[COMMONLY USED DEFINED TERMS](index=4&type=section&id=COMMONLY%20USED%20DEFINED%20TERMS) This section defines key terms and abbreviations used throughout the Annual Report, such as "China," "PRC," "BVI Wetouch," "Sichuan Vtouch," and currency denominations, to ensure clarity and consistency - The report defines key entities and geographical terms, including **"China"** (People's Republic of China, excluding Taiwan, Hong Kong, Macau for this report), **"BVI Wetouch"** (Wetouch Holding Group Limited), and **"Sichuan Vtouch"** (Sichuan Vtouch Technology Co., Ltd.), which is a wholly foreign-owned subsidiary of HK Wetouch[14](index=14&type=chunk) [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=5&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section warns readers that the Annual Report contains forward-looking statements, which are subject to known and unknown risks, uncertainties, and assumptions, where actual results may differ materially from expectations - Forward-looking statements are based on current estimates and assumptions, but **actual results may differ materially** due to various risks[16](index=16&type=chunk)[17](index=17&type=chunk)[19](index=19&type=chunk) - Key risks include **significant reliance on top customers**, potential **uncollectible accounts receivable**, challenges in maintaining product quality and safety, **intense competition**, and the need for **substantial additional financing**[18](index=18&type=chunk) - Risks related to operating in China include **adverse regulatory developments**, potential **delisting under the HFCAA**, changes in economic/political conditions, **uncertainties in the PRC legal system**, and **exchange rate fluctuations**[20](index=20&type=chunk) [PART I](index=7&type=section&id=PART%20I) This part outlines Wetouch Technology Inc.'s business operations, including its touchscreen manufacturing and corporate structure, along with key business and regulatory risks, unresolved staff comments, and cybersecurity disclosures [ITEM 1. BUSINESS](index=7&type=section&id=ITEM%201.%20BUSINESS) Wetouch Technology Inc. specializes in R&D, manufacturing, and sales of medium- to large-sized projected capacitive touchscreens for diverse industries, detailing its corporate history, product portfolio, customer and supplier relations, and the regulatory landscape in China - Wetouch specializes in **medium- to large-sized projected capacitive touchscreens** (7.0 to 42-inch) for diverse markets[22](index=22&type=chunk)[23](index=23&type=chunk) - The company holds **ISO9001, ISO 14001, and RoHS SGS certifications**, highlighting its commitment to product quality and environmental standards[24](index=24&type=chunk) - **Top five customers accounted for 82.4% of total revenues in 2024**, indicating high customer concentration[64](index=64&type=chunk) - **R&D expenses were nil in 2024**, a significant decrease from $84,551 in 2023, with future increases expected for new product development[84](index=84&type=chunk)[85](index=85&type=chunk) - The company faces **fewer competitors in its niche of medium- to large-sized touchscreens** for specialized industries due to requirements for stable supply and longer lifespans[95](index=95&type=chunk) - Operations in Mainland China are subject to a **comprehensive legal regime** covering foreign investment, environmental protection, consumer rights, intellectual property, foreign exchange, offshore financing, dividend distribution, M&A, and taxation[98](index=98&type=chunk)[99](index=99&type=chunk) [Overview](index=7&type=section&id=Overview) Wetouch Technology Inc. focuses on the R&D, manufacturing, sales, and servicing of medium- to large-sized projected capacitive touchscreens for specialized industries, generating $42.3 million in revenues in 2024 - Wetouch specializes in **medium- to large-sized projected capacitive touchscreens** (7.0 to 42-inch) for diverse markets[22](index=22&type=chunk)[23](index=23&type=chunk) - **Revenue Breakdown (2024 vs. 2023):** | Metric | 2024 (USD) | 2023 (USD) | | :----- | :--------- | :--------- | | Total Revenues | $42.3 million | $39.7 million | | Domestic Sales | 64.7% | 69.7% | | International Sales | 35.3% | 30.3% | - The company holds **ISO9001, ISO 14001, and RoHS SGS certifications**, highlighting its commitment to product quality and environmental standards[24](index=24&type=chunk) [Corporate History and Structure](index=7&type=section&id=Corporate%20History%20and%20Structure) Wetouch Technology Inc. was formed through a reverse merger with BVI Wetouch in 2020, establishing Sichuan Vtouch as its PRC operating subsidiary, and has since undergone private placements, stock splits, and a Nasdaq uplisting - Wetouch Technology Inc. was formed through a **reverse merger with BVI Wetouch on October 9, 2020**, making Sichuan Wetouch (later Sichuan Vtouch) an indirect wholly-owned subsidiary[31](index=31&type=chunk)[33](index=33&type=chunk) - The company completed a **private placement in January 2023**, selling 160,000,000 shares for **$40,000,000**, used for working capital and debt repayment[41](index=41&type=chunk) - Two reverse stock splits were effected: **1-for-70 in September 2020** and **1-for-20 in September 2023**, retroactively adjusting share information[44](index=44&type=chunk)[46](index=46&type=chunk) - A **2024 Uplisting Offering on Nasdaq raised $10.8 million gross ($9.2 million net)** by selling 2,160,000 shares at $5.00 per share[47](index=47&type=chunk) - Recent material events include **board changes, Nasdaq notifications for late periodic filings and minimum bid price non-compliance**, and a change in the independent registered public accounting firm[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) [Our Products](index=12&type=section&id=Our%20Products) Wetouch offers a portfolio of medium- to large-sized projected capacitive touchscreens (7.0 to 42-inch) with various structures, primarily GG and GFF, applied across diverse industries, with automotive touchscreens being the largest revenue contributor - Product portfolio includes **GG, GFF, PG, and GF touchscreens**, ranging from 7.0 to 42 inches[23](index=23&type=chunk)[53](index=53&type=chunk) - **Product Type Revenue Contribution (2024 vs. 2023):** | Product Type | 2024 Revenue Share | 2023 Revenue Share | | :----------- | :----------------- | :----------------- | | GG | 52.7% | 51.7% | | GFF | 38.5% | 41.8% | | GF | 2.6% | 2.0% | | PG | 4.4% | 2.4% | - **Application Revenue Contribution (2024 vs. 2023):** | Application | 2024 Revenue Share | 2023 Revenue Share | | :---------- | :----------------- | :----------------- | | Automotive Touchscreens | 27.2% | 24.6% | | Industrial HMI Touchscreens | 19.4% | 19.9% | | Gaming Touchscreens | 15.3% | 14.1% | | Medical Touchscreens | 14.9% | 14.6% | | POS Touchscreens | 14.8% | 16.7% | | Multi-Functional Printer Touchscreens | 8.4% | 10.1% | [Our Customers](index=14&type=section&id=Our%20Customers) Wetouch relies heavily on a concentrated customer base, with its top five customers accounting for 82.4% of total revenues in 2024, and maintains sales framework agreements with key clients - High customer concentration, with **top five customers representing 82.4% of total revenues in 2024**[64](index=64&type=chunk) - Sales framework agreements with top customers include **annual minimum purchase amounts, price lists, and credit terms** (e.g., $1.5 million credit limit, 3-month term for the first year)[66](index=66&type=chunk) - Standard payment terms require **full payment within three to six months** from the delivery date, with no extended terms provided in 2023 or 2024[68](index=68&type=chunk) [Sales and Marketing](index=16&type=section&id=Sales%20and%20Marketing) Wetouch acquires customers through SEO, referrals, company websites, and industry exhibitions, targeting economically developed regions in Mainland China, Taiwan, South Korea, and Germany, with overseas sales increasing to $14.9 million in 2024 - Customer acquisition channels include **SEO, referrals, websites, and industry exhibitions**[69](index=69&type=chunk) - Target markets include Eastern, Southern, Northern, and Southwest Mainland China, Taiwan, South Korea, and Germany[70](index=70&type=chunk) - **Overseas Sales (2024 vs. 2023):** | Metric | 2024 (USD) | 2023 (USD) | | :----- | :--------- | :--------- | | Overseas Sales | $14.9 million | $12.1 million | - Products are produced to order and marketed directly by the company's sales personnel, **without reliance on distributors**[71](index=71&type=chunk) [Our Suppliers](index=17&type=section&id=Our%20Suppliers) Sichuan Vtouch maintains flexibility in supplier choice without long-term agreements or minimum purchase requirements, procuring raw materials via purchase orders that specify quality standards and return policies - **No long-term supply agreements**; flexibility in choosing suppliers without minimum purchase requirements[74](index=74&type=chunk) - Purchase orders specify product details, delivery, packaging, inspection, breach terms, and payment terms, with a requirement for **quality certification and unconditional returns for defects**[75](index=75&type=chunk)[78](index=78&type=chunk) - **Top Supplier Concentration (2024 vs. 2023):** | Year | Top Supplier 1 | Top Supplier 2 | Top Supplier 3 | | :--- | :------------- | :------------- | :------------- | | 2024 | 15.5% | 12.2% | 11.5% | | 2023 | 13.3% | N/A | N/A | [Production and Quality Control](index=18&type=section&id=Production%20and%20Quality%20Control) Wetouch operates on a made-to-order production model with continuous review and monitoring to ensure high quality and ISO9001 compliance, implementing strict quality control and exceeding industry standards in key product attributes - Made-to-order production model with **continuous review and monitoring** by management and technical experts to ensure quality and **ISO9001 compliance**[79](index=79&type=chunk)[81](index=81&type=chunk) - Strict quality control includes **cosmetic, function, stress (humidity, temperature, corrosion), and hazardous substances testing** before delivery[83](index=83&type=chunk)[87](index=87&type=chunk) - **Product Quality Standards (Company vs. Industry):** | Item | Industry Standards | Our Standards | | :--- | :----------------- | :------------ | | Reaction time | ≤ 5 milliseconds | ≤ 5 milliseconds | | Surface hardness | 6H | 7H~9H | | Operational temperature | 0~70 degrees Celsius | -30~80 degrees Celsius | | EsD requirement | 6~12KV | 8~15KV | | Transparency | 86% | 88% | | Touch conditions | Normal touch and ordinary conditions | Waterproof and anti-saline solution and anti-corrosion and Anti interference | [Research and Development ("R&D")](index=19&type=section&id=Research%20and%20Development%20%28%22R%26D%22%29) Wetouch is committed to R&D for continuous touchscreen technology upgrades, employing 11 R&D staff, though expenses were nil in 2024, with future increases anticipated for new product development - R&D department has **11 employees**, all with at least a bachelor's degree and an average of three years' experience[84](index=84&type=chunk) - **R&D Expenses (2024 vs. 2023):** | Metric | 2024 (USD) | 2023 (USD) | Change (%) | | :----- | :--------- | :--------- | :--------- | | R&D Expenses | $0 | $84,551 | -100.0% | - Future R&D expenses are expected to **increase to accelerate new product development** and enhance existing products[85](index=85&type=chunk) [Intellectual Property](index=19&type=section&id=Intellectual%20Property) Wetouch protects its intellectual property through trademarks, patents, domain names, trade names, and trade secrets, with Sichuan Vtouch holding one registered trademark and five pending patent applications in Mainland China - Intellectual property protection relies on **trademarks, patents, domain names, trade names, and trade secrets**[86](index=86&type=chunk) - Sichuan Vtouch has **one registered trademark in Mainland China** and **five pending patent applications** (utility models and inventions)[86](index=86&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk)[90](index=90&type=chunk) - Patents registered in Mainland China **cannot be enforced in other jurisdictions** where the company supplies products[89](index=89&type=chunk) [Environmental Matters](index=20&type=section&id=Environmental%20Matters) Wetouch's operations in Mainland China are subject to various pollution control regulations, with Sichuan Vtouch registered under the local environmental protection system and no known environmental investigations or punishments - Operations in Mainland China are subject to **PRC pollution control regulations** (noise, water, air, waste disposal)[91](index=91&type=chunk) - Sichuan Vtouch holds a **Stationary Pollution Source Registration Form** under the local environmental protection system[92](index=92&type=chunk) - The company is **not aware of any environmental investigations, prosecutions, or punishments**[93](index=93&type=chunk) [Competition](index=20&type=section&id=Competition) The touchscreen market is highly competitive and rapidly changing, with Wetouch facing fewer competitors in its niche of medium- to large-sized touchscreens for specialized industries due to stringent requirements - Highly competitive touchscreen market, with **product characteristics** (performance, durability, clarity, price) and **supplier attributes** (quality, service, delivery, reputation) as key competitive factors[94](index=94&type=chunk) - Wetouch faces **fewer competitors in its niche of medium- to large-sized touchscreens** for specialized industries requiring stable supply and longer lifespans[95](index=95&type=chunk) - Competitors include **Apex Material Technology Corp., Elo Touch Systems Inc., and AbonTouch System Inc.**, which are expanding into capacitive touchscreens for industrial, medical, and POS applications[100](index=100&type=chunk) [Industry](index=21&type=section&id=Industry) Wetouch operates in the professional touchscreen display industry, which has seen significant evolution and widespread adoption since 2007, making touchscreen technology integral to human-machine interaction across various computing products - Wetouch operates in the **professional touchscreen display industry**, which has seen rapid technological advancements and widespread adoption since 2007[96](index=96&type=chunk)[97](index=97&type=chunk) - Touchscreen technology is now a **crucial component for human-machine interaction** across various computing products[97](index=97&type=chunk) [Regulations](index=21&type=section&id=Regulations) Wetouch's operations in Mainland China are governed by a comprehensive legal regime covering foreign investment, environmental protection, consumer rights, intellectual property, foreign exchange, offshore financing, dividend distribution, M&A, and taxation - Operations in Mainland China are subject to a **legal regime covering foreign investment, environmental protection, consumer rights, intellectual property, foreign exchange, offshore financing, dividend distribution, M&A, and taxation**[98](index=98&type=chunk)[99](index=99&type=chunk) - The **Foreign Investment Law** (effective Jan 1, 2020) permits foreign investment in touchscreen manufacturing and provides protections for foreign investors[101](index=101&type=chunk)[103](index=103&type=chunk)[105](index=105&type=chunk) - Environmental Protection Law requires impact assessments and pollution control, with Sichuan Vtouch registered under the **Stationary Pollution Source Registration Form**[108](index=108&type=chunk)[109](index=109&type=chunk)[113](index=113&type=chunk) - Intellectual property is protected by **PRC Trademark Law (1 registered trademark)** and **Patent Law (5 pending patent applications)**[117](index=117&type=chunk)[118](index=118&type=chunk) - Foreign exchange regulations (SAFE Circulars) govern **RMB convertibility, capital contributions, and dividend remittances**, requiring registrations and approvals[119](index=119&type=chunk)[120](index=120&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - Offshore financing by PRC residents through SPVs requires **SAFE registration (SAFE Circular 37)**, with non-compliance potentially leading to restrictions on onshore entities[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk) - Dividend distribution by FIEs is limited to retained earnings, subject to statutory reserve funds and **withholding tax (10% generally, 5% with treaty)**[135](index=135&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - M&A and overseas listings are regulated by the **M&A Rule and Trial Administrative Measures**, requiring CSRC filings for indirect overseas listings by domestic companies meeting specific criteria[137](index=137&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - Enterprise Income Tax is **25% (15% preferential for HNTEs)**, VAT rates are up to 13%, and labor laws mandate written contracts and social insurance contributions[141](index=141&type=chunk)[142](index=142&type=chunk)[145](index=145&type=chunk) - Cybersecurity review measures (effective Feb 15, 2022) apply to "online platform operators" with over one million users seeking foreign listings, though Wetouch believes it is **not applicable to them**[146](index=146&type=chunk) [Employees](index=30&type=section&id=Employees) Wetouch has 131 full-time employees, with Sichuan Vtouch participating in government-organized social security plans, and maintains good working relationships without significant labor disputes - The company has **131 full-time employees** and no part-time employees or independent contractors[147](index=147&type=chunk) - Sichuan Vtouch contributes to various employee **social security plans** (pension, unemployment, childbirth, work-related injury, medical, housing insurance) as required by PRC regulations[148](index=148&type=chunk) - The company maintains **good working relationships** with employees and has not experienced significant labor disputes[149](index=149&type=chunk) [ITEM 1A. RISK FACTORS](index=31&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section outlines significant business, industry, China-specific, and common stock risks, including financial reporting weaknesses, customer dependency, regulatory uncertainties, potential delisting threats, and stock price volatility - Identified **material weaknesses in internal control over financial reporting** include lack of competent financial reporting personnel and inadequate risk assessment procedures[160](index=160&type=chunk)[161](index=161&type=chunk) - **High customer concentration** poses a significant risk, with the top five customers accounting for **82.4% of 2024 revenues**[163](index=163&type=chunk)[164](index=164&type=chunk) - Failure to secure land use rights for new facilities and **delays in construction could materially and adversely affect business operations** and financial condition[168](index=168&type=chunk)[169](index=169&type=chunk) - The company faces risks from **fluctuations in raw material costs and availability**, and **dependency on key executives** without long-term supplier