What changed in this filing

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Item 9A. Controls and Procedures

2025-09-11 compared with 2024-04-17 · 1725 added, 1601 removed, 332 unchanged (91% of the section changed)

and Procedures

of Disclosure Controls and Procedures

management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness

of the design and operation of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of

December 31, 2022, pursuant to Exchange Act Rule 13a-15(b).

We concluded that our disclosure controls and procedures were not effective

as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange

Act were recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that

our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we

file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer

and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required

Report on Internal Control over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over

financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed under the supervision

of our principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other

personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its consolidated financial

statements for external reporting purposes in accordance with GAAP.

Weaknesses in Internal Control over Financial Reporting

assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2022 based on the framework

established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway

Based on this assessment, management has determined that the Company’s internal control over financial reporting as

of December 31, 2022 was not effective.

material weakness, as defined in the standards established by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”),

is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility

that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely

ineffectiveness of the Company’s internal control over financial reporting was due to the following material weaknesses:

segregation of duties consistent with control objectives;

of formal policies and procedures;

of risk assessment procedures on internal controls to detect financial reporting risks on a timely manner.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation

of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our

disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of December 31, 2024, pursuant to Exchange

Act Rule 13a-15(b).

We concluded that our disclosure controls and procedures were not effective as of such date to ensure that information

required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and

reported within the time periods specified in the SEC’s rules and forms and that our disclosure controls are not effectively designed

to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated

and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar

functions, as appropriate to allow timely decisions regarding required disclosure.

Management Report on Internal Control over

Financial Reporting

Our management is responsible

for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting is defined

in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed under the supervision of our principal executive

and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable

assurance regarding the reliability of financial reporting and the preparation of its consolidated financial statements for external reporting

purposes in accordance with GAAP.

Material Weaknesses in Internal Control over

Financial Reporting

Management assessed the effectiveness

of the Company’s internal control over financial reporting as of December 31, 2024 based on the framework established in Internal

Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment,

management determined that the Company’s internal control over financial reporting as of December 31, 2024 was not effective.

A material weakness, as defined

in the standards established by the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), is a deficiency, or a combination

of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement

of our annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

The ineffectiveness of the

Company’s internal control over financial reporting was due to the following material weaknesses:

Lack of competent financial reporting and accounting personnel with appropriate understanding of U.S.

GAAP and financial reporting requirements to design and implement key controls over financial reporting process;

Lack of risk assessment procedures on internal controls to detect financial reporting risks in a timely manner.

believes that the material weaknesses that were identified did not have an effect on our financial results.

5 unchanged sentences

the degree of compliance with the policies or procedures may deteriorate.

All internal control systems, no matter how well designed,

have inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect

to financial statement preparation and presentation.

Because of the inherent limitations of internal control, there is a risk that material

misstatements may not be prevented or detected on a timely basis by internal control over financial reporting.

However, these inherent

limitations are known features of the financial reporting process.

Therefore, it is possible to design into the process safeguards to

reduce, though not eliminate, this risk.

Plan to Remediate the Material Weakness

All internal control systems, no matter how well designed, have

inherent limitations.

Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial

statement preparation and presentation.

Because of the inherent limitations of internal control, there is a risk that material misstatements

may not be prevented or detected on a timely basis by internal control over financial reporting.

However, these inherent limitations are

known features of the financial reporting process.

Therefore, it is possible to design into the process safeguards to reduce, though not

eliminate, this risk.

Management’s Plan to Remediate the Material

has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness

1 unchanged sentence

The remediation actions planned include:

gaps in our skills base and the expertise of our staff required to meet the financial reporting requirements of a public company;

to develop policies and procedures on internal control over financial reporting and monitor the effectiveness of operations on existing

controls and procedures.

have engaged with a third-party financial consulting firm during the year to assist with the preparation of SEC reporting.

We are committed

to maintaining a strong internal control environment, and believe that these remediation efforts will deliver improvements in our control

Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our

internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing

additional enhancements or improvements, as necessary and as funds allow.

Annual Report does not include an attestation report of our registered public accounting firm regarding our internal control over financial

Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the

SEC that exempt smaller reporting companies from this requirement.

in Internal Control over Financial Reporting

have been no changes in our internal control over financial reporting that occurred during our fourth quarter that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

have adopted an insider trading policy and a clawback policy.

Our insider trading policy clawback policy are available on our website

and are filed as exhibits to this Annual Report.

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Executive Officers and Corporate Governance

below are the names of the directors and executive officers of the Company, their ages as of the date of this Annual Report, and their

positions with the Company.

and Chief Executive Officer

Financial Officer

Bai - Chairman and Director

Bai has been our company’s Chairman and Director since August 31, 2022.

Additionally, he serves as an independent director on the

board of directors of Xinxu Copper Industry Technology Limited (Nasdaq:

XXC), a metal material manufacturer, since March 2024.

2019 to December 2021, Mr.

Bai served as the general manager of the Nanjing Branch of Qianhai Century Fund Management Co., Ltd.,

a private fund management company, where he was primarily responsible for private fundraising and sales funding of trust products.

Bai also served as the general manager of the business division of Heyi Asset, an asset management company, from September 2015 to June

2019, where he was responsible for marketing.

He received his bachelor’s degree in law from Nanjing Normal University in June 2006

and holds a securities/fund qualification issued by the Securities Association of China since August 2015.

Lian - Chief Executive Officer and President

Lian was appointed Chief Executive Officer and President on October 12, 2020.

He has served as Chief Executive Officer of Sichuan Wetouch

since November 21, 2017.

In 2006, he co-founded Chongqing Damai Touchscreen Computer Co., Ltd (“Damai”) (later renamed Chengdu

Wetouch) and served as Vice Technique General Manager, where he was responsible for overseeing the product technology department.

In 2011, he co-founded Sichuan Wetouch and served

as Vice Technique General Manager.

Lian holds a Master’s degree in Automatic Control from National Chiao Tung University.

Huang - Chief Financial Officer

Huang was appointed our Chief Financial Officer on October 12, 2020.

He concurrently serves as Chief Financial Officer of Sichuan

Wetouch, a position he has held since March 2018.

From 2010 to 2013, he worked as an accountant at Liugong Group, where he was

responsible for overseeing the finance department.

From 2014 to 2017, he served as Financial Manager at Shanghai Oriental Pearl

Group Co., Ltd., an import and export company, where he was responsible for the financing activities.

Huang holds a

Bachelor’s degree in accounting from Sichuan Institute of Industrial Technology.

He was qualified as a CPA in China in 2004

and as an auditor in 2014, respectively.

Cai - Secretary and Director

Cai has been our Company’s Secretary and Director since June 2020.

She concurrently serves as the Chief Executive Officer and director

of BVI Wetouch, our wholly-owned subsidiary, since its inception on August 14, 2020.

From February 2017 to May 2019, Ms.

Cai worked at

Chengdu Wetouch Technology Co., Ltd, an affiliate of Guangde Cai, which specializes in the research, development, manufacturing and sales

of capacitive touchscreens widely used in HMI and military industries, where she served as staff within the financial department, human

resources department and purchasing department.

In April 2020, she joined Chengdu Haobot Technology Co., Ltd, a software and hardware development company, where she

has been serving as its Legal Representative and General Manager until present.

Cai holds a Bachelor’s degree in Music from

The Sichuan Conservatory of Music and an EMBA degree from Sichuan University.

Chen - Director

Chen was appointed to our company’s Board of Directors, effective November 12, 2021.

Additionally, she serves as an independent

director and the chairman of the audit committee on the board of directors of Erayak Power Solution Group Inc.

RAYA) since November

2021, of Jin Medical International Limited.

ZJYL) from August 2021 to December 2023, of Bon Natural Lift Limited.

since October 2023, and of Xinxu Copper Industry Technology Limited.

XXC) since March 2024.She has served as the Group Vice

President of Future Fintech Group Inc.

FTFT), a FinTech company, where she was responsible for the company’s internal control and merger and acquisition.

Identify gaps in the Company’s skills base and the expertise of its staff required to meet the financial reporting requirements of a public company;

Continue to cooperate with operation teams

to ensure a control environment in place, and monitor the effectiveness of operations on existing controls and procedures.

Establish procedures to assess compliance requirements under the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) and improve overall internal control.

We are committed to maintaining

a strong internal control environment, and believe that these remediation efforts will deliver improvements in our control environment.

Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls

and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements

or improvements, as necessary and as funds allow.

This Annual Report does not

include an attestation report of our registered public accounting firm regarding our internal control over financial reporting.

report was not subject to attestation by our registered public accounting firm pursuant to rules of the SEC that exempt smaller reporting

companies from this requirement.

Changes in Internal Control over Financial

There have been no changes

in our internal control over financial reporting that occurred during our fourth quarter that have materially affected, or are reasonably

likely to materially affect, our internal control over financial reporting.

OTHER INFORMATION.

We have adopted an insider

trading policy and clawback policy.

Our insider trading policy clawback policy are available on our website and are filed as exhibits

to this Annual Report.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS

THAT PREVENT INSPECTIONS.

Not applicable.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Listed below are the names

of the directors and executive officers of the Company, their ages as of the date of this Annual Report, and their positions with the

Position(s) Held

Guangrong Cai

Chairman, Director

President and Chief Executive Officer

Chief Financial Officer

Secretary, Director

Jiaxing Huang

* Jing Chen served from November 12, 2021 untill April 29,

** Jing Guo served from May 1, 2025

Guangrong Cai - Chairman and Director

Guangrong Cai has served as our Chairman and Director since June 2024.

Cai has served as a legal representative and director of the

strategic planning department of Sichuan Vtouch Technology Co., Ltd since 2020.

Cai has served as a legal representative and general

manager of Frejoo Enterprise Management (Chengdu) Co., Ltd.

since January 2019, a company specializing in helping Chinese enterprises

go public on Nasdaq.

From January 2013 to December 2016, Mr.

Cai served as the founder and established a project center for the research

and development of industrial capacitive screens.

In 2020, he transformed the project center into Sichuan Vtouch Technology Co., Ltd.

From January 2003 to December 2012, he served as the Chief Financial Officer at Hong Kong Zhentai Toy Group.

Cai received a master’s

degree in Economics from Sun Yat-sen University in 1992 and a bachelor’s degree in Economics from Sun Yat sen University in 1989.

He received an EMBA degree from Tsinghua University in 2002.

We believe that Mr.

Cai is qualified to serve as our Chairman and Director

due to his extensive knowledge and background in economics and management.

Zongyi Lian - Chief Executive Officer and

Lian has served as our

Chief Executive Officer and President since October 12, 2020.

He has also served as Chief Executive Officer of Sichuan Wetouch since November

In 2006, he co-founded Chongqing Damai Touchscreen Computer Co., Ltd (“Damai”) (later renamed Chengdu Wetouch) and

served as Vice Technique General Manager, where he was responsible for overseeing the product technology department.

In 2011, he co-founded

Sichuan Wetouch and served as Vice Technique General Manager.

Lian holds a master’s degree in Automatic Control from National

Yang Ming Chiao Tung University in 1982.

Xing Tang - Chief Financial Officer

Xing Tang has served as our Chief Financial Officer since July 2024.

From August 2013 to June 2024, Ms.

Tang served as Chief Financial

Officer of Elong Power Holdings Ltd.

ELPW), a company focusing on high-power lithium-ion batteries for energy storage

From August 2010 to May 2023, Ms.

Tang served as Finance Director of China XD Plastics

From March 2010 to August 2010, she served as a director of Audit Coordination Department of Ashir Capital, Inc.

Tang obtained

the Association of Chartered Certified Accountants certificate in June 1998.

Tang received a bachelor’s degree in arts from

Sichuan University in 1988 and a bachelor’s degree in law from Foreign Affairs College in 1990.

She received an MBA with a concentration

in Accounting from Seton Hall University in 2003.

She has extensive experience in financial reporting in US GAAP and internal controls.

Jing Chen - Director

Chen has served as our

director since November 12, 2021.

Since November 2024, Ms.

Chen has served as the Chief Financial Officer of Shanxi Yansen New Energy

Chen also has served as an independent director and the chairperson of the audit committee of Erayak Power Solution Group

RAYA) since November 2021, and Bon Natural Lift Limited (Nasdaq:

BON) since October 2023.

Chen served as an independent

director and the chairperson of the audit committee of Jin Medical International Ltd.

ZJYL) from August 2021 to December 2023.

She also served as the Vice President of Future Fintech Group Inc.

FTFT), a FinTech company, where she was responsible for the

company’s internal control and merger and acquisition from December 2020 to April 2023.

From May 2019 to November 2020, Ms.

Chen served as the CFO of Future Fintech Group Inc.

She served as the CFO of AnZhiXinCheng

(Beijing) Technology Co., Ltd.

from August 2018 to May 2019.

Chen is an Independent Director of Hello iPayNow (Beijing) Company Ltd.

since April 2019.

From August 2017 to July 2018, she served as CFO of Beijing Logis Technology Development Co., Ltd., a company listed

on The National Equities Exchange and Quotations Co., Ltd.

served as the CFO of Future Fintech Group Inc.

She served as the CFO of AnZhiXinCheng (Beijing) Technology Co., Ltd.

from August 2018

Chen also served as an independent director of Hello iPayNow (Beijing) Company Ltd.

from April 2019 to March 2021.

August 2017 to July 2018, she served as CFO of Beijing Logis Technology Development Co., Ltd., a company listed on The National Equities

Exchange and Quotations Co., Ltd.

of China, which is a Chinese over-the-counter stock trading system.

2016 to July 2017, Ms.

From June 2016 to July 2017, Ms.

Chen served as Group Chief Financial Officer of Beijing AnWuYou Food Co., Ltd.

Chen served as Chief Financial

Officer of Beijing DKI Investment Management Co., Ltd.

Chen also served as Chief Financial Officer of Beijing

DKI Investment Management Co., Ltd.

from August 2012 to May 2016.

Chen received a Doctorate of Business Administration

from Victoria University, Neuchatel, Switzerland and an MBA degree from City University of Seattle in Washington, U.S.

Fellow Membership of CPA Australia (FCPA) and is a Member

of the Chartered Institute of Management Accountants (CIMA).

She is also a Senior Member of the International Financial Management (SIFM)

accredited by the Ministry of Human Resources and Social Security of the PRC.

Tang - Director

Tang was elected to our Company’s Board of Directors, effective August 31, 2022.

Additionally, he serves as an independent director on the board of directors of Xinxu Copper Industry Technology

Limited (Nasdaq:

XXC), a metal material manufacturer, since March 2024.

He has served as an attorney at Gaopeng &

Partners since 2019.

From April 2017 to December 2017, he served as the deputy director of Nanjing

Immigration Inspection.

Tang received his bachelor’s degree in corporate law from Hohai University.

He received his master’s

degree in sociology from Jiangsu Provincial Party School.

Wang - Director

Wang was elected to our Company’s Board of Directors, effective February 17, 2023.

Wang has served as an attorney at Gaopeng

(Nanjing) Law Firm since June 2022.

From June 2021 through May 2022, Mr.

Wang worked for Guohao Law Firm.

He worked at Beijing Gaopeng

(Nanjing) Law Firm from December 2014 through May 2021.

He is currently a member of Nanjing Securities and Futures Fund Professional

Committee, a public interest lawyer of China Securities Small and Medium Investors Service Center, a member of Jiangsu foreign lawyers

Talent Pool, and a member of the Nanjing Foreign Lawyers Talent Pool.

Wang received a bachelor’s degree from Anqing Normal

University in July 2014, and he is currently studying at University of Chinese Academy of Social Sciences for his master’s degree.

Relationships

are no other family relationships between any of our directors or executive officers.

There are no arrangements or understandings between

our directors and directors and any other person pursuant to which they were appointed as an officer and director of the Company.

Chen received a Doctorate of Business Administration from Victoria

University, Neuchatel, Switzerland and an MBA degree from City University of Seattle in Washington, U.S.

Chen holds Fellow Membership

of CPA Australia (FCPA) and is a Member of the Chartered Institute of Management Accountants (CIMA).

She is also a Senior Member of the

International Financial Management (SIFM) accredited by the Ministry of Human Resources and Social Security of the PRC.

We believe Ms.

Chen is qualified to serve as our director due to her extensive knowledge and background in accounting and management.

On April 29, 2025, Ms.

resigned as a Board director and no longer served as a member of the Audit Committee, the Compensation Committee, and the Nominating and

Corporate Governance Committee of the Board, including as the Chairperson of the Audit Committee.

Jiaxing Huang -

Jiaxing Huang has served as our director since June 2024.

Huang has served as an administrative

personnel specialist and manager of Chengdu Tianfu Investment Co., Ltd since July 2021.

Since November 2022, he has also served as an

independent director of Shenzhen Fushiyuan Intelligent Fire Protection Co., Ltd, responsible for supervising the formulation and implementation

of personnel recruitment, assessment, reward and other systems in the company.

Huang received a bachelor’s degree in administration

management from University of Electronic Science and Technology of China in 2021.

We believe Mr.

Huang is qualified to serve as our director

due to his knowledge and background in the management field.

Guijun Gan - Director

Gan has served as our director since June 2024, Mr.

Gan has also served as a director of Chengdu Qili Water Treatment Technology Co.

From July 1998 to October 2018, he served as the Chief Financial Officer of Zhongtu Chemical (Guangdong) Co., Ltd., a wholly-owned

company of China Coatings Co., Ltd., a Japanese listed company.

Gan received a master’s degree in Statistics from Sun Yat-sen

University in 1992 and a bachelor’s degree in Statistics from Sun Yat-sen University in 1989.

