Company faces complex and evolving PRC laws and regulations, including restrictions on capital flows, dividend payments, currency conversion, cybersecurity, and data privacy[132](index=132&type=chunk) - As of June 30, 2025, the Company contributed **RMB 348.0 million (US$47.7 million)** to its PRC subsidiary, with no dividends distributed to date[132](index=132&type=chunk) - Domestic sales accounted for **67.7%** and **66.7%** of revenues for the three and six months ended June 30, 2025, respectively, with international sales covering Taiwan, South Korea, and Germany[133](index=133&type=chunk) - Construction of a new facility in Chengdu is expected to be completed by the **end of 2025**, with production commencing in **Q2 2026**, funded by existing cash and operating cash flows[135](index=135&type=chunk)[136](index=136&type=chunk) [Results of Operations - Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024](index=30&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Three%20Months%20Ended%20June%2030%2C%202024) Q2 2025 saw slight revenue growth but decreased gross profit and net income, primarily due to higher cost of revenues and general and administrative expenses Key Financial Highlights (Three Months Ended June 30) (in US$ millions) | Metric | 2025 (in US$ millions) | 2024 (in US$ millions) | Change % | | :-------------------------- | :--------------------- | :--------------------- | :------- | | Revenues | $12.4 | $12.2 | 1.6% | | Cost of revenues | $(8.3) | $(7.4) | 12.2% | | Gross profit | $4.1 | $4.8 | (14.5)% | | Total operating expenses | $(1.0) | $(1.1) | (9.1)% | | Operating income | $3.1 | $3.7 | (16.2)% | | Net income | $2.2 | $2.7 | (18.5)% | - Revenues increased by **1.6% to $12.4 million**, driven by a **5.1% increase** in sales volume and a **0.2% positive exchange rate impact**, partially offset by a **3.6% decrease** in average selling price[140](index=140&type=chunk) - Gross profit decreased by **14.5% to $4.1 million**, with gross profit margin falling to **33.1%** from **39.7%**, primarily due to a **12.8% increase** in cost of goods sold (**13.5%** in raw materials, **3.3%** in labor cost)[147](index=147&type=chunk) - Selling expenses decreased by **66.7% to $0.1 million** due to reduced traveling expenses, while **General and administrative expenses increased by 12.5% to $0.9 million** due to higher professional fees[148](index=148&type=chunk)[149](index=149&type=chunk) - Research and development expenses were **nil** in Q2 2025, down from **$43,211** in Q2 2024[150](index=150&type=chunk) - Net income decreased by **18.5% to $2.2 million**, and the effective income tax rate was **28.1%** (vs. **28.9%** in Q2 2024)[153](index=153&type=chunk)[154](index=154&type=chunk) [Results of Operations - Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024](index=34&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030%2C%202025%20Compared%20to%20Six%20Months%20Ended%20June%2030%2C%202024) H1 2025 revenues, gross profit, and net income increased, driven by higher sales volume and improved gross margin, despite increased general and administrative expenses Key Financial Highlights (Six Months Ended June 30) (in US$ millions) | Metric | 2025 (in US$ millions) | 2024 (in US$ millions) | Change % | | :-------------------------- | :--------------------- | :--------------------- | :------- | | Revenues | $27.7 | $27.1 | 2.2% | | Cost of revenues | $(18.0) | $(18.9) | (4.8)% | | Gross profit | $9.7 | $8.2 | 18.3% | | Total operating expenses | $(2.7) | $(2.2) | 22.7% | | Operating income | $7.0 | $6.0 | 16.7% | | Net income | $4.8 | $3.3 | 45.5% | - Revenues increased by **2.2% to $27.7 million**, primarily due to an **8.9% increase** in total units sold, partially offset by a decrease in average RMB selling price and negative exchange rate impact[156](index=156&type=chunk) - Gross profit increased by **18.3% to $9.7 million**, with gross profit margin rising to **35.2%** from **30.2%**, mainly due to increased revenues from high-end products[162](index=162&type=chunk) - Selling expenses decreased by **71.4% to $0.2 million** due to reduced traveling expenses. **General and administrative expenses increased by 92.3% to $2.5 million**, driven by higher professional fees and amortization of prepaid marketing research fees[163](index=163&type=chunk)[164](index=164&type=chunk) - Research and development expenses were **nil** in H1 2025, down from **$85,949** in H1 2024[165](index=165&type=chunk) - Net income increased by **45.5% to $4.8 million**, and the effective income tax rate was **32.8%** (vs. **35.1%** in H1 2024)[169](index=169&type=chunk)[170](index=170&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) The Company maintains strong liquidity with significant cash, generating positive operating cash flow in H1 2025, with minimal investing and financing activities - As of June 30, 2025, current