contracts[192](index=192&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) - Significant risks related to doing business in China include **adverse regulatory developments**, potential **delisting under the HFCAA** due to PCAOB inspection issues, and **uncertainties in the PRC legal system**[208](index=208&type=chunk)[216](index=216&type=chunk)[251](index=251&type=chunk) - The company is subject to the **CSRC's Trial Administrative Measures for overseas listings** and faces potential fines for non-compliance with post-offering filing obligations[214](index=214&type=chunk)[215](index=215&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - Risks to common stock include **price volatility**, potential for **manipulative short selling**, and **delisting from Nasdaq** due to late periodic filings or minimum bid price non-compliance[267](index=267&type=chunk)[273](index=273&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk) [Summary of Risks Affecting Our Company](index=31&type=section&id=Summary%20of%20Risks%20Affecting%20Our%20Company) This section provides a high-level overview of key risks, including financial reporting weaknesses, customer dependency, operational challenges, China-specific regulatory changes, potential delisting, and common stock price volatility - Key business risks include **financial reporting weaknesses, heavy customer dependency, uncollectible accounts receivable**, and **intense industry competition**[152](index=152&type=chunk) - Risks specific to operating in China involve **regulatory changes, potential delisting under the HFCAA**, and **uncertainties in the PRC legal system**[155](index=155&type=chunk) - Risks to common stock include **price volatility**, potential for **manipulative short selling**, and **delisting from Nasdaq** due to non-compliance[155](index=155&type=chunk) [Risks Related to Our Business and Industry](index=33&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Wetouch faces various business and industry-specific risks, including material weaknesses in financial reporting, heavy dependence on top customers, operational delays, uncollectible accounts, raw material cost fluctuations, and lack of insurance - **Material weaknesses in internal control over financial reporting** were identified, including a lack of competent financial reporting personnel and inadequate risk assessment procedures[158](index=158&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - **Heavy dependence on top customers** (top five accounted for **82.4% of 2024 revenues**) creates a significant risk if these relationships are not maintained or new customers are not acquired[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk) - **Delays in obtaining land use rights and completing construction of new facilities** in Sichuan Province could materially and adversely affect business expansion and operations[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - The company holds **$7.5 million in accounts receivable** as of December 31, 2024, which could become uncollectible, impacting cash flows and liquidity[179](index=179&type=chunk) - Risks include **fluctuations in raw material costs and availability, dependency on key executives**, lack of long-term supplier contracts, and the need to adopt new technologies to evolving customer needs[192](index=192&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk)[197](index=197&type=chunk) - The company **lacks business liability or disruption insurance**, exposing it to significant costs and business disruption from uninsured risks[202](index=202&type=chunk)[204](index=204&type=chunk) [Risks Related to Doing Business in China](index=42&type=section&id=Risks%20Related%20to%20Doing%20Business%20in%20China) Operating in China exposes Wetouch to substantial risks, including adverse regulatory developments, potential delisting under the HFCAA, trade policy impacts, governmental control over currency, and uncertainties in the PRC legal system - **Adverse regulatory developments in China**, including cybersecurity reviews and restrictions on offshore capital raising, could increase compliance costs and limit business operations[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[213](index=213&type=chunk) - The company is subject to the **CSRC's Trial Administrative Measures for overseas listings**, requiring post-offering filings and facing potential fines (**RMB 1 million to RMB 10 million**) for non-compliance or misrepresentation[214](index=214&type=chunk)[215](index=215&type=chunk)[223](index=223&type=chunk)[224](index=224&type=chunk) - The **Holding Foreign Companies Accountable Act (HFCAA)** poses a risk of delisting from U.S. exchanges if the PCAOB is unable to inspect the company's auditor for two consecutive years[216](index=216&type=chunk)[221](index=221&type=chunk) - **PRC regulations on loans and currency conversion** may delay or prevent the use of offering proceeds for capital contributions to Chinese subsidiaries, affecting liquidity and business expansion[231](index=231&type=chunk)[232](index=232&type=chunk) - **PRC labor laws** could negatively impact operational flexibility and financial results, while exposure to the FCPA and Chinese anti-corruption laws carries risks of severe sanctions[240](index=240&type=chunk)[241](index=241&type=chunk)[242](index=242&type=chunk) - The Chinese government exerts **substantial influence over business activities**, and changes in economic, political, or social conditions or government policies could materially affect operations and stock value[246](index=246&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk)[264](index=264&type=chunk) - **Uncertainties in the evolving PRC legal system**, including enforcement and sudden changes in laws, limit legal protections and could adversely affect business[251](index=251&type=chunk)[252](index=252&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - **Difficulties in enforcing foreign judgments in China** and government control of currency conversion (RMB into foreign currencies) could undermine contractual protections and affect investment value[255](index=255&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk) - Classification as a **PRC resident enterprise** could lead to a **25% enterprise income tax** on worldwide income and a **10% withholding tax on dividends** for non-PRC shareholders[265](index=265&type=chunk)[266](index=266&type=chunk) [Risks Related to Our Common Stock](index=53&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The market price of Wetouch's common stock may be volatile and decline, influenced by market performance, company results, analyst opinions, and regulatory developments, with shareholders facing potential difficulties in judicial forums and risks from manipulative short selling - The market price of common stock may be **volatile** due to numerous factors beyond control, including overall equity market performance, company operating results, analyst opinions, and regulatory developments[267](index=267&type=chunk)[269](index=269&type=chunk) - By-laws designate **Nevada courts as the exclusive forum** for most shareholder disputes, potentially limiting litigation options[270](index=270&type=chunk)[271](index=271&type=chunk) - The stock is susceptible to **manipulative short selling and negative publicity** involving U.S.-listed Chinese companies, which could drive down its market price[273](index=273&type=chunk)[274](index=274&type=chunk)[276](index=276&type=chunk) - **Substantial sales of common stock** by existing shareholders could negatively affect the market price[277](index=277&type=chunk) - **No dividends are expected** in the foreseeable future, meaning returns depend entirely on stock price appreciation[278](index=278&type=chunk)[279](index=279&type=chunk) - **Worsening U.S.-China relations** could decrease stock price and complicate access to U.S. capital markets[281](index=281&type=chunk) - The company faces **delisting from Nasdaq** due to late periodic filings (Form 10-K for 2024, Form 10-Q for Q1/Q2 2025) and failure to meet the $1.00 minimum bid price requirement[282](index=282&type=chunk)[283](index=283&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=57&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company has no unresolved staff comments to report - No unresolved staff comments[286](index=286&type=chunk) [ITEM 1C. CYBERSECURITY](index=57&type=section&id=ITEM%201C.%20CYBERSECURITY) Wetouch faces significant cybersecurity risks to its business, confidential information, and personnel data, maintaining robust governance and oversight to assess, identify, and mitigate these evolving threats - The company faces **significant cybersecurity risks** to its business, confidential information, and personnel data[286](index=286&type=chunk) - **Robust governance and oversight** are maintained, with mechanisms and processes to assess, identify, and mitigate cybersecurity risks, including regular employee training[286](index=286&type=chunk)[288](index=288&type=chunk) - **No cybersecurity threats or incidents materially affected** the company's business, strategy, results of operations, or financial condition during the year ended December 31, 2024[289](index=289&type=chunk) - The company remains **vulnerable to known or unknown threats** and acknowledges increasing regulatory requirements for cybersecurity incident responses[287](index=287&type=chunk) [ITEM 2. PROPERTIES](index=58&type=section&id=ITEM%202.%20PROPERTIES) Wetouch operates from leased facilities in Sichuan, China, and is acquiring land use rights for a new facility in Chengdu as part of a government-directed relocation, with construction expected to complete by end of 2025 - Operates from approximately **40,126.9 sq. ft. across nine leased buildings** in Shigao Town, Renshou County, Meishan, Sichuan, for offices, R&D, and manufacturing[290](index=290&type=chunk)[291](index=291&type=chunk)[292](index=292&type=chunk)[293](index=293&type=chunk) - Current leases expire on **October 31, 2025**, with expected renewal on commercially reasonable terms[291](index=291&type=chunk) - In the process of obtaining land use rights for a new **131,010 sq. ft. parcel in Chengdu, Sichuan**, for a new facility, with the certificate expected in Q1 2026[296](index=296&type=chunk)[301](index=301&type=chunk) - New facility construction is estimated to be **completed by the end of 2025**, with production commencing in Q1 2026, but delays are possible[170](index=170&type=chunk)[171](index=171&type=chunk)[302](index=302&type=chunk) - Received approximately **$17.7 million in compensation** for the withdrawal of land use rights and demolition of previous facilities due to government-directed relocation[299](index=299&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=60&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) Wetouch is not aware of any material, active, pending, or threatened legal or administrative claims or proceedings against the company or its subsidiaries - No material, active, pending, or threatened legal or administrative claims or proceedings against the company or its subsidiaries[304](index=304&type=chunk)[662](index=662&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=60&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to Wetouch Technology Inc - Not applicable[305](index=305&type=chunk) [PART II](index=61&type=section&id=PART%20II) Part II covers Wetouch's common equity market, stockholder matters, and issuer purchases, alongside a detailed management discussion and analysis of financial condition, operational results, critical accounting policies, market risk disclosures, and internal controls [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=61&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT'S%20COMMON%20EQUITY,%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) Wetouch's common stock trades on Nasdaq under "WETH," with 11,931,534 shares outstanding as of September 8, 2025, and the company does not anticipate paying cash dividends in the foreseeable future - Common stock trades on Nasdaq under the symbol **"WETH"**[308](index=308&type=chunk) - **Stock Information (as of September 8, 2025):** | Metric | Value | | :----- | :---- | | Closing Price per Share | $1.1500 | | Shares Outstanding | 11,931,534 | | Stockholders of Record | ~448 | - The company **does not anticipate paying cash dividends** in the foreseeable future, intending to retain all available funds and future earnings for business development and expansion[309](index=309&type=chunk) - No equity compensation plans, recent sales of unregistered securities, or issuer purchases of equity securities[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk) [ITEM 6. [RESERVED]](index=61&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information - Item is reserved[313](index=313&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=62&type=section&id=ITEM%207.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides an overview of Wetouch's financial condition and operational results for 2024 and 2023, detailing revenue, profit, and cash flow performance, critical accounting policies, and internal controls - Wetouch is a Nevada holding company with primary operations in China through its subsidiary Sichuan Vtouch, subject to complex PRC laws and regulations[315](index=315&type=chunk)[316](index=316&type=chunk) - **Key Financial Highlights (2024 vs. 2023):** | Metric | 2024 (USD) | 2023 (USD) | Change (%) | | :----- | :--------- | :--------- | :--------- | | Revenues | $42.3 million | $39.7 million | 6.5% | | Gross Profit | $13.6 million | $17.2 million | (20.9)% | | Gross Profit Margin | 32.2% | 43.3% | (11.1) pts | | Net Income | $6.0 million | $8.3 million | (27.7)% | | Total Volume Shipped | 2,060,870 units | 1,967,316 units | 4.8% | - **Gross profit margin decreased to 32.2% in 2024 from 43.3% in 2023**, primarily due to a **29.9% increase in cost of goods sold** (31.8% increase in raw materials, 24.3% in labor costs) and sales discounts[331](index=331&type=chunk) - Strong liquidity with **$103.7 million in cash as of December 31, 2024**, largely from a **$40.0 million private placement in 2023** and **$9.0 million net proceeds from the 2024 Uplisting Offering**[344](index=344&type=chunk)[350](index=350&type=chunk) - Capital expenditure commitment of **$0.7 million for construction in progress** of new facilities as of December 31, 2024[353](index=353&type=chunk) [Overview](index=62&type=section&id=Overview) Wetouch Technology Inc., a Nevada holding company, conducts operations through its PRC subsidiary Sichuan Vtouch, specializing in medium- to large-sized projected capacitive touchscreens, subject to evolving PRC laws and regulations - Wetouch is a Nevada holding company with primary operations in China through its subsidiary Sichuan Vtouch, specializing in **medium- to large-sized projected capacitive touchscreens**[315](index=315&type=chunk)[317](index=317&type=chunk) - Operations are subject to complex and evolving PRC laws and regulations, including **restrictions on capital flows, dividend payments, currency conversion, cybersecurity**, and governmental discretion over overseas securities offerings[316](index=316&type=chunk) - As of March 31, 2025, **$47.7 million has been contributed to the PRC subsidiary**, with no dividends or other distributions made to the Company to date[316](index=316&type=chunk) - **Revenue Breakdown (2024 vs. 2023):** | Metric | 2024 (USD) | 2023 (USD) | | :----- | :--------- | :--------- | | Total Revenues | $42.3 million | $39.7 million | | Domestic Sales | 64.7% | 69.6% | | International Sales | 35.3% | 30.3% | [Highlights for the Year Ended December 31, 2024](index=63&type=section&id=Highlights%20for%20the%20Year%20Ended%20December%2031,%202024) For the year ended December 31, 2024, Wetouch reported revenues of $42.3 million, a 6.5% increase, but gross profit decreased by 20.9% to $13.6 million, and net income declined by 27.7% to $6.0 million - **Key Financial Highlights (2024 vs. 2023):** | Metric | 2024 (USD) | 2023 (USD) | Change (%) | | :----- | :--------- | :--------- | :--------- | | Revenues | $42.3 million | $39.7 million | 6.5% | | Gross Profit | $13.6 million | $17.2 million | (20.9)% | | Gross Profit Margin | 32.2% | 43.3% | (11.1) pts | | Net Income | $6.0 million | $8.3 million | (27.7)% | | Total Volume Shipped | 2,060,870 units | 1,967,316 units | 4.8% | [Results of Operations](index=64&type=section&id=Results%20of%20Operations) Wetouch's revenues increased by 6.5% to $42.3 million in 2024, but gross profit decreased by 20.9% to $13.6 million, and net income declined by 27.7% to $6.0 million, primarily due to increased cost of goods sold and sales discounts - **Consolidated Statements of Income Data (2024 vs. 2023):** | Metric (in US Dollar millions, except percentage) | 2024 | 2023 | % Change | | :------------------------------------------------ | :--- | :--- | :--------- | | Revenues | 42.3 | 39.7 | 6.5% | | Cost of revenues | (28.7) | (22.5) | 27.6% | | Gross profit | 13.6 | 17.2 | (20.9)% | | Total operating expenses | (4.3) | (4.5) | (4.4)% | | Operating income | 9.3 | 12.7 | (26.8)% | | Total other expense, net | (0.6) | (0.3) | 100.0% | | Income before income taxes | 8.7 | 12.4 | (29.8)% | | Income tax expense | (2.7) | (4.1) | (34.1)% | | Net income | 6.0 | 8.3 | (27.7)% | - **Gross profit margin decreased to 32.2% in 2024 from 43.3% in 2023**, primarily due to a **29.9% increase in cost of goods sold** (31.8% increase in raw materials, 24.3% in labor costs) and sales discounts[331](index=331&type=chunk) - **Selling expenses increased by 33.3% to $0.8 million in 2024**, mainly due to increased traveling and transportation for sales and marketing[332](index=332&type=chunk) - **General and administrative expenses decreased by 7.9% to $3.5 million in 2024**, primarily due to the payment of $1.2 million in accrued private placement agent fees from 2023, partially offset by increased amortized consulting fees[333](index=333&type=chunk) - **Research and development expenses were nil in 2024**, a **100% decrease** from $84,551 in 2023[335](index=335&type=chunk) - **Operating income decreased by 26.8% to $9.3 million in 2024**, driven by lower gross profit and higher selling expenses[336](index=336&type=chunk) - A **gain of $378,371 was recognized on changes in the fair value of common stock purchase warrants in 2024**, compared to a loss of $121,413 in 2023, as warrants expired[337](index=337&type=chunk)[338](index=338&type=chunk) - **Net income for 2024 was $6.0 million**, a **27.7% decrease** from $8.3 million in 2023[341](index=341&type=chunk) [Revenues](index=64&type=section&id=Revenues) Total revenues increased by 6.5% to $42.3 million in 2024, driven by higher sales volume and average selling prices, despite negative exchange rate impacts, with overseas revenue growing significantly due to demand for higher-end products - **Revenue Growth Drivers (2024 vs. 2023):** | Factor | Change | | :----- | :----- | | Sales Volume | +4.8% | | Average Selling Price (RMB) | +3.2% | | Exchange Rate Impact (RMB