We believe Mr.

Gan is qualified to

serve as our director due to his extensive knowledge and background in accounting and management.

Jing Guo - Director

Jing Guo, age 35, has served as the Human Resources Director (Vice President level) of All Home Furnishings Limited since December 2020.

Guo received a bachelor’s degree in Electronic Information Engineering from the University of Electronic Science and Technology

of China in 2012.

The Board believes Ms.

Guo’s extensive knowledge and background in the fields of human resources management and

corporate administration will make her a valuable addition to the Board.

Family Relationships

are no other family relationships between any of our directors or executive officers, except that former

Jiaying Cai is the niece of Mr.

Guangrong Cai .

arrangements or understandings between our directors and any other person pursuant to which they were appointed as an officer or

director of the Company.

Board Committees

have established three committees under the board of directors:

3 unchanged sentences

Each committee’s members and functions are described

Our audit committee consists of Jing Chen, Xiaojin Tang and Congjin Wang.

Chen is the chairperson of the audit

Our audit committee consists of Jing Chen, Jiaxing Huang and Guijun

Chen is the chairperson of the audit committee.

We have determined that Ms.

Wang each satisfy the “independence” requirements of Nasdaq

Listing Rule 5605(a)(2) and meets the independence standards under Rule 10A-3 under the Exchange Act.

Huang and Mr.

Gan each satisfy the

“independence” requirements of Nasdaq Listing Rule 5605(a)(2) and meet the independence standards under Rule 10A-3 under the

Exchange Act.

We have determined that Ms.

qualifies as an “audit committee financial expert.”

Chen qualifies as an “audit committee financial expert.”

have adopted an audit committee charter, which details the principal responsibilities of the audit committee, including:

To assist board

oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) our

independent auditor’s qualifications and independence, and (iv) the performance of our internal audit function and independent

the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other

independent registered public accounting firm engaged by us;

To (i) approve all audit

engagement fees and terms and (ii) pre-approve all audit and permitted non-audit and tax services that may be provided by the Company’s

independent auditors or other registered public accounting firms.

At least annually, to evaluate

the qualifications, performance and independence of the Company’s independent auditors, including an evaluation of the lead

audit partner;

and to assure the regular rotation of the lead audit partner at the Company’s independent auditors and consider

regular rotation of the accounting firm serving as the Company’s independent auditors.

To review and discuss with

the Company’s independent auditors and management the Company’s quarterly financial statements and the disclosure under

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” to be included in the Company’s

Quarterly Report on Form 10-Q before such Form 10-Q is filed;

To assist board oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) our independent auditor’s qualifications and independence, and (iv) the performance of our internal audit function and independent auditors;

and the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by us;

To (i) approve all audit engagement fees and terms and (ii) pre-approve all audit and permitted non-audit and tax services that may be provided by the Company’s independent auditors or other registered public accounting firms.

At least annually, to evaluate the qualifications, performance and independence of the Company’s independent auditors, including an evaluation of the lead audit partner;

and to assure the regular rotation of the lead audit partner at the Company’s independent auditors and consider regular rotation of the accounting firm serving as the Company’s independent auditors.

To review and discuss with the Company’s independent auditors and management the Company’s quarterly financial statements and the disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to be included in the Company’s Quarterly Report on Form 10-Q before such Form 10-Q is filed;

and to review and discuss the Form 10-Q for filing with the SEC.

To review, approve and

oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K promulgated by the SEC)

and any other potential conflict of interest situations on an ongoing basis, in accordance with Company policies and procedures,

and to develop policies and procedures for the Committee’s approval of related party transactions.

To review with management

and the Company’s independent auditors:

(i) any major issues regarding accounting principles and financial statement presentation,

including any significant changes in the Company’s selection or application of accounting principles;

(ii) any significant

financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including

the effects of alternative GAAP methods;

and (iii) the effect of regulatory and accounting initiatives and off-balance sheet structures

on the Company’s financial statements.

To assist and advise the

Board and the Compensation Committee thereof in enforcing the Company’s executive compensation clawback policy and related

laws, rules and regulations.

The audit committee oversees our accounting and financial reporting processes

and the audits of the financial statements of our company.

The audit committee is responsible for, among other things:

(a) representing

and assisting the Board in its oversight responsibilities regarding the Company’s accounting and financial reporting processes,

the audits of the Company’s financial statements, including the integrity of the financial statements, and the independent auditors’

qualifications and independence;

(b) overseeing the preparation of the report required by SEC rules for inclusion in the Company’s

annual proxy statement;

(d) approving in advance all audit and

permissible non-audit services to be performed by the independent auditors;

To review, approve and oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K promulgated by the SEC) and any other potential conflict of interest situations on an ongoing basis, in accordance with Company policies and procedures, and to develop policies and procedures for the Committee’s approval of related party transactions.

To review with management and the Company’s independent auditors:

(i) any major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company’s selection or application of accounting principles;

(ii) any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including the effects of alternative GAAP methods;

and (iii) the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company’s financial statements.

To assist and advise the Board and the Compensation Committee in enforcing the Company’s executive compensation clawback policy and related laws, rules and regulations.

audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company.

audit committee is responsible for, among other things:

(a) representing and assisting the Board in its oversight responsibilities regarding

the Company’s accounting and financial reporting processes, the audits of the Company’s financial statements, including the

integrity of the financial statements, and the independent auditors’ qualifications and independence;

(b) overseeing the preparation

of the report required by SEC rules for inclusion in the Company’s annual proxy statement;

independent auditors;

(d) approving in advance all audit and permissible non-audit services to be performed by the independent auditors;

and (e) approving related person transactions.

Our compensation committee consists of Jing Chen, Xiaojin Tang and Congjin Wang.

Tang is the chairperson of our

compensation committee.

Our compensation committee consists of Jing Chen, Jiaxing Huang and Guijun

Huang is the chairperson of our compensation committee.

We have determined that Ms.

Wang each are “independent,” as such term is defined

for directors and compensation committee members in the listing standards of the NASDAQ Stock Market LLC.

Additionally, each qualify

as “non-employee directors” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 and as “outside directors”

for purposes of Section 162(m) of the Internal Revenue Code.

Huang and Mr.

“independent,” as such term is defined for directors and compensation committee members in the listing standards of the NASDAQ

Stock Market LLC.

Additionally, each qualifies as “non-employee directors” for purposes of Rule 16b-3 under the Securities

Exchange Act of 1934 and as “outside directors” for purposes of Section 162(m) of the Internal Revenue Code.

have adopted a compensation committee charter, which details the principal responsibilities of the compensation committee, including:

To review and

approve the Company’s compensation programs and arrangements applicable to its executive officers, including without limitation

salary, incentive compensation, equity compensation and perquisite programs, and amounts to be awarded or paid to individual officers

under those programs and arrangements, or make recommendations to the Board regarding approval of the same.

To determine the objectives

of the Company’s executive officer compensation programs, identify what the programs are designed to reward, and modify (or

recommend that the Board modify) the programs as necessary and consistent with such objectives and intended rewards.

To ensure appropriate corporate

performance measures and goals regarding executive officer compensation are set and determine the extent to which they are achieved

and any related compensation earned.

To at least annually review

and approve the Company’s goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light

of such goals and objectives, and determine and approve the CEO’s compensation level based on this evaluation.

To review and approve any

new equity compensation plan or any material change to an existing plan where stockholder approval has not been obtained.

To assist management in

complying with our proxy statement and annual report disclosure requirements;

To implement and enforce

the Company’s executive compensation clawback policy and related laws, rules and regulations, including determining what constitutes

“incentive-based compensation” and, if a clawback is triggered due to a financial statement restatement, the amount of

any clawback.

To review and approve the Company’s compensation programs and arrangements applicable to its executive officers, including without limitation salary, incentive compensation, equity compensation and perquisite programs, and amounts to be awarded or paid to individual officers under those programs and arrangements, or make recommendations to the Board regarding approval of the same.

To determine the objectives of the Company’s executive officer compensation programs, identify what the programs are designed to reward, and modify (or recommend that the Board modify) the programs as necessary and consistent with such objectives and intended rewards.

To ensure appropriate corporate performance measures and goals regarding executive officer compensation are set and determine the extent to which they are achieved and any related compensation earned.

To at least annually review and approve the Company’s goals and objectives relevant to CEO compensation, evaluate the CEO’s performance in light of such goals and objectives, and determine and approve the CEO’s compensation level based on this evaluation.

To review and approve any new equity compensation plan or any material change to an existing plan where stockholder approval has not been obtained.

To assist management in complying with our proxy statement and annual report disclosure requirements;

To implement and enforce the Company’s executive compensation clawback policy and related laws, rules and regulations, including determining what constitutes “incentive-based compensation” and, if a clawback is triggered due to a financial statement restatement, the amount of any clawback.

charter also provides that the compensation committee may select, retain and terminate independent legal counsel and other experts or

1 unchanged sentence

payable to such counsel, experts or consultants and any other term of retention.

However, before engaging or receiving advice from a

compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each

such adviser, including the factors required by Nasdaq and the SEC.

However, before engaging or receiving advice from a compensation

consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser,

including the factors required by Nasdaq and the SEC.

and Corporate Governance Committee.

Our nominating and corporate governance committee consists of Jing Chen, Xiaojin Tang and

Congjin Wang.

Wang is the chairperson of our nominating and corporate governance committee.

Our nominating and corporate governance committee consists of Jing Chen, Jiaxing

Huang and Guijun Gan .

Gan is the chairperson of our nominating and corporate governance

We have determined that each of Ms.

Wang qualify as “independent” as that term is defined by Nasdaq Listing Rule 5605(a)(2).

have adopted a nominating and corporate governance committee charter, which details the principal responsibilities of the nominating

and corporate governance committee, including:

identification, evaluation and recommendation of qualified candidates to become Board members.

oversight of the implementation of and monitoring compliance with the Company’s Code

of Ethics (other than with respect to complaints regarding accounting or auditing issues).

● Coordinating

and overseeing Board, committee, and director evaluations.

review of the Company’s governance documents as appropriate.

Huang and Mr.

Gan qualifies as “independent” as that term is defined

by Nasdaq Listing Rule 5605(a)(2).

have adopted a nominating and corporate governance committee charter, which details the principal responsibilities of the nominating and

corporate governance committee, including:

The identification, evaluation and recommendation of qualified candidates to become Board members.

The oversight of the implementation of and monitoring compliance with the Company’s Code of Ethics (other than with respect to complaints regarding accounting or auditing issues).

Coordinating and overseeing Board, committee, and director evaluations.

Periodic review of the Company’s governance documents as appropriate.

charter also provides that the nominating and corporate governance committee may, in its sole discretion, retain or obtain the advice

1 unchanged sentence

firm’s fees and other retention terms.

have adopted a written code of ethics and business conduct that applies to our directors, officers and employees, including our principal

executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

A copy of the code of ethics and business conduct will be provided to any person, without charge, upon written request sent to Wetouch

Technology Inc., No.

Code of Ethics

We have adopted a written

code of ethics and business conduct that applies to our directors, officers and employees, including our principal executive officer,

principal financial officer, principal accounting officer or controller, or persons performing similar functions.

A copy of the code of

ethics and business conduct will be provided to any person, without charge, upon written request sent to Wetouch Technology Inc., No.

29, Third Main Avenue, Shigao Town, Renshou County, Meishan, Sichuan, China;

Corporate Secretary.

amendments to or waivers of the code of ethics and business conduct will be promptly reported in a Current Report on Form 8-K, as required

by applicable laws.

April 16, 2024, we adopted insider trading policies and procedures governing the purchase, sale, and/or other dispositions of

our securities by directors, officers and employees, which are reasonably designed to promote compliance with insider trading laws, rules

and regulations, and applicable Nasdaq listing standards (the “Insider Trading Policy”).

foregoing description of the Insider Trading Policy does not purport to be complete and is qualified in its entirety by the terms and

conditions of the Insider Trading Policy, a copy of which is attached hereto as Exhibit 19 and is incorporated herein by reference.

in Certain Legal Proceedings

our knowledge, during the last ten years, none of our directors and executive officers (including those of our subsidiaries) has:

a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at

the time of the bankruptcy or within two years prior to that time.

convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor

subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,

permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities

or banking activities.

found by a court of competent jurisdiction (in a civil action), the SEC, or the Commodities Futures Trading Commission to have violated

a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

the subject to, or a party to, any sanction or order, not subsequently reverse, suspended or vacated, of any self-regulatory organization,

any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members

or persons associated with a member.

Section 16(a) Reports

16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than

10% percent of our equity securities (“Reporting Persons”) to file reports of ownership and changes in ownership with the

Based solely on our review of copies of such reports and representations from the Reporting Persons, we believe that during the

fiscal year ended December 31, 2023, the Reporting Persons timely filed all such reports, except that Fei Bai, Xiaojin Tang, and Congjin

Wang, directors of the Company, failed to timely file Forms 3 as directors of the Company.

No securities of the Company are beneficially

following table sets forth total compensation paid to our named executive officers for the years ended December 31, 2023 and 2022.

Any amendments to or waivers

of the code of ethics and business conduct will be promptly reported in a Current Report on Form 8-K, as required by applicable laws.

Trading Policies

On April 16, 2024 , we adopted

insider trading policies and procedures governing the purchase, sale, and/or other disposition of our securities by directors, officers

and employees, which are reasonably designed to promote compliance with insider trading laws, rules and regulations, and applicable Nasdaq

listing standards (the “Insider Trading Policy”).

The foregoing description

of the Insider Trading Policy does not purport to be complete and is qualified in its entirety by the terms and conditions of the Insider

Trading Policy, a copy of which is attached hereto as Exhibit 19 and is incorporated herein by reference.

Involvement in Certain Legal Proceedings

To our knowledge, during the

last ten years, none of our directors and executive officers (including those of our subsidiaries) has:

Had a bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time.

Been convicted in a criminal proceeding or been subject to a pending criminal proceeding, excluding traffic violations and other minor offenses.

Been subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities.

Been found by a court of competent jurisdiction (in a civil action), the SEC, or the Commody Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Been subject to, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Delinquent Section

16(a) Reports

Section 16(a) of the Securities

Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities

(“Reporting Persons”) to file reports of ownership and changes in ownership with the SEC.

Based solely on our review of copies

of such reports and representations from the Reporting Persons, we believe that during the fiscal year ended December 31, 2024, the Reporting

Persons timely filed all such reports, except that Ms.

Xing Tang, our CFO, Mr.

Guangrong Cai, our Chairman, and Mr.

Huang and Mr.

Guijun Gan, our directors, failed to timely file Forms 3 as officers and directors of the Company.

No securities

of the Company are beneficially owned by Ms.

Xing Tang, Mr.

Jiaxing Huang and Mr.

EXECUTIVE COMPENSATION

The following table sets forth

total compensation paid to our named executive officers for the years ended December 31, 2024 and 2023.

Name and principal position

3 unchanged sentences

Yuhua Huang, Chief Financial Officer (1)

Xing Tang, Chief Financial Officer (2)

Yuhua Huang resigned as Chief Financial Officer of the Company on July 8, 2024.

Xing Tang was appointed as Chief Financial Officer of the Company on July 8, 2024.

Employment Agreements

November 21, 2017, Sichuan Wetouch entered into an employment agreement with its Chief Executive Officer, Zongyi Lian, pursuant to which

2 unchanged sentences

to RMB48,000) and subsidies of approximately $9,104 (equivalent to RMB64,000).

Lian’s employment is for an initial term of

three (3) years and may be renewed by the parties within 30 days prior to the expiration of the employment agreement.

Lian’s employment is for an initial term of three

(3) years and may be renewed by the parties within 30 days prior to the expiration of the employment agreement.

On November 13, 2020,

the employment agreement with Mr.

Lian was renewed for another three (3) years until November 20, 2023, with the similar terms

and conditions.

Lian was renewed for another three (3) years until November 20, 2023, with similar terms and conditions.

Amount reflects salary paid to Mr.

Lian for services rendered to our former operating subsidiary, Sichuan Wetouch.

employment agreement has been assigned to our PRC subsidiary, Sichuan Vtouch.

On April 16, 2024, our board of directors ratified and approved the extension of the term of employment of Mr.

as our CEO for another three years from November 21, 2023 under same terms and conditions.

We expect to enter into a new agreement with

Lian to memorize the terms and conditions and expect to file with the SEC upon execution of such agreement.

November 1, 2017, Sichuan Wetouch entered into an employment agreement with its Chief Financial Officer, Yuhua Huang, pursuant to which

he receives an annual base salary of approximately $11,945 (equivalent to RMB84,000) plus other annual remuneration, including but not

limited to position salary of approximately $8,535 (equivalent to RMB60,000), confidentiality fee of approximately $3,414 (equivalent

to RMB24,000) and subsidies of approximately $4,552 (equivalent to RMB32,000).

Huang’s employment is for an initial term of

three (3) years and may be renewed by the parties within 30 days prior to the expiration of the employment agreement.

On November 11,

2020, the employment agreement with Mr.

Huang was renewed for another three (3) years until October 31, 2023, with the similar terms

and conditions.

Amount reflects salary paid to Mr.

Huang for services rendered to our former operating subsidiary, Sichuan Wetouch.

employment agreement has been assigned to our PRC subsidiary, Sichuan Vtouch.

Such employment agreement

has been assigned to our PRC subsidiary, Sichuan Vtouch.

On April 16, 2024, our board of directors ratified and approved the extension

of the term of employment of Mr.

Huang as our CFO for another three years from November 1, 2023 under same terms and conditions.

to enter into a new agreement with Mr.