assets were **$123.2 million** (including **$110.5 million** in cash), and current liabilities were **$5.0 million**[173](index=173&type=chunk) Cash Flow Summary (Six Months Ended June 30) (in US$ millions) | Cash Flow Activity | 2025 (in US$ millions) | 2024 (in US$ millions) | | :--------------------------------------- | :--------------------- | :--------------------- | | Net cash provided by (used in) operating activities | $4.7 | $(5.3) | | Net cash used in investing activities | $(0.0) | $(0.1) | | Net cash provided by financing activities | $0.0 | $7.8 | | Effect of foreign currency exchange rate changes on cash | $2.0 | $(2.1) | | Net increase in cash and cash equivalents | $6.7 | $0.4 | | Cash and cash equivalents at the end of period | $110.5 | $98.4 | - Net cash provided by operating activities was **$4.7 million** in H1 2025, a significant improvement from net cash used of **$5.3 million** in H1 2024[175](index=175&type=chunk) - The positive operating cash flow in H1 2025 was driven by net income, amortization of operating right-of-use assets, decreased prepaid expenses, and increased accounts payable and accrued liabilities, partially offset by increased accounts receivable[176](index=176&type=chunk) - Days Sales Outstanding (DSO) increased to **89 days** for the six months ended June 30, 2025, from **64 days** for the year ended December 31, 2024[180](index=180&type=chunk) - The Company expects existing cash, operating cash flows, and bank borrowings to meet liquidity requirements for **at least the next 12 months**[182](index=182&type=chunk)[184](index=184&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) No material changes to critical accounting estimates have occurred since the 2024 Form 10-K, as detailed in Note 2 of the financial statements - The Company's critical accounting policies involve judgments, assumptions, and estimates affecting reported amounts, as detailed in Note 2 of the financial statements[189](index=189&type=chunk) - No material changes to critical accounting estimates have occurred since the 2024 Form 10-K[189](index=189&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable for smaller reporting companies - This section is not applicable for smaller reporting companies[190](index=190&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective as of June 30, 2025, due to material weaknesses in financial reporting personnel and risk assessment, with ongoing remediation efforts - As of June 30, 2025, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were **not effective** due to identified material weaknesses[191](index=191&type=chunk) - Despite the material weakness, management believes the unaudited condensed consolidated financial statements fairly represent the Company's financial condition, results of operations, and cash flows[192](index=192&type=chunk) - **Material weaknesses** identified include a lack of competent financial reporting and accounting personnel with U.S. GAAP understanding and a lack of risk assessment procedures on internal controls[195](index=195&type=chunk)[196](index=196&type=chunk) - Management is implementing measures to remediate these weaknesses, including identifying skill gaps, cooperating with operation teams for control environment, and establishing SOX compliance procedures[198](index=198&type=chunk)[202](index=202&type=chunk) - Remediation efforts are **ongoing**, and the Company cannot assure that internal control over financial reporting will be effective as a result of these efforts[199](index=199&type=chunk) [PART II OTHER INFORMATION](index=42&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any material legal or administrative claims or proceedings - As of the date of this Quarterly Report, the Company is not aware of any material, active, pending, or threatened legal proceedings[205](index=205&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or common stock repurchases occurred during the three and six months ended June 30, 2025 - No unregistered sales of equity securities occurred during the three and six months ended June 30, 2025[205](index=205&type=chunk) - The Company did not repurchase any shares of its common stock during the three and six months ended June 30, 2025[206](index=206&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[207](index=207&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company - This section is not applicable[208](index=208&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - No other information is applicable[209](index=209&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report, including organizational documents, stock certificates, warrants, and certifications - The exhibits include Amended and Restated Articles of Incorporation, Bylaws, Specimen Common Stock Certificate, Underwriter's Warrants, Common Stock Purchase Warrants, and various **certifications (e.g., 302 and 906 certifications)** and XBRL documents[210](index=210&type=chunk) [SIGNATURES](index=44&type=section&id=SIGNATURES) The Quarterly Report was signed by CEO Zongyi Lian and CFO Xing Tang on **October 9, 2025** - The Quarterly Report was signed on **October 9, 2025**, by Zongyi Lian (CEO and President) and Xing Tang (CFO)[213](index=213&type=chunk)

