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 ...

Financial Performance - Revenues for the year ended December 31, 2022, were $37.9 million, a decrease of 7.1% from $40.8 million in 2021[309] - Gross profit was $14.0 million, down 23.9% from $18.4 million in the previous year, resulting in a gross profit margin of 37.0% compared to 45.3% in 2021[310] - Net income decreased by 50.0% to $8.7 million from $17.4 million in 2021[310] - Total volume shipped was 1,916,976 units, a slight decrease of 0.3% from 1,922,353 units in 2021[310] - Revenue from domestic sales was $26.4 million, accounting for 69.7% of total revenues, while overseas sales were $11.5 million, representing 30.3%[312] - Revenue from automotive touchscreens decreased by 19.9% to $9.3 million, while POS touchscreens saw a 4.2% increase to $6.6 million[318] - The average selling price of products in RMB decreased by 2.6%, contributing to the overall revenue decline[314] - Operating income declined to $11.4 million in 2022 from $12.6 million in 2021, a decrease of $1.2 million or 9.5%[326] - Net income for 2022 was $8.7 million, down from $17.4 million in 2021, reflecting a decrease of $8.7 million[333] Cost and Expenses - Gross profit decreased to $14.0 million in 2022 from $18.4 million in 2021, a decline of $4.4 million or 23.9%[320] - Gross profit margin fell to 37.0% in 2022 from 45.3% in 2021, primarily due to a 7.1% decrease in sales and a 13.2% increase in material costs[320] - Selling expenses increased to $1.3 million in 2022, up 116.7% from $0.6 million in 2021, driven by increased marketing efforts[321] - General and administrative expenses decreased to $1.3 million in 2022, down 31.6% from $1.9 million in 2021, mainly due to a loss of VAT input credits[322] - Research and development expenses were $85,251 in 2022, a decrease of $4,226 or 4.7% from $89,477 in 2021[323] Cash Flow and Financial Position - Cash and cash equivalents at the end of 2022 were $51.3 million, compared to $46.2 million at the end of 2021[337] - Net cash provided by operating activities was $8.6 million in 2022, down from $14.0 million in 2021, primarily due to decreased net income[338] - Days Sales Outstanding (DSO) decreased to 81 days for the year ended December 31, 2022, compared to 88 days for the year ended December 31, 2021[342] - Total accounts receivable as of December 31, 2022, was $9,057,741, up from $7,991,037 as of December 31, 2021[343] - The company expects cash and cash equivalents from operating and financing activities to meet working capital needs for at least the next 12 months[345] Inventory and Liabilities - The company prepaid RMB15.0 million (approximately $2.2 million) for a facility decoration contract, with a remaining balance of RMB5.0 million (approximately $0.7 million) to be paid by the end of 2023[348] - The company recorded $74,100 in inventory write-offs for the year ended December 31, 2022, compared to nil for the year ended December 31, 2021[362] - The company had common stock purchase warrants liabilities of $256,957 and $1,128,635 as of December 31, 2022, and 2021, respectively[369] Tax and Regulatory Matters - The effective income tax rate increased to 27.7% in 2022 from 20.2% in 2021, primarily due to changes in preferential tax rates[331] - Legal claims have been settled, and the company has been fully discharged from these actions as of the date of the annual report[347] Accounting Policies and Risks - The company adopted ASC 606 for revenue recognition, which did not have a material impact on its consolidated financial statements[353] - The company has not recognized any impairment of long-lived assets for the years presented[375] - The company adopted ASU 2020-06 effective January 1, 2021, which simplifies accounting for convertible instruments[380] - The company adopted ASU 2016-13 utilizing the modified retrospective transition method, with no material impact on its financial statements[381] Economic Environment - The year-over-year percent changes in the consumer price index for December 2022 and 2021 were increases of 2.0% and 0.9%, respectively[390] - On December 31, 2022, the RMB traded at 6.8972 RMB to 1.00 U.S. dollar[388] - The company has not been exposed to material risks due to changes in interest rates[386] - The company faces foreign currency rate translation risks when results are translated to U.S. dollars[387] - The RMB was relatively stable against the U.S. dollar until a 2.1% revaluation on July 21, 2005[388] - There is international pressure on the Chinese government to adopt a more flexible currency policy, affecting the RMB exchange rate[389] - Inflation in China has not materially affected the company's results of operations to date[390]

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, 2022 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 ...

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 June 30, 2022 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 20-40 ...

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, 2022 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to __________ Commission File Number: 333-108715 Wetouch Technology Inc. (Exact Name of Registrant as Specified in Its Charter) Nevada 20-4080330 (State or Other Jurisdiction of Inc ...

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, 2021 or WETOUCH TECHNOLOGY INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Nevada 20-4080330 (I.R.S. Employer Identification No.) No.29, Third Main Avenue, Shigao Town, Renshou County Meishan, Sichuan, China ...