Huang to memorize the terms and conditions and expect to file with the SEC upon execution of such

these agreements, each of the individuals is employed for a specified time period and is entitled to receive annual salary plus other

remuneration, pension insurance, medical insurance, maternity insurance, unemployment insurance, work-related injury insurance, housing

provident funds and other benefits pursuant to PRC law.

We and the individuals may terminate the employment upon mutual agreement.

that the individuals propose earlier termination and the agreement is terminated upon mutual agreement.

The persons are not entitled

to compensation.

The persons may terminate the employment by giving thirty days advance written notice.

We may terminate their employment

for cause, at any time, without notice or remuneration, for certain acts of the person, such as serious violation of Sichuan Vtouch’s

rules and regulations, and gross neglect of duty and misconduct resulting in large economic losses to Sichuan Vtouch.

Lian as our CEO for another three years from November 21, 2023 under the same terms and conditions.

expect to enter into a new agreement with Mr.

Lian to memorialize the terms and conditions and expect to file with the SEC upon execution.

these agreements with Zongyi Lian, he is employed for a specified time period and is entitled to receive annual salary plus other remuneration,

pension insurance, medical insurance, maternity insurance, unemployment insurance, work-related injury insurance, housing provident funds

and other benefits pursuant to PRC law.

We and the individual may terminate the employment upon mutual agreement.

Provided that the individual

proposes earlier termination and the agreement is terminated upon mutual agreement.

The individual is not entitled to compensation.

individual may terminate the employment by giving thirty days’ advance written notice.

We may terminate his employment for cause,

at any time, without notice or remuneration, for certain acts by the individual, such as serious violation of Sichuan Vtouch’s rules

and regulations, and gross neglect of duty and misconduct resulting in large economic losses to Sichuan Vtouch.

We may also terminate

2 unchanged sentences

inability to perform the assigned work and after training or adjustment of position, still failure to perform the assigned work.

employment agreements will be terminated upon (1) expiry of the employment, (2) the entitlement of the named executive officers to the

pension insurance, (3) the death of the named executive officers, (4) the bankruptcy of Sichuan Vtouch, and (5) other circumstances regulated

by laws and regulations.

individual is not permitted to (1) hold any side job during the employment, and (2) operate on their own or on behalf of other individuals

or enterprises any business providing same or similar competitive products or services.

The employment

agreements will be terminated upon (1) expiry of the employment, (2) the entitlement of the named executive officers to the pension insurance,

(3) the death of the named executive officers, (4) the bankruptcy of Sichuan Vtouch, and (5) other circumstances regulated by laws and

Lian is not permitted to (1) hold any side job during the employment, and (2) operate on his own or on behalf of other individuals or

enterprises any business providing same or similar competitive products or services.

November 1, 2017, Sichuan Wetouch entered into an employment agreement with our former Chief Financial Officer, Yuhua Huang, pursuant

to which he received an annual base salary of approximately $11,945 (equivalent to RMB84,000) plus other annual remuneration, including

but not limited to position salary of approximately $8,535 (equivalent to RMB60,000), confidentiality fee of approximately $3,414 (equivalent

to RMB24,000) and subsidies of approximately $4,552 (equivalent to RMB32,000).

Huang’s initial employment was for an initial

term of three (3) years, which was renewed by the parties for another three (3) years until October 31, 2023, with similar terms and conditions.

On April 16, 2024, our board of directors ratified and approved the extension of the term of employment of Mr.

Huang as our Chief

Financial Officer for another three years starting from November 1, 2023 under the same terms and conditions.

8, 2024, Yuhua Huang resigned as Chief Financial Officer of the Company and ceased to be

employed by us.

July 8, 2024, the Company and Xing Tang entered into an executive officer agreement.

The term of the agreement is three years, effective

as of July 8, 2024.

Pursuant to this agreement, Xing Tang serves as our Chief Financial Officer and is entitled to receive $5,630 per

month ( which shall accrue on a daily basis ).

The agreement contains customary restrictive

covenants related to non-conflict and non-competition, confidentiality covenants restricting disclosures of trade secrets and other confidential

The agreement may be terminated by the Company at any time, without notice or

remuneration (unless notice or remuneration is specifically required by applicable law, in which case notice or remuneration will be provided

in accordance with applicable law) for cause (including but not limited to gross negligence, willful

misconduct or failure to perform duties), or due to death or disability, or without cause by providing one-month prior written notice.

Xing Tang may terminate the employment at any time with a one-month prior written notice to the Company if (1) there is a material

reduction in her authority, duties and responsibilities, or (2) there is a material reduction in her annual salary.

Confidentiality

and Non-Competition

have entered into confidentiality and non-competition agreements with each of Mr.

Huang in November 2017, which were renewed

in November 2020.

Such agreements have been assigned to our PRC subsidiary, Sichuan Vtouch.

Each individual has agreed (1) to keep all

confidential information confidential and return them together with any copy to Sichuan Vtouch upon termination of employment;

to disclose the confidential information of Sichuan Vtouch to any third party;

(3) not to allow any third party to use or acquire the

confidential information of Sichuan Vtouch, except as required in the performance of his or her duties in connection with the employment

or pursuant to the instruction of the Company;

(4) not to use the confidential information of Sichuan Vtouch for its own benefits;

(4) to keep other confidential obligations.

As compensation, each individual is entitled to receive a monthly confidentiality fee at

a different rate.

Each individual has also agreed to hold, after the termination or expiry of his employment agreement, in strict confidence,

any of our confidential information without any extra compensation.

entered into confidentiality and non-competition agreements with Mr.

Lian in November 2017, which were renewed in November 2020.

agreements have been assigned to our PRC subsidiary, Sichuan Vtouch.

Each individual has agreed (1) to keep all confidential information

confidential and return it, together with any copies, to Sichuan Vtouch upon termination of employment;

(2) not to disclose the confidential

information of Sichuan Vtouch to any third party;

(3) not to allow any third party to use or acquire the confidential information of Sichuan

Vtouch, except as required in the performance of his or her duties in connection with the employment or pursuant to the instruction of

(4) not to use the confidential information of Sichuan Vtouch for his own benefit;

and (4) to keep other confidential obligations.

As compensation, each individual is entitled to receive a monthly confidentiality fee at a different rate.

Each individual has also agreed

to hold, after the termination or expiry of his employment agreement, in strict confidence, any of our confidential information without

any extra compensation.

officer has agreed to be bound by non-competition restrictions during the term of his employment and for two years following termination

of the employment.

The executive officers are not allowed to (1) directly or indirectly invest, establish, or be hired by, any individual

or enterprises engaging in the same or similar business, or competitive business, (2) directly or indirectly persuade, induce, encourage,

or cause any employee of the Company to terminate the employment with Sichuan Vtouch or its subsidiaries;

and (3) directly or indirectly

persuade, induce, encourage, or cause any customers of Sichuan Vtouch to terminate the business relationship with Sichuan Vtouch or its

subsidiaries.

The executive officers may not (1) directly or indirectly invest, establish, or be hired by, any individual or enterprises

engaging in the same or similar business, or competitive business, (2) directly or indirectly persuade, induce, encourage, or cause any

employee of the Company to terminate employment with Sichuan Vtouch or its subsidiaries;

and (3) directly or indirectly persuade, induce,

encourage, or cause any customers of Sichuan Vtouch to terminate the business relationship with Sichuan Vtouch or its subsidiaries.

officer is obligated to pay $7,110 to $14,220 (equivalent to RMB50,000 to RMB100,000) as a penalty, together with any earnings generated

from the use or disclose of the confidential information, to Sichuan Vtouch for violation of the confidentiality and non-competition

board of directors adopted a clawback policy covering our executive officers.

An executive officer is our chief executive officer, president,

principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president

in charge of a significant principal business unit, division, or function (such as sales, administration, or finance), any other officer

who performs a policy-making function, or any other person who performs similar policy-making functions for us.

As of the date of this

Annual Report, our only executive officers are our chief executive officer and our chief financial officer.

The clawback policy relates

to incentive-based compensation, which is any compensation that is granted, earned or vested based wholly or in part upon the attainment

of a financial reporting measure.

The clawback policy covers the recovery of incentive-based compensation from an executive officer only

in the event that we are required to prepare an accounting restatement due to the material noncompliance of our financial reporting requirement

under the United States securities laws, including any required accounting restatement to correct an error in previously issued financial

statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error

were corrected in the current period or left uncorrected in the current period.

Questions as to “materiality” will be made

by the Compensation Committee in coordination with the Audit Committee.

incentive-based compensation subject to recovery is the incentive-based compensation received during the three completed fiscal years

immediately preceding the date that we are required to prepare an accounting restatement as described above, provided that the person

served as an executive officer at any time during the performance period applicable to the incentive-based compensation in question provided

that the clawback policy shall only apply if the incentive-based compensation is received while we have a class of securities listed

on Nasdaq and on or after October 2, 2023.

None of our officers’ employment agreements provide incentive-based compensation during

the year ended December 31.

Equity Awards at Fiscal Year-End

are no current outstanding equity awards to our executive officers as of December 31, 2023.

Incentive Plans

are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.

from the use or disclosure of the confidential information, to Sichuan Vtouch for violation of the confidentiality and non-competition

Clawback Policy

directors adopted a clawback policy covering our executive officers.

An executive officer is our chief executive officer, president, principal

financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president in charge

of a significant principal business unit, division, or function (such as sales, administration, or finance), any other officer who performs

a policy-making function, or any other person who performs similar policy-making functions for us.

As of the date of this Annual Report,

our only executive officers are our chief executive officer and our chief financial officer.

The clawback policy relates to incentive-based

compensation, which is any compensation that is granted, earned or vested based wholly or in part upon the attainment of a financial reporting

The clawback policy covers the recovery of incentive-based compensation from an executive officer only in the event that we are

required to prepare an accounting restatement due to the material noncompliance of our financial reporting requirements under the United

States securities laws, including any required accounting restatement to correct an error in previously issued financial statements that

is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected

in the current period or left uncorrected in the current period.

Questions as to “materiality” will be determined by the Compensation

Committee in coordination with the Audit Committee.

The incentive-based

compensation subject to recovery is the incentive-based compensation received during the three completed fiscal years immediately preceding

the date that we are required to prepare an accounting restatement as described above, provided that the person served as an executive

officer at any time during the performance period applicable to the incentive-based compensation in question provided that the clawback

policy shall only apply if the incentive-based compensation is received while we have a class of securities listed on Nasdaq and on or

after October 2, 2023.

None of our officers’ employment agreements provide incentive-based compensation during the year ended December

Outstanding Equity Awards at Fiscal Year-End

are no outstanding equity awards to our executive officers as of December 31, 2024.

Long-Term Incentive

are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers as of December

Director Compensation

table below shows the compensation paid to our non-employee directors during 2024.

Fees Earned or Paid in Cash

Option Awards

Non-Equity Incentive Plan Compensation

Nonqualified Deferred Compensation Earnings

Jeffrey Kone(1)

*Accrued and not paid.

Jeffrey Kone resigned as a director on February 16, 2023.

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

following table lists, as of April 15, 2024, the number of shares of common stock beneficially owned by (i) each person, entity or

Incentive Plan

Xiaojin Tang(2)

Congjin Wang(3)

Jiaxing Huang (4)

Guijun Gan (5)

Accrued and not paid, except Jing Chen’s.

Fei Bai resigned as Chairman and a director of the Company on June 3, 2024.

Xiaojin Tang resigned as a director of the Company on June 3, 2024.

Congjin Wang resigned as a director of the Company on June 3, 2024.

Jiaxing Huang was appointed as a director of the Company on June 28, 2024, effective July 1, 2024.

Guijun Gan was appointed as a director of the Company on June 28, 2024, effective July 1, 2024.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

following table lists, as of September 8, 2025, the number of shares of common stock beneficially owned by (i) each person, entity or

group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known to the Company to be the beneficial owner

7 unchanged sentences

Shigao Town, Renshou County, Meishan, Sichuan, China.

percentages below are calculated based on 11,931,534 shares of common stock issued and outstanding as of April 15, 2024.

Shares Beneficially Owned

Name of Beneficial Owner

Executive Officers and Directors:

All officers and directors as a group (7 persons)

5% or Greater Holders:

percentages below were calculated based on 11,931,534 shares of common stock issued and outstanding as of September 8, 2025.

Beneficially Owned

of Beneficial Owner

Officers and Directors:

Guangrong Cai

Zongyi Lian (2)

Jiaxing Huang

All officers and directors

as a group (7 persons)

Greater Holders:

Represents 9,576 shares

of common stock held of record by Guangrong Cai, Chairman of the Company.

Represents 5,657 shares

of common stock held of record by Zongyi Lian, Chief Executive Officer of the Company.

in Control Agreements

of the date of this Annual Report, we are not aware of any arrangements that may result in “changes in control,” as that

term is defined by the provisions of Item 403(c) of Regulation S-K.

Relationships and Related Transactions, and Director Independence

following is a description of transactions since January 1, 2022 to which we were a party in which (i) the amount involved exceeded

or will exceed the lesser of (A) $120,000 or (B) one percent of our average total assets at year end for the last two completed fiscal

years and (ii) any of our directors, executive officers or holders of more than 5% of our capital stock, or any member of the immediate

family of, or person sharing the household with, any of the foregoing persons, who had or will have a direct or indirect material interest,

other than equity and other compensation, termination, change in control and other similar arrangements, which are described under “Executive

Compensation.”

due to Related Parties

the years ended December 31, 2023 and 2022, the total amounts due to related parties were nil and $1,665, respectively.

These advances

are non-interest bearing and due on demand.

ACCOUNTING FEES AND SERVICES.

each fiscal year of 2023 and 2022, we incurred aggregate fees and expenses of $275,000 and $164,000, respectively, from B F Borgers

CPA PC for works completed for our annual audits and quarterly reviews.

Audit-Related

Audit-related

expenses for 2023 and 2022 were $0 and $0, respectively.

incurred aggregate fees and expenses of $0 and $0 for each fiscal year of 2023 and 2022, respectively.

incurred other fees of $0 and $0 for each fiscal year of 2022 and 2021.

and Financial Statements Schedules

Financial Statements

financial statements and the notes thereto, together with the report of our independent registered public accounting firm on those financial

statements, are hereby filed as part of this Annual Report beginning on page F-1.

Statement Schedules

financial statement schedules have been omitted since the required information is not applicable or is not present in amounts sufficient

to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes

following is a complete list of exhibits filed as part of this Form 10-K.

Exhibit numbers correspond to the numbers in the Exhibit Table

of Item 601 of Regulation S-K.

term is defined by Item 403(c) of Regulation S-K.

September 4, 2025, Jiaying Cai resigned as a member of the Board of Directors (the “Board”).

Jiaying Cai’s decision

to resign was not the result of any disagreement with the Company, the Board, management, or any matter relating to the Company’s

operations, policies or practices.

April 29, 2025, Jing Chen resigned as a member of the Board of Directors (the “Board”).

Jing Chen’s decision to

resign was not the result of any disagreement with the Company, the Board, management, or any matter relating to the Company’s

operations, policies or practices.

July 8, 2024, Mr.

Yuhua Huang resigned as a Chief Financial Officer of Wetouch Technology Inc.

(the “Company”).

decision to resign was not the result of any disagreement with the Company, the Board of Directors (the “Board”), management,

or any matter relating to the Company’s operations, policies or practices.

June 3, 2024, Mr.

Fei Bai resigned as a member of the Board of Directors (the “Board”) and as the Chairman of the Board.

Bai’s decision to resign was not the result of any disagreement with the Company, the Board, management, or any matter relating

to the Company’s operations, policies or practices.

June 3, 2024, Mr.

Xiaojin Tang resigned as a member of the Board and the Audit Committee, the Compensation Committee, and the Nominating

and Corporate Governance Committee of the Board, including as chairperson of the Compensation Committee.

Tang’s decision to

resign was not the result of any disagreement with the Company, the Board, management, or any matter relating to the Company’s

operations, policies or practices.

June 3, 2024, Mr.

Congjin Wang resigned as a member of the Board and the Audit Committee, the Compensation Committee, and the Nominating

and Corporate Governance Committee of the Board, including as chairperson of the Nominating and Corporate Governance Committee.

decision to resign was not the result of any disagreement with the Company, the Board, management, or any matter relating to the Company’s

operations, policies or practices.

September 5, 2025, the Board appointed Jian Feng to serve as a member of the Board.

May 1, 2025, the Board appointed Jing Guo to serve as a member of the Board, the Audit Committee, the Compensation Committee, and the

Nominating and Corporate Governance Committee of the Board, including as the Chairperson of the Nominating and Corporate Governance Committee.

May 1, 2025, the Board appointed Guijun Gan to serve as the Chairperson of the Audit Committee of the Board and removed him from his

position as the Chairperson of the Nominating and Corporate Governance Committee of the Board.

July 8, 2024.

the Board of Company appointed Xing Tang to serve as the Chief Financial Officer of the Company.

June 28, 2024, the Board of Directors (the “Board”) appointed Guangrong Cai to serve as a member of the Board and Chairman

of the Board.

June 28, 2024, the Board of Directors (the “Board”) appointed Jiaxing Huang to serve as a member of the Board, the Audit

Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee of the Board, including as chairperson of

the Compensation Committee.

June 28, 2024, the Board of Directors (the “Board”) appointed Guijun Gan to serve as a member of the Board, the Audit Committee,

the Compensation Committee, and the Nominating and Corporate Governance Committee of the Board, including as chairperson of the Nominating

and Corporate Governance Committee.