Core Insights - WeTouch Technology Inc. reported total revenue of $27.7 million for the first half of fiscal year 2025, reflecting a 2.2% increase from $27.1 million in the same period of fiscal 2024 [1] Financial Performance - Total Revenue: $27.7 million for H1 FY 2025, up 2.2% from $27.1 million in H1 FY 2024 [1] - The financial results indicate a positive growth trend for the company in the touch display solutions market [1]

[Filing Information](index=1&type=section&id=Filing%20Information) This report is a Quarterly Report on Form 10-Q for WETOUCH TECHNOLOGY INC. for Q1 2025, identifying the registrant as a non-accelerated, smaller reporting, and emerging growth company - The document is a Quarterly Report on Form 10-Q for WETOUCH TECHNOLOGY INC. for the period ended March 31, 2025[1](index=1&type=chunk) - The registrant is classified as a non-accelerated filer, smaller reporting company, and emerging growth company[4](index=4&type=chunk) - As of October 7, 2025, there were **11,931,534 shares of common stock outstanding**[4](index=4&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward%20Looking%20Statements) This report contains forward-looking statements subject to risks like customer reliance, uncollectible receivables, government fines, and financing needs - This report contains forward-looking statements subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations[8](index=8&type=chunk)[10](index=10&type=chunk) - Key risks include significant reliance on top customers, potential uncollectible accounts receivable, fines from the Chinese government, and the need for substantial additional financing[9](index=9&type=chunk) - Other risks involve adverse regulatory developments in Mainland China, potential delisting under the Holding Foreign Companies Accountable Act, and fluctuations in exchange rates[12](index=12&type=chunk) [PART I FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements and management's discussion for Q1 2025 [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Wetouch Technology Inc. and its subsidiaries for Q1 2025 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased by $5.66 million, driven by cash and accounts receivable, while liabilities rose due to payables | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (USD) | % Change | | :-------------------------------- | :------------- | :---------------- | :------- | :------- | | Total Assets | $133,677,892 | $128,019,463 | $5,658,429 | 4.42% | | Cash | $106,407,564 | $103,760,324 | $2,647,240 | 2.55% | | Accounts receivable, net | $11,101,555 | $7,504,630 | $3,596,925 | 47.93% | | Total Current Liabilities | $5,444,381 | $2,951,192 | $2,493,189 | 84.48% | | Total Liabilities | $5,797,125 | $3,433,798 | $2,363,327 | 68.82% | | Total Stockholders' Equity | $127,880,767 | $124,585,665 | $3,295,102 | 2.64% | [Condensed Consolidated Statements of Income and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20%28Loss%29) Net income surged over 300% year-over-year due to revenue growth, lower cost of revenues, and eliminated interest expense | Metric | 3 Months Ended Mar 31, 2025 (USD) | 3 Months Ended Mar 31, 2024 (USD) | Change (USD) | % Change | | :------------------------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Revenues | $15,289,578 | $14,877,259 | $412,319 | 2.77% | | Cost of revenues | $(9,647,947) | $(11,539,301) | $1,891,354 | -16.39% | | Gross Profit | $5,641,631 | $3,337,958 | $2,303,673 | 69.01% | | Income from Operations | $3,972,734 | $2,304,904 | $1,667,830 | 72.36% | | Interest expense | $0 | $(1,169,974) | $1,169,974 | -100.00% | | Net Income | $2,562,722 | $558,870 | $2,003,852 | 358.55% | | Basic EPS | $0.21 | $0.04 | $0.17 | 425.00% | | Diluted EPS | $0.21 | $0.04 | $0.17 | 425.00% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased to $127.88 million, primarily from net income and foreign currency translation adjustment | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------------- | :------------- | :---------------- | | Total Stockholders' Equity | $127,880,767 | $124,585,665 | | Net income contribution | $2,562,722 | N/A (part of prior year) | | Foreign currency translation adjustment | $732,380 | N/A (part of prior year) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow turned positive in Q1 2025, a significant improvement from the prior year's negative cash flow | Metric | 3 Months Ended Mar 31, 2025 (USD) | 3 Months Ended Mar 31, 2024 (USD) | Change (USD) | | :------------------------------------------ | :-------------------------- | :-------------------------- | :------- | | Net cash provided by (used in) operating activities | $2,039,728 | $(9,217,544) | $11,257,272 | | Net cash used in investing activities | $0 | $(111,289) | $111,289 | | Net cash provided by financing activities | $0 | $7,506,140 | $(7,506,140) | | Net increase (decrease) in cash | $2,647,238 | $(3,244,104) | $5,891,342 | | Cash, end of period | $106,407,562 | $94,796,450 | $11,611,112 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed disclosures for financial statements, covering accounting policies, related party transactions, and risks [NOTE 1 — BUSINESS DESCRIPTION](index=10&type=section&id=NOTE%201%20%E2%80%94%20BUSINESS%20DESCRIPTION) Wetouch Technology Inc. operates through Sichuan Vtouch, focusing on touchscreen R&D, manufacturing, and distribution in PRC - Wetouch Technology Inc. acquired BVI Wetouch in a reverse merger in October 2020[24](index=24&type=chunk) - The company's primary business is R&D, manufacturing, and distribution of touchscreen displays for financial terminals, automotive, POS, gaming, medical, and HMI industries[25](index=25&type=chunk) - Sichuan Vtouch took over operating business from Sichuan Wetouch in March 2021 due to a government-directed relocation order, and Sichuan Wetouch was deconsolidated in March 2023[30](index=30&type=chunk)[31](index=31&type=chunk)[37](index=37&type=chunk) [NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=11&type=section&id=NOTE%202%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Financial statements adhere to U.S. GAAP, with key policies including consolidation, estimates, and recent ASU evaluations - Financial statements are prepared under U.S. GAAP, with management making significant estimates[35](index=35&type=chunk)[39](index=39&type=chunk) - The company adopted ASU 2016-02 (Leases), recognizing right-of-use assets and lease liabilities[42](index=42&type=chunk)[43](index=43&type=chunk) - The company operates in one reporting segment, focusing on touchscreen business, with all assets located in the PRC[46](index=46&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) - Recent FASB ASUs (2023-07, 2023-09, 2024-03, 2025-02) are being evaluated for their impact on future financial statements and disclosures[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) [NOTE 3 — ACCOUNTS RECEIVABLE](index=16&type=section&id=NOTE%203%20%E2%80%94%20ACCOUNTS%20RECEIVABLE) Accounts receivable, net, increased significantly to $11.10 million, with a notable rise in 1-3 months past due receivables | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (USD) | % Change | | :---------------------- | :------------- | :---------------- | :------- | :------- | | Accounts receivable, net | $11,101,555 | $7,504,630 | $3,596,925 | 47.93% | | Current (aging) | $4,365,438 | $3,726,124 | $639,314 | 17.16% | | 1-3 months past due | $5,828,772 | $2,536,815 | $3,291,957 | 129.77% | [NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=16&type=section&id=NOTE%204%20%E2%80%94%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) Prepaid expenses and other current assets decreased to $2.17 million, mainly due to reduced prepaid consulting fees | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (USD) | % Change | | :-------------------------------- | :------------- | :---------------- | :------- | :------- | | Prepaid expenses and other current assets | $2,167,153 | $2,762,580 | $(595,427) | -21.55% | | Prepaid consulting service fees | $357,390 | $884,687 | $(527,297) | -59.60% | | Prepayment for land use right | $540,912 | $537,755 | $3,157 | 0.59% | | Prepaid market research fees | $955,000 | $955,000 | $0 | 0.00% | [NOTE 5 — PROPERTY, PLANT AND EQUIPMENT, NET](index=18&type=section&id=NOTE%205%20%E2%80%94%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) Property, plant and equipment, net, slightly increased to $12.86 million, driven by construction in progress | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (USD) | % Change | | :-------------------------------- | :------------- | :---------------- | :------- | :------- | | Property, plant and equipment, net | $12,855,562 | $12,782,997 | $72,565 | 0.57% | | Construction in progress | $12,830,673 | $12,755,791 | $74,882 | 0.59% | | Depreciation expense (3 months) | $2,471 | $2,316 | $155 | 6.69% | [NOTE 6 — OPERATING LEASE](index=18&type=section&id=NOTE%206%20%E2%80%94%20OPERATING%20LEASE) New facility construction is delayed to Q2 2026, with operating lease expenses at $151,375 for Q1 2025 - New facility construction delayed, expected completion by end of 2025, production to start **Q2 2026**[60](index=60&type=chunk) | Metric | 3 Months Ended Mar 31, 2025 (USD) | 3 Months Ended Mar 31, 2024 (USD) | | :---------------------- | :-------------------------- | :-------------------------- | | Operating lease expense | $151,375 | $0 | | Short-term