depreciation) | -1.6% | - **Revenue by Geography (2024 vs. 2023):** | Geography | 2024 (USD) | 2023 (USD) | Change (USD) | Change (%) | | :-------- | :--------- | :--------- | :----------- | :--------- | | PRC Domestic | $27,340,555 | $27,668,985 | $(328,430) | (1.2)% | | Overseas | $14,939,818 | $12,036,954 | $2,902,864 | 24.1% | - **Units Sold by Geography (2024 vs. 2023):** | Geography | 2024 (Units) | 2023 (Units) | Change (Units) | Change (%) | | :-------- | :----------- | :----------- | :------------- | :--------- | | PRC Domestic | 1,309,240 | 1,330,013 | (20,773) | (1.6)% | | Overseas | 751,630 | 637,303 | 114,327 | 17.9% | - Overseas revenue growth was particularly driven by **higher demand for automotive, gaming, and industrial control touchscreens**, where the company had greater pricing power[328](index=328&type=chunk) - The company shifted production mix towards **higher-end touchscreens** (automotive, gaming, medical, industrial control) due to greater growth potential and stronger demand for quality products[330](index=330&type=chunk) [Gross Profit and Gross Profit Margin](index=66&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit decreased by 20.9% to $13.6 million in 2024, with the margin declining to 32.2% due to a significant increase in the cost of goods sold, including raw material and labor costs, and sales discounts - **Gross Profit and Margin (2024 vs. 2023):** | Metric | 2024 (USD millions) | 2023 (USD millions) | Change (USD millions) | Change (%) | | :----- | :------------------ | :------------------ | :-------------------- | :--------- | | Gross Profit | $13.6 | $17.2 | $(3.6) | (20.9)% | | Gross Profit Margin | 32.2% | 43.3% | (11.1) pts | N/A | - Decrease in gross profit margin primarily due to a **29.9% increase in cost of goods sold**, including a **31.8% increase in raw material costs** (43% from chip costs) and a **24.3% increase in labor costs**[331](index=331&type=chunk) [Selling Expenses](index=66&type=section&id=Selling%20Expenses) Selling expenses increased by 33.3% to $0.8 million in 2024, primarily due to higher traveling and transportation costs for sales and marketing activities aimed at promoting sales growth - **Selling Expenses (2024 vs. 2023):** | Metric | 2024 (USD millions) | 2023 (USD millions) | Change (USD millions) | Change (%) | | :----- | :------------------ | :------------------ | :-------------------- | :--------- | | Selling Expenses | $0.8 | $0.6 | $0.2 | 33.3% | | As % of Revenues | 1.9% | 1.5% | 0.4% pts | N/A | - Increase primarily due to **higher traveling and transportation expenses** for sales and marketing activities[332](index=332&type=chunk) [General and Administrative Expenses](index=66&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased by 7.9% to $3.5 million in 2024, mainly due to the payment of accrued private placement agent fees from 2023, partially offset by increased consulting and miscellaneous expenses - **General and Administrative Expenses (2024 vs. 2023):** | Metric | 2024 (USD millions) | 2023 (USD millions) | Change (USD millions) | Change (%) | | :----- | :------------------ | :------------------ | :-------------------- | :--------- | | G&A Expenses | $3.5 | $3.8 | $(0.3) | (7.9)% | | As % of Revenues | 8.3% | 9.6% | (1.3)% pts | N/A | - Decrease primarily due to the **$1.2 million accrued private placement agent fees in 2023 being paid in 2024**, partially offset by increased amortized consulting fees and miscellaneous expenses[333](index=333&type=chunk) [Research and Development Expenses](index=67&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses were nil in 2024, representing a 100% decrease from $84,551 in 2023, as the company incurred no R&D expenses during the year - **R&D Expenses (2024 vs. 2023):** | Metric | 2024 (USD) | 2023 (USD) | Change (USD) | Change (%) | | :----- | :--------- | :--------- | :----------- | :--------- | | R&D Expenses | $0 | $84,551 | $(84,551) | (100.0)% | [Operating Income](index=67&type=section&id=Operating%20Income) Operating income decreased by 26.8% to $9.3 million in 2024, primarily due to lower gross profit and higher selling expenses, partially offset by reduced general & administrative and research & development expenses - **Operating Income (2024 vs. 2023):** | Metric | 2024 (USD millions) | 2023 (USD millions) | Change (USD millions) | Change (%) | | :----- | :------------------ | :------------------ | :-------------------- | :--------- | | Operating Income | $9.3 | $12.7 | $(3.4) | (26.8)% | - Decrease primarily due to **lower gross profit and higher selling expenses**, partially offset by lower G&A and R&D expenses[336](index=336&type=chunk) [Gain (loss) on Changes in Fair Value of Common Stock Purchase Warrants](index=67&type=section&id=Gain%20%28loss%29%20on%20Changes%20in%20Fair%20Value%20of%20Common%20Stock%20Purchase%20Warrants) The company recognized a gain of $378,371 on changes in the fair value of common stock purchase warrants in 2024, a significant improvement from a loss of $121,413 in 2023, as derivative liabilities related to expired warrants were re-measured - **Gain (Loss) on Warrants (2024 vs. 2023):** | Metric | 2024 (USD) | 2023 (USD) | Change (USD) | Change (%) | | :----- | :--------- | :--------- | :----------- | :--------- | | Gain (loss) on changes in fair value of common stock purchase warrants | $378,371 | $(121,413) | $499,784 | (411.6)% | - The gain in 2024 reflects the **re-measurement of derivative liabilities for warrants issued in 2021**, which expired during the year[338](index=338&type=chunk)[373](index=373&type=chunk)[374](index=374&type=chunk)[375](index=375&type=chunk) [Income Taxes](index=68&type=section&id=Income%20Taxes) Income tax expense decreased by 34.1% to $2.7 million in 2024, with an effective income tax rate of 30.6%, and no deferred income tax liabilities were provided for PRC withholding tax on undistributed earnings due to indefinite reinvestment plans - **Income Taxes (2024 vs. 2023):** | Metric (in US$ millions) | 2024 | 2023 | Change (USD millions) | Change (%) | | :----------------------- | :--- | :--- | :-------------------- | :--------- | | Income before Income Taxes | $8.7 | $12.4 | $(3.7) | (29.8)% | | Income Tax Expense | $(2.7) | $(4.1) | $(1.4) | (34.1)% | | Effective income tax rate | 30.6% | 33.1% | (2.5)% pts | N/A | - PRC subsidiary's **$103.7 million cash is planned for indefinite reinvestment**, so no deferred income tax liabilities for PRC withholding tax on undistributed earnings[340](index=340&type=chunk) [Net Income](index=68&type=section&id=Net%20Income) As a result of various factors, Wetouch reported a net income of $6.0 million for the year ended December 31, 2024, representing a 27.7% decrease compared to $8.3 million in 2023 - **Net Income (2024 vs. 2023):** | Metric | 2024 (USD millions) | 2023 (USD millions) | Change (USD millions) | Change (%) | | :----- | :------------------ | :------------------ | :-------------------- | :--------- | | Net Income | $6.0 | $8.3 | $(2.3) | (27.7)% | [Liquidity and Capital Resources](index=68&type=section&id=Liquidity%20and%20Capital%20Resources) Wetouch expects to meet its short-term operational and capital expenditure needs using existing cash, operating cash flows, and bank borrowings, demonstrating strong liquidity with $103.7 million in cash as of December 31, 2024 - Expects to meet short-term cash needs with **existing cash, operating cash flows, and bank borrowings**, but may require additional financing for future developments[342](index=342&type=chunk)[343](index=343&type=chunk) - **Current Assets and Liabilities (as of Dec 31, 2024):** | Metric | Amount (USD millions) | | :----- | :-------------------- | | Current Assets | $114.1 | | Cash | $103.7 | | Accounts Receivable, net | $7.5 | | Inventories | $0.1 | | Prepaid Expenses and Other Current Assets | $2.8 | | Current Liabilities | $3.0 | | Accounts Payable | $1.3 | | Due to Related Parties | $0.1 | | Accrued Expenses and Other Current Liabilities | $1.0 | | Operating Lease Liabilities-Current | $0.6 | - **Cash Flow Summary (2024 vs. 2023):** | Cash Flow Activity (in US$ millions) | 2024 | 2023 | | :---------------------------------- | :--- | :--- | | Net cash provided by operating activities | $1.1 | $12.7 | | Net cash used in investing activities | $(0.3) | $(2.3) | | Net cash provided by financing activities | $7.6 | $40.0 | | Effect of foreign currency exchange rate changes | $(2.7) | $(3.6) | | Net increase in cash | $5.7 | $46.8 | | Cash and cash equivalents at end of period | $103.7 | $98.0 | - **Days Sales Outstanding (DSO) decreased to 64 days in 2024 from 75 days in 2023**, indicating faster collection of accounts receivables[351](index=351&type=chunk) [Operating Activities](index=69&type=section&id=Operating%20Activities) Net cash provided by operating activities significantly decreased by 91.3% to $1.1 million in 2024, primarily due to net income and increases in accounts payable, partially offset by a gain on warrants and increases in accounts receivable and prepaid expenses - **Net Cash Provided by Operating Activities (2024 vs. 2023):** | Metric | 2024 (USD millions) | 2023 (USD millions) | Change (USD millions) | Change (%) | | :----- | :------------------ | :------------------ | :-------------------- | :--------- | | Net cash provided by operating activities | $1.1 | $12.7 | $(11.6) | (91.3)% | - Positive cash flow in 2024 driven by **$6.0 million net income**, increased accounts payable (**$0.6 million**), and amounts due to a related party (**$0.1 million**)[347](index=347&type=chunk) - Offsetting factors included a **$0.4 million gain on warrants**, increased accounts receivable (**$0.2 million**) and prepaid expenses (**$1.8 million**), and a **$3.3 million decrease in accrued expenses**[347](index=347&type=chunk) [Investing Activities](index=69&type=section&id=Investing%20Activities) Net cash used in investing activities decreased to $0.3 million in 2024 from $2.3 million in 2023, primarily for the purchase of property, plant, and equipment and construction in progress - **Net Cash Used in Investing Activities (2024 vs. 2023):** | Metric | 2024 (USD millions) | 2023 (USD millions) | | :----- | :------------------ | :------------------ | | Net cash used in investing activities | $(0.3) | $(2.3) | - Cash used for **purchase of property, plant, and equipment and construction in progress**[349](index=349&type=chunk) [Financing Activities](index=69&type=section&id=Financing%20Activities) Net cash provided by financing activities was $7.6 million in 2024, primarily from the 2024 Uplisting Offering, compared to $40.0 million in 2023 from a private placement - **Net Cash Provided by Financing Activities (2024 vs. 2023):** | Metric | 2024 (USD millions) | 2023 (USD millions) | | :----- | :------------------ | :------------------ | | Net cash provided by financing activities | $7.6 | $40.0 | - 2024 cash flow from financing includes **$9.0 million net proceeds from the 2024 Uplisting Offering**, partially offset by **$1.4 million repayment of convertible promissory notes**[350](index=350&type=chunk) - 2023 cash flow from financing was primarily **$40.0 million from a private placement**[350](index=350&type=chunk) [COMMITMENTS AND CONTINGENCIES](index=70&type=section&id=COMMITMENTS%20AND%20CONTINGENCIES) As of December 31, 2024, Wetouch had a capital expenditure commitment of $0.7 million for construction in progress of its new facility and no off-balance sheet arrangements - **Capital Expenditure Commitment (as of Dec 31, 2024):** | Commitment Type | Amount (USD equivalent) | | :-------------- | :---------------------- | | Construction in progress | $0.7 million (RMB5.0 million) | - **No off-balance sheet arrangements** as of December 31, 2024[354](index=354&type=chunk) [Critical Accounting Policies](index=70&type=section&id=Critical%20Accounting%20Policies) Wetouch's critical accounting policies involve significant judgments and estimates in revenue recognition, inventory valuation, accounting for convertible promissory notes and warrants, income taxes, property, plant, and equipment, fair value measurement, impairment, and lease accounting - Critical accounting policies require **significant judgment and estimates**, including allowance for uncollectible receivables, inventory valuations, useful lives of assets, and contingent liabilities[355](index=355&type=chunk)[356](index=356&type=chunk)[365](index=365&type=chunk)[538](index=538&type=chunk) - Revenue is recognized under **ASC 606 at the point in time when title and risk of loss pass** and the customer accepts the goods, typically at delivery[359](index=359&type=chunk)[360](index=360&type=chunk)[361](index=361&type=chunk)[569](index=569&type=chunk) - Inventories are stated at the **lower of cost or net realizable value**, with a **$54,873 write-off** recorded in 2024 for obsolete inventory[366](index=366&type=chunk)[367](index=367&type=chunk)[542](index=542&type=chunk) - Convertible promissory notes are accounted for as debt, with embedded conversion features **not bifurcated as derivatives** due to fixed interest rates and specified settlement[368](index=368&type=chunk)[370](index=370&type=chunk)[545](index=545&type=chunk)[546](index=546&type=chunk) - Common stock purchase warrants are treated as **derivative liabilities under ASC 815** due to "down-round protection" provisions, requiring fair value re-measurement[373](index=373&type=chunk)[548](index=548&type=chunk)[549](index=549&type=chunk) - Lease accounting follows **ASU 2016-02 (Topic 842)**, recognizing right-of-use (ROU) assets and lease liabilities on the balance sheet, with a weighted-average remaining lease term of **1.8 years** and a discount rate of **1.06% in 2024**[389](index=389&type=chunk)[390](index=390&type=chunk)[601](index=601&type=chunk) - The company is evaluating new ASUs on **Reference Rate Reform (ASU 2022-06, deferred to Dec 31, 2024)** and **Improvements to Income Tax Disclosures (ASU 2023-09, effective after Dec 15, 2024)**[395](index=395&type=chunk)[396](index=396&type=chunk)[588](index=588&type=chunk)[589](index=589&type=chunk)[590](index=590&type=chunk) [ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=76&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) As a "smaller reporting company," Wetouch is not required to provide the information typically required by this item - Not required to provide information as a **"smaller reporting company"**[397](index=397&type=chunk) [ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA](index=76&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This item refers to the consolidated financial statements and supplementary data, which are incorporated by reference and begin on page F-1 of the Annual Report - Financial statements and supplementary data are included starting on **page F-1**[398](index=398&type=chunk) [ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE](index=76&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) This item is not applicable to Wetouch Technology Inc - Not applicable[399](index=399&type=chunk) [ITEM 9A. CONTROLS AND PROCEDURES](index=77&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES) Wetouch's management concluded that its disclosure controls and procedures were not effective as of December 31, 2024, due to material weaknesses in internal control over financial reporting, for which remediation measures are being implemented - **Disclosure controls and procedures were not effective** as of December 31, 2024[401](index=401&type=chunk) - **Material weaknesses in internal control over financial reporting** include lack of competent financial reporting and accounting personnel with U.S. GAAP understanding and insufficient risk assessment procedures[405](index=405&type=chunk)[407](index=407&type=chunk) - Management is implementing remediation plans, including identifying skill gaps, cooperating with operations teams to ensure control environment, and establishing **Sarbanes-Oxley Act compliance procedures**[408](index=408&type=chunk)[413](index=413&type=chunk) - **No material changes in internal control over financial reporting** occurred during the fourth quarter[410](index=410&type=chunk) [ITEM 9B. OTHER INFORMATION](index=78&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) Wetouch has adopted an insider trading policy and a clawback policy, which are available on its website and filed as exhibits to this Annual Report - Adopted an **insider trading policy and a clawback policy**, filed as exhibits[411](index=411&type=chunk) [ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](index=78&type=section&id=ITEM%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to Wetouch Technology Inc - Not applicable[412](index=412&type=chunk) [PART III](index=79&type=section&id=PART%20III) Part III outlines Wetouch's corporate governance structure, including directors, executive officers, board committees, compensation, security ownership, related party transactions, and ethical policies [ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE](index=79&type=section&id=ITEM%2010.