CERTAIN RELATIONSHIPS AND RELATED

TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Related Party Transactions

Since January 1, 2024, the

Company has engaged in the following related person transaction in which the amount involved exceeded the lesser of $120,000 or one percent

of the Company’s average total assets at year-end for the last two completed fiscal years, and in which a related person had a material

As of December 31, 2024,

the Company had an outstanding payable of approximately $149,211 due to Chengdu Wetouch Intelligent Optoelectronics Co., Ltd., an

affiliate of Ms.

Jiaying Cai, a former director and secretary of the Company.

The balance was nil as of December 31, 2023.

advances were unsecured, non-interest bearing, and due on demand.

The Company’s Audit

Committee is responsible for reviewing and approving related party transactions.

Any such transaction is evaluated to ensure it is on

terms comparable to those available with unrelated third parties and in the best interests of the Company and its shareholders.

than the transaction described above, the Company is not aware of any related person transactions since January 1, 2024, requiring disclosure

under Item 404.

Family Relationships

The only family relationship among the Company’s directors and

executive officers was that Ms.

Jiaying Cai, a former Director and secretary of the Company, is the niece of Mr.

Guangrong Cai, Chairman

of the Company.

Director Independence

The Board of Directors has

reviewed the independence of its members under the independence standards of the Nasdaq Stock Market (the “Nasdaq Rules”),

which the Company has adopted as its definition of independence for purposes of determining director independence generally and committee

independence specifically.

The Nasdaq Rules require that a majority of the board be independent and that members of the audit, compensation,

and nominating committees meet additional independence requirements.

Based on this review, the

Board has determined that each of Jing Chen, Jiaxing Huang, and Guijun Gan qualifies as an independent director under Nasdaq Listing Rule

In addition, the Board determined that these directors meet the heightened independence standards applicable to audit committee

members under Rule 10A-3 of the Exchange Act and Nasdaq rules, and to compensation and nominating committee members under Nasdaq rules.

Chen also qualifies as an “audit committee financial expert” as defined by SEC rules.

The remaining directors, Guangrong Cai, Zongyi Lian, Jian Feng, and

Jing Guo, are not considered independent because of their current roles as executive officers of the Company or family relationship, as

described above.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

For fiscal year 2024, we incurred

aggregate fees and expenses of $250,000 from Enrome LLP for work completed related to our

annual audit and quarterly reviews.

For fiscal year 2023, we incurred

aggregate fees and expenses of $275,000 from B F Borgers CPA PC for work completed related to our annual audits and quarterly reviews.

Audit-Related Expenses

Audit-related expenses for

2024 and 2023 were $0 and $0, respectively.

We incurred aggregate fees

and expenses of $0 and $0 for each fiscal year 2024 and 2023, respectively.

All Other Fees

We incurred other fees of

$0 and $0 for each fiscal year 2024 and 2023.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Consolidated Financial Statements

Our financial statements and

the notes thereto, together with the report of our independent registered public accounting firm on those financial statements, are hereby

filed as part of this Annual Report beginning on page F-1.

Financial Statement Schedules

All financial statement schedules

have been omitted since the required information is not applicable or is not present in amounts sufficient to require submission of the

schedule, or because the information required is included in the consolidated financial statements and notes thereto.

The following is a complete

list of exhibits filed as part of this Form 10-K.

Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation

Share Exchange Agreement dated October 9, 2020 among Wetouch Technology Inc.

2 unchanged sentences

Bylaws of the Company.

Certificate of Incorporation of Wetouch Holding Group Limited, dated August 14, 2020.

Memorandum of Association and Articles of Association of Wetouch Holding Group Limited, dated August 14, 2020.

Certificate of Incorporation of Hong Kong Vtouch Electronics Technology Limited, dated May 5, 2016.

Certificate of Change of Name of Hong Kong Wetouch Electronics Technology Limited, dated August 13, 2020.

Certificate of Change of Name of Hong Kong Wetouch Electronics Technology Limited, dated September 8, 2020.

Articles of Association of Hong Kong Vtouch Electronics Technology Limited, dated May 5, 2016.

Amended Articles of Association of Hong Kong Wetouch Electronics Technology Limited.

English Translation of Business License of Sichuan Wetouch Technology Co., Ltd, dated January 23, 2017.

English Translation of Articles of Association of Sichuan Wetouch Technology Co., Ltd, dated July 19, 2016.

English Translation of Business License of Sichuan Vtouch Technology Co., Ltd., dated December 30, 2020.

English Translation of Articles of Association of Sichuan Vtouch Technology Co., Ltd, dated December 29, 2020.

Certificate of Incorporation of Hong Kong Wetouch Holding Group Limited, dated December 3, 2020.

Certificate of Change of Name of Hong Kong Wetouch Technology Limited, dated December 9, 2020.

Articles of Association of Hong Kong Wetouch Holding Group Limited, dated December 3, 2020.

Articles of Association of Hong Kong Wetouch Technology Limited, dated March 12, 2021.

Specimen Common Stock Certificate.

10 unchanged sentences

English Translation of Confidentiality and Non-Competition Agreement between Sichuan Wetouch Technology Co., Ltd and Zongyi Lian.

English Translation of Employment Agreement between Sichuan Wetouch Technology Co., Ltd and Yuhua Huang.

English Translation of Confidentiality and Non-Competition Agreement between Sichuan Wetouch Technology Co., Ltd and Yuhua Huang.

Executive Officer Agreement between Wetouch Technology Inc.

and Xing Tang.

English Translation of Form of Sichuan Vtouch Technology Co., Ltd.

6 unchanged sentences

English Translation of Renewed Confidentiality and Non-Competition Agreement between Sichuan Wetouch Technology Co., Ltd and Zongyi Lian dated November 13, 2020.

English Translation of Renewed Employment Agreement between Sichuan Wetouch Technology Co., Ltd and Yuhua Huang dated November 11, 2020.

English Translation of Renewed Confidentiality and Non-Competition Agreement between Sichuan Wetouch Technology Co., Ltd and Yuhua Huang dated November 11, 2020.

English Translation of Form of Sichuan Wetouch Technology Co., Ltd.

Supplemental Agreement to Sales Framework Agreement.

English Translation of Agreement of Compensation on Demolition between Sichuan Wetouch Technology Co., Ltd and Sichuan Renshou Shigao Tianfu Investment Co., Ltd dated March 16, 2021.

Translation of Form of Sichuan Wetouch Technology Co., Ltd.

Supplemental Agreement to Sales Framework Agreement dated April

English Translation of Leaseback Agreement between Sichuan Vtouch Technology Co., Ltd and Sichuan Renshou Shigao Tianfu Investment Co., Ltd dated March 16, 2021.

32 unchanged sentences

English Translation of Construction Contract, dated as of July 27, 2021, between Sichuan Vtouch Technology Co., Ltd and Sichuan Chunqiu Development and Construction Group Co.

Form of Director Offer Letter

English Translation of Lease Agreement, dated August 9, 2024, between Sichuan Vtouch Technology Co., Ltd and Sichuan Renshou Shigao Tianfu Investment Co., Ltd.

Ethics (incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 2022)

Insider Trading Policy.

List of subsidiaries of the Company.

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Sarbanes-Oxley Act.

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act

Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act.

Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Sarbanes-Oxley Act.

Certification of the Principal Executive Officer pursuant to 18 U.S.C.

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of the Principal Financial Officer pursuant to 18 U.S.C.

1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Executive Compensation Recovery Policy

2 unchanged sentences

Nominating and Corporate Governance Committee Charter

XBRL Instance Document*

XBRL Taxonomy Extension Schema Document*

XBRL Taxonomy Extension Calculation Linkbase Document*

XBRL Taxonomy Extension Definition Linkbase Document*

XBRL Taxonomy Extension Label Linkbase Document*

XBRL Taxonomy Extension Presentation Linkbase Document*

Page Interactive Data File (embedded within the Inline XBRL document)

Inline XBRL Instance Document*

Inline XBRL Taxonomy Extension Schema Document*

Inline XBRL Taxonomy Extension Calculation Linkbase Document*

Inline XBRL Taxonomy Extension Definition Linkbase Document*

Inline XBRL Taxonomy Extension Label Linkbase Document*

Inline XBRL Taxonomy Extension Presentation Linkbase Document*

Cover Page Interactive Data File (embedded within the Inline XBRL document)

filed herewith

Furnished herewith

Filed as an exhibit to the Company’s registration statement on Form

S-1, File No.

Filed as an exhibit to the registrant’s registration statement on Form S-1, File No.

333-270726 and incorporated herein by reference.

Filed as an exhibit to the registrant’s current report on Form 8-K, f iled with the SEC on July 12, 2024.

Filed as an exhibit to the registrant’s current report on Form 8-K, f iled with the SEC on July 1, 2024.

Filed as an exhibit to the registrant’s annual report on Form 10-K, f iled with the SEC on April 16, 2024.

FORM 10-K SUMMARY

to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed

on its behalf by the undersigned, thereunto duly authorized.

April 16, 2024

TECHNOLOGY INC.

and Chief Executive Officer

Executive Officer)

Financial Officer

Financial and Accounting Officer)

to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf

of the registrant and in the capacities and on the dates indicated.

Executive Officer and

Chairman(Principal

Executive Officer)

Financial Officer

Financial and Accounting Officer)

TECHNOLOGY INC.

Pursuant to the requirements of Section 13 or

15(d) of the Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto

duly authorized.

September 10, 2025

WETOUCH TECHNOLOGY INC.

/s/ Zongyi Lian

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Xing Tang

Chief Financial Officer

(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities

Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities

and on the dates indicated.

/s/ Zongyi Lian

September 10, 2025

Chief Executive Officer and

Chairman(Principal Executive Officer)

/s/ Xing Tang

Chief Financial Officer

September 10, 2025

(Principal Financial and Accounting Officer)

/s/ Guangrong Cai

Chairman and Director

September 10, 2025

Guangrong Cai

September 10, 2025

/s/ Jiaxing Huang

September 10, 2025

Jiaxing Huang

/s/ Guijun Gan

September 10, 2025

WETOUCH TECHNOLOGY INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2023 and 2022

Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2023 and 2022

Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

Notes to Consolidated Financial Statements as of December 31, 2023 and 2022

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered

Public Accounting Firm

the shareholders and the board of directors of Wetouch Technology Inc.

on the Financial Statements

have audited the accompanying consolidated balance sheets of Wetouch Technology Inc.

as of December 31, 2023 and 2022, the related statements

of operations, stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred

to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years

then ended, in conformity with accounting principles generally accepted in the United States.

financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s

financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board

(United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits

we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion

on the effectiveness of the Company’s internal control over financial reporting.

Consolidated Balance Sheets as of December 31, 2024

Consolidated Statements of Income and Comprehensive

Income for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Changes in Stockholders’

Equity for the Years Ended December 31, 2024 and 2023

Consolidated Statements of Cash Flows for the Years

Ended December 31, 2024 and 2023

Notes to Consolidated Financial Statements as of December

31, 2024 and 2023

Report of Independent Registered Public Accounting

To the Board of Directors and Shareholders of

Wetouch Technology Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated

balance sheets of Wetouch Technology Inc.

and its subsidiaries (collectively, the “Company”) as of December 31, 2024 and 2023,

and the related consolidated statements of income and comprehensive income, changes in shareholders’ equity (deficit), and cash

flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated

financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial

position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years

in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America (“U.S.

Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding

of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

Accordingly, we express no such opinion.

audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or

fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding

the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statement.

We believe that our audits provide

a reasonable basis for our opinion.

BF Borgers CPA PC (PCAOB ID 5041 )

have served as the Company’s auditor since 2019

TECHNOLOGY INC.

/s/ ST & PARTNERS PLT (PCAOB ID

We have served as the Company’s auditor

Petaling Jaya, Malaysia

September 10, 2025

WETOUCH TECHNOLOGY INC.

AND SUBSIDIARIES

BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

(Currency expressed in United States Dollars(“US”),

except for number of shares)

As of December 31,

CURRENT ASSETS

$ 103,760,324

Accounts receivable, net

2 unchanged sentences

Property, plant and equipment, net

Operating right-of-use assets

Deferred tax assets

$ 128,019,463

$ 119,641,398

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

Loan from a third party

Due to related parties

Due to a related party

Income tax payable

Accrued expenses and other current liabilities

Convertible promissory notes payable

Operating lease liabilities- current

TOTAL CURRENT LIABILITIES

Common stock purchase warrants liability

Operating lease liabilities- non current

TOTAL LIABILITIES

1 unchanged sentence

STOCKHOLDERS’ EQUITY

Common stock, $ 0.001

par value, 15,000,000 shares authorized,

9,732,948 and 1,680,248

issued and outstanding as of December 31, 2023 and 2022, respectively *

Common stock, $ 0.001 par value, 15,000,000 shares authorized, 11,931,534 and 9,732,948 issued and outstanding as of December 31, 2024 and 2023, respectively*

Additional paid in capital*

7 unchanged sentences

$ 128,019,463

* Retrospectively restated for effect

of reverse stock split (1-for-20) ,

see Note 10 (2)

accompanying notes are an integral part of these consolidated financial statements.

TECHNOLOGY INC.

$ 119,641,398

* Retrospectively

restated for effect of reverse stock split (1-for-20), see Note 10 (2)

The accompanying notes are an integral part of these consolidated financial statements.

WETOUCH TECHNOLOGY INC.

AND SUBSIDIARIES

STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

The Years Ended December 31,

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE

(Currency expressed in United States Dollars(“US”),

except for number of shares)

The Years Ended

COST OF REVENUES

3 unchanged sentences

Selling expenses

( 1,288,467 )

General and administrative expenses

8 unchanged sentences

Interest expense

Other expense

Loss on conversion of convertible promissory notes payable

( 1,169,974 )

Other income (expense)

Gain (loss)on changes in fair value of common stock purchase warrants liability

TOTAL OTHER INCOME (EXPENSE), NET

TOTAL OTHER EXPENSE, NET

INCOME BEFORE INCOME TAX EXPENSE

6 unchanged sentences

( 4,297,908 )

COMPREHENSIVE INCOME (LOSS)

COMPREHENSIVE INCOME

EARNINGS PER COMMON SHARE*

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING*

* Retrospectively restated

for effect of reverse stock split (1-for-20) , see Note 10 (2)

accompanying notes are an integral part of these consolidated financial statements.

TECHNOLOGY INC.

* Retrospectively

restated for effect of reverse stock split (1-for-20), see Note 10 (2)

The accompanying notes are an integral part of

these consolidated financial statements.

WETOUCH TECHNOLOGY INC.

AND SUBSIDIARIES

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

THE YEARS ENDED DECEMBER 31, 2023 AND 2022

(income) loss

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023

(Currency expressed in United States Dollars(“US”),except

for number of shares)

Common stock at

2 unchanged sentences

stockholders’

(income) loss

Balance at December 31 2022*

$ ( 2,977,524 )

Appropriation to statutory reserve

Exercise of warrants issued in conjunction with legal services in 2020

( 1,154,131 )

Shares issued to private placement

Fraction shares issued due to reverse stock split

Exercise of warrants issued to third parties in conjunction with debt issuance in 2021

5 unchanged sentences

$ ( 7,275,432 )

$ 112,920,610

Common stock at

2 unchanged sentences

stockholders’

Balance at December 31 2022 *

$ ( 2,977,524 )

Balance as of December 31 2023*

$ ( 7,275,432 )

Appropriation to statutory reserve

$ 112,920,610

Shares issued to private placement

Fraction shares issued due to reverse stock split

Issuance of common stock from the 2024 Public Offering, net of issuance costs

Exercise of warrants issued in conjunction with legal/consultant services in 2020 and 2021

Exercise of warrants issued to third parties in conjunction with debt issuance in 2021

Stock issuance for convertible promissory notes payable

Appropriation to statutory reserve

Foreign currency translation adjustment

1 unchanged sentence

( 3,355,857 )

Balance at September 30, 2023

$ ( 7,275,432 )

$ 112,920,610

Balance as of December 31, 2024

$ ( 10,631,289 )

$ 124,585,665

* Retrospectively restated

for effect of reverse stock split (1-for-20) , see Note 10 (2)

accompanying notes are an integral part of these consolidated financial statements.

TECHNOLOGY INC.

* Retrospectively

restated for effect of reverse stock split (1-for-20), see Note 10 (2)

The accompanying notes are an integral part of

these consolidated financial statements.

WETOUCH TECHNOLOGY INC.

AND SUBSIDIARIES

STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Currency expressed in United States Dollars(“US”),except

for number of shares)

For the Years Ended

1 unchanged sentence

Adjustments to reconcile net income to cash provided by operating activities

Inventory write-off

Depreciation and amortization

Loss on convertible promissory notes payable

Allowance for credit losses

Provision for obsolete inventory

Amortization of discounts and issuance cost of the notes

Loss (Gain) on changes in fair value of common stock purchase warrants liability

(Gain) loss on changes in fair value of common stock purchase warrants liability

Amortization of operating Right-of-use assets

Changes in operating assets and liabilities:

Accounts receivable

( 1,497,237 )

Due from a related party

Prepaid expenses and other current assets

( 1,771,602 )

Deferred tax assets

Accounts payable

3 unchanged sentences

Accrued expenses and other current liabilities

( 3,343,142 )

Operating lease liabilities

Net cash provided by operating activities

5 unchanged sentences

Cash flows from financing activities

Proceeds from issuance of public offerings, net of expenses

Proceeds from stock issuance of private placement

1 unchanged sentence

( 1,400,750 )

Proceeds from interest-free advances from a third party

Net cash provided by (used in) financing activities

5 unchanged sentences

Cash, end of year

$ 103,760,324

Supplemental disclosures of cash flow information

1 unchanged sentence

Income taxes paid

Non-cash financing activities

Supplemental disclosures of non-cash flow information

Cashless stock issuance for convertible promissory notes payable

accompanying notes are an integral part of these consolidated financial statements.