lease expense | $0 | $147,729 | | Total lease expense | $151,375 | $147,729 | | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :-------------------------------- | :------------- | :---------------- | | Operating lease right-of-use assets | $952,398 | $1,055,208 | | Total operating lease liabilities | $952,398 | $1,054,145 | [NOTE 7 — RELATED PARTY TRANSACTIONS](index=20&type=section&id=NOTE%207%20%E2%80%94%20RELATED%20PARTY%20TRANSACTIONS) Amounts due to a related party increased significantly to $400,513 for expenses paid on behalf of the company | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (USD) | % Change | | :---------------------- | :------------- | :---------------- | :------- | :------- | | Due to a related party | $400,513 | $149,211 | $251,302 | 168.42% | [NOTE 8 — INCOME TAXES](index=20&type=section&id=NOTE%208%20%E2%80%94%20INCOME%20TAXES) Income tax expense increased to $1.47 million in Q1 2025, with an effective tax rate of 36.5% - PRC subsidiaries (Sichuan Wetouch, Sichuan Vtouch) are subject to **25% CIT**, with Sichuan Wetouch previously benefiting from a **15% HNTE rate until Oct 2023**[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) | Metric | 3 Months Ended Mar 31, 2025 (USD) | 3 Months Ended Mar 31, 2024 (USD) | Change (USD) | % Change | | :---------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Income tax provision | $1,471,106 | $661,848 | $809,258 | 122.28% | | Effective tax rate | 36.5% | 54.2% | -17.7% | -32.66% | | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (USD) | % Change | | :---------------------- | :------------- | :---------------- | :------- | :------- | | Deferred tax assets, net | $47,035 | $41,397 | $5,638 | 13.62% | [NOTE 9 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=22&type=section&id=NOTE%209%20%E2%80%94%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses and other current liabilities rose to $1.56 million, driven by increases in other payables | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | Change (USD) | % Change | | :-------------------------------- | :------------- | :---------------- | :------- | :------- | | Accrued expenses and other current liabilities | $1,558,615 | $966,461 | $592,154 | 61.27% | | Other payable to third parties | $629,694 | $147,102 | $482,592 | 328.07% | | Other tax payables | $296,946 | $162,888 | $134,058 | 82.30% | [NOTE 10 — CONVERTIBLE PROMISSORY NOTES PAYABLE](index=23&type=section&id=NOTE%2010%20%E2%80%94%20CONVERTIBLE%20PROMISSORY%20NOTES%20PAYABLE) All convertible promissory notes were repaid in February 2024, eliminating interest expenses in Q1 2025 - All remaining five outstanding convertible promissory notes were fully repaid on February 23, 2024, for **$2,586,960**[87](index=87&type=chunk) | Metric | 3 Months Ended Mar 31, 2025 (USD) | 3 Months Ended Mar 31, 2024 (USD) | Change (USD) | % Change | | :---------------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Interest expenses of Notes | $0 | $1,169,974 | $(1,169,974) | -100.00% | - Warrants issued with the notes expired during the year ended December 31, 2024[94](index=94&type=chunk) [NOTE 11 — STOCKHOLDERS' EQUITY](index=25&type=section&id=NOTE%2011%20%E2%80%94%20STOCKHOLDERS'%20EQUITY) Stockholders' equity includes 11,931,534 shares outstanding, a 1-for-20 reverse split, and a statutory reserve - **11,931,534 shares of common stock** were issued and outstanding as of March 31, 2025, and December 31, 2024[102](index=102&type=chunk) - A **1-for-20 reverse stock split** was effective on September 12, 2023[104](index=104&type=chunk) - In February 2024, a public offering of **2,160,000 shares generated $10.8 million gross proceeds**[105](index=105&type=chunk) | Metric | March 31, 2025 (USD) | December 31, 2024 (USD) | | :---------------- | :------------- | :---------------- | | Statutory reserve | $8,073,968 | $8,073,968 | [NOTE 12 — SHARE BASED COMPENSATION](index=27&type=section&id=NOTE%2012%20%E2%80%94%20SHARE%20BASED%20COMPENSATION) No share-based compensation expense was recognized in Q1 2025 or Q1 2024 as all warrants expired - No share-based compensation expense was recognized for the three months ended March 31, 2025, or 2024[116](index=116&type=chunk) - Warrants related to legal and consulting services were exercised or expired by December 31, 2024[116](index=116&type=chunk) [NOTE 13 — WEIGHTED AVERAGE NUMBER OF SHARES](index=28&type=section&id=NOTE%2013%20%E2%80%94%20WEIGHTED%20AVERAGE%20NUMBER%20OF%20SHARES) Weighted-average shares are computed per ASC 260, adjusting for reverse merger exchange ratios - Weighted-average shares are computed per ASC 260, adjusting for reverse merger exchange ratios[118](index=118&type=chunk) [NOTE 14 — RISKS AND UNCERTAINTIES](index=28&type=section&id=NOTE%2014%20%E2%80%94%20RISKS%20AND%20UNCERTAINTIES) The company faces credit, interest rate, and currency risks, alongside