%20DIRECTORS,%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) This section lists Wetouch's directors and executive officers, including recent changes, and details the structure of its Audit, Compensation, and Nominating and Corporate Governance Committees, along with the company's Code of Ethics and Trading Policies - **Directors and Executive Officers (as of report date):** | Name | Age | Position(s) Held | | :--- | :-- | :--------------- | | Guangrong Cai | 62 | Chairman, Director | | Zongyi Lian | 60 | President and Chief Executive Officer | | Xing Tang | 58 | Chief Financial Officer | | Jian Feng | 30 | Secretary, Director | | Jiaxing Huang | 25 | Director | | Guijun Gan | 56 | Director | | Jing Guo | 35 | Director | - Recent changes include **Guangrong Cai appointed Chairman (June 2024), Xing Tang appointed CFO (July 2024)**, and Jing Chen resigned (April 2025), with Jing Guo appointed (May 2025)[417](index=417&type=chunk)[419](index=419&type=chunk)[421](index=421&type=chunk)[477](index=477&type=chunk)[479](index=479&type=chunk) - The Board has **three committees: Audit, Compensation, and Nominating and Corporate Governance**, with independent directors meeting Nasdaq and Exchange Act requirements[426](index=426&type=chunk)[427](index=427&type=chunk)[430](index=430&type=chunk)[434](index=434&type=chunk) - The company has adopted a written **Code of Ethics and Business Conduct** applicable to directors, officers, and employees[436](index=436&type=chunk) - An **insider trading policy was adopted on April 16, 2024**, governing securities transactions by directors, officers, and employees[439](index=439&type=chunk) - **Delinquent Section 16(a) reports** were noted for Ms. Xing Tang (CFO), Mr. Guangrong Cai (Chairman), Mr. Jiaxing Huang, and Mr. Guijun Gan (directors) for Forms 3[441](index=441&type=chunk) [ITEM 11. EXECUTIVE COMPENSATION](index=84&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION) This section details the compensation of Wetouch's named executive officers and non-employee directors for 2024 and 2023, including salaries, employment agreements, a clawback policy, and cash fees for directors - **Executive Compensation (2024 vs. 2023):** | Name and Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All other compensation ($) | Total ($) | | :---------------- | :--- | :--------- | :-------- | :--------------- | :---------------- | :------------------------- | :-------- | | Zongyi Lian, President, CEO | 2023 | 20,336 | - | - | - | - | 20,336 | | | 2024 | 12,857 | - | - | - | - | 12,857 | | Yuhua Huang, Former CFO | 2023 | 18,642 | - | - | - | - | 18,642 | | | 2024 | 7,500 | - | - | - | - | 7,500 | | Xing Tang, CFO | 2023 | - | - | - | - | - | - | | | 2024 | 28,150 | - | - | - | - | 28,150 | - Employment agreements for executive officers include **annual salaries, remuneration, and social security benefits**, with non-competition clauses[446](index=446&type=chunk)[447](index=447&type=chunk)[450](index=450&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk) - A **clawback policy covers incentive-based compensation** for executive officers in the event of an accounting restatement due to material noncompliance with financial reporting requirements[454](index=454&type=chunk)[455](index=455&type=chunk) - **No outstanding equity awards or long-term incentive plans** for executive officers as of December 31, 2024[456](index=456&type=chunk)[457](index=457&type=chunk) - **Non-Employee Director Compensation (2024):** | Name | Fees Earned or Paid in Cash ($) | Total ($) | | :--- | :----------------------------- | :-------- | | Fei Bai | 17,143 | 17,143 | | Xiaojin Tang | 8,571 | 8,571 | | Congjin Wang | 8,571 | 8,571 | | Jiaxing Huang | 6,429* | 6,429 | | Jing Chen | 20,571* | 20,571 | | Guijun Gan | 6,429* | 6,429 | *Accrued and not paid, except Jing Chen's [ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS](index=89&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) This section details the beneficial ownership of Wetouch's common stock as of September 8, 2025, for executive officers, directors, and 5% or greater holders, noting that all officers and directors as a group own less than 1% of outstanding shares - **Beneficial Ownership (as of September 8, 2025):** | Name of Beneficial Owner | Shares | Percentage | | :----------------------- | :----- | :--------- | | Guangrong Cai (Chairman) | 9,576 | <1% | | Zongyi Lian (CEO) | 5,657 | <1% | | Jian Feng | - | - | | Guijun Gan | - | - | | Jiaxing Huang | - | - | | Jing Guo | - | - | | Xing Tang | - | - | | All officers and directors as a group (7 persons) | 15,233 | <1% | - **No arrangements that may result in "changes in control" are known**[470](index=470&type=chunk) - Recent board and executive changes include **resignations of Jiaying Cai, Jing Chen, Yuhua Huang, Fei Bai, Xiaojin Tang, and Congjin Wang**, and **appointments of Jian Feng, Jing Guo, Guijun Gan, Guangrong Cai, and Xing Tang**[471](index=471&type=chunk)[472](index=472&type=chunk)[473](index=473&type=chunk)[474](index=474&type=chunk)[475](index=475&type=chunk)[476](index=476&type=chunk)[477](index=477&type=chunk)[478](index=478&type=chunk)[479](index=479&type=chunk)[480](index=480&type=chunk)[481](index=481&type=chunk) [ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE](index=91&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS,%20AND%20DIRECTOR%20INDEPENDENCE) This section discloses related party transactions, including an outstanding payable to an affiliate of a former director, and confirms the independence of certain directors under Nasdaq rules - As of December 31, 2024, an **outstanding payable of $149,211 was due to Chengdu Wetouch Intelligent Optoelectronics Co., Ltd.**, an affiliate of former director Jiaying Cai[483](index=483&type=chunk) - The Audit Committee is responsible for **reviewing and approving related party transactions** to ensure fair terms[484](index=484&type=chunk) - The only family relationship was between former director Jiaying Cai and Chairman Guangrong Cai[485](index=485&type=chunk) - **Jing Chen, Jiaxing Huang, and Guijun Gan are deemed independent directors** under Nasdaq rules, with Ms. Chen also an "audit committee financial expert"[487](index=487&type=chunk) [ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES](index=92&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES) This section outlines the audit fees paid to independent registered public accounting firms for fiscal years 2024 and 2023, with no audit-related, tax, or other fees incurred - **Audit Fees (2024 vs. 2023):** | Year | Auditor | Audit Fees (USD) | | :--- | :------ | :--------------- | | 2024 | Enrome LLP | $250,000 | | 2023 | B F Borgers CPA PC | $275,000 | - **No audit-related, tax, or other fees** were incurred in fiscal years 2024 and 2023[491](index=491&type=chunk)[492](index=492&type=chunk)[493](index=493&type=chunk) [PART IV](index=93&type=section&id=PART%20IV) Part IV details the exhibits and financial statement schedules included in the Annual Report, confirming consolidated financial statements and listing various corporate documents, agreements, and certifications [ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES](index=93&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES) This item lists the consolidated financial statements, financial statement schedules, and a comprehensive list of exhibits filed with the Form 10-K, including corporate governance documents, various agreements, and certifications - Consolida

Core Insights - WeTouch Technology Inc. reported a net income of $6.0 million for the fiscal year 2024, with cash reserves of $103.7 million, equating to $8.7 per share [1] - The company provided guidance for fiscal year 2025, projecting revenue of approximately $46.15 million and net income of approximately $11.88 million, representing a 97% increase [1] - The fiscal year 2024 saw record revenue of $42.3 million, driven by growth in core applications such as automotive and gaming [1]

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section warns that the report contains forward-looking statements subject to various risks and uncertainties that could materially alter actual results - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[6](index=6&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk) - Key risks include significant reliance on **top customers**, substantial **accounts receivable** that may become uncollectible, and potential expenses or delays due to the **dismissal of BF Borgers as auditor**[6](index=6&type=chunk)[7](index=7&type=chunk) - Other risks include potential **fines from the Chinese government** for uncompleted filings, challenges in **maintaining product quality** and competing effectively, and the need for **substantial additional financing** to execute business plans[7](index=7&type=chunk)[8](index=8&type=chunk) - Risks also encompass the unavailability of **preferential tax treatments**, disruptions in **third-party supplier operations**, fluctuations in **raw material costs**, and reliance on **key executives**[9](index=9&type=chunk)[10](index=10&type=chunk) - **Regulatory developments in Mainland China**, potential **trading prohibitions** under the Holding Foreign Companies Accountable Act, and changes in China's economic/political conditions pose additional risks[11](index=11&type=chunk)[12](index=12&type=chunk) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for periods ended September 30, 2024, and December 31, 2023, prepared under U.S. GAAP - The financial statements are unaudited and prepared in accordance with U.S. GAAP, with certain disclosures condensed or omitted as permitted by SEC rules[37](index=37&type=chunk) - Management believes all necessary adjustments have been made to present a fair statement of financial position, results of operations, and cash flows[38](index=38&type=chunk) [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets provide a snapshot of the company's financial position as of September 30, 2024, and December 31, 2023, showing assets, liabilities, and stockholders' equity | Metric | September 30, 2024 (Unaudited) | December 31, 2023 | Change | % Change | | :--------------------------------- | :----------------------------- | :---------------- | :----- | :------- | | **Assets** | | | | | | Cash | $106,737,492 | $98,040,554 | $8,696,938 | 8.87% | | Accounts receivable | $9,732,758 | $7,455,252 | $2,277,506 | 30.55% | | Inventories | $187,408 | $222,102 | $(34,694) | -15.62% | | Prepaid expenses & other current assets | $3,360,770 | $1,063,627 | $2,297,143 | 216.00% | | TOTAL CURRENT ASSETS | $120,018,428 | $106,781,535 | $13,236,893 | 12.39% | | Property, plant and equipment, net | $13,125,448 | $12,859,863 | $265,585 | 2.07% | | **TOTAL ASSETS** | **$133,143,876** | **$119,641,398** | **$13,502,478** | **11.28%** | | **Liabilities** | | | | | | Accounts payable | $1,218,402 | $640,795 | $577,607 | 90.14% | | Due to related parties | $434,576 | $- | $434,576 | N/A | | Income tax payable | $1,000,261 | $- | $1,000,261 | N/A | | Accrued expenses & other current liabilities | $800,612 | $4,462,496 | $(3,661,884) | -82.06% | | Convertible promissory notes payable | $- | $1,239,126 | $(1,239,126) | -100.00% | | TOTAL CURRENT LIABILITIES | $3,453,851 | $6,342,417 | $(2,888,566) | -45.54% | | Common stock purchase warrants liability | $214,679 | $378,371 | $(163,692) | -43.26% | | **TOTAL LIABILITIES** | **$3,668,530** | **$6,720,788** | **$(3,052,258)** | **-45.41%** | | **Stockholders' Equity** | | | | | | Common stock | $11,932 | $9,733 | $2,199 | 22.59% | | Additional paid in capital | $52,501,680 | $43,514,125 | $8,987,555 | 20.65% | | Retained earnings | $75,398,355 | $69,477,092 | $5,921,263 | 8.52% | | Accumulated other comprehensive loss | $(5,631,713) | $(7,275,432) | $1,643,719 | -22.60% | | **TOTAL STOCKHOLDERS' EQUITY** | **$129,475,346** | **$112,920,610** | **$16,554,736** | **14.66%** | | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | **$133,143,876** | **$119,641,398** | **$13,502,478** | **11.28%** | [Condensed Consolidated Statements of Income and Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This statement details the company's revenues, expenses, and net income, as well as other comprehensive income, for the three and nine months ended September 30, 2024 and 2023 | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change | % Change | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change | % Change | | :--------------------------------------- | :-------------------------- | :-------------------------- | :--------- | :------- | :-------------------------- | :-------------------------- | :--------- | :------- | | Revenues | $11,537,989 | $11,123,605 | $414,384 | 3.73% | $38,649,823 | $37,331,498 | $1,318,325 | 3.53% | | Cost of Revenues | $(7,101,645) | $(6,346,079) | $(755,566) | 11.91% | $(26,014,703) | $(20,261,755) | $(5,752,948) | 28.39% | | Gross Profit | $4,436,344 | $4,777,526 | $(341,182) | -7.14% | $12,635,120 | $17,069,743 | $(4,434,623) | -25.98% | | Operating Expenses | $(953,332) | $(492,046) | $(461,286) | 93.75% | $(3,121,916) | $(2,389,043) | $(732,873) | 30.68% | | Income From Operations | $3,483,012 | $4,285,480 | $(802,468) | -18.72% | $9,513,204 | $14,680,700 | $(5,167,496) | -35.20% | | Total Other Income (Loss) | $157,123 | $(278,327) | $435,450 | -156.45% | $(851,326) | $(245,821) | $(605,505) | 246.39% | | Income Before Income Tax Expense | $3,640,135 | $4,007,153 | $(367,018) | -9.16% | $8,661,878 | $14,434,879 | $(5,773,001) | -40.00% | | Income Tax Expense | $(979,436) | $(1,148,185) | $168,749 | -14.70% | $(2,740,615) | $(4,109,679) | $1,369,064

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section details the company's unaudited condensed consolidated financial information and related disclosures [Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from expectations - **Forward-looking statements** are subject to **numerous risks and uncertainties** that could cause actual results to differ materially from expectations[4](index=4&type=chunk) - **Key risks** include **significant reliance** on top customers, **substantial accounts receivable** that may become uncollectible, and **potential significant expenses or delays due to the dismissal of BF Borgers as auditor**[4](index=4&type=chunk)[5](index=5&type=chunk) - The company faces **potential fines and penalties** from the Chinese government for not completing required filings and risks associated with adverse regulatory developments in Mainland China, including potential delisting under the Holding Foreign Companies Accountable Act[5](index=5&type=chunk)[7](index=7&type=chunk) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Unaudited condensed consolidated financial statements for the company and its subsidiaries, with detailed notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show the company's financial position, highlighting changes in assets, liabilities, and equity Condensed Consolidated Balance Sheets (in USD) | ASSETS (in USD) | June 30, 2024 | December 31, 2023 | | :---------------------- | :------------ | :---------------- | | Cash | $98,374,302 | $98,040,554 | | Accounts receivable | $10,826,787 | $7,455,252 | | Inventories | $179,264 | $222,102 | | Prepaid expenses and other current assets | $3,856,718 | $1,063,627 | | **TOTAL CURRENT ASSETS** | **$113,237,071** | **$106,781,535** | | Property, plant and equipment, net | $12,672,986 | $12,859,863 | | **TOTAL ASSETS** | **$125,910,057** | **$119,641,398** | | LIABILITIES AND STOCKHOLDERS' EQUITY (in USD) | June 30, 2024 | December 31, 2023 | | :-------------------------------------- | :------------ | :---------------- | | Accounts payable | $917,153 | $640,795 | | Due to a related party | $263,956 | - | | Income tax payable | $1,093,839 | - | | Accrued expenses and other current liabilities | $839,781 | $4,462,496 | | Convertible promissory notes payable | - | $1,239,126 | | **TOTAL CURRENT LIABILITIES** | **$3,114,729** | **$6,342,417** | | Common stock purchase warrants liability | $332,799 | $378,371 | | **TOTAL LIABILITIES** | **$3,447,528** | **$6,720,788** | | STOCKHOLDERS' EQUITY (in USD) | June 30, 2024 | December 31, 2023 | | :---------------------------- | :------------ | :---------------- | | Common stock | $11,932 | $9,733 | | Additional paid in capital | $52,501,680 | $43,514,125 | | Statutory reserve | $7,195,092 | $7,195,092 | | Retained earnings | $72,737,656 | $69,477,092 | | Accumulated other comprehensive loss | ($9,983,831) | ($7,275,432) | | **TOTAL STOCKHOLDERS' EQUITY** | **$122,462,529** | **$112,920,610** | | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | **$125,910,057** | **$119,641,398** | - Total assets **increased by approximately $6.27 million (5.2%)** from December 31, 2023, to June 30, 2024, **primarily driven by** an increase in accounts receivable and prepaid expenses[9](index=9&type=chunk) - Total current liabilities **decreased significantly by approximately $3.23 million (50.9%)** **due to** the repayment of convertible promissory notes and a decrease in accrued expenses and other current liabilities[9](index=9&type=chunk) [Condensed Consolidated Statements of Income and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20(Loss)) This statement provides an overview of the company's financial performance, detailing revenues, costs, operating expenses, and net income Metric (in USD) | Metric (in USD) | 3 Months Ended June 30, 2024 | 3 Months Ended June 30, 2023 | 6 Months Ended June 30, 2024 | 6 Months Ended June 30, 2023 | | :-------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | $12,234,575 | $12,774,432 | $27,111,834 | $26,207,893 | | Cost of Revenues | ($7,373,757) | ($6,521,015) | ($18,913,058) | ($13,915,676) | | Gross Profit | $4,860,818 | $6,253,417 | $8,198,776 | $12,292,217 | | Total Operating Expenses | ($1,135,590) | ($158,651) | ($2,168,473) | ($1,896,997) | | Income From Operations | $3,725,228 | $6,094,766 | $6,030,303 | $10,395,220 | | Total Other Income (Expenses) | $75,797 | $134,312 | ($1,008,560) | $32,506 | | Income Before Income Tax Expense | $3,801,025 | $6,229,078 | $5,021,743 | $10,427,726 | | Income Tax Expense | ($1,099,331) | ($1,556,095) | ($1,761,179) | ($2,961,494) | | **NET INCOME** | **$2,701,694** | **$4,672,983** | **$3,260,564** | **$7,466,232** | | Comprehensive Income (Loss) | $1,923,288 | ($1,531,968) | $552,165 | $580,305 | | Basic EPS | $0.23 | $0.48 | $0.29 | $0.84 | | Diluted EPS | $0.23 | $0.48 | $0.29 | $0.84 | | Basic Weighted Average Shares Outstanding | 11,931,534 | 9,682,721 | 11,325,873 | 8,841,712 | | Diluted Weighted Average Shares Outstanding | 11,982,239 | 9,779,349 | 11,376,578 | 9,034,969 | - Net income for the three months ended June 30, 2024, **decreased by 42.2% to $2.7 million** from **$4.7 million** in the prior year period, **primarily due to higher cost of revenues and operating expenses**[11](index=11&type=chunk) - For the six months ended June 30, 2024, net income **decreased by 56.3% to $3.3 million** from **$7.5 million** in the prior year period, **largely impacted by a significant increase in cost of revenues and interest expenses**[11](index=11&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) This statement details changes in stockholders' equity, reflecting common stock issuances, net income, and currency adjustments Stockholders' Equity Item (in USD) | Stockholders' Equity Item (in USD) | Balance as of Dec 31, 2023 | Issuance of common stock from 2024 Public Offering | Exercise of warrants | Net income | Foreign currency translation adjustment | Balance as of June 30, 2024 | | :--------------------------------- | :------------------------- | :------------------------------------------------- | :------------------- | :--------- | :-------------------------------------- | :-------------------------- | | Common Stock (par value) | $9,733 | $2,160 | $39 | - | - | $11,932 | | Additional Paid-in Capital | $43,514,125 | $8,987,594 | ($39) | - |

Core Viewpoint - Wetouch Technologies Inc. has announced a stock buyback program to repurchase up to $15 million of its common stock, reflecting confidence in its business and addressing perceived undervaluation in the market [1][3]. Summary by Sections Stock Buyback Program - The company is authorized to repurchase shares in the open market or through privately negotiated transactions, with the timing and amount depending on various factors such as price and market conditions [2]. - The program does not obligate the company to repurchase a specific number of shares and can be suspended or modified at any time [2]. Financial Position - Wetouch has over $90 million in cash and nearly $8 per share in cash, while its market capitalization is less than $30 million, indicating that the stock is significantly undervalued [3]. - The buyback program is seen as an attractive opportunity to return value to shareholders [3]. Company Overview - Wetouch Technologies Inc. is a leader in the global touch display industry, focusing on innovation and customer satisfaction to provide premium touch display solutions [3].