TECHNOLOGY INC.

Issue costs charged to additional paid-in capital

Exercise of warrant shares

Lease liabilities arising from obtaining right-of-use assets

The accompanying notes are an integral part of

these consolidated financial statements.

WETOUCH TECHNOLOGY INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

1 — BUSINESS DESCRIPTION

Technology Inc.

(“Wetouch”, or the “Company”), formerly known as Gulf West Investment Properties, Inc., was originally

incorporated in August 1992, under the laws of the state of Nevada.

October 9, 2020, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Wetouch Holding

Group Limited (“BVI Wetouch”) and all the shareholders of BVI Wetouch (each, a “BVI Shareholder” and collectively,

the “BVI Shareholders”), to acquire all the issued and outstanding capital stock of BVI Wetouch in exchange for the issuance

to the BVI Shareholders an aggregate of 28,000,000 shares ( 1,400,000 shares post-Reverse Stock Split) of the Company’s common stock

(the “Reverse Merger”).

In the Reverse Merger, each ordinary share of BVI Wetouch was exchanged for 2,800 shares ( 140 shares

post-Reverse Stock Split) of common stock of Wetouch.

Immediately after the closing of the Reverse Merger on October 9, 2020, the Company

had a total of 31,396,394 ( 1,569,820 shares post-Reverse Stock Split) issued and outstanding shares of common stock.

As a result of the

Reverse Merger, BVI Wetouch became a wholly-owned subsidiary of the Company.

Wetouch is a holding company whose only asset, held through a subsidiary, is 100 % of the registered capital of Sichuan Wetouch Technology

(“Sichuan Wetouch”), a limited liability company organized under the laws of the People’s Republic of China

(“China” or the “PRC”).

Sichuan Wetouch is primarily engaged in the business of research and development, manufacture,

and distribution of touchscreen displays to customers both in the PRC and overseas.

The touchscreen products, which are manufactured

by the Company, are primarily for use financial terminals, automotive, Point of Sales, gaming, lottery, medical, Human-Machine Interface

(HMI) , and other specialized industries

Reverse Merger was accounted for as a recapitalization effected by a share exchange, wherein BVI Wetouch is considered the acquirer for

accounting and financial reporting purposes.

The assets and liabilities of BVI Wetouch have been brought forward at their book value

and no goodwill has been recognized.

The number of shares, par value amount, and additional paid-in capital in the prior years are retrospectively

adjusted accordingly.

History of BVI Wetouch

Wetouch was incorporated under the laws of British Virgin Islands on August 14, 2020.

It became the holding company of Hong Kong Wetouch

Electronics Technology Limited (“Hong Kong Wetouch”) on September 11, 2020.

Kong Wetouch Technology Limited (“HK Wetouch”), was incorporated as a holding company under the laws of Hong Kong Special

Administrative Region (the “SAR”) on December 3, 2020.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — ORGANIZATION AND BUSINESS

Wetouch Technology Inc.

(“Wetouch”, or the “Company”), formerly known as Gulf West Investment Properties, Inc., was originally incorporated

in August 1992, under the laws of the state of Nevada.

On October 9, 2020, the

Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Wetouch Holding Group Limited (“BVI

Wetouch”) and all the shareholders of BVI Wetouch (each, a “BVI Shareholder” and collectively, the “BVI Shareholders”),

to acquire all the issued and outstanding capital stock of BVI Wetouch in exchange for the issuance to the BVI Shareholders an aggregate

of 28,000,000 shares ( 1,400,000 shares post-Reverse Stock Split) of the Company’s common stock (the “Reverse Merger”).

In the Reverse Merger, each ordinary share of BVI Wetouch was exchanged for 2,800 shares ( 140 shares post-Reverse Stock Split) of common

stock of Wetouch.

Immediately after the closing of the Reverse Merger on October 9, 2020, the Company had a total of 31,396,394 ( 1,569,820

shares post-Reverse Stock Split) issued and outstanding shares of common stock.

As a result of the Reverse Merger, BVI Wetouch became

a wholly-owned subsidiary of the Company.

BVI Wetouch is a holding

company whose only asset, held through a subsidiary, is 100 % of the registered capital of Sichuan Wetouch Technology Co., Ltd.

Wetouch”), a limited liability company organized under the laws of the People’s Republic of China (“China” or

Sichuan Wetouch is primarily engaged in the business of research and development, manufacture, and distribution

of touchscreen displays to customers both in the PRC and overseas.

The touchscreen products, which are manufactured by the Company, are

primarily for use financial terminals, automotive, Point of Sales, gaming, lottery, medical, Human-Machine Interface (HMI) ,

and other specialized industries

The Reverse Merger was

accounted for as a recapitalization effected by a share exchange, wherein BVI Wetouch is considered the acquirer for accounting and financial

reporting purposes.

The assets and liabilities of BVI Wetouch have been brought forward at their book value and no goodwill has been recognized.

The number of shares, par value amount, and additional paid-in capital in the prior years are retrospectively adjusted accordingly.

wholly-owned subsidiaries, the Company is engaged in the research, development, manufacturing, sales and servicing of medium to

large sized projected capacitive touchscreens.

The Company specializes in large-format touchscreens, which are developed and

designed for a wide variety of markets and used in the financial terminals, automotive, Point of Sales, gaming, lottery, medical,

Human-Machine Interface (“HMI”), and other specialized industries.

Corporate History

of BVI Wetouch

BVI Wetouch was incorporated

under the laws of British Virgin Islands on August 14, 2020.

It became the holding company of Hong Kong Wetouch Electronics Technology

Limited (“Hong Kong Wetouch”) on September 11, 2020.

Hong Kong Wetouch Technology

Limited (“HK Wetouch”), was incorporated as a holding company under the laws of Hong Kong Special Administrative Region (the

“SAR”) on December 3, 2020.

On March 2, 2021, HK Wetouch acquired all shares of Hong Kong Wetouch.

Due to the fact that Hong Kong Wetouch and HK Wetouch are both under the same sole stockholder, the acquisition is accounted for under

common control.

June 2021, Hong Kong Wetouch completed its dissolution process pursuant to the minutes of its special shareholder meeting.

Wetouch was formed on May 6, 2011 in the PRC and became a Wholly Foreign-Owned Enterprise (WFOE”) in PRC on February 23, 2017.

On July 19, 2016, Sichuan Wetouch was 100 % held by HK Wetouch.

December 30, 2020, Sichuan Vtouch was incorporated in Chengdu, Sichuan, under the

March 2021, pursuant to local PRC government guidelines on local environmental issues and the national plan, Sichuan Wetouch was under

the government directed relocation order.

Due to the fact that Hong

Kong Wetouch and HK Wetouch are both under the same sole stockholder, the acquisition is accounted for under common control.

In June 2021, Hong Kong

Wetouch completed its dissolution process pursuant to the minutes of its special shareholder meeting.

Sichuan Wetouch was formed

on May 6, 2011 in the PRC and became a Wholly Foreign-Owned Enterprise (WFOE”) in PRC on February 23, 2017.

On July 19, 2016, Sichuan

Wetouch was 100 % held by HK Wetouch.

On December 30, 2020,

Sichuan Vtouch was incorporated in Chengdu, Sichuan, under the PRC laws.

In March 2021, pursuant

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

relocation order.

Sichuan Vtouch took over the operating business of Sichuan Wetouch.

March 30, 2023, an independent third party acquired all shares of Sichuan Wetouch for a nominal amount.

a result of the above restructuring, HK Wetouch became the sole shareholder of Sichuan Vtouch.

following diagram illustrates the Company’s current corporate structure:

2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the

United States of America (“U.S.

GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission

The accompanying consolidated financial statements include the financial statements of Wetouch and its wholly

owned subsidiaries.

All significant intercompany transactions and balances have been eliminated upon consolidation.

Deconsolidation

of Sichuan Wetouch

March 30, 2023, upon transferring Sichuan Wetouch to a third-party individual for a nominal value, the Company was no longer able to

operate and exert control over this subsidiary whose operation has been taken over by Sichuan Vtouch since the first quarter of 2021.

As a result, Sichuan Wetouch was deconsolidated accordingly since the disposal date.

deconsolidated Sichuan Wetouch had assets, liabilities and the non-controlling interest on disposal date as the following:

SCHEDULE OF DISPOSAL GROUPS, INCLUDING DISCONTINUED OPERATIONS

On March 30, 2023, an independent third party

acquired all shares of Sichuan Wetouch for a nominal amount.

As a result of the above

restructuring, HK Wetouch became the sole shareholder of Sichuan Vtouch.

The following diagram illustrates the Company’s

current corporate structure:

Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING

(a) Basis of Presentation and Principles

of Consolidation

The accompanying consolidated financial statements

have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

The accompanying consolidated

financial statements include the financial statements of Wetouch and its wholly owned subsidiaries.

All significant intercompany transactions

and balances have been eliminated upon consolidation.

Deconsolidation of Sichuan Wetouch

On March 30, 2023, upon transferring Sichuan Wetouch

to a third-party individual for a nominal value, the Company was no longer able to operate and exert control over this subsidiary whose

operation has been taken over by Sichuan Vtouch since the first quarter of 2021.

As a result, Sichuan Wetouch was deconsolidated accordingly

since the disposal date.

The deconsolidated Sichuan

Wetouch had assets, liabilities and the non-controlling interest on disposal date as the following:

Total assets as of deconsolidated date

1 unchanged sentence

Total gain or loss from deconsolidation

the deconsolidation, the Company was no longer entitled to the assets and also legally released from the liabilities previously held

by the deconsolidated Sichuan Wetouch, derived nil gain or loss from the deconsolidation in the consolidated statements of operations

and comprehensive income for the year ended December 31, 2023.

The disposal of Sichuan Wetouch did not represent a strategic

shift and did not have a major effect on the Company’s operation.

There was no cash outflow for the disposal for the year ended

December 31, 2023.

Uses of estimates

preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the

reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting period.

These estimates are based on information as of the date

of the consolidated financial statements.

Significant estimates required to be made by management include, but are not limited to, the

allowance for estimated uncollectible receivables, fair values of financial instruments, inventory valuations, useful lives of property,

plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue

recognition and realization of deferred tax assets.

Upon the deconsolidation,

the Company was no longer entitled to the assets and also legally released from the liabilities previously held by the deconsolidated

Sichuan Wetouch, derived nil gain or loss from the deconsolidation in the consolidated statements of operations and comprehensive income

for the year ended December 31, 2023.

The disposal of Sichuan Wetouch did not represent a strategic shift and did not have a major effect

on the Company’s operation.

There was no cash outflow for the disposal for the year ended December 31, 2023.

(b) Uses of estimates

In preparing the consolidated financial statements

in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and

disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses

during the reporting period.

These estimates are based on information as of the date of the consolidated financial statements.

estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, fair

values of financial instruments, inventory valuations, useful lives of property, plant and equipment, intangible assets, operating lease,

the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition and realization of deferred

Actual results could differ from those estimates.

Cash and cash equivalents

includes currency on hand and deposits held by banks that can be added or withdrawn without limitation.

Accounts receivables, net

receivables are presented net of allowance for doubtful accounts.

The Company determines the adequacy of reserves for doubtful accounts

based on individual account analysis and historical collection trend.

The Company establishes a provision for doubtful receivables when

there is objective evidence that the Company may not be able to collect amounts due.

The allowance is based on management’s best

estimate of specific losses on individual exposures, as well as a provision on historical trends of collections.

Actual amounts received

may differ from management’s estimate of credit worthiness and the economic environment.

Delinquent account balances are written-off

against the allowance for doubtful accounts after management has determined that the collection is not probable.

consists of raw materials, work-in-process and finished goods and is stated at the lower of cost or net realizable value.

Cost is determined

using a weighted average.

For work-in-process and manufactured inventories, cost consists of raw materials, direct labor and an allocated

portion of the Company’s production overhead.

The Company writes down excess and obsolete inventory to its estimated net realizable

value based upon assumptions about future demand and market conditions.

For finished goods and work-in-process, if the estimated net

realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable

costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable

Net realizable value for raw materials is based on replacement cost.

Provisions for inventory write-downs are included in the

cost of revenues in the consolidated statements of operations.

Cash includes currency on hand and deposits held

by banks that can be added or withdrawn without limitation.

(d) Accounts receivables, net

Accounts receivable primarily consists of receivables

from customers, which are recognized and carried at the original invoice amount less an allowance for credit losses.

The Company adopted ASC 326, Financial

Instruments — Credit Loss on January 1, 2023 using the modified retrospective approach.

Upon adoption of

ASC 326 starting from January 1, 2023, the provision of credit losses for accounts receivable is based upon the current expected credit

losses (“CECL”) model.

The CECL model requires an estimate of the credit losses expected over the life of accounts receivable

since initial recognition, and accounts receivable with similar risk characteristics are grouped together when estimating CECL.

the CECL, the Company considers both quantitative and qualitative information that is reasonable and supportable, including historical

credit loss experience, adjusted for relevant factors impacting collectability and forward-looking information indicative of external

market conditions.

While the Company uses the best information available in making determination, the ultimate recovery of recorded receivables

is also dependent upon future economic events and other conditions that may be beyond the Company’s control.

Accounts receivable

which are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential

for recovery is considered remote.

There is a time lag between when the Company estimates a portion of or the entire account balances

to be uncollectible and when a write off of the account balances is taken.

The Company does not have any off-balance sheet credit exposure

related to its customers.

(e) Inventory

Inventory consists of raw materials, work-in-process

and finished goods and is stated at the lower of cost or net realizable value.

Cost is determined using a weighted average.

For work-in-process

and manufactured inventories, cost consists of raw materials, direct labor and an allocated portion of the Company’s production

The Company writes down excess and obsolete inventory to its estimated net realizable value based upon assumptions about future

demand and market conditions.

For finished goods and work-in-process, if the estimated net realizable value for an inventory item, which

is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower

than its cost, the specific inventory item is written down to its estimated net realizable value.

Net realizable value for raw materials

is based on replacement cost.

Provisions for inventory write-downs are included in the cost of revenues in the consolidated statements

of operations.

Inventories are carried at this lower cost basis until sold or scrapped.

Nil and $ 74,100 inventory write-off were recorded for the years ended December 31, 2023 and 2022, respectively.

Convertible Promissory Notes

Company accounts for its convertible promissory notes according to guidance of ASU 2020-06, “Debt—Debt with Conversion and

Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40):

for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for convertible instruments

by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required

to be accounted for as derivatives under Topic 815.

analyze the convertible notes for the existence of a beneficial conversion feature.

the Company considered the three characteristics

of a derivative instrument listed in ASC 815-10-15-83:

(i) having one or more underlyings and one or more notional amounts or payment

provisions or both;

$ 54,873 and nil inventory write-off were recorded

for the years ended December 31, 2024 and 2023, respectively.

(f) Property, plant and equipment, net

Property, plant and equipment are stated at cost

less accumulated depreciation and amortization.

Depreciation and amortization of property and equipment is provided using the straight-line

method over their expected useful lives, as follows:

Buildings 20 years

Machinery and equipment 10 years

Vehicles 4 years

Expenditures for maintenance and repairs, which

do not materially extend the useful lives of the assets, are charged to expense as incurred.

Expenditures for major renewals and betterments

which substantially extend the useful life of assets are capitalized.

The cost and related accumulated depreciation of assets retired

or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other

comprehensive income in other income or expenses.

Construction in progress, funded by Company’s

working capital, represents manufacturing facilities and office building under construction, is stated at cost and transferred to property,

plant and equipment when it is substantially ready for its intended use.

No depreciation is recorded for construction in progress.

management estimate that construction in progress for our new facilities will be completed by the end of fourth quarter of 2026 and will

transfer construction in progress to property, plant and equipment to start depreciation.

(g) Convertible Promissory Notes

The Company accounts for its convertible promissory

notes according to guidance of ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives

and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate

embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under

We analyze the convertible notes for the existence

of a beneficial conversion feature.

the Company considered the three characteristics of a derivative instrument listed in ASC 815-10-15-83:

(i) having one or more underlyings and one or more notional amounts or payment provisions or both;

(ii) requiring no initial net investment;

(iii) permitting net settlement;

the Company’s notes have fixed interest rate, specified notional principal and settlement date, which no other events would affect

specified settlement, and the Company received net proceeds after issuance costs and discount, which the Company recorded as the net

proceeds or net settled investment, the management assessed that the Notes did not meet the definition of a derivative instruments

and an embedded feature would not be bifurcated.

The discounts on the convertible notes, are amortized to interest expense, using the

effective interest method, over the terms of the related convertible notes.

Common stock purchase warrants

Company also analyzed the Warrants in accordance with ASC 815, to determine whether the Warrants meet the definition of a derivative

and, if so, whether the Warrants meet the scope exception of ASC 815-40, which is that contracts issued or held by the reporting entity

that are both (1) indexed to its own stock and (2) classified in stockholders’ equity shall not be considered to be derivative

instruments for purposes of ASC 815-40.

Company concluded that the warrants issued in the financings in November and December 2021 should be treated as a derivative liability

because these warrants are entitled to a price adjustment to allow the exercise price to be increased or reduced in the event the Company

issues or sells any additional shares of common stock at a price per share other than the then-applicable exercise price or without consideration,

which is typically referred to as a “Down-round protection” or “anti-dilution” provision.

