What changed in this filing

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Item 2. Properties

2025-09-11 compared with 2024-04-17 · 110 added, 51 removed, 2 unchanged (99% of the section changed)

and Facilities

operate our business in approximately nine separate buildings covering a total area of approximately 735,745 square feet at No.

Main Avenue, Shigao Town, Renshou County, Meishan City, Sichuan, China (previously known as 22 Xingan Ave., Section 2, Shigao Town, Sichuan,

China ) where we maintain our executive offices, research and development facilities, factories and other facilities.

to local PRC government guidelines on local environmental issues and the national overall plan, Sichuan Wetouch is under the government-directed

relocation order to relocate no later than December 31, 2021 and received compensation accordingly.

March 16, 2021, Sichuan Wetouch entered into an Agreement of Compensation on Demolition (the “Compensation Agreement”) with

Meishan Huantian Industrial Co., Ltd, formerly named Sichuan Renshou Shigao Tianfu Investment Co., Ltd, a limited company owned by the

local government (“Sichuan Renshou”), for the withdrawal of our right to use of a parcel of state-owned land and the demolition

of all buildings, facilities and equipment on such land where we maintain our executive offices, research and development facilities

and factories at No.29, Third Main Avenue, Shigao Town, Renshou County, Meishan City, Sichuan, China (the “Property”).

Property, all buildings, facilities, equipment and all other appurtenances on the Property are collectively referred to as “Properties”.

The Compensation Agreement was executed and delivered as a result of the guidelines (the “Guidelines”) published by the local

government with respect to local environmental issues and a national plan on Tianfu New District, Meishan City, Sichuan, PRC.

In accordance

with the Guidelines, a project named “Chaisang River Ecological Wetland Park” is under construction in the areas where our

manufacturing facilities and properties are located.

In consideration for such relocation, as an owner of the buildings on the state-owned

land, we will be compensated.

On March 18, 2021, Sichuan Wetouch received a total amount of RMB115.2 million (approximately $17.7 million)

as the total amount of compensation from Sichuan Renshou, including RMB100.2 million ($15.4 million) based upon the appraised value of

the Properties plus an extra 15% relocation bonus of RMB15.0 million ($2.3 million).

order to minimize the interruption to our business, Sichuan Vtouch entered into a Leaseback Agreement with Sichuan Renshou on March 16,

The Leaseback Agreement entitles us to lease back the Properties commencing from April 1, 2021 until December 31, 2021, at a monthly

rent of RMB300,000 (approximately $46,154), which period was extended to October 31, 2022.

On October 16, 2022, Sichuan Vtouch entered

an extension to the Leaseback Agreement with Sichuan Renshou to extend the period it granted Sichuan Vtouch to lease back the Properties

until October 31, 2024, at a monthly rent of RMB 400,000 ($56,339).

PROPERTIES AND FACILITIES

We operate our business in

approximately nine separate leased buildings covering a total area of approximately 40,126.9 square feet at No.

29, Third Main Avenue,

Shigao Town, Renshou County, Meishan City, Sichuan, China (previously known as 22 Xingan Ave., Section 2, Shigao Town, Sichuan, China

) where we maintain our executive offices, research and development facilities, factories and other facilities.

Our principal physical properties

are used in connection with our [manufacturing/administrative/R&D/distribution] operations.

We believe that our facilities are generally

suitable and adequate for their current and anticipated future uses.

The following table summarizes our material properties:

Location (City, Country)

General Character of

Property (e.g., Office,

Manufacturing, Warehouse)

Ownership/Lease

Shigao Town, Renshou County, Meishan City, Sichuan Province, China

Touchscreen business

Offices building

same as above

Touchscreen business

Experimental building( testing and experimenting of samples and products

same as above

Touchscreen business

Manufacturing/warehouse building No.

same as above

Touchscreen business

Security gate

the date of this Annual Report, we lease approximately 8,085.0 sq.m of office space for R&D, sales and other corporate functions

in Shigao Town, Renshou County, Meishan City , Sichuan Province, China, which serves as our corporate headquarter.

The lease expires on

October 31, 2025 and we believe it can be renewed on commercially reasonable terms.

We also lease 30,879.3 sq.m facility with three

manufacturing wards for principal manufacturing operations in Shigao Town, Renshou ,County, Meishan City, Sichuan Province, China, at

which production of, assembly, packaging, warehousing of our touchscreen products.

We believe these facilities are adequate to meet our

current production requirements and provide room for moderate expansion.

In addition, space of 1069.6 sq.

m in Shigao Town,

Renshou County, Meishan City, Sichuan Province, China was used for testing and experimenting of samples and products by our engineering

None of our properties are subject to material encumbrances

that would adversely affect their use.

the date of this Annual Report, we do not own any real property.

However, we are in the process of obtaining a certificate of land

use right for a new parcel located at Tianfu Avenue, Youjiadu Community in Chengdu, Sichuan province, China, and expect to receive the

certificate from the local government in the first quarter of 2026.

We believe the above properties

are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available

to accommodate any such expansion of our operations.

Leaseback Agreement

Pursuant to local PRC government

guidelines on local environmental issues and the national overall plan, Sichuan Wetouch is under the government-directed relocation order

to relocate no later than December 31, 2021 and received compensation accordingly.