[Cautionary Note Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Note%20Regarding%20Forward%20Looking%20Statements) This section advises readers that the report contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements, which are subject to various risks and uncertainties that could cause actual results to differ materially from expectations[8](index=8&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk) - Key risks include significant reliance on top customers, potential uncollectible accounts receivable, and the impact of dismissing BF Borgers as auditor, which may cause expenses, delays, and affect stock price[10](index=10&type=chunk)[203](index=203&type=chunk)[205](index=205&type=chunk) - Operational and strategic risks involve maintaining product quality, effective competition, securing additional financing for business plans and new facilities, and potential disruptions from third-party suppliers and raw material cost fluctuations[10](index=10&type=chunk)[142](index=142&type=chunk) - Regulatory and geopolitical risks include potential fines from the Chinese government for uncompleted filings, adverse regulatory developments in Mainland China, delisting under the Holding Foreign Companies Accountable Act, and uncertainties in the PRC legal system and exchange rate fluctuations[10](index=10&type=chunk)[13](index=13&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[206](index=206&type=chunk)[209](index=209&type=chunk) [PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements for Wetouch Technology Inc. and its subsidiaries, along with management's discussion and analysis - The financial information includes unaudited condensed consolidated balance sheets, statements of income and comprehensive loss, statements of changes in stockholders' equity, and statements of cash flows[15](index=15&type=chunk) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section provides unaudited condensed consolidated financial statements, including balance sheets, income statements, and cash flow statements, with detailed notes [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$123.1 million** as of March 31, 2024, while total liabilities significantly decreased to **$2.6 million**, driven by debt repayment Condensed Consolidated Balance Sheet Highlights | Metric | March 31, 2024 (USD) | December 31, 2023 (USD) | Change (USD) | | :-------------------------------- | :------------------- | :-------------------- | :----------- | | Total Assets | $123,147,198 | $119,641,398 | $3,505,800 | | Total Current Assets | $110,035,893 | $106,781,535 | $3,254,358 | | Cash | $94,796,450 | $98,040,554 | $(3,244,104) | | Accounts Receivable | $10,937,840 | $7,455,252 | $3,482,588 | | Prepaid Expenses and Other Current Assets | $4,116,860 | $1,063,627 | $3,053,233 | | Total Liabilities | $2,607,957 | $6,720,788 | $(4,112,831) | | Total Current Liabilities | $2,237,407 | $6,342,417 | $(4,105,010) | | Convertible Promissory Notes Payable | $- | $1,239,126 | $(1,239,126) | | Accrued Expenses and Other Current Liabilities | $626,611 | $3,992,905 | $(3,366,294) | | Total Stockholders' Equity | $120,539,241 | $112,920,610 | $7,618,631 | [Condensed Consolidated Statements of Income and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Loss) Net income decreased significantly to **$0.6 million** in Q1 2024 from **$2.8 million** in Q1 2023, due to increased cost of revenues and interest expenses Condensed Consolidated Statements of Income and Comprehensive Loss Highlights | Metric | 3 Months Ended March 31, 2024 (USD) | 3 Months Ended March 31, 2023 (USD) | Change (USD) | Change (%) | | :------------------------------------ | :---------------------------------- | :---------------------------------- | :----------- | :--------- | | Revenues | $14,877,259 | $13,433,461 | $1,443,798 | 10.7% | | Cost of Revenues | $(11,539,301) | $(7,394,661) | $(4,144,640) | 56.1% | | Gross Profit | $3,337,958 | $6,038,800 | $(2,700,842) | (44.7)% | | Total Operating Expenses | $(1,033,054) | $(1,738,346) | $705,292 | (40.6)% | | Income From Operations | $2,304,904 | $4,300,454 | $(1,995,550) | (46.4)% | | Total Other Expenses | $(1,084,186) | $(101,806) | $(982,380) | 965.0% | | Interest Expense | $(1,169,974) | $(33,399) | $(1,136,575) | 3403.8% | | Income Before Income Tax Expense | $1,220,718 | $4,198,648 | $(2,977,930) | (70.9)% | | Net Income | $558,870 | $2,793,249 | $(2,234,379) | (80.0)% | | Basic EPS | $0.04 | $0.35 | $(0.31) | (88.6)% | | Diluted EPS | $0.04 | $0.35 | $(0.31) | (88.6)% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Total stockholders' equity increased to **$120.5 million** as of March 31, 2024, primarily from a public offering and net income, offset by currency adjustments Condensed Consolidated Statements of Changes in Stockholders' Equity Highlights | Metric | March 31, 2024 (USD) | December 31, 2023 (USD) | Change (USD) | | :------------------------------------ | :------------------- | :-------------------- | :----------- | | Total Stockholders' Equity | $120,539,241 | $112,920,610 | $7,618,631 | | Common Stock (Shares) | 11,931,534 | 9,732,948 | 2,198,586 | | Common Stock (Amount) | $11,932 | $9,733 | $2,199 | | Additional Paid-in Capital | $52,501,680 | $43,514,125 | $8,987,555 | | Retained Earnings | $70,035,962 | $69,477,092 | $558,870 | | Accumulated Other Comprehensive Loss | $(9,205,425) | $(7,275,432) | $(1,929,993) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by **$3.2 million** in Q1 2024, with **$9.2 million** used in operations, partially offset by **$7.5 million** from financing activities Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | 3 Months Ended March 31, 2024 (USD) | 3 Months Ended March 31, 2023 (USD) | | :------------------------------------------ | :---------------------------------- | :---------------------------------- | | Net cash (used in) provided by operating activities | $(9,217,544) | $2,716,539 | | Net cash used in investing activities | $(111,289) | $- | | Net cash provided by financing activities | $7,506,140 | $40,051,735 | | Effect of changes of foreign exchange rates on cash | $(1,421,411) | $(760,531) | | Net (decrease) increase in cash | $(3,244,104) | $42,007,743 | | Cash, beginning of period | $98,040,554 | $51,250,505 | | Cash, end of period | $94,796,450 | $93,258,248 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section details the company's business, accounting policies, and specific financial line items, including corporate structure changes and revenue segmentation [NOTE 1 — BUSINESS DESCRIPTION](index=11&type=section&id=NOTE%201%20%E2%80%94%20BUSINESS%20DESCRIPTION) Wetouch Technology Inc. specializes in touchscreen displays for various industries, with Sichuan Wetouch deconsolidated in March 2023 due to a government-directed relocation - Wetouch Technology Inc. acquired BVI Wetouch through a reverse merger in October 2020, making BVI Wetouch a wholly-owned subsidiary[26](index=26&type=chunk) - The company's primary business is the research, development, manufacture, and distribution of touchscreen displays for financial terminals, automotive, POS, gaming, medical, and HMI industries[27](index=27&type=chunk) - Sichuan Wetouch was deconsolidated on March 30, 2023, following a government-directed relocation and its operations being taken over by Sichuan Vtouch[32](index=32&type=chunk)[33](index=33&type=chunk)[37](index=37&type=chunk) [NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=12&type=section&id=NOTE%202%20%E2%80%94%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Financial statements adhere to U.S. GAAP, with Sichuan Wetouch deconsolidated in March 2023, and property, plant and equipment depreciation revised - Financial statements are prepared under U.S. GAAP, relying on management estimates for various financial items[35](index=35&type=chunk)[39](index=39&type=chunk) - Sichuan Wetouch was deconsolidated on March 30, 2023, due to loss of operational control, resulting in no gain or loss from the disposal[37](index=37&type=chunk)[38](index=38&type=chunk) - Property, plant and equipment are stated at cost less accumulated depreciation, with construction in progress capitalized and expected to be completed by Q1 2025[41](index=41&type=chunk)[42](index=42&type=chunk) [NOTE 3 — ACCOUNTS RECEIVABLE](index=14&type=section&id=NOTE%203%20%E2%80%94%20ACCOUNTS%20RECEIVABLE) Accounts receivable increased to **$10.9 million** as of March 31, 2024, from **$7.5 million** at December 31, 2023, primarily from product sales Accounts Receivable | Metric | March 31, 2024 (USD) | December 31, 2023 (USD) | | :------------------ | :------------------- | :-------------------- | | Accounts receivable | $10,937,840 | $7,455,252 | [NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS](index=14&type=section&id=NOTE%204%20%E2%80%94%20PREPAID%20EXPENSES%20AND%20OTHER%20CURRENT%20ASSETS) Prepaid expenses and other current assets significantly increased to **$4.1 million** as of March 31, 2024, driven by new consulting and market research fees Prepaid Expenses and Other Current Assets | Metric | March 31, 2024 (USD) | December 31, 2023 (USD) | | :-------------------------------- | :------------------- | :-------------------- | | Prepaid expenses and other current assets | $4,116,860 | $1,063,627 | | Prepaid consulting service fees | $2,138,482 | $- | | Prepaid market research fees | $955,000 | $- | | Prepayment for land use right | $543,638 | $537,998 | - The company advanced **$955,000** in market research fees to two individuals for overseas market research, bearing **3.45%** interest and due February 28, 2025[45](index=45&type=chunk) [NOTE 5 — PROPERTY, PLANT AND EQUIPMENT, NET](index=15&type=section&id=NOTE%205%20%E2%80%94%20PROPERTY%2C%20PLANT%20AND%20EQUIPMENT%2C%20NET) Net property, plant and equipment slightly decreased to **$12.75 million** as of March 31, 2024, with construction in progress forming the majority Property, Plant and Equipment, Net | Metric | March 31, 2024 (USD) | December 31, 2023 (USD) | | :-------------------------------- | :------------------- | :-------------------- | | Property, plant and equipment, net | $12,753,915 | $12,859,863 | | Construction in progress | $12,722,820 | $12,825,896 | | Accumulated depreciation | $(25,264) | $(23,348) | - Depreciation expense for the three months ended March 31, 2024, was **$2,316**[46](index=46&type=chunk) - The company has a construction commitment of **RMB5.0 million** (equivalent to **$0.7 million**) as of March 31, 2024[49](index=49&type=chunk) [NOTE 6 — INCOME TAXES](index=16&type=section&id=NOTE%206%20%E2%80%94%20INCOME%20TAXES) The effective income tax rate decreased to **25.4%** in Q1 2024 from **33.5%** in Q1 2023, reflecting varying tax rates across entities Effective Income Tax Rates | Period | Effective Income Tax Rate | | :-------------------------------- | :------------------------ | | Three Months Ended March 31, 2024 | 25.4% | | Three Months Ended March 31, 2023 | 33.5% | - Sichuan Vtouch is subject to a **25%** income tax rate in the PRC[55](index=55&type=chunk) [NOTE 7 — ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=17&type=section&id=NOTE%207%20%E2%80%94%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses and other current liabilities significantly decreased to **$0.63 million** as of March 31, 2024, due to full payment of various accrued fees Accrued Expenses and Other Current Liabilities | Metric | March 31, 2024 (USD) | December 31, 2023 (USD) | | :------------------------------------ | :------------------- | :-------------------- | | Accrued expenses and other current liabilities | $626,611 | $3,992,905 | | Accrued private placement agent fees | $- | $1,200,000 | | Accrued consulting fees | $- | $1,370,972 | | Accrued litigation charges | $- | $45,828 | - The company made full payments for accrued private placement agent fees and accrued consulting fees in February 2024[59](index=59&type=chunk) [NOTE 8 — CONVERTIBLE PROMISSORY NOTES PAYABLE](index=18&type=section&id=NOTE%208%20%E2%80%94%20CONVERTIBLE%20PROMISSORY%20NOTES%20PAYABLE) The company fully repaid **$2.59 million** in convertible promissory notes in February 2024, leading to a significant increase in interest expenses due to default charges - The company fully repaid **$2,586,960** for the remaining five outstanding convertible promissory notes on February 23, 2024, including **$1,400,750** in principal and **$1,186,210** in accrued interest and default charges[69](index=69&type=chunk) Interest Expenses from Convertible Promissory Notes | Period | Interest Expenses (USD) | | :-------------------------------- | :---------------------- | | Three Months Ended March 31, 2024 | $1,169,974 | | Three Months Ended March 31, 2023 | $33,399 | - One lender exercised Note Warrants cashlessly for **2,725 shares** of common stock during the three months ended March 31, 2024[78](index=78&type=chunk) [NOTE 9 — STOCKHOLDERS' EQUITY](index=20&type=section&id=NOTE%209%20%E2%80%94%20STOCKHOLDERS%27%20EQUITY) Total stockholders' equity increased to **$120.5 million** as of March 31, 2024, following a public offering that generated **$10.8 million** in gross proceeds - On February 23, 2024, the company closed a public offering of **2,160,000 shares** at **$5.00 per share**, generating **$10.8 million** in gross proceeds[85](index=85&type=chunk)[89](index=89&type=chunk) - Issuance costs of **$1,810,246** were charged to additional paid-in capital during the three months ended March 31, 2024[90](index=90&type=chunk) - A 1-for-20 reverse stock split was approved on July 16, 2023, and became effective on September 12, 2023[88](index=88&type=chunk) [NOTE 10 — SHARE BASED COMPENSATION](index=22&type=section&id=NOTE%2010%20%E2%80%94%20SHARE%20BASED%20COMPENSATION) No share-based compensation expense was recognized in Q1 2024 or Q1 2023, with warrants for **35,861 shares** exercised during Q1 2024 - No share-based compensation expense was recognized for the three months ended March 31, 2024, or 2023[96](index=96&type=chunk) - Warrants for **35,861 shares** of common stock related to legal and consulting services were exercised during the three months ended March 31, 2024, and no such warrants remain outstanding[96](index=96&type=chunk) [NOTE 11 — RISKS AND UNCERTAINTIES](index=23&type=section&id=NOTE%2011%20%E2%80%94%20RISKS%20AND%20UNCERTAINTIES) The company faces credit, interest rate, and significant currency risks, alongside high revenue concentration with top ten customers accounting for **98.8%** of Q1 2024 revenue - The company faces significant credit risk from accounts receivable and currency risk due to RMB-denominated transactions and assets[98](index=98&type=chunk)[101](index=101&type=chunk) - Revenue concentration is high, with the top ten customers accounting for **98.8%** of total revenue for the three months ended March 31, 2024[103](index=103&type=chunk) - Raw material purchases are concentrated, with three suppliers accounting for approximately **42.4%** of total raw material purchases in Q1 2024[104](index=104&type=chunk) [NOTE 12 — COMMITMENTS AND CONTINGENCIES](index=24&type=section&id=NOTE%2012%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) The company faces potential CSRC fines for untimely Nasdaq listing filings and is involved in two ongoing legal cases, with a construction commitment of **$0.7 million** - The company failed to timely complete CSRC filing procedures for its Nasdaq listing, potentially facing fines of **RMB 1 million** to **RMB 10 million**[106](index=106&type=chunk)[107](index=107&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - All prior material legal proceedings against the company and its former chairman have been settled and discharged[109](index=109&type=chunk) - Two ongoing legal cases involve a claim for **$425,540** for unsettled accounts payable and fund interests, and another for a **$233,310** debt payable where Sichuan Vtouch was ordered joint liability[129](index=129&type=chunk)[132](index=132&type=chunk) - As of March 31, 2024, the company has a construction commitment of **RMB5.0 million** (equivalent to **$0.7 million**)[134](index=134&type=chunk)[185](index=185&type=chunk) [NOTE 13 — REVENUES](index=28&type=section&id=NOTE%2013%20%E2%80%94%20REVENUES) Total revenues increased by **11.2%** to **$14.88 million** for the three months ended March 31, 2024, with overseas sales growing significantly by **34.1%** Geographical Revenue Breakdown | Region | 3 Months Ended March 31, 2024 (USD) | 3 Months Ended March 31, 2023 (USD) | Change (USD) | Change (%) | | :-------------------- | :---------------------------------- | :---------------------------------- | :----------- | :--------- | | Sales in PRC | $9,374,473 | $9,287,566 | $86,907 | 0.9% | | Sales in Overseas | $5,502,786 | $4,145,895 | $1,356,891 | 32.7% | | Total Revenues | $14,877,259 | $13,433,461 | $1,443,798 | 10.7% | [NOTE 14 — SUBSEQUENT EVENT](index=28&type=section&id=NOTE%2014%20%E2%80%94%20SUBSEQUENT%20EVENT) The company's common stock began trading on Nasdaq on February 21, 2024, but it failed to timely complete CSRC filing procedures for its overseas listing - The company's common stock began trading on the Nasdaq Capital Market on February 21, 2024[136](index=136&type=chunk) - The company failed to timely complete CSRC filing procedures for its overseas listing, and management is monitoring potential penalties[136](index=136&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's Q1 2024 financial performance, covering revenues, gross profit, operating expenses, net income, liquidity, and capital resources - The company is engaged in the research, development, manufacturing, sales, and servicing of medium to large-sized projected capacitive touchscreens for various specialized industries[140](index=140&type=chunk) - The company is actively constructing new production facilities and office buildings in Chengdu, China, with building construction estimated to finish by the end of 2024 and production to commence in Q3 2025[142](index=142&type=chunk) [Overview](index=29&type=section&id=Overview) Wetouch Technology Inc. specializes in projected capacitive touchscreens and is expanding production with new facilities in Chengdu, expected to be completed by end of 2024 - Wetouch specializes in medium to large-sized projected capacitive touchscreens (**7.0 to 42 inches**) for various industries, including automotive, industrial HMI, and medical[140](index=140&type=chunk) - The company is constructing new production facilities and office buildings in Chengdu, China, with building construction expected to finish by the end of 2024 and production to commence in Q3 2025[142](index=142&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q1 2024 revenues increased by **11.2%** to **$14.9 million**, but gross profit decreased by **45.0%** and net income fell by **78.6%** due to higher costs and interest Q1 2024 vs Q1 2023 Financial Highlights | Metric | Q1 2024 (USD Million) | Q1 2023 (USD Million) | Change (%) | | :---------------------- | :-------------------- | :-------------------- | :--------- | | Revenues | $14.9 | $13.4 | 11.2% | | Gross Profit | $3.3 | $6.0 | (45.0)% | | Gross Profit Margin | 22.4% | 45.0% | (22.6)% | | Net Income | $0.6 | $2.8 | (78.6)% | | Total Volume Shipped | 681,370 units | 635,276 units | 7.3% | [Revenues](index=30&type=section&id=Revenues) Total revenues for Q1 2024 increased by **11.2%** to **$14.9 million**, driven by higher sales volume and average selling price, with significant overseas growth Revenue Performance (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change | Change (%) | | :-------------------------------- | :---------- | :---------- | :------- | :--------- | | Total Revenues (USD Million) | $14.9 | $13.4 | $1.5 | 11.2% | | Total Units Sold | 681,370 | 635,276 | 46,094 | 7.3% | | Revenue from PRC (USD Million) | $9.4 | $9.3 | $0.1 | 1.1% | | Revenue from Overseas (USD Million) | $5.5 | $4.1 | $1.4 | 34.1% | - The increase in revenue was driven by a **7.3%** increase in sales volume and an **8.5%** increase in average selling price, partially offset by a **5.1%** negative impact from RMB depreciation[146](index=146&type=chunk) - The company is shifting its production mix towards higher-end products like automotive, medical, gaming, and industrial control computer touchscreens due to greater growth potential and stronger demand[153](index=153&type=chunk) [Gross Profit and Gross Profit Margin](index=32&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin) Gross profit decreased by **45.0%** to **$3.3 million** in Q1 2024, with margin falling to **22.4%** due to a **56.7%** increase in cost of revenues Gross Profit and Margin (Q1 2024 vs Q1 2023) | Metric | Q1 2024 | Q1 2023 | Change (USD) | Change (%) | | :---------------- | :-------- | :-------- | :----------- | :--------- | | Gross Profit | $3.3 million | $6.0 million | $(2.7) million | (45.0)% | | Gross Profit Margin | 22.4% | 45.0% | (22.6)% | - | - The decrease in gross profit margin was primarily due to a **56.7%** increase in cost of revenues, driven by a **66.9%** rise in raw material costs[154](index=154&type=chunk) - Raw material cost increases were attributed to U.S. export controls on advanced computing and semiconductor manufacturing to China, and production under capacity during the Chinese Spring Festival[154](index=154&type=chunk) [Selling Expenses](index=32&type=section&id=Selling%20Expenses) Selling expenses increased significantly by **806.8%** to **$459,792** in Q1 2024, primarily due to increased traveling and logistic expenses for marketing Selling Expenses (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD) | Q1 2023 (USD) | Change (USD) | Change (%) | | :------------------------ | :------------ | :------------ | :----------- | :--------- | | Selling Expenses | $459,792 | $50,705 | $409,087 | 806.8% | | As a percentage of revenues | 3.4% | 0.0% | 3.4% | - | - The increase in selling expenses was primarily due to a **$0.3 million** increase in traveling expenses and a **$0.1 million** increase in logistic expenses for marketing[156](index=156&type=chunk) [General and Administrative Expenses](index=33&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased by **70.6%** to **$0.5 million** in Q1 2024, mainly due to the full payment of a **$1.2 million** accrued private placement agent fee General and Administrative Expenses (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD Million) | Q1 2023 (USD Million) | Change (USD Million) | Change (%) | | :-------------------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | General and Administrative Expenses | $0.5 | $1.7 | $(1.2) | (70.6)% | | As a percentage of revenues | 3.4% | 12.7% | (9.3)% | - | - The decrease was primarily due to the full payment of an accrued **$1.2 million** private placement agent fee in February 2024, which was accrued in Q1 2023[158](index=158&type=chunk) [Research and Development Expenses](index=34&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses increased by **104.6%** to **$42,738** in Q1 2024, primarily due to an increase in material consumption Research and Development Expenses (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD) | Q1 2023 (USD) | Change (USD) | Change (%) | | :------------------------------ | :------------ | :------------ | :----------- | :--------- | | Research and Development Expenses | $42,738 | $20,885 | $21,853 | 104.6% | - The increase was due to an increase in material consumption[159](index=159&type=chunk) [Operating Income](index=34&type=section&id=Operating%20Income) Operating income decreased by **46.5%** to **$2.3 million** in Q1 2024, mainly due to lower gross margin and higher selling expenses Operating Income (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD Million) | Q1 2023 (USD Million) | Change (USD Million) | Change (%) | | :--------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Operating Income | $2.3 | $4.3 | $(2.0) | (46.5)% | - The decrease was primarily due to lower gross margin and higher selling expenses, partially offset by lower general and administrative expenses[160](index=160&type=chunk) [Gain (loss) on Changes in Fair Value of Common Stock Purchase Warrants](index=34&type=section&id=Gain%20%28loss%29%20on%20Changes%20in%20Fair%20Value%20of%20Common%20Stock%20Purchase%20Warrants) The company recorded a gain of **$7,821** on changes in fair value of common stock purchase warrants in Q1 2024, a significant improvement from a prior year loss Gain (Loss) on Changes in Fair Value of Common Stock Purchase Warrants (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD) | Q1 2023 (USD) | Change (USD) | Change (%) | | :---------------------------------------------------- | :------------ | :------------ | :----------- | :--------- | | Gain (loss) on changes in fair value of common stock purchase warrants | $7,821 | $(97,602) | $105,423 | (108.0)% | [Interest Expenses](index=34&type=section&id=Interest%20Expenses) Interest expenses surged to **$1.17 million** in Q1 2024, primarily due to **$1.15 million** in default interest charges from convertible promissory note repayments Interest Expenses (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD Million) | Q1 2023 (USD Million) | Change (USD Million) | Change (%) | | :---------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Interest Expenses | $1.2 | $0.0 | $1.2 | N/A | - The significant increase in interest expenses was mainly due to **$1,145,995** in default interest charges upon the repayment of convertible promissory notes[163](index=163&type=chunk) [Income Taxes](index=34&type=section&id=Income%20Taxes) Income tax expense decreased by **57.1%** to **$0.6 million** in Q1 2024, reflecting a lower effective tax rate of **25.4%** due to reduced income before taxes Income Taxes (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD Million) | Q1 2023 (USD Million) | Change (USD Million) | Change (%) | | :----------------------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Income before Income Taxes | $1.2 | $4.2 | $(3.0) | (71.4)% | | Income Tax (Expense) | $(0.6) | $(1.4) | $0.8 | (57.1)% | | Effective income tax rate | 25.4% | 33.5% | (8.1)% | - | [Net Income](index=34&type=section&id=Net%20Income) Net income for Q1 2024 significantly decreased to **$0.6 million** from **$2.8 million** in Q1 2023, driven by lower gross margin and increased expenses Net Income (Q1 2024 vs Q1 2023) | Metric | Q1 2024 (USD Million) | Q1 2023 (USD Million) | Change (USD Million) | Change (%) | | :--------- | :-------------------- | :-------------------- | :------------------- | :--------- | | Net Income | $0.6 | $2.8 | $(2.2) | (78.6)% | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2024, the company had **$94.8 million** in cash and **$110.0 million** in current assets, with **$9.2 million** cash used in operating activities Liquidity and Capital Resources Highlights | Metric | March 31, 2024 (USD Million) | December 31, 2023 (USD Million) | | :-------------------------------- | :--------------------------- | :--------------------------- | | Cash and Cash Equivalents | $94.8 | $98.0 | | Total Current Assets | $110.0 | $106.8 | | Total Current Liabilities | $2.2 | $6.3 | - Net cash used in operating activities was **$9.2 million** in Q1 2024, a significant shift from **$2.7 million** provided in Q1 2023[171](index=171&type=chunk) - Financing activities provided **$7.5 million** in Q1 2024, mainly from the 2024 Public Offering, compared to **$40.0 million** in Q1 2023 from a private placement[174](index=174&type=chunk)[175](index=175&type=chunk) - Days Sales Outstanding (DSO) decreased to **56 days** for Q1 2024 from **77 days** for the year ended December 31, 2023[176](index=176&type=chunk) [Operating Activities](index=36&type=section&id=Operating%20Activities) Net cash used in operating activities was **$9.2 million** for Q1 2024, a significant shift from **$2.7 million** provided in Q1 2023, due to decreased net income and increased expenses Net Cash Flow from Operating Activities | Period | Net Cash (Used in) Provided by Operating Activities (USD) | | :-------------------------------- | :------------------------------------------ | | Three Months Ended March 31, 2024 | $(9,217,544) | | Three Months Ended March 31, 2023 | $2,716,539 | - The change was driven by a **$2.2 million** decrease in net income, a **$0.1 million** decrease in gain on fair value of warrants, increases in inventories and prepaid assets, and decreases in various liabilities[171](index=171&type=chunk) [Investing Activities](index=36&type=section&id=Investing%20Activities) Net cash used in investing activities for Q1 2024 was **$0.1 million**, solely for property, plant, and equipment purchases, with no activity in the prior year Net Cash Flow from Investing Activities | Period | Net Cash Used in Investing Activities (USD) | | :-------------------------------- | :-------------------------------- |\ | Three Months Ended March 31, 2024 | $(111,289) | | Three Months Ended March 31, 2023 | $- | - The cash outflow was for the purchase of property, plant, and equipment[172](index=172&type=chunk) [Financing Activities](index=36&type=section&id=Financing%20Activities) Net cash provided by financing activities was **$7.5 million** for Q1 2024, primarily from a public offering, contrasting with **$40.0 million** from a private placement in Q1 2023 Net Cash Flow from Financing Activities | Period | Net Cash Provided by Financing Activities (USD) | | :-------------------------------- | :-------------------------------- |\ | Three Months Ended March 31, 2024 | $7,506,140 | | Three Months Ended March 31, 2023 | $40,051,735 | - Q1 2024 financing cash flow included **$9.0 million** from the 2024 Public Offering, offset by **$1.4 million** in convertible promissory note repayments[174](index=174&type=chunk) - Q1 2023 financing cash flow included **$40.0 million** from a private placement[175](index=175&type=chunk) [Holding Company Structure](index=38&type=section&id=Holding%20Company%20Structure) No changes occurred in the company's holding company structure during the three months ended March 31, 2024 - No changes occurred in the company's holding company structure during Q1 2024[180](index=180&type=chunk) [Cash and Other Assets Transfers between the Holding Company and Its Subsidiaries](index=38&type=section&id=Cash%20and%20Other%20Assets%20Transfers%20between%20the%20Holding%20Company%20and%20Its%20Subsidiaries) For details on cash and other asset transfers, readers are directed to the 2023 Form 10-K, indicating no new material information for the current quarter - For details on cash and other asset transfers, refer to the 2023 Form 10-K[181](index=181&type=chunk) [Commitments and Contingencies](index=38&type=section&id=Commitments%20and%20Contingencies) The company faces potential CSRC fines for untimely Nasdaq listing filings and has a construction commitment of **RMB5.0 million** (**$0.7 million**) - The company failed to timely complete CSRC filing procedures for its Nasdaq listing, potentially facing fines of **RMB 1 million** to **RMB 10 million**[182](index=182&type=chunk)[183](index=183&type=chunk) - As of March 31, 2024, the company has a construction commitment of **RMB5.0 million** (equivalent to **$0.7 million**)[185](index=185&type=chunk) [Off Balance Sheet Arrangements](index=38&type=section&id=Off%20Balance%20Sheet%20Arrangements) The company has no off-balance sheet arrangements - The company has no off-balance sheet arrangements[186](index=186&type=chunk) [Critical Accounting Policies](index=38&type=section&id=Critical%20Accounting%20Policies) No material changes to critical accounting estimates have occurred since the 2023 Form 10-K, with financial statement preparation relying on management judgments and estimates - No material changes to critical accounting estimates have occurred since the 2023 Form 10-K[187](index=187&type=chunk) - Financial statement preparation involves management judgments, assumptions, and estimates in conformity with GAAP[187](index=187&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable for smaller reporting companies - This item is not applicable for smaller reporting companies[188](index=188&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's disclosure controls were ineffective as of March 31, 2024, due to material weaknesses, with management implementing remediation plans - Disclosure controls and procedures were not effective as of March 31, 2024, due to identified material weaknesses[190](index=190&type=chunk) - Material weaknesses include inadequate segregation of duties, lack of formal policies and procedures, and insufficient risk assessment procedures on internal controls[193](index=193&type=chunk)[197](index=197&type=chunk) - Remediation plans include engaging a third-party financial consulting firm, identifying skill gaps, developing internal control policies, and hiring an assistant financial controller[194](index=194&type=chunk)[198](index=198&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective as of March 31, 2024, due to a material weakness, though management believes financial statements are fairly presented - Disclosure controls and procedures were deemed ineffective as of March 31, 2024, due to a material weakness[190](index=190&type=chunk) - Despite the material weakness, management believes the unaudited condensed consolidated financial statements fairly represent the company's financial condition and results[191](index=191&type=chunk) [Material Weakness](index=40&type=section&id=Material%20Weakness) Material