According to ASC 815-40,

the “Down-round protection” provision is not considered to be an input to the fair value of a fixed-for-fixed option on equity

Since the Company’s

notes have fixed interest rate, specified notional principal and settlement date, which no other events would affect specified settlement,

and the Company received net proceeds after issuance costs and discount, which the Company recorded as the net proceeds or net settled

investment, the management assessed that the Notes did not meet the definition of a derivative instruments and an embedded feature would

not be bifurcated.

The discounts on the convertible notes, are amortized to interest expense, using the effective interest method, over

the terms of the related convertible notes.

On February 23, 2024,

immediately upon the closing of the 2024 Public Offering, the Company made a full payment to the remaining five outstanding promissory

(see details in NOTE 10 – CONVERTIBLE PROMISSORY NOTES PAYABLE-a) Convertible promissory notes).

There were no convertible

promissory notes as of December 31, 2024.

(h) Common stock purchase warrants

The Company also analyzed

the Warrants in accordance with ASC 815, to determine whether the Warrants meet the definition of a derivative and, if so, whether the

Warrants meet the scope exception of ASC 815-40, which is that contracts issued or held by the reporting entity that are both (1) indexed

to its own stock and (2) classified in stockholders’ equity shall not be considered to be derivative instruments for purposes of

The Company concluded

that the warrants issued in the financings in November and December 2021 should be treated as a derivative liability because these warrants

are entitled to a price adjustment to allow the exercise price to be increased or reduced in the event the Company issues or sells any

additional shares of common stock at a price per share other than the then-applicable exercise price or without consideration, which is

typically referred to as a “Down-round protection” or “anti-dilution” provision.

According to ASC 815-40, the

“Down-round protection” provision is not considered to be an input to the fair value of a fixed-for-fixed option on equity

shares which leads the warrants to fail to be qualified as indexed to the Company’s own stock and then to fail to meet the scope

3 unchanged sentences

derivatives are measured at fair value and re-measured at fair value with changes in fair value recorded in earnings at each reporting

Company used a black-scholes-pricing model to estimate the fair values of common stock purchase warrants at the balance sheet dates.

As of December 31, 2023 and 2022, the Company recorded $ 378,371 and $ 256,957 common stock purchase warrant liability, respectively, and

$ 121,413 loss and $ 871,677 gain on changes of fair value of common stock purchase warrant liability for the year ended December 31, 2023

and 2022, respectively.

Fair value of financial instruments

value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

The Company used a black-scholes-pricing

model to estimate the fair values of common stock purchase warrants at the balance sheet dates.

The Note Warrant (see

details in NOTE 10 – CONVERTIBLE PROMISSORY NOTES PAYABLE-b) Note Warrant) was issued in 2021 which was valid for three years and

expired during the year ended December 31, 2024.

As of December 31, 2024

and 2023, the Company recorded nil and $ 378,371 common stock purchase warrant liability, respectively, and $ 378,371 gain and $$ 121,413

loss on changes of fair value of common stock purchase warrant liability for the year ended December 31, 2024 and 2023, respectively.

(i) Fair value of financial instruments

Fair value is defined as the price that would

be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement

A three-level fair value hierarchy prioritizes the inputs used to measure fair value.

hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of

inputs used to measure fair value are as follows:

1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in

active markets.

2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,

quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable

and inputs derived from or corroborated by observable market data.

3 — inputs to the valuation methodology are unobservable.

otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses

and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and

due to related parties, common stock purchase warrants liability, approximate the fair value of the respective assets and liabilities

as of December 31, 2023 and 2022 based upon the nature of the assets and liabilities.

Property, plant and equipment, net

plant and equipment are stated at cost less accumulated depreciation and amortization.

Depreciation and amortization of property and

equipment is provided using the straight-line method over their expected useful lives, as follows:

OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT

and equipment

and electric equipment

for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred.

for major renewals and betterments which substantially extend the useful life of assets are capitalized.

The cost and related accumulated

depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated

statements of income and other comprehensive income in other income or expenses.

Impairment of long-lived Assets

assets, such as property, plant and equipment, land use rights, are reviewed for impairment when events or changes in circumstances indicate

that the carrying value of such assets may not be recoverable.

Recoverability of a long-lived asset or asset group to be held and used

is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected

to be generated by the asset or asset group.

If the carrying value of an asset or asset group exceeds its estimated undiscounted future

cash flows, an impairment charge is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or

Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values

and third-party independent appraisals, as considered necessary.

Assets to be disposed are reported at the lower of carrying amount or

fair value less costs to sell, and are no longer depreciated.

There was nil impairment of intangible assets recognized for the years

ended December 31, 2023 and 2022.

Foreign Currency Translation

Company uses US dollars as the reporting currency.

The Company’s subsidiary HK Wetouch’s functional currency for HK Wetouch

is Hong Kong dollar.

The functional currency of Sichuan Vtouch is the Chinese Yuan (“RMB”).

The Company’s consolidated

financial statements have been translated into US$.

Assets and liabilities accounts are translated using the exchange rate at each reporting

period end date.

Equity accounts are translated at historical rates.

Income and expense accounts are translated at the average rate of

exchange during the reporting period.

The resulting translation adjustments are reported under other comprehensive income (loss).

and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.

RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.

No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

OF CURRENT EXCHANGE RATES

Revenue Recognition

Company adopted Accounting Standards Codification (“ASC”) 606 using the modified retrospective approach.

The adoption of

this standard did not have a material impact on the Company’s consolidated financial statements.

Therefore, no adjustments to opening

retained earnings were necessary.

606, Revenue from Contracts with customers, establishes principles for reporting information about the nature, amount, timing and uncertainty

of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers.

The core principle requires

an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration

that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

606 requires the use of a five-step model to recognize revenue from customer contracts.

The five-step model requires that the Company

(i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction

price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate

the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies

the performance obligation.

The application of the five-step model to the revenue streams compared to the prior guidance did not result

in significant changes in the way the Company records its revenue.

The Company has assessed the impact of the guidance by reviewing its

existing customer contracts and current accounting policies and practices to identify differences that would result from applying the

new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control

and principal versus agent considerations.

Based on the assessment, the Company concluded that there was no change to the timing and

pattern of revenue recognition for its current revenue streams.

accordance with ASC 606, the Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects

the consideration to which the Company expects to be entitled in such exchange.

The Company accounts for the revenue generated from sales

of its products primarily to its customers in PRC and overseas, as the Company is acting as a principal in these transactions, is subject

to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified

goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits.

All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual goods to customers,

and there is no separately identifiable other promises in the contracts.

The Company’s revenue streams are recognized at a point

in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery.

The Company’s

products are sold with no right of return and the Company does not provide other credits or sales incentive to customers.

The Company’s

sales are net of value added tax (“VAT”) and business tax and surcharges collected on behalf of tax authorities in respect

of product sales.

Assets and Liabilities

terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit

Contract assets are recognized for in related accounts receivable.

Contract liabilities are recognized for contracts where payment

has been received in advance of delivery.

The contract liability balance can vary significantly depending on the timing when an order

is placed and when shipment or delivery occurs.

As of December 31, 2023 and 2022, other than accounts receivable and advances from customers,

the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance

Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer

of control, are recognized in selling, general and administrative expense when incurred.

Disaggregation

Company disaggregates its revenue from contracts by geography, as the Company believes it best depicts how the nature, amount, timing

and uncertainty of the revenue and cash flows are affected by economic factors.

The Company’s disaggregation of revenues for the

years ended December 31, 2023 and 2022 are disclosed in Note 14 to the financial statements.

Selling, General and Administrative Expenses

expenses represents primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses.

administrative expenses represent primarily payroll and benefits costs for administrative employees, rent and operating costs of office

premises, depreciation and amortization of office facilities, professional fees and other administrative expenses.

Research and Development Expense

and development costs are expensed as incurred.

Share-Based Compensation

Company awards share options and other equity-based instruments to its employees, directors and third party service providers (collectively

“share-based payments”).

Compensation cost related to such awards is measured based on the fair value of the instrument on

the grant date.

The Company recognizes the compensation cost over the period the employee is required to provide service in exchange

for the award, which generally is the vesting period.

The amount of cost recognized is adjusted to reflect the expected forfeiture prior

When no future services are required to be performed by the employee in exchange for an award of equity instruments, and

if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date.

The Company recognizes

compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite

service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals

the portion of the grant-date value of such award that is vested at that date.

Government grant

Company follows other authoritative accounting guidance since there is no clear guidance with regard to government grants.

grants are recognized at fair value where there is reasonable assurance that the grant will be received and all grant conditions will

Grants relating to expense items are recognized as income over the periods necessary to match the grant to the costs it is compensating.

Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the

asset on a straight-line basis.

Company accounts for income taxes in accordance with the asset and liability method.

Deferred taxes are recognized for the future tax

consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes

and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled.

The effect on deferred

taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

A valuation allowance is established,

as needed, to reduce the amount of deferred tax assets if it is considered more-likely-than-not that some portion or all of the deferred

tax assets will not be realized.

Company recognizes the effect of uncertain income tax positions only if those positions are more-likely-than-not of being sustained.

Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.

Changes in recognition

or measurement are reflected in the period in which the change in judgment occurs.

The Company’s policy is to record interest and

penalties related to uncertain tax positions as a component of income tax expense.

There were no such interest or penalty for the years

ended December 31, 2023 and 2022.

December 22, 2017, the Tax Cut and Jobs Act of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces

federal corporate income tax rate to 21% from 34% (or 35% in certain cases) beginning in 2018 , and requires companies to pay

a one-time transition tax on certain unrepatriated earnings from non-U.S.

The hierarchy requires entities to maximize

the use of observable inputs and minimize the use of unobservable inputs.

The three levels of inputs used to measure fair value are as

Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data.

Level 3 — inputs to the valuation methodology are unobservable.

Unless otherwise disclosed, the fair value of

the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable,

short-term bank loans, accrued expenses and other current liabilities, taxes payable and due to related parties, common stock purchase

warrants liability, approximate the fair value of the respective assets and liabilities as of December 31, 2023 and 2022 based upon the

nature of the assets and liabilities.

(j) Fair value measurement

Fair value is the price that would be received

from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers

the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when

pricing the asset or liability.

Authoritative literature provides a fair value

hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring

An asset or liability categorization within the fair value hierarchy is based upon the lowest level of input that is significant

to the fair value measurement as follows:

Level 1 applies to assets or liabilities for which

there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which

there are inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities such as quoted prices

for similar assets or liabilities in active markets;

quoted prices for identical assets or liabilities in markets with insufficient volume

or infrequent transactions (less active markets);

or model-derived valuations in which significant inputs are observable or can be derived

principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which

there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or

Accounting guidance also describes three main

approaches to measuring the fair value of assets and liabilities:

(1) market approach;

(2) income approach and (3) cost approach.

market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets

or liabilities.

The income approach uses valuation techniques to convert future amounts to a single present value amount.

The measurement

is based on the value indicated by current market expectations about those future amounts.

The cost approach is based on the amount that

would currently be required to replace an asset.

When available, the Company uses quoted market

prices to determine the fair value of an asset or liability.

If quoted market prices are not available, the Company will measure fair

value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest

rates and currency rates.

(k) Impairment of long-lived Assets

Long-lived assets, such as property, plant and

equipment, land use rights, are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such

assets may not be recoverable.

Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of

the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or

If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge

is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group.

Fair value is determined

through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals,

as considered necessary.

Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are

no longer depreciated.

There was nil impairment of intangible assets recognized for the years ended December 31, 2024 and 2023.

(l) Foreign Currency Translation

The Company uses US dollars as the reporting currency.

The Company’s subsidiary HK Wetouch’s functional currency for HK Wetouch is Hong Kong dollar.

The functional currency of Sichuan

Vtouch is the Chinese Yuan (“RMB”).

The Company’s consolidated financial statements have been translated into US$.

and liabilities accounts are translated using the exchange rate at each reporting period end date.

Equity accounts are translated at historical

Income and expense accounts are translated at the average rate of exchange during the reporting period.

The resulting translation

adjustments are reported under other comprehensive income (loss).

Gains and losses resulting from the translations of foreign currency

transactions and balances are reflected in the results of operations.

During the years ended December 31, 2024 and 2023, the Company recorded

gains of $ 52,211 and $ 230,844 on foreign currency transactions in the line of general & administration expenses, respectively.

The RMB is not freely convertible into foreign

currency and all foreign exchange transactions must take place through authorized institutions.

No representation is made that the RMB

amounts could have been, or could be, converted into US$ at the rates used in translation.

The following table outlines the currency exchange

rates that were used in creating the consolidated financial statements in this report:

Year-end spot rate

US$ 1 =RMB 7.2993

US$ 1 =RMB 7.0999

US$ 1 =RMB 7.1957

US$ 1 =RMB 7.0809

(m) Revenue Recognition

The Company adopted Accounting Standards Codification

(“ASC”) 606 using the modified retrospective approach.

The adoption of this standard did not have a material impact on the

Company’s consolidated financial statements.

Therefore, no adjustments to opening retained earnings were necessary.

ASC 606, Revenue from Contracts with customers,

establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from

the entity’s contracts to provide goods or services to customers.

The core principle requires an entity to recognize revenue to

depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive

in exchange for those goods or services recognized as performance obligations are satisfied.

ASC 606 requires the use of a five-step model

to recognize revenue from customer contracts.

The five-step model requires that the Company (i) identify the contract with the customer,

(ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to

the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective

performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.

application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the

way the Company records its revenue.

The Company has assessed the impact of the guidance by reviewing its existing customer contracts

and current accounting policies and practices to identify differences that would result from applying the new requirements, including

the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations.

Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current

revenue streams.

In accordance with ASC 606, the Company recognizes

revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects

to be entitled in such exchange.

The Company accounts for the revenue generated from sales of its products primarily to its customers

in PRC and overseas, as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing

prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods

and has the ability to direct the use of goods to obtain substantially all the benefits.

All of the Company’s contracts have one

single performance obligation as the promise is to transfer the individual goods to customers, and there is no separately identifiable

other promises in the contracts.

The Company’s revenue streams are recognized at a point in time when title and risk of loss passes

and the customer accepts the goods, which generally occurs at delivery.

The Company’s products are sold with no right of return

and the Company does not provide other credits or sales incentive to customers.

The Company’s sales are net of value added tax (“VAT”)

and business tax and surcharges collected on behalf of tax authorities in respect of product sales.

Contract Assets and Liabilities

Payment terms are established on the Company’s

pre-established credit requirements based upon an evaluation of customers’ credit quality.

Contract assets are recognized for in

related accounts receivable.

Contract liabilities are recognized for contracts where payment has been received in advance of delivery.

The contract liability balance can vary significantly depending on the timing when an order is placed and when shipment or delivery occurs.

As of December 31, 2024 and 2023, other than accounts receivable and advances from customers, the Company had no other material contract

assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet.

Costs of fulfilling customers’

purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general

and administrative expense when incurred.

Disaggregation of Revenues

The Company disaggregates its revenue from contracts

by geography, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are

affected by economic factors.

The Company’s disaggregation of revenues for the years ended December 31, 2024 and 2023 are disclosed

in Note 14 to the financial statements.

(n) Selling, General and Administrative

Selling expenses represents

primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses.

General and administrative expenses

represent primarily payroll and benefits costs for administrative employees, rent and operating costs of office premises, depreciation

and amortization of office facilities, professional fees and other administrative expenses.

The Company adopts ASU

2016-02, Leases (Topic 842) (“ASU 2016-02”) for all periods presented.

The Company elects the short-term lease exemption

for all contracts with lease terms of 12 months or less.

Under the guidance of AUS 2016-02, an entity is

required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements.

The Company’s lease

terms include options to renew or terminate the lease when it is reasonably certain that it will exercise the option.

The Company determines

if a contract contains a lease based on whether it has the right to obtain substantially all of the economic benefits from the use of

an identified asset which the Company does not own and whether it has the right to direct the use of an identified asset in exchange for

consideration.

Right of use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term

and lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

ROU assets are recognized

as the amount of the lease liability, adjusted for lease incentives received.

Lease liabilities are recognized at the present value of

the future lease payments at the lease commencement date.

The interest rate used to determine the present value of the future lease payments

is the Company’s incremental borrowing rate (“IBR”), because the interest rate implicit in most of the Company’s

leases is not readily determinable.

The IBR is a hypothetical rate based on the Company’s understanding of what its credit rating

would be to borrow and resulting interest the Company would pay to borrow an amount equal to the lease payments in a similar economic

environment over the lease term on a collateralized basis.

Lease payments may be fixed or variable, however, only fixed payments or in-substance

fixed payments are included in the Company’s lease liability calculation.

Variable lease payments are recognized in operating expenses

in the period in which the obligation for those payments is incurred.

The lease right-of-use assets are initially measured

at the carrying amount of the lease liability and adjusted for any prepaid or accrued lease payments, remaining balance of lease incentives

received, unamortized initial direct costs, or impairment charges relating to the right-of-use-asset.

Lease expense for minimum lease

payments exclusive of the value-added tax are recognized on straight-line basis over the lease term The new standard provides a number

of optional practical expedients at transition.

The Company elected certain practical expedients that must be elected as a package, which

permit the Company to not reassess, under the new standard, prior conclusions about (1) lease identification, (2) lease classification

and (3) initial direct costs.

Additionally, the Company elected a short-term lease exception policy, which allows entities to not apply

Topic 842 to short-term leases (i.e.

leases with terms of 12 months or less) and a hindsight policy, which allows an entity to include

current considerations for existing leases when determining initial lease terms.