high customer and supplier concentration - Significant credit risk from accounts receivable and currency risk due to RMB non-convertibility[119](index=119&type=chunk)[122](index=122&type=chunk) - High customer concentration: top ten customers accounted for **99.7% of total revenue in Q1 2025**[124](index=124&type=chunk) - High supplier concentration: four suppliers accounted for **48.2% of raw material purchases in Q1 2025**[125](index=125&type=chunk) [NOTE 15 — COMMITMENTS AND CONTINGENCIES](index=28&type=section&id=NOTE%2015%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) No material legal proceedings are active, and there is a $0.7 million capital expenditure commitment - No material legal proceedings are active, pending, or threatened[127](index=127&type=chunk) - Capital expenditure commitment of **$0.7 million** for construction in progress as of March 31, 2025[128](index=128&type=chunk) [NOTE 16 — SEGMENT REPORTING](index=30&type=section&id=NOTE%2016%20%E2%80%94%20SEGMENT%20REPORTING) The company operates in a single touchscreen segment, with domestic sales increasing to 67.3% of total revenues - The company operates in one operating segment: touchscreen business[130](index=130&type=chunk) - Substantially all long-lived assets are located in the PRC[131](index=131&type=chunk) | Region | 3 Months Ended Mar 31, 2025 (USD) | 3 Months Ended Mar 31, 2024 (USD) | Change (USD) | % Change | | :---------------- | :-------------------------- | :-------------------------- | :------- | :------- | | Sales in PRC | $10,301,069 | $9,374,473 | $926,596 | 9.88% | | Sales in Overseas | $4,988,509 | $5,502,786 | $(514,277) | -9.34% | | Total revenues | $15,289,578 | $14,877,259 | $412,319 | 2.77% | [NOTE 17 — SUBSEQUENT EVENTS](index=30&type=section&id=NOTE%2017%20%E2%80%94%20SUBSEQUENT%20EVENTS) Sichuan Vtouch signed a $0.6 million supplemental construction contract for its R&D facility in April 2025 - Sichuan Vtouch signed a **$0.6 million supplemental construction contract** for R&D facility completion on April 11, 2025, with **50% prepaid**[132](index=132&type=chunk)[133](index=133&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, liquidity, and capital resources for Q1 2025, highlighting key operational aspects [Overview](index=32&type=section&id=Overview) Wetouch Technology operates through Sichuan Vtouch in touchscreen R&D and manufacturing, facing PRC regulatory risks - Company operates through PRC subsidiary Sichuan Vtouch, specializing in medium- to large-sized projected capacitive touchscreens[137](index=137&type=chunk) - Domestic sales in China accounted for **67.3% of revenues in Q1 2025**, up from 63.1% in Q1 2024[139](index=139&type=chunk) - New production facility construction expected to finish by end of 2025, with production commencing in **Q2 2026**[142](index=142&type=chunk) | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | % Change | | :---------------------- | :------------- | :------------- | :------- | :------- | | Revenues | $15.3 | $14.9 | $0.4 | 2.7% | | Gross profit | $5.6 | $3.3 | $2.3 | 69.7% | | Gross profit margin | 36.9% | 22.4% | 14.5% | 64.73% | | Net income | $2.5 | $0.6 | $1.9 | 316.7% | | Total volume shipped | 762,545 units | 681,370 units | 81,175 units | 11.9% | [Results of Operations](index=34&type=section&id=Results%20of%20Operations) The company achieved a 2.7% revenue increase and a 316.7% net income surge in Q1 2025, driven by improved margins [Revenues](index=34&type=section&id=Revenues) Total revenues increased by 2.7% to $15.3 million, driven by sales volume growth despite lower average selling prices - Revenue increase of **2.7% driven by 11.9% sales volume increase**, offset by 6.9% lower average selling price and 1.2% negative exchange rate impact[145](index=145&type=chunk) | Market | Q1 2025 Revenue (USD millions) | Q1 2024 Revenue (USD millions) | Change (USD millions) | % Change | | :---------------- | :-------------- | :-------------- | :------- | :------- | | Mainland China | $10.3 | $9.4 | $0.9 | 9.6% | | Overseas | $5.0 | $5.5 | $(0.5) | -9.1% | | Total Revenue | $15.3 | $14.9 | $0.4 | 2.7% | | Product Category | Q1 2025 Revenue (USD) | Q1 2024 Revenue (USD) | Change (USD) | % Change | | :-------------------------------- | :-------------- | :-------------- | :------- | :------- | | Automotive Touchscreens | $3,960,497 | $4,185,270 | $(224,773) | -5.4% | | Industrial Control Computer Touchscreens | $3,235,073 | $2,847,660 | $387,413 | 13.6% | | POS Touchscreens | $2,411,031 | $2,114,099 | $296,932 | 14.0% | | Gaming Touchscreens | $2,320,592 | $2,172,475 | $148,117 | 6.8% | | Medical Touchscreens | $1,949,656 | $2,414,961 | $(465,305) | -19.3% | | Multi-Functional Printer Touchscreens | $1,412,727 | $1,142,794 | $269,933 | 23.6% | - Company is shifting production mix to higher-end products like industrial control computer, POS, gaming, and multi-functional