weaknesses in internal control over financial reporting include inadequate segregation of duties, lack of formal policies, and insufficient risk assessment - Material weaknesses in internal control over financial reporting were identified, including inadequate segregation of duties, lack of formal policies, and insufficient risk assessment[192](index=192&type=chunk)[193](index=193&type=chunk)[197](index=197&type=chunk) - These deficiencies create a reasonable possibility that material misstatements in financial statements will not be prevented or detected on a timely basis[192](index=192&type=chunk) [Management's Plan to Remediate the Material Weakness](index=40&type=section&id=Management%27s%20Plan%20to%20Remediate%20the%20Material%20Weakness) Management is implementing remediation plans, including engaging financial consulting, identifying skill gaps, developing policies, and hiring an assistant financial controller - Management is implementing remediation plans, including engaging a third-party financial consulting firm and identifying skill gaps[194](index=194&type=chunk)[198](index=198&type=chunk) - Further steps include developing and monitoring internal control policies and procedures, and hiring an assistant financial controller familiar with US GAAP and English[198](index=198&type=chunk) - The company acknowledges that remediation will take time and cannot guarantee immediate success or effectiveness of internal controls[195](index=195&type=chunk) [Changes in Internal Control over Financial Reporting](index=40&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during Q1 2024, apart from ongoing remediation efforts for the identified material weakness - No material changes in internal control over financial reporting occurred during Q1 2024, apart from ongoing remediation efforts for the identified material weakness[197](index=197&type=chunk) [PART II - OTHER INFORMATION](index=41&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers non-financial information, including legal proceedings, updated risk factors, equity sales, and other regulatory disclosures - This section addresses legal proceedings, risk factors, equity sales, and other regulatory disclosures[199](index=199&type=chunk)[200](index=200&type=chunk)[202](index=202&type=chunk)[210](index=210&type=chunk)[217](index=217&type=chunk) [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) The company may face adverse impacts from legal actions in the ordinary course of business, with further details provided in Note 12 of the financial statements - The company may face legal proceedings in the ordinary course of business, which can adversely impact operations[200](index=200&type=chunk) - Additional information on legal proceedings is provided in Note 12 of the financial statements[201](index=201&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) New and updated risk factors include potential expenses and delays from auditor dismissal, inability to collect judgments against the former auditor, and possible Chinese government fines for filing failures - Dismissal of BF Borgers as auditor may cause significant expenses, delays in financings/SEC filings, and affect stock price and market access[203](index=203&type=chunk) - There is a risk of being unable to exercise effective remedies or collect judgments against BF Borgers due to their permanent bar from practicing before the SEC[205](index=205&type=chunk) - The company may face fines from the Chinese government (**RMB 1 million** to **RMB 10 million**) for failing to timely complete CSRC filing obligations for its overseas listing, with substantial uncertainties in regulation interpretation[206](index=206&type=chunk)[209](index=209&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not undertake any unregistered sales of equity securities or repurchase any shares of its common stock during the quarter ended March 31, 2024 - No unregistered sales of equity securities occurred during Q1 2024[210](index=210&type=chunk) - The company did not repurchase any shares of its common stock during Q1 2024[211](index=211&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the quarter ended March 31, 2024 - No defaults upon senior securities were reported[212](index=212&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[214](index=214&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company - This item is not applicable[215](index=215&type=chunk) [Item 6. Exhibits](index=44&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2)[217](index=217&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase, and Cover Page Interactive Data File) are filed as exhibits[217](index=217&type=chunk) [Signatures](index=45&type=section&id=Signatures) The Quarterly Report was signed on June 14, 2024, by Zongyi Lian, Chief Executive Officer and President, and Yuhua Huang, Chief Financial Officer - The Quarterly Report was signed by Zongyi Lian (CEO and President) and Yuhua Huang (CFO) on June 14, 2024[220](index=220&type=chunk)

Financial Performance - Revenues for the year ended December 31, 2023, were $39.7 million, an increase of 4.7% from $37.9 million in 2022[433] - Gross profit was $17.2 million, reflecting a 22.8% increase from $14.0 million in the previous year[443] - Net income decreased to $8.3 million, down 4.6% from $8.7 million for the year ended December 31, 2022[443] - Total revenues for the year ended December 31, 2023, increased to $39,705,939, representing a 4.7% growth from $37,923,112 in 2022[445] Sales and Market Performance - Total volume shipped was 1,967,316 units, an increase of 2.6% from 1,916,976 units in 2022[433] - Revenue from the PRC domestic market increased by $1.2 million or 4.6%, driven by a 2.7% increase in sales volume and a 6.8% rise in average sales price[435] - Revenue from sales to customers in the PRC was $27,646,722, accounting for 69.6% of total revenues, with a 4.6% increase from $26,440,376 in 2022[445] - Revenue from overseas customers reached $12,059,217, which is 30.4% of total revenues, marking a 5.0% increase from $11,482,736 in 2022[445] - Total units sold in 2023 were 1,967,316, a 2.6% increase from 1,916,976 units sold in 2022[445] - Units sold to customers in the PRC were 1,330,013, maintaining a 67.6% share of total units sold, with a 2.7% increase from 1,295,097 units in 2022[445] - Units sold to overseas customers totaled 637,303, representing 32.4% of total units sold, with a 2.5% increase from 621,879 units in 2022[445] - The increase in sales price in RMB was 6.8%, driven by marketing initiatives for higher-end products in Southwest and East China[447] Profitability and Margins - The gross profit margin improved to 43.3%, compared to 37.0% for the year ended December 31, 2022[433] Exchange Rate Impact - The company experienced a 5.2% negative impact from exchange rate fluctuations due to the depreciation of RMB against US dollars[444] Corporate Actions and Future Outlook - A reverse stock split at a ratio of 1-for-20 was approved and took effect on September 12, 2023[429] - The company does not anticipate declaring or paying cash dividends in the foreseeable future, focusing instead on business development and expansion[424] - The aggregate market value of the common stock held by non-affiliates as of June 30, 2023, was $77 million[450] - The company is classified as an emerging growth company, indicating potential for future growth and investment opportunities[450] Legal and Operational Risks - Legal cases involving various amounts, including a debt payable of RMB 1,656,480 (approximately $233,310), are ongoing and may impact financial results[420][421] - The company faces risks related to reliance on key executives and potential disruptions from third-party suppliers, which could impact operations and financial performance[463][464]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the Quarterly Period Ended September 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission File Number: 000-56215 WETOUCH TECHNOLOGY INC. (Exact name of registrant as specified in its charter) | Nevada | 20-4080330 | | --- | --- | | (State or other jurisdiction of | ...

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended June 30, 2023 [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Wetouch Technology Inc. and its subsidiaries for the period ended June 30, 2023, prepared in accordance with U.S. GAAP [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity as of June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2023 (US$) | December 31, 2022 (US$) | Change (US$) | | :--- | :--- | :--- | :--- | | Cash | $92,214,861 | $51,250,505 | +$40,964,356 | | Accounts receivable, net | $13,963,453 | $9,057,741 | +$4,905,712 | | Total Current Assets | $107,404,114 | $62,182,142 | +$45,221,972 | | Total Assets | $117,789,704 | $73,105,752 | +$44,683,952 | | Total Current Liabilities | $8,163,038 | $4,014,608 | +$4,148,430 | | Total Liabilities | $8,375,212 | $4,271,565 | +$4,103,647 | | Total Stockholders' Equity | $109,414,492 | $68,834,187 | +$40,580,305 | [Condensed Consolidated Statements of Income and Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) This statement details the company's revenues, expenses, and net income for the three and six months ended June 30, 2023 and 2022 Income Statement Highlights (Three-Month Period Ended June 30) | Metric | 2023 (US$) | 2022 (US$) | Change (US$) | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenues | $12,774,432 | $11,752,934 | +$1,021,498 | +8.7% | | Gross Profit | $6,253,417 | $5,050,999 | +$1,202,418 | +23.8% | | Net Income | $4,672,983 | $2,930,705 | +$1,742,278 | +59.4% | | Basic EPS | $0.02 | $0.09 | -$0.07 | -77.8% | | Diluted EPS | $0.02 | $0.09 | -$0.07 | -77.8% | Income Statement Highlights (Six-Month Period Ended June 30) | Metric | 2023 (US$) | 2022 (US$) | Change (US$) | Change % | | :--- | :--- | :--- | :--- | :--- | | Revenues | $26,207,893 | $23,747,481 | +$2,460,412 | +10.4% | | Gross Profit | $12,292,217 | $9,361,754 | +$2,930,463 | +31.3% | | Net Income | $7,466,232 | $5,493,218 | +$1,973,014 | +35.9% | | Basic EPS | $0.04 | $0.17 | -$0.13 | -76.5% | | Diluted EPS | $0.04 | $0.17 | -$0.13 | -76.5% | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) This statement outlines the changes in the company's shareholders' equity for the six months ended June 30, 2023 and 2022 - Total stockholders' equity increased from **$68,834,187** as of December 31, 2022, to **$109,414,492** as of June 30, 2023, primarily driven by a **$40,000,000** private placement stock issuance[18](index=18&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk) - **160,000,000 shares** of common stock were issued in a private placement on January 19, 2023, generating **$40,000,000** in proceeds[22](index=22&type=chunk)[88](index=88&type=chunk) - Foreign currency translation adjustment resulted in a loss of **$(6,885,927)** for the six months ended June 30, 2023[23](index=23&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2023 and 2022 Cash Flow Highlights (Six-Month Period Ended June 30) | Cash Flow Activity | 2023 (US$) | 2022 (US$) | Change (US$) | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $6,758,708 | $1,498,745 | +$5,259,963 | | Net cash provided by investing activities | $0 | $0 | $0 | | Net cash provided by financing activities | $40,047,145 | $0 | +$40,047,145 | | Effect of changes of foreign exchange rates on cash | $(5,841,498) | $(2,516,649) | $(3,324,849) | | Net increase in cash | $40,964,356 | $(1,017,904) | +$41,982,260 | | Cash, end of period | $92,214,861 | $45,145,800 | +$47,069,061 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements - Wetouch Technology Inc. is primarily engaged in the research, development, manufacture, and distribution of touchscreen displays, mainly for computer components, to customers in PRC and overseas[31](index=31&type=chunk)[115](index=115&type=chunk) - The company's corporate structure includes BVI Wetouch, HK Wetouch, and Sichuan Vtouch, with Sichuan Wetouch being acquired by an independent third party on March 30, 2023[31](index=31&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk)[115](index=115&type=chunk) Accounts Receivable, Net | Metric | June 30, 2023 (US$) | December 31, 2022 (US$) | | :--- | :--- | :--- | | Accounts receivable, net | $13,963,453 | $9,057,741 | - Prepayments for land use rights and security deposits for a new facility are expected to be reclassified to intangible assets and refunded, respectively, by the end of 2023[47](index=47&type=chunk) - Sichuan Wetouch received **RMB115.2 million ($15.9 million)** in compensation for government-directed relocation and demolition of assets[49](index=49&type=chunk) - The effective income tax rates for the six-month periods ended June 30, 2023 and 2022 were **28.4%** and **28.2%**, respectively[59](index=59&type=chunk)[152](index=152&type=chunk) - Accrued expenses and other current liabilities increased significantly due to a **$1.2 million** accrued underwriting fee related to a private placement[60](index=60&type=chunk)[148](index=148&type=chunk) - The company issued seven convertible promissory notes in 2021, with principal amounts totaling **$1,420,750** as of June 30, 2023, and also issued warrants to purchase **1,800,000 shares** of common stock[64](index=64&type=chunk)[70](index=70&type=chunk)[74](index=74&type=chunk) - A private placement on January 19, 2023, resulted in the sale of **160,000,000 common shares** for **$40,000,000**[88](index=88&type=chunk) Geographical Revenue Breakdown (Six-Month Period Ended June 30) | Region | 2023 (US$) | 2022 (US$) | Change % | | :--- | :--- | :--- | :--- | | Sales in PRC | $18,395,711 | $16,262,309 | +13.1% | | Sales in Overseas | $7,812,182 | $7,485,172 | +4.4% | | Total Revenue | $26,207,893 | $23,747,481 | +10.4% | - A reverse stock split with a ratio of **1-for-20** was authorized by the Board on February 17, 2023, and fixed on July 16, 2023, to be retroactively restated upon implementation[110](index=110&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results for the three and six months ended June 30, 2023, compared to the same periods in 2022 [Forward-Looking Statements](index=23&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to various risks and uncertainties - The report contains forward-looking statements subject to known and unknown risks and uncertainties that may cause actual results to differ materially[8](index=8&type=chunk)[9](index=9&type=chunk)[112](index=112&type=chunk) [Basis of Presentation](index=23&type=section&id=Basis%20of%20Presentation) This section clarifies that the financial discussion is based on unaudited statements prepared under U.S. GAAP - The discussion and analysis are based on unaudited financial statements prepared in accordance with United States generally accepted accounting principles (U.S. GAAP)[113](index=113&type=chunk) [Overview](index=23&type=section&id=Overview) This section provides a general description of Wetouch Technology Inc.'s business, products, and target industries - Wetouch Technology Inc. is engaged in the research, development, manufacturing, sales, and servicing of medium to large sized projected capacitive touchscreens, with products ranging from **7.0 to 42 inches**[115](index=115&type=chunk) - The company's product portfolio includes Glass-Glass (GG), Glass-Film-Film (GFF), Plastic-Glass (PG), and Glass-Film (GF) touch panel structures, used across various industries like financial terminals, automotive, POS, gaming, and medical[115](index=115&type=chunk) [Effects of COVID-19](index=24&type=section&id=Effects%20of%20COVID-19) This section discusses the impact of the COVID-19 pandemic on the company's operations and future uncertainties - The company's PRC subsidiary has resumed normal operations after temporary shutdowns and restrictive policies related to the COVID-19 pandemic[119](index=119&type=chunk) - The extent of future impact from COVID-19 remains uncertain, depending on the pandemic's duration, severity, and macroeconomic factors[119](index=119&type=chunk) [Highlights for the three-month period ended June 30, 2023](index=24&type=section&id=Highlights%20for%20the%20three-month%20period%20ended%20June%2030,%202023) This section summarizes key financial and operational performance metrics for the second quarter of 2023 Q2 2023 Financial Highlights | Metric | Q2 2023 (US$) | Q2 2022 (US$) | Change % | | :--- | :--- | :--- | :--- | | Revenues | $12.8 million | $11.8 million | +8.5% | | Gross profit | $6.3 million | $5.1 million | +23.5% | | Gross profit margin | 49.0% | 43.0% | +6.0 pp | | Net income | $4.7 million | $2.9 million | +62.1% | | Total volume shipped | 590,140 units | 566,875 units | +4.1% | [Results of Operations - Three Months Ended June 30, 2023 Compared to Three