The Company has also elected to account for lease and

non-lease components as a single component for all leases, and elected to utilize an IBR (incremental borrowing rate) that is risk free

rate plus premium for all leases when calculating the lease liability.

(p) Share-Based Compensation

The Company awards share options and other equity-based

instruments to its employees, directors and third party service providers (collectively “share-based payments”).

cost related to such awards is measured based on the fair value of the instrument on the grant date.

The Company recognizes the compensation

cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period.

amount of cost recognized is adjusted to reflect the expected forfeiture prior to vesting.

When no future services are required to be

performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition,

the cost of the award is expensed on the grant date.

The Company recognizes compensation cost for an award with only service conditions

that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the

cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is

vested at that date.

(q) Income taxes

The Company accounts for income taxes in accordance

with the asset and liability method.

Deferred taxes are recognized for the future tax consequences attributable to temporary differences

between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected

to be in effect when such amounts are realized or settled.

The effect on deferred taxes of a change in tax rates is recognized in income

in the period that includes the enactment date.

A valuation allowance is established, as needed, to reduce the amount of deferred tax

assets if it is considered more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

The Company recognizes the effect of uncertain

income tax positions only if those positions are more-likely-than-not of being sustained.

Recognized income tax positions are measured

at the largest amount that is greater than 50% likely of being realized.

Changes in recognition or measurement are reflected in the period

in which the change in judgment occurs.

The Company’s policy is to record interest and penalties related to uncertain tax positions

as a component of income tax expense.

There were no such interest or penalty for the years ended December 31, 2024 and 2023.

On December 22, 2017, the Tax Cut and Jobs Act

of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces the U.S.

federal corporate income tax rate

to 21% from 34% (or 35% in certain cases) beginning in 2018 , and requires companies to pay a one-time transition tax on certain unrepatriated

earnings from non-U.S.

subsidiaries that is payable over eight years.

No tax was due

under this provision.

The Tax Act also makes the receipt of future non-U.S.

No tax was due under this provision.

The Tax Act also makes the

receipt of future non-U.S.

sourced income of non-U.S.

subsidiaries tax-free to U.S.

companies and creates a new minimum tax on the earnings of non-U.S.

subsidiaries relating to the parent’s deductions for payments

to the subsidiaries.

Value added tax (“VAT”)

revenue represents the invoiced value of goods, net of VAT.

companies and creates a new minimum tax on the earnings

subsidiaries relating to the parent’s deductions for payments to the subsidiaries.

On July 4, 2025, the One Big Beautiful Bill Act

("the Act") was signed into law.

The Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100 % bonus depreciation

and domestic research cost expensing, increases the Advanced Manufacturing Investment Credit to 35 percent from 25 percent, and makes

modifications to the international tax framework.

We are currently evaluating the impact of the Act upon our future effective tax rate,

tax liabilities, and cash taxes.

(r) Value added tax (“VAT”)

Sales revenue represents the invoiced value of

goods, net of VAT.

The VAT is based on gross sales price.

Since April 1, 2019, VAT rate was

lowered from 16 % to 13 %.

The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of

producing or acquiring its finished products.

The Company recorded a VAT payable or recoverable net of VAT payments in the accompanying

consolidated financial statements.

export sales, VAT is not imposed on gross sales price, but the VAT related to purchasing raw materials is refunded after the export is

Earnings per Share

Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”).

ASC 260 requires companies with complex capital structures to present basic and diluted EPS.

Basic EPS is measured as net income divided

by the weighted average common shares outstanding for the period.

Diluted presents the dilutive effect on a per share basis of potential

common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented,

or issuance date, if later.

Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or

decrease loss per share) are excluded from the calculation of diluted EPS.

As of December 31, 2023 and 2022, warrants were included for

the dilutive EPS calculation, respectively.

Comprehensive income (loss)

Comprehensive

income (loss) consists of two components, net income and other comprehensive income (loss).

The foreign currency translation gain or

loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss)

in the consolidated statements of income and comprehensive income.

Recent Accounting Pronouncements

Company considers the applicability and impact of all accounting standards updates (“ASUs”).

Management periodically reviews

new accounting standards that are issued.

August 2020, the FASB issued ASU No.

2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options

(Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible

Instruments and Contracts in an Entity’s Own Equity.” ASU 2020-06 will simplify the accounting for convertible instruments

by reducing the number of accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting

models results in fewer embedded conversion features being separately recognized from the host contract as compared with current U.S.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are

not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception

from derivative accounting, and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded

as additional paid-in capital.

ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s

own equity to reduce form-over-substance-based accounting conclusions.

For public business entities, the amendments in ASU 2020-06 are

effective for public entities which meet the definition of a smaller reporting company are effective for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2023, including interim periods within those fiscal years.

Early application

of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2020, including interim periods within

those fiscal years.

The Company adopted ASU 2020-06 effective January 1, 2021.

June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the

accounting for credit losses on instruments within its scope.

The new guidance introduces an approach based on expected losses to estimate

credit losses on certain types of financial instruments.

It also modifies the impairment model for available-for-sale (AFS) debt securities

and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination.

pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including

interim periods within those fiscal years.

Early application of the guidance will be permitted for all entities for fiscal years beginning

after December 15, 2019, including interim periods within those fiscal years.

The Company adopted ASU 2016-13 utilizing the modified

retrospective transition method on January 1, 2022.

The adoption of ASU 2016-13 did not have a material impact on the Company’s

consolidated financial statements.

December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”.

amendment simplifies the accounting for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes.

It also clarifies certain aspects of the existing guidance to promote more consistent application, among other things.

The guidance is

effective for interim and annual reporting periods beginning within 2021 with early adoption permitted.

October 2021, the FASB issued ASU No.

2021-08, which will require companies to apply the definition of a performance obligation under

ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers

that are acquired in a business combination.

Under current U.S.

GAAP, an acquirer generally recognizes assets acquired and liabilities

assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers,

at fair value on the acquisition date.

2021-08 will result in the acquirer recording acquired contract assets and liabilities

on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606.

2021-08 is effective

for fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company adopted ASU No.

2021-08 on January 1,

The adoption of ASU No.

2021-08 did not have a material impact on the Company’s consolidated financial statements.

November 2021, the FASB issued ASU No.

2021-10, Government Assistance (Topic 832).

This ASU requires business entities to disclose information

about government assistance they receive if the transactions were accounted for by analogy to either a grant or a contribution accounting

The disclosure requirements include the nature of the transaction and the related accounting policy used, the line items on the

balance sheets and statements of operations that are affected and the amounts applicable to each financial statement line item and the

significant terms and conditions of the transactions.

The ASU is effective for annual periods beginning after December 15, 2021.

disclosure requirements can be applied either retrospectively or prospectively to all transactions in the scope of the amendments that

are reflected in the financial statements at the date of initial application and new transactions that are entered into after the date

of initial application.

The ASU is currently not expected to have a material impact on the Company’s financial results or financial

time to time, the FASB or other standards setting bodies issue new accounting pronouncements.

Updates to the FASB ASCs are communicated

through issuance of ASUs.

Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be

adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption.

issued accounting pronouncements not yet adopted

March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate

Reform on Financial Reporting”, which provides optional expedients and exceptions for applying U.S.

GAAP on contract modifications

and hedge accounting to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected

to be discontinued because of reference rate reform, if certain criteria are met.

These optional expedients and exceptions provided in

2020-04 are effective for the Company as of March 12, 2020 through December 31, 2022.

In December 2022, the FASB issued ASU 2022-06,

Since April 1, 2019, VAT rate was lowered from 16 % to 13 %.

The VAT may be offset

by VAT paid by the Company on raw materials and other materials included in the cost of producing or acquiring its finished products.

The Company recorded a VAT payable or recoverable net of VAT payments in the accompanying consolidated financial statements.

For export sales, VAT is not imposed on gross

sales price, but the VAT related to purchasing raw materials is refunded after the export is completed.

(s) Earnings per Share

The Company computes earnings per share (“EPS”)

in accordance with ASC 260, “Earnings per Share” (“ASC 260”).

ASC 260 requires companies with complex capital

structures to present basic and diluted EPS.

Basic EPS is measured as net income divided by the weighted average common shares outstanding

for the period.

Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options

and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later.

Potential common shares

that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation

of diluted EPS.

As of December 31, 2024 and 2023, warrants were included for the dilutive EPS calculation, respectively.

(t) Comprehensive income (loss)

Comprehensive income (loss) consists of two components,

net income and other comprehensive income (loss).

The foreign currency translation gain or loss resulting from translation of the financial

statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the consolidated statements of income and comprehensive

(u) Recent Accounting Pronouncements

The Company considers the applicability and impact

of all accounting standards updates (“ASUs”).

Management periodically reviews new accounting standards that are issued.

Recently issued accounting pronouncements

not yet adopted

In March 2020, the FASB issued

2020-04, “Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”), which deferred the application

dates of Topic 848 to December 31, 2024.

The Group currently does not have any financial instrument that reference to LIBOR and does

not anticipate the adoption will have a material impact to the Group’s combined and consolidated financial statements.

November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-07, Improvements to Reportable Segment

Disclosures (Topic 280).

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable

segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported

measure of a segment’s profit or loss.

This ASU also requires disclosure of the title and position of the individual identified

as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance

and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods

within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented

in the financial statements.

Early adoption is also permitted.

This ASU will likely result in the group including the additional required

disclosures when adopted.

The Group is currently evaluating the provisions of this ASU and expect to adopt them for the year ending December

December 2023, the FASB issued ASU No.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting”,

which provides optional expedients and exceptions for applying U.S.

GAAP on contract modifications and hedge accounting to contracts,

hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference

rate reform, if certain criteria are met.

These optional expedients and exceptions provided in ASU No.

2020-04 are effective for the Company

as of March 12, 2020 through December 31, 2022.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

of the Sunset Date of Topic 848 (“ASU 2022-06”), which deferred the application dates of Topic 848 to December 31, 2024.

Company currently does not have any financial instrument that reference to LIBOR and does not anticipate the adoption will have a material

impact to the Company’s combined and consolidated financial statements.

In November 2023, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 (ASC Topic 280), Improvements

to Reportable Segment Disclosures.

This ASU expands on existing reportable segment disclosure requirements primarily through enhanced

disclosures about significant segment expenses.

This ASU is effective for our annual reporting for 2025 on a retrospective basis.

standard will impact our disclosures and will not impact our financial statements.

In December 2023, the FASB

issued ASU No.

2023-09, Improvements to Income Tax Disclosures (Topic 740).

The ASU requires disaggregated information

about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

effective on a prospective basis for annual periods beginning after December 15, 2024.

Early adoption is also permitted for annual financial

statements that have not yet been issued or made available for issuance.

The Group has evaluated this ASU and expects to add additional

disclosures to our combined and consolidated financial statements, once adopted.

ACCOUNTS RECEIVABLE

receivable consists of the following:

OF ACCOUNTS RECEIVABLE

The ASU requires disaggregated information about a reporting

entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The ASU is effective on a prospective

basis for annual periods beginning after December 15, 2024.

Early adoption is also permitted for annual financial statements that have

not yet been issued or made available for issuance.

The Company is evaluating this ASU and expects to add additional disclosures to our

combined and consolidated financial statements, once adopted.

NOTE-3 — ACCOUNTS

Accounts receivable and

credit losses consists of the following:

Accounts receivable

Allowance for doubtful accounts

Allowance for credit losses

Accounts receivable, net

Company’s accounts receivable primarily includes balance due from customers when the Company’s products are sold and delivered

to customers.

— PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets consist of the following:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

The Company’s accounts receivable primarily

includes balance due from customers when the Company’s products are sold and delivered to customers.

The following table provides

an analysis of the aging of accounts receivable as of December 31, 2024 and 2023:

1-3 months past due

4-6 months past due

Total accounts receivable

NOTE-4 — PREPAID EXPENSES AND OTHER CURRENT

Prepaid expenses and other current assets consist

of the following:

Advance to suppliers

VAT input credits

Issue cost related to convertible promissory notes

Issuance cost related to convertible promissory notes

Prepayment for land use right (i)

Security deposit (ii)

Others receivable (iv)

Prepaid consulting service fees (iii)

Prepaid market research fees (iv)

Others receivable (v)

Prepaid expenses and other current assets

(i) On July 23, 2021,

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

of a land use right of a parcel of land of 131,010 square feet for a consideration of RMB 3,925,233 (equivalent to $ 537,998 ) for the Company’s

new facility.

July 23, 2021, Sichuan Vtouch entered into a contract with Chengdu Wenjiang District Planning and Natural Resources Bureau

for the purchase of a land use right of a parcel of land of 131,010 square feet for a consideration of RMB 3,925,233 (equivalent to $ 537,755 )

for the Company’s new facility.

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

Upon issuance of a certificate of land use right by the

local government, which is estimated to be obtained by the fourth quarter of 2024, the Company will reclassify this prepayment to intangible

assets accordingly.

(ii) On July 28, 2021,

Sichuan Vtouch made a security deposit of RMB 393,000 (equivalent to $ 53,865 ) to Chengdu Cross-Strait Science and Technology Industry

Development Park Management Committee to obtain a construction license for its new facility.

This deposit will be refunded upon the issuance

of the construction license by the end of 2024.

(iv) Other receivables

are mainly employee advances, and prepaid expenses.

5— PROPERTY, PLANT AND EQUIPMENT, NET

OF PROPERTY , PLANT AND EQUIPMENT

September 30,

Upon issuance of a certificate

of land use right by the local government, which is estimated to be obtained by the second half of 2026, the Company will reclassify

this prepayment to intangible assets accordingly.

(ii) On July 28, 2021, Sichuan Vtouch made a security deposit of RMB 393,000 (equivalent to $ 53,840 ) to Chengdu Cross-Strait Science and Technology Industry Development Park Management Committee to obtain a construction license for its new facility.

This deposit will be refunded upon the issuance of the construction license, which is expected to be by the second half of 2025.

(iii) In May 2023, the Company entered into two third-party consulting service agreements for a fee of $ 1.35 million and $ 3.1 million, respectively, for the three-year consulting services.

The total fee would be amortized over the three-year services and reclassified to stock issuance costs accordingly.

As of December 31, 2024, $ 884,687 was recognized as prepaid consulting service fees within one year.

(iv) On February 29, 2024, the Company advanced market research fees $ 70,000 and $ 855,000 , respectively, to two unrelated individuals, Mr.

Chien Hui Chueh and Mr.

Cheung Ming Lin, in relation to the Company’s market research service overseas.

The two individuals signed borrowing contracts with a principal amount of $ 70,000 and $ 855,000 , respectively, on February 29, 2024.

Those contracts were issued to the Company to evidence the advances, bearing 3.45 % interest per annum, and payable on February 28, 2025, and extended till August 29, 2026.

(v) Other receivables are mainly employee advances, and prepaid expenses.

NOTE 5— PROPERTY, PLANT AND EQUIPMENT,

Machinery and equipment

2 unchanged sentences

Property, plant and equipment, net

expense was $ 9,465 and $ 9,891 for the year ended December 31, 2023 and 2022, respectively.

to local PRC government guidelines on local environment issues and the national overall plan, Sichuan Wetouch, was under the government

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

On March 18, 2021, pursuant

to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received a compensation

of RMB 115.2 million ($ 16.2 million) (the “Compensation Funds”) for the withdrawal of the right to use of state-owned land

(the “property”) and the demolition of all buildings, facilities, equipment and all other appurtenances on the land.

March 16, 2021, in order to minimize interruption of the Company’s business, Sichuan Vtouch entered into a leasing agreement with

Sichuan Renshou Shigao Tianfu Investment Co., Ltd.

(later renamed as Meishan Huantian Industrial Co., Ltd.), a limited liability company

owned by the local government, to lease the property, and all buildings, facilities and equipment thereon (the “Demised Properties)

of Sichuan Wetouch, commencing from April 1, 2021 until December 31, 2021 at a monthly rent of RMB 300,000 ($ 42,254 ).

The lease was renewed

on December 31, 2021 at a monthly rent of RMB 400,000 ($ 56,339 ) with a term from January 1, 2022 to October 31, 2024 for the use of the

Demised Properties.

6 – RELATED PARTY TRANSACTIONS

due to a related party are as follows:

OF RELATED PARTY TRANSACTIONS

President and CEO of the Company

Payable to employee

7 — INCOME TAXES

is subject to a tax rate of 21 % per beginning 2018, and files a U.S.

Depreciation expense was $ 9,805 and $ 9,403 for

the year ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, the Company had

commitment of RMB 5.0 million (equivalent to $ 0.7 million) for construction in progress of our new facility.

NOTE 6— OPERATING LEASE

In March 2021, pursuant to the local PRC government

guidelines on local environmental issues and the national plan, the Company was under the government directed relocation order to relocate

from a parcel of state-owned land where we maintained our executive offices, research and development facilities and factories.

received a total amount of RMB 115.2 million (approximately $ 17.7 million) from the local government (see ITEM 2.

PROPERTIES AND FACILITIES)

to start the construction of the new facility in a neighboring Chengdu Wenjiang District.

On March 16, 2021, in order to minimize interruption

of the Company’s business, Sichuan Vtouch entered into a leasing agreement with Sichuan Renshou Shigao Tianfu Investment

(later renamed as Meishan Huantian Industrial Co., Ltd.), a limited liability company owned by the local government, to lease

the property, and all buildings, facilities and equipment thereon (the “Demised Properties) of Sichuan Wetouch, commencing from

April 1, 2021 until December 31, 2021 at a monthly rent of RMB 300,000 ($ 41,100 ), which period was extended to October 31, 2022.

was renewed on October 30, 2022, October 30, 2023 and August 9, 2024, respectively , with a monthly rent of RMB 400,000 ($ 54,800 ), the

term of which has been extended to October 31, 2025 for the use of the Demised Properties.