printer touchscreens due to growth potential and stronger demand[151](index=151&type=chunk) [Gross Profit and Gross Profit Margin](index=35&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit increased by 69.7% to $5.6 million, with margin expanding to 36.9% due to lower raw material costs | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | % Change | | :---------------- | :------------- | :------------- | :------- | :------- | | Gross Profit | $5.6 | $3.3 | $2.3 | 69.7% | | Gross Profit Margin | 36.9% | 22.4% | 14.5% | 64.73% | - Gross profit margin increase driven by lower raw material costs, partially offset by higher labor costs[153](index=153&type=chunk) [Selling Expenses](index=36&type=section&id=Selling%20Expenses) Selling expenses decreased by 80.0% to $0.1 million, primarily due to reduced traveling expenses and online communication | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | % Change | | :-------------------------- | :-------------------- | :-------------------- | :------- | :------- | | Selling Expenses | $0.1 | $0.5 | $(0.4) | -80.0% | | As a percentage of revenues | 0.6% | 3.4% | -2.8% | -82.35% | - Decrease in selling expenses attributed to less traveling and increased use of online communication[154](index=154&type=chunk) [General and Administrative Expenses](index=36&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses increased by 220.0% to $1.6 million, driven by higher professional and marketing fees | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | % Change | | :-------------------------------- | :-------------------- | :-------------------- | :------- | :------- | | General and Administrative Expenses | $1.6 | $0.5 | $1.1 | 220.0% | | As a percentage of revenues | 10.5% | 3.4% | 7.1% | 208.82% | - Increase driven by higher professional fees, amortization of prepaid marketing research fees, and allowance for credit losses[155](index=155&type=chunk) [Research and Development Expenses](index=36&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses were nil in Q1 2025, representing a 100% decrease from the prior year | Metric | Q1 2025 (USD) | Q1 2024 (USD) | Change (USD) | % Change | | :-------------------------------- | :------ | :------ | :------- | :------- | | Research and Development Expenses | $0 | $42,738 | $(42,738) | -100.0% | [Operating Income](index=37&type=section&id=Operating%20Income) Operating income increased by 73.9% to $4.0 million, driven by higher gross margin and lower selling expenses | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | % Change | | :--------------- | :-------------------- | :-------------------- | :------- | :------- | | Operating Income | $4.0 | $2.3 | $1.7 | 73.9% | [Interest Expenses](index=37&type=section&id=Interest%20Expenses) Interest expenses were nil in Q1 2025 due to the full repayment of all outstanding convertible promissory notes | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | % Change | | :--------------- | :-------------------- | :-------------------- | :------- | :------- | | Interest Expenses | $0.0 | $1.2 | $(1.2) | -100.0% | - Elimination of interest expenses due to full repayment of convertible promissory notes in February 2024[158](index=158&type=chunk) [Income Taxes](index=37&type=section&id=Income%20Taxes) Income tax expense increased by 150.0% to $1.5 million, while the effective tax rate decreased to 36.5% | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | % Change | | :-------------------------- | :-------------------- | :-------------------- | :------- | :------- | | Income Tax (Expense) | $(1.5) | $(0.6) | $(0.9) | 150.0% | | Effective income tax rate | 36.5% | 54.2% | -17.7% | -32.66% | [Net Income](index=37&type=section&id=Net%20Income) Net income significantly increased to $2.5 million, a 316.7% rise, driven by improved margins and lower expenses | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | % Change | | :--------- | :-------------------- | :-------------------- | :------- | :------- | | Net Income | $2.5 | $0.6 | $1.9 | 316.7% | [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved with $106.4 million cash, and operating activities generated $2.0 million in Q1 2025 - Current assets were **$119.8 million** and current liabilities were **$5.4 million** as of March 31, 2025[163](index=163&type=chunk) | Metric | Q1 2025 (USD millions) | Q1 2024 (USD millions) | Change (USD millions) | | :------------------------------------------ | :------ | :------ | :------- | | Net cash provided by (used in) operating activities | $2.0 | $(9.2) | $11.2 | | Net cash used in investing activities | $0.0 | $(0.1) | $0.1 | | Net cash provided by financing activities | $0.0 | $7.5 | $(7.5) | | Net increase (decrease) in cash | $2.7 | $(3.2) | $5.9 | | Cash, end of period | $106.4 | $94.8 | $11.6 | - Positive cash flow from operating activities in Q1 2025 (**$2.0 million**) compared