Months Ended June 30, 2022](index=25&type=section&id=Results%20of%20Operations%20-%20Three%20Months%20Ended%20June%2030,%202023%20Compared%20to%20Three%20Months%20Ended%20June%2030,%202022) This section analyzes the company's financial performance for the second quarter of 2023 compared to the same period in 2022 [Revenues](index=25&type=section&id=Revenues%20(Three%20Months)) This subsection details the drivers of revenue changes, including sales volume, average selling price, and foreign exchange impacts - Revenues increased by **8.5%** to **$12.8 million**, driven by a **4.1%** increase in sales volume and a **10.4%** increase in average selling price, partially offset by a **6.1%** negative impact from RMB depreciation[121](index=121&type=chunk) - Domestic market revenue grew by **12.3%** due to a **9.3%** increase in sales volume and an **8.8%** increase in average RMB selling price, primarily from higher-end products like POS and industrial control computer touchscreens[123](index=123&type=chunk)[124](index=124&type=chunk) - The company shifted its production mix towards higher-end products such as POS, medical, multi-functional printer, and automotive touchscreens, recognizing greater growth potential and stronger demand[128](index=128&type=chunk) Revenue Breakdown by End Application (Three Months Ended June 30) | Product Category | 2023 Amount (US$) | 2023 % | 2022 Amount (US$) | 2022 % | Change % | | :--- | :--- | :--- | :--- | :--- | :--- | | Automotive Touchscreens | $3,210,054 | 25.1% | $2,904,951 | 24.7% | +10.5% | | Industrial Control Computer Touchscreens | $2,422,606 | 19.0% | $2,344,118 | 20.0% | +3.3% | | POS Touchscreens | $2,278,814 | 17.8% | $2,017,900 | 17.2% | +12.9% | | Medical Touchscreens | $1,888,053 | 14.8% | $1,576,755 | 14.4% | +19.7% | | Gaming Touchscreens | $1,733,135 | 13.6% | $1,803,630 | 15.3% | -3.9% | | Multi-Functional Printer Touchscreens | $1,241,770 | 9.7% | $1,105,671 | 9.4% | +12.3% | [Gross Profit and Gross Profit Margin](index=26&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin%20(Three%20Months)) This subsection explains the changes in gross profit and margin, attributing them to revenue growth and product mix shifts - Gross profit increased by **23.5%** to **$6.3 million**, and gross profit margin rose to **49.0%** from **43.0%** in the prior year, primarily due to increased revenues and a shift towards higher-end products[129](index=129&type=chunk) [General and Administrative Expenses](index=26&type=section&id=General%20and%20Administrative%20Expenses%20(Three%20Months)) This subsection analyzes the decrease in general and administrative expenses for the quarter - General and administrative expenses decreased by **87.2%** to **$56,907**, mainly due to lower salary, wages, and miscellaneous expenses[130](index=130&type=chunk) [Research and Development Expenses](index=27&type=section&id=Research%20and%20Development%20Expenses%20(Three%20Months)) This subsection details the slight decrease in research and development expenses for the quarter - Research and development expenses decreased by **6.1%** to **$20,384**, primarily due to reduced material consumption[132](index=132&type=chunk) [Operating Income](index=27&type=section&id=Operating%20Income%20(Three%20Months)) This subsection explains the significant increase in operating income, driven by higher gross margin and reduced expenses - Operating income increased by **48.8%** to **$6.1 million**, driven by higher gross margin and lower selling and administrative expenses[133](index=133&type=chunk) [Gain on changes in fair value of Common Stock Purchase Warrants](index=27&type=section&id=Gain%20on%20changes%20in%20fair%20value%20of%20Common%20Stock%20Purchase%20Warrants%20(Three%20Months)) This subsection reports the gain recognized from changes in the fair value of common stock purchase warrants - The company recognized a gain of **$0.1 million** on changes in the fair value of common stock purchase warrants for the three months ended June 30, 2023[134](index=134&type=chunk) [Income Taxes](index=27&type=section&id=Income%20Taxes%20(Three%20Months)) This subsection details the effective income tax rate for the three-month period - The effective income tax rate for the three-month period ended June 30, 2023, was **25.0%**, down from **28.3%** in the prior year[135](index=135&type=chunk) [Net Income](index=27&type=section&id=Net%20Income%20(Three%20Months)) This subsection highlights the substantial increase in net income for the second quarter of 2023 - Net income increased by **62.1%** to **$4.7 million** for the second quarter of 2023, compared to **$2.9 million** in the same period of 2022[136](index=136&type=chunk) [Results of Operations - Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022](index=28&type=section&id=Results%20of%20Operations%20-%20Six%20Months%20Ended%20June%2030,%202023%20Compared%20to%20Six%20Months%20Ended%20June%2030,%202022) This section analyzes the company's financial performance for the first half of 2023 compared to the same period in 2022 [Revenues](index=28&type=section&id=Revenues%20(Six%20Months)) This subsection details the drivers of revenue changes, including sales volume, average selling price, and foreign exchange impacts for the six-month period - Revenues increased by **10.5%** to **$26.2 million**, primarily due to a **28.1%** increase in average RMB selling price, partially offset by a **7.9%** decrease in sales volume and a **6.9%** negative impact from RMB depreciation[138](index=138&type=chunk) - Domestic market revenue increased by **13.6%** due to a **13.9%** increase in sales volume and a **6.2%** increase in average RMB selling price, driven by higher-end products[140](index=140&type=chunk)[141](index=141&type=chunk) - Overseas market revenue increased by **4.0%** to **$7.8 million**, mainly due to a **5.6%** increase in average selling price, despite a **35.1%** decrease in sales volume due to reduced demand for gaming and automotive touchscreens[143](index=143&type=chunk) - The company continued to shift its production mix towards higher-end products like POS, medical, and automotive touchscreens, driven by growth potential and consumer demand for quality[146](index=146&type=chunk) Revenue Breakdown by End Application (Six Months Ended June 30) | Product Category | 2023 Amount (US$) | 2023 % | 2022 Amount (US$) | 2022 % | Change % | | :--- | :--- | :--- | :--- | :--- | :--- | | Automotive Touchscreens | $6,444,890 | 24.6% | $5,917,676 | 24.9% | +8.9% | | Industrial Control Computer Touchscreens | $5,094,856 | 19.4% | $4,642,261 | 19.6% | +5.7% | | POS Touchscreens | $4,345,588 | 16.6% | $3,566,699 | 15.0% | +21.8% | | Medical Touchscreens | $3,982,295 | 15.2% | $3,048,846 | 12.8% | +30.6% | | Gaming Touchscreens | $3,644,432 | 13.9% | $3,974,250 | 16.8% | -8.3% | | Multi-Functional Printer Touchscreens | $2,695,832 | 10.3% | $2,593,846 | 10.9% | +3.9% | [Gross Profit and Gross Profit Margin](index=29&type=section&id=Gross%20Profit%20and%20Gross%20Profit%20Margin%20(Six%20Months)) This subsection explains the changes in gross profit and margin, attributing them to increased sales of high-end products - Gross profit increased by **30.9%** to **$12.3 million**, and gross profit margin improved to **46.9%** from **39.4%** in the prior year, mainly due to increased sales of high-end products[147](index=147&type=chunk) [General and Administrative Expenses](index=29&type=section&id=General%20and%20Administrative%20Expenses%20(Six%20Months)) This subsection analyzes the increase in general and administrative expenses, primarily due to an underwriting fee - General and administrative expenses increased by **112.5%** to **$1.7 million**, primarily due to a **$1.2 million** accrued underwriting fee related to a private placement[148](index=148&type=chunk) [Research and Development Expenses](index=30&type=section&id=Research%20and%20Development%20Expenses%20(Six%20Months)) This subsection details the slight decrease in research and development expenses for the six-month period - Research and development expenses decreased by **7.4%** to **$41,269**[149](index=149&type=chunk) [Operating Income](index=30&type=section&id=Operating%20Income%20(Six%20Months)) This subsection explains the increase in operating income, driven by higher gross profit and lower selling expenses - Operating income increased by **38.7%** to **$10.4 million**, driven by higher gross profit and lower selling expenses, partially offset by increased general and administrative expenses[150](index=150&type=chunk) [Gain (loss) on changes in fair value of Common Stock Purchase Warrants](index=30&type=section&id=Gain%20(loss)%20on%20changes%20in%20fair%20value%20of%20Common%20Stock%20Purchase%20Warrants%20(Six%20Months)) This subsection reports the gain recognized from changes in the fair value of common stock purchase warrants for the six-month period - The company recorded a gain of **$44,784** on changes in the fair value of common stock purchase warrants for the six months ended June 30, 2023, a decrease from **$0.2 million** in the prior year[151](index=151&type=chunk) [Income Taxes](index=30&type=section&id=Income%20Taxes%20(Six%20Months)) This subsection details the effective income tax rate and the policy on reinvested earnings for the six-month period - The effective income tax rate for the six-month period ended June 30, 2023, was **28.4%**, slightly up from **28.2%** in the prior year[152](index=152&type=chunk) - The company has a policy of indefinitely reinvesting earnings from its PRC subsidiary, Sichuan Vtouch, in PRC, thus not providing for deferred income tax liabilities related to PRC withholding income tax[153](index=153&type=chunk) [Net Income](index=31&type=section&id=Net%20Income%20(Six%20Months)) This subsection highlights the significant increase in net income for the first half of 2023 - Net income increased by **36.4%** to **$7.5 million** for the six-month period ended June 30, 2023, compared to **$5.5 million** in the same period of 2022[154](index=154&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet its short-term and long-term financial obligations and funding sources [Overview of Liquidity](index=31&type=section&id=Overview%20of%20Liquidity) This subsection provides an overview of the company's current liquidity position and expected funding sources - The company expects to meet its operational and capital expenditure needs for the next 12 months using cash, cash equivalents, operating cash flows, and bank borrowings[155](index=155&type=chunk) - As of June 30, 2023, current assets were **$107.4 million** (including **$92.2 million** in cash) and current liabilities were **$8.1 million**[157](index=157&type=chunk) [Operating Activities](index=31&type=section&id=Operating%20Activities) This subsection details the cash generated from the company's primary business operations - Net cash provided by operating activities was **$6.8 million** for the six months ended June 30, 2023, a significant increase from **$1.5 million** in the prior year[158](index=158&type=chunk)[159](index=159&type=chunk) - This increase was primarily due to higher net income, a decrease in accounts receivable due to faster collection, and changes in other operating assets and liabilities[159](index=159&type=chunk) [Investing Activities](index=32&type=section&id=Investing%20Activities) This subsection reports on cash flows related to the acquisition and disposal of long-term assets - There were no investing activities for the six-month periods ended June 30, 2023 and 2022[161](index=161&type=chunk) [Financing Activities](index=32&type=section&id=Financing%20Activities) This subsection details cash flows from debt and equity transactions, including a private placement - Net cash provided by financing activities was **$40.0 million** for the six months ended June 30, 2023, entirely from proceeds of a private placement stock issuance[162](index=162&type=chunk) [Days Sales Outstanding (DSO) and Accounts Receivable Aging](index=32&type=section&id=Days%20Sales%20Outstanding%20(DSO)%20and%20Accounts%20Receivable%20Aging) This subsection analyzes the efficiency of accounts receivable collection and the aging of outstanding balances - Days Sales Outstanding (DSO) decreased to **79 days** for the six-month period ended June 30, 2023, from **81 days** for the year ended December 31, 2022[163](index=163&type=chunk) Accounts Receivable Aging | Aging Category | June 30, 2023 (US$) | December 31, 2022 (US$) | | :--- | :--- | :--- | | Current | $8,031,102 | $1,252,152 | | 1-3 months past due | $4,600,385 | $4,998,596 | | 4-6 months past due | $1,331,966 | $2,806,973 | | 7-12 months past due | $0 | $20 | | > 1 year past due | $0 | $0 | | Total accounts receivable | $13,963,453 | $9,057,741 | [Future Outlook](index=32&type=section&id=Future%20Outlook) This subsection presents management's expectations regarding future liquidity and capital resources - Management believes current cash, cash equivalents, operating cash flows, and financing activities will provide sufficient liquidity for the next 12 months[164](index=164&type=chunk) [Off Balance Sheet Arrangements](index=32&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section confirms the absence of any off-balance sheet arrangements for the company - The company has no off-balance sheet arrangements[165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable for the company as it is a smaller reporting company - Not applicable for smaller reporting companies[166](index=166&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2023, and concluded they were not effective due to material weaknesses in internal control over financial reporting [Disclosure Controls and Procedures](index=32&type=section&id=Disclosure%20Controls%20and%20Procedures) This section details the evaluation of disclosure controls and procedures, identifying material weaknesses - Disclosure controls and procedures were not effective as of June 30, 2023[168](index=168&type=chunk) - Material weaknesses include limited segregation of duties due to a limited number of employees and the lack of a formal audit committee with a financial expert[168](index=168&type=chunk)[169](index=169&type=chunk) [Changes in Internal Control Over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section reports on any material changes in internal control over financial reporting during the period - No material changes in internal control over financial reporting occurred during the period[170](index=170&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings and exhibits [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any material, active, pending, or threatened legal proceedings against it or its subsidiaries as of June 30, 2023 - No material, active, pending, or threatened legal proceedings against the company or its subsidiaries as of June 30, 2023[173](index=173&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This item is not required for smaller reporting companies - Not required for smaller reporting companies[174](index=174&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - None to report[175](index=175&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - None to report[176](index=176&type=chunk) [Item 4. Mine Safety Disclosure](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - Not applicable[177](index=177&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) No other information to report for the period - None to report[178](index=178&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents Exhibits Filed | Exhibit No. | Description | | :--- | :--- | | 31.1 | Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 31.2 | Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | | 32.1 | Certifications of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 32.2 | Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | | 101.INS | Inline XBRL Instance Document | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | [SIGNATURES](index=35&type=section&id=SIGNATURES) This section contains the required signatures of the registrant's Principal Executive Officer and Principal Financial Officer, certifying the report [SIGNATURES](index=35&type=section&id=SIGNATURES_Details) This section contains the required signatures of the registrant's Principal Executive Officer and Principal Financial Officer, certifying the report - The report was signed by Zongyi Lian, President and Chief Executive Officer, and Yuhua Huang, Chief Financial Officer, on August 16, 2023[183](index=183&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the Quarterly Period Ended March 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission File Number: 000-56215 WETOUCH TECHNOLOGY INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Nevada 20-4 ...