On March 16, 2021, Sichuan

Wetouch entered into an Agreement of Compensation on Demolition (the “Compensation Agreement”) with Meishan Huantian Industrial

Co., Ltd, formerly named Sichuan Renshou Shigao Tianfu Investment Co., Ltd, a limited company owned by the local government (“Sichuan

Renshou”), for the withdrawal of our right to use of a parcel of state-owned land and the demolition of all buildings, facilities

and equipment on such land where we maintain our executive offices, research and development facilities and factories at No.29, Third

Main Avenue, Shigao Town, Renshou County, Meishan City, Sichuan, China (the “Property”).

The Property, all buildings, facilities,

equipment and all other appurtenances on the Property are collectively referred to as “Properties”.

The Compensation Agreement

was executed and delivered as a result of the guidelines (the “Guidelines”) published by the local government with respect

to local environmental issues and a national plan on Tianfu New District, Meishan City, Sichuan, PRC.

In accordance with the Guidelines,

a project named “Chaisang River Ecological Wetland Park” is under construction in the areas where our manufacturing facilities

and properties are located.

In consideration for such relocation, as an owner of the buildings on the state-owned land, we will be compensated.

On March 18, 2021, Sichuan Wetouch received a total amount of RMB115.2 million (approximately $17.7 million) as the total amount of compensation

from Sichuan Renshou, including RMB100.2 million ($15.4 million) based upon the appraised value of the Properties plus an extra 15% relocation

bonus of RMB15.0 million ($2.3 million).

In order to minimize the interruption

to our business, Sichuan Vtouch entered into a Leaseback Agreement with Sichuan Renshou on March 16, 2021.

The Leaseback Agreement entitles

us to lease back the Properties commencing from April 1, 2021 until December 31, 2021, at a monthly rent of RMB300,000 (approximately

$46,154), which period was extended to October 31, 2022.

On October 16, 2022, October 30, 2023, Sichuan Vtouch twice entered an extension

to the Leaseback Agreement with Sichuan Renshou to extend the period it granted Sichuan Vtouch to lease back the Properties until October

31, 2024, at a monthly rent of RMB 400,000 ($56,339).

On August 9, 2024, in order to incorporate the new facility construction schedule,

the lease was renewed and extended till October 31, 2025, with a monthly rent of RMB 400,000 ($54,800).

New Facilities

On July 23, 2021, Sichuan Vtouch

entered into a contract with the Chengdu Wenjiang District Planning and Natural Resources Bureau for the purchase of a land use right

for a parcel of land spanning 131,010 square feet, for a consideration of RMB3,925,233 (equivalent to $537,998) for the Company’s

new facility.

On August 6, 2021, Sichuan

Vtouch entered into a contract with the Chengdu Wenjiang District Planning and Natural Resources Bureau for the purchase of a land use

right for a parcel of land spanning 131,010 square feet, for a consideration of approximately RMB3,925,233 (equivalent to $537,755) for

the Company’s new facility.

The Company paid the consideration in full on November 18, 2021.

The Company estimates receiving the certificate of land

use right from the local government in the fourth quarter of 2024.

July 27, 2021, Sichuan Vtouch and Sichuan Chunqiu Development and Construction Group Co., Ltd.

entered into a construction contract

for a project to build the capacitive touch screen and touch machine research and development production base.

The contract was

estimated to start on August 15, 2021, and to be completed by August 15, 2022, at a provisional price of RMB76,000,000

(approximately $11.9 million).

This price is subject to adjustment based on actual completion settlement.

However, the construction

project has been put on hold due to the outbreak of Covid-19 and government-ordered shutdowns in China.

The parties have agreed to

extend the term of the contract to December 31, 2024.

As of the date of

this Annual Report, we estimate that our capital needs for this acquisition and construction will be approximately RMB170.0 million

(approximately $26.2 million), but there is no assurance that the estimated amount is sufficient to achieve our goals.

additional financing for our new facilities.

In addition, we expect that this the construction of buildings and affixtures will be

completed by end of 2023 and our production at the new facilities will commence in the third quarter of 2025, but there is no assurance and we may need extended time to achieve our business

We are in the process of obtaining

the certificate of land use right for the new parcel and expect to receive the certificate from the local government in the first quarter

On July 27, 2021, Sichuan

Vtouch and Sichuan Chunqiu Development and Construction Group Co., Ltd.

entered into a construction contract for a project to build the

capacitive touchscreen and touch machine research and development production base.

The project was initially scheduled to commence on

August 15, 2021, and reach completion by August 15, 2022, with a provisional contract value of RMB76,000,000 (approximately $11.9 million),

subject to adjustment based on the final completion settlement.

However, the construction project was subsequently suspended due to the

outbreak of Covid-19 and government-ordered shutdowns in China.

As a result, the parties have agreed to extend the term of the contract

to December 31, 2024.

On April 11, 2025, Sichuan Vtouch entered into a supplemental construction contract with Sichuan Chunqiu Development

& Construction Group Co.

for an additional consideration of RMB 4,633,118 (equivalent to $0.6 million) regarding the completion

of the Company’s facility construction project on the capacitive touchscreen and touch machine research and development, which extended

the original contract term to December 31, 2025.

As of the date of this Annual Report, we estimate that our capital needs for this acquisition

and construction will be approximately RMB170.0 million (approximately $26.2 million), but there is no assurance that the estimated amount

is sufficient to achieve our goals.

We may need additional financing for our new facilities.

In addition, we expect that this the construction

of buildings and affixtures will be completed by end of 2025 and our production at the new facilities will commence in the second half

of 2026, but there is no assurance and we may need extended time to achieve our business plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 2. Properties