to negative in Q1 2024 (**$9.2 million**)[165](index=165&type=chunk) - Days Sales Outstanding (DSO) decreased to **55 days in Q1 2025** from 64 days in FY 2024[170](index=170&type=chunk) - Company expects to meet liquidity needs for the next 12 months with existing cash and operating cash flows[172](index=172&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) The company had no off-balance sheet arrangements as of March 31, 2025 - No off-balance sheet arrangements as of March 31, 2025[176](index=176&type=chunk) [Critical Accounting Policies](index=39&type=section&id=Critical%20Accounting%20Policies) No material changes to critical accounting estimates have occurred since the 2024 Form 10-K - No material changes to critical accounting estimates since the 2024 Form 10-K[177](index=177&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable for smaller reporting companies - Not applicable for smaller reporting companies[178](index=178&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were ineffective due to material weaknesses, but management believes financial statements are fairly presented [Evaluation of Disclosure Controls and Procedures](index=39&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls were ineffective due to material weaknesses, yet financial statements are deemed fairly presented - Disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses[179](index=179&type=chunk) - Despite material weaknesses, management believes financial statements fairly represent the company's financial condition[180](index=180&type=chunk) [Material Weakness](index=40&type=section&id=Material%20Weakness) Identified material weaknesses include a lack of competent financial reporting personnel and insufficient risk assessment - Material weaknesses include lack of competent financial reporting personnel with U.S. GAAP understanding[185](index=185&type=chunk) - Material weaknesses also include lack of risk assessment procedures on internal controls[185](index=185&type=chunk) [Management's Plan to Remediate the Material Weakness](index=41&type=section&id=Management's%20Plan%20to%20Remediate%20the%20Material%20Weakness) Remediation plans are ongoing, focusing on skill gaps, control environment, and Sarbanes-Oxley Act compliance - Remediation plans include identifying skill gaps, improving the control environment, and establishing Sarbanes-Oxley Act compliance procedures[186](index=186&type=chunk)[190](index=190&type=chunk) - Remediation efforts are ongoing, and effectiveness cannot be assured until controls operate for a sufficient period and are tested[187](index=187&type=chunk) [Changes in Internal Control over Financial Reporting](index=41&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No other material changes in internal control over financial reporting occurred, apart from ongoing remediation efforts - No other material changes in internal control over financial reporting during Q1 2025, apart from remediation efforts[189](index=189&type=chunk) [PART II OTHER INFORMATION](index=42&type=section&id=PART%20II%20OTHER%20INFORMATION) This section provides disclosures on legal, equity, and other corporate matters, along with a list of filed exhibits [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any material legal or administrative claims or proceedings as of the report date - No material legal proceedings are active, pending, or threatened[192](index=192&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or share repurchases occurred during Q1 2025 - No unregistered sales of equity securities or share repurchases during Q1 2025[193](index=193&type=chunk)[194](index=194&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the quarter ended March 31, 2025 - No defaults upon senior securities[195](index=195&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[196](index=196&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) No other information is reported under this item - Not applicable[197](index=197&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and data files - Lists various exhibits including organizational documents, warrants, and certifications[198](index=198&type=chunk) [Signatures](index=44&type=section&id=Signatures) The report is signed by CEO Zongyi Lian and CFO Xing Tang on October 8, 2025 - The report is signed by CEO Zongyi Lian and CFO Xing Tang on October 8, 2025[201](index=201&type=chunk)

Core Insights - WeTouch Technology Inc. reported a total revenue of $15.3 million for the first quarter of fiscal year 2025, marking a 2.7% increase from $14.9 million in the same period of fiscal year 2024 [1] - The company's net income surged to $2.6 million, reflecting a significant year-over-year increase of 316.7% [1] Financial Performance - Total Revenue: $15.3 million, up 2.7% from $14.9 million in Q1 FY 2024 [1] - Net Income: $2.6 million, an increase of 316.7% year-over-year [1]