The Company’s new facility started in August

2021 yet was delayed and suspended due to the outbreak of Covid-19 and government-ordered shutdowns in China.

The Company has rescheduled

and extended the completion by end of December 31, 2025 with the production at the new facilities will commencing in the second quarter

For the year ended December 31, 2024, management makes estimates and assumptions to use the leasing property till the end of

October 2026, and applies ASU 2016-02 “Leases (Topic 842) as practical expedients during the year ended December 31, 2024.

Both operating lease expense and short-term lease

expense are recognized in cost of revenues and general and administrative expenses.

The components of lease

expense for the years ended December 31, 2024 and 2023 were as follows:

For the Years Ended

Lease expense

Operating lease expense

Short-term lease expense

Total lease expense

The balances for the operating leases where the

Company is the lessee are presented as follows:

As of December 31,

Operating lease right-of-use assets

Lease liabilities – current

Lease liabilities – non-current

Total operating lease liabilities

The following is a schedule, by years, of

maturities of lease liabilities as of December 31, 2024:

2025 lease payment

imputed interest

Present value of lease liabilities

Lease term and discount

For the Years ended

Weighted-average remaining lease term (years)

Operating lease 1.8 -

Weighted-average discount rate

Operating lease 1.06 % -

Supplemental cash flow

information related to leases where the Company was the lessee for the year ended December 31, 2024 was as follows:

For the Years ended

Cash payments for operating leases

Lease liabilities arising from obtaining right-of-use assets

NOTE 7 – RELATED PARTY TRANSACTIONS

Amounts due to a related

party are as follows:

Relationship December 31,

2024 December 31,

Chengdu Wetouch Intelligent Optoelectronics Co., Ltd.

Affiliate of Ms.

Jiaying Cai, director of the Company $ 149,211 $ -

Payable to affiliate for expenses paid on behalf of the Company

Total $ 149,211 $ -

NOTE 8 — INCOME TAXES

Wetouch is subject to a tax rate of 21 % per beginning

2018, and files a U.S.

federal income tax return.

the current laws of the British Virgin Islands, BVI Wetouch, a wholly owned subsidiary of Wetouch, is not subject to tax on its income

or capital gains.

In addition, no British Virgin Islands withholding tax will be imposed upon the payment of dividends by the Company

to its shareholders.

Wetouch is subject to profit taxes in Hong Kong at a progressive rate of 16.5 %.

Wetouch and Sichuan Vtouch files income tax returns in the PRC.

Effective from January 1, 2008, the PRC statutory income tax rate is

25 % according to the Corporate Income Tax (“CIT”) Law which was passed by the National People’s Congress on March 16,

PRC CIT Law, domestic enterprises and foreign investment enterprises (the “FIEs”) are usually subject to a unified 25% enterprise

income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis by local government

as preferential tax treatment to High and New Technology Enterprises (the “HNTEs”).

Under this preferential tax treatment,

HNTEs are entitled to an income tax rate of 15 %, subject to a requirement that they re-apply for their HNTE status every three years.

Pursuant to an approval from the local tax authority in October 2017, Sichuan Wetouch became a qualified enterprise located in the western

region of the PRC, entitled it to a preferential income tax rate of 15 % from October 11, 2017 to October 11, 2020.

October 21, 2020, Sichuan Wetouch was granted on a case-by-case basis by Sichuan Provincial government as an HNTE , entitled to a reduced

income tax rate of 15% from October 21, 2020 until October 20, 2023.

Vtouch is subject to a 25 % income tax rate.

CIT Law and its implementation rules impose a withholding income tax at 10%, unless reduced by a tax treaty or arrangement, on the amount

of dividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC that are related to earnings accumulated

beginning on January 1, 2008.

Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding

components of the income tax provision are as follows:

OF COMPONENTS OF THE INCOME TAX PROVISION

Under the current laws of the British Virgin Islands,

BVI Wetouch, a wholly owned subsidiary of Wetouch, is not subject to tax on its income or capital gains.

In addition, no British Virgin

Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.

HK Wetouch is subject to profit taxes in Hong

Kong at a progressive rate of 16.5 %.

Sichuan Wetouch and Sichuan Vtouch files income

tax returns in the PRC.

Effective from January 1, 2008, the PRC statutory income tax rate is 25 % according to the Corporate Income Tax

(“CIT”) Law which was passed by the National People’s Congress on March 16, 2007.

Under PRC CIT Law, domestic enterprises and foreign

investment enterprises (the “FIEs”) are usually subject to a unified 25 % enterprise income tax rate while preferential tax

rates, tax holidays and even tax exemption may be granted on a case-by-case basis by local government as preferential tax treatment to

High and New Technology Enterprises (the “HNTEs”).

Under this preferential tax treatment, HNTEs are entitled to an income

tax rate of 15 %, subject to a requirement that they re-apply for their HNTE status every three years.

Pursuant to an approval from the

local tax authority in October 2017, Sichuan Wetouch became a qualified enterprise located in the western region of the PRC, entitled

it to a preferential income tax rate of 15 % from October 11, 2017 to October 11, 2020.

On October 21, 2020, Sichuan Wetouch was granted

on a case-by-case basis by Sichuan Provincial government as an HNTE , entitled to a reduced income tax rate of 15 % from October 21, 2020

until October 20, 2023.

Sichuan Vtouch is subject to a 25 % income tax

The CIT Law and its implementation rules impose

a withholding income tax at 10 %, unless reduced by a tax treaty or arrangement, on the amount of dividends distributed by a PRC-resident

enterprise to its immediate holding company outside the PRC that are related to earnings accumulated beginning on January 1, 2008.

relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding income tax.

The Company’s provision

for income taxes credit (expenses) consisted of:

For the Years Ended

Current tax provision

Total current tax provision

Deferred tax provision

Total deferred tax provision

PRC income tax

Income tax provision

following table reconciles the PRC statutory rates to the Company’s effective tax rate for the years ended December 31, 2023 and

OF INCOME TAX RATE

Deferred income tax expenses (credit)

Income tax provision

The following table reconciles the PRC statutory

rates to the Company’s effective tax rate for the years ended December 31, 2024 and 2023:

For the Years Ended

PRC statutory income tax rate

Effect of income tax holiday

Income tax computed at PRC statutory corporate income tax rate of 25 %

Tax rate differential on entities not subject to PRC income

R&D additional deduction

Non-deductible expenses in the PRC

Change in valuation allowance

Temporary differences

Non-deductible expenses

Effective tax rate

Company’s had no deferred tax assets are as of December 31, 2023 and 2022, respectively.

Company follows ASC 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected

future tax consequences of events that have been included in the financial statements or tax returns.

Under this method, deferred income

taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their

financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which

the differences are expected to affect taxable income.

Valuation allowances are established, when necessary, to reduce deferred tax assets

to the amount expected to be realized.

Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative

As of December 31, 2023 and 2022, taxes for Sichuan Wetouch and Sichuan Vtouch remained open for statutory examination by PRC

tax authorities.

A reconciliation of the

provision for income taxes determined at the statutory income tax rate to the Company’s income taxes is as follows:

For the Years Ended

Income before income taxes

Income tax computed at PRC statutory corporate income tax rate of 25 %

Reconciling items:

Tax rate differential on entities not subject to PRC income tax

R&D additional deduction

Change in valuation allowance

Temporary differences

Non-deductible expenses

Income tax provision

The Company follows ASC 740, “Income Taxes”,

which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been

included in the financial statements or tax returns.

Under this method, deferred income taxes are recognized for the tax consequences

in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end

based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income.

Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company’s deferred tax assets consisted

of the following components:

Deferred tax assets:

Credit loss on advance to vendors

Provision of obsolete inventory

Leasing liabilities

Total gross deferred tax assets

Less valuation allowance

Deferred tax assets net of valuation allowance

Deferred tax liabilities:

Right-of-use assets

Deferred tax liabilities

Deferred tax assets, net

The Company continually evaluates expiring statutes

of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings.

As of December 31, 2024 and 2023, taxes

for Sichuan Vtouch remained open for statutory examination by PRC tax authorities.

NOTE 9— ACCRUED EXPENSES AND OTHER CURRENT

Accrued expenses and other current liabilities

expenses and other current liabilities consist of the following:

OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Advance from customers (i)

consist of the following:

Advance from customers

Accrued payroll and employee benefits

Accrued interest expenses

Accrued private placement agent fees (ii)

Accrued consulting fees (iii)

Accrued litigation charges (iv)

Accrued private placement agent fees (i)

Accrued consulting fees (ii)

Accrued legal compensation charges (iii)

Accrued professional fees

Accrued director fees

Other tax payables (v)

Other payable to a former stockholder (vi)

Other payable

Other tax payables (iv)

Accrued expenses and other current liabilities

(i) RMB 2,587,825 (equivalent to $ 365,465 ) of the beginning balance of advance from customers was recognized as revenues

for the year ended December 31, 2023

(ii) On March 18, 2023,

the Company entered into a private placement consent agreement with a third-party investment bank firm (see Note 10) on the agent fees

of US$ 1.2 million, payable only on the completion of the private placement .

The Company made the full payment in February, 2024.

(iii) In May, 2023, the

Company entered into two third-party consulting service agreements for a fee of $ 1.35 million and $ 3.1 million, respectively, payable

only on the completion of an underwriting offering.

March 18, 2023, the Company entered into a private placement consent agreement with a third-party investment bank firm on the agent fees

of $ 1.2 million, payable only on the completion of the private placement.

The Company made the full payment in February 2024.

(iv) As of December

31, 2023, the Company accrued litigation compensation of RMB 324,501 ($ 45,705 ) and court fee of RMB 10,627 ($ 1,497 ).

For the details, please

see NOTE 13 — COMMITMENTS AND CONTINGENCIES - Legal Proceedings - vii) and viii).

(v) Other tax payables

are mainly VAT payable.

(vi) Other payable to

a former shareholder was paid in March 2023.

(vii) Others mainly represent

accrued employee reimbursement payable and other accrued miscellaneous operating expenses.

(ii) In May 2023, the Company

entered into two third-party consulting service agreements for a fee of $ 1.35 million and $ 3.1 million, respectively.

made the full payment in February 2024.

Due to the service of three-year term, Upon the closing of the 2024 Public

Offering ( as defined in Note 1 ), $ 316,378 was charged to additional paid-in capital as the closing cost of the

2024 Public Offering, and the remaining was recognized as consulting service fee over the service period.

Company recorded $ 1,370,972 as consulting service fee for the year ended December 31, 2024.

of December 31, 2024, the Company accrued litigation compensation charges of RMB 258,075 ($ 35,356 ).

tax payable mainly represent value added tax payable.

mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses.

CONVERTIBLE PROMISSORY NOTES PAYABLE

Convertible promissory notes

October, November, and December 2021, the Company, issued seven (7) convertible promissory notes (the “Notes”) of an aggregate

principal amount of US$ 2,250,000 , due in one year with issuance price discounted 90.0 %.

The Notes bore interest at a rate

of 8.0 % per annum, payable in one year and matured on October 27, November 5, November 16, November 29 and December 2 of 2022.

after debt issuance costs and debt discounts were approximately US$ 1,793,000 .

Debt issuance costs in the amount of US$ 162,000 are recorded

a) Convertible promissory

In October, November,

and December 2021, the Company, issued seven (7) convertible promissory notes (the “Notes”) of an aggregate principal amount

of $ 2,250,000 , due in one year with discounted issuance price at 90.0 %.

The Notes bore interest at a rate of 8.0 % per annum,

payable in one year and matured on October 27, November 5, November 16, November 29, and December 2, 2022, respectively.

after debt issuance costs and debt discounts were approximately $ 1,793,000 .

Debt issuance costs in the amount of $ 162,000 are recorded

as deferred charges and included in the other current assets on the consolidated balance sheet.

1 unchanged sentence

are amortized into interest expense using the effective interest method over the terms of the Notes.

details of the Notes are as follows:

the Notes are converted, the principal amounts of the Notes, and accrued interest at the rate of 8 % per annum, are payable on the one-year

anniversary of the issuance of the Notes (the “Maturity Date”).

If the Company fails to satisfy its loan obligation by the

Maturity Date, the default interest rate will be 16 %.

Lenders have the right to convert any or all of the principal and accrued interest on the Notes into shares of common stock of the Company

on the earlier of (i) 180 calendar days after the issuance date of the Notes or (ii) the closing of a listing for trading of the common

stock of the Company on a national securities exchange offering resulting in gross proceeds to the Company of $ 15,000,000 or more (an

“ Uplist Offering ”).

If the Company closes an Uplist Offering on or before the 180 th calendar date after

the issuance date of the Notes, the conversion price shall be 70 % of the per share offering price in the Uplist Offering;

the conversion price is $ 15.0 per share.

to customary exceptions, if the Company issues shares or any securities convertible into shares of common stock at an effective price

per share lower than the conversion price of the Notes, the conversion rate of the Notes shall be reduced to such lower price.

the Notes are either paid or converted in their entirety, the Company agreed with the Lenders not to sell any securities convertible

into shares of common stock of the Company (i) at a conversion price that is based on the trading price of the stock or (ii) with a conversion

price that is subject to being reset at a future date or upon an event directly or indirectly related to the business of the Company

or the market for the common stock.

Unless the Notes

are converted, the principal amounts of the Notes, and accrued interest at the rate of 8 % per annum, are payable on the one-year anniversary

of the issuance of the Notes (the “Maturity Date”).

If the Company fails to satisfy its loan obligation by the Maturity Date,

the default interest rate will be 16 %.

The Lenders have the

right to convert any or all of the principal and accrued interest on the Notes into shares of common stock of the Company on the earlier

of (i) 180 calendar days after the issuance date of the Notes or (ii) the closing of a listing for trading of the common stock of the

Company on a national securities exchange offering resulting in gross proceeds to the Company of $ 15,000,000 or more (an “ Uplist

If the Company closes an Uplist Offering on or before the 180 th calendar date after the issuance date

of the Notes, the conversion price shall be 70 % of the per share offering price in the Uplist Offering;

otherwise, the conversion price

is $ 15.0 per share.

Subject to customary

exceptions, if the Company issues shares or any securities convertible into shares of common stock at an effective price per share lower

than the conversion price of the Notes, the conversion rate of the Notes shall be reduced to such lower price.

Until the Notes

are either paid or converted in their entirety, the Company agreed with the Lenders not to sell any securities convertible into shares

of common stock of the Company (i) at a conversion price that is based on the trading price of the stock or (ii) with a conversion price

that is subject to being reset at a future date or upon an event directly or indirectly related to the business of the Company or the

market for the common stock.

The Company also agreed to not issue securities at a future determined price.

Lenders have the right to require the Company to repay the Notes if the Company receives cash proceeds, including proceeds from customers

and the issuance of equity (including in the Uplist Offering).

If the Company prepays the Notes prior to the Maturity Date, the Company

shall pay a 10 % prepayment penalty.

following table summarizes the outstanding promissory notes as of December 31, 2023 and December 31, 2022:

OF OUTSTANDING PROMISSORY NOTES

December 31, 2023

December 31, 2022

Convertible Note - Talos Victory (Note 9 (b))

Convertible Note - Mast Hill (Note 9 (b))

Convertible Note - First Fire (Note 9 (b))

Convertible Note - LGH Note 9 (b))

Convertible Note - Fourth Man (Note 9 (b))

Convertible Note - Jeffery Street Note 9 (b))

Convertible Note - Blue Lake Note 9 (b))Total

Amortization of Discounts for the Year Ended December 31, 2023

Convertible Promissory Notes payable as of December 31, 2023

December 28, 2022 to April 6, 2023, the lenders of five outstanding Notes and the Company entered into an amendment to the Notes (“Amendment

The Lenders have

the right to require the Company to repay the Notes if the Company receives cash proceeds, including proceeds from customers and the issuance

of equity (including in the Uplist Offering).

If the Company prepays the Notes prior to the Maturity Date, the Company shall pay a 10 %

prepayment penalty.

From December 28,

2022 to April 6, 2023, the lenders of five outstanding Notes and the Company entered into an amendment to the Notes (“Amendment

1 to Promissory Note”) extending the term of the Notes for an additional 6 months.

August 29 to September 9, 2023, the lenders of the outstanding Notes and the Company entered into an amendment to the Notes (“Amendment

to Promissory Note”) that the Company’s ordinary shares on the Nasdaq Capital Market (the “Uplist”), the Company

shall within three (3) business days after the Uplist, pay to the Holders amounts equal to 105% of the total outstanding balance of the

Convertible Debenture.

the year ended December 31, 2023, principal and default charges totaling $ 1,200,000 were converted into 25,000 shares of common stock

of the Company.

the year ended December 31, 2022, principal, accrued and unpaid interest and default charges totaling $ 1,038,426 were converted into

69,228 shares of common stock of the Company.

From August 29

to September 9, 2023, the lenders of the outstanding Notes and the Company entered into an amendment to the Notes (“Amendment No.

2 to Promissory Note”) that upon the listing of the Company’s common stock on the Nasdaq Capital Market (the “Uplist”),

the Company shall within three (3) business days after the Uplist, pay to the Holders amounts equal to 105 % of the total outstanding balance

of the Convertible Debenture .

During the year ended

December 31, 2023, principal and default charges totaling $ 1,200,000 were converted into 25,000 shares of common stock of the Company.

During the year

ended December 31, 2023, principal, accrued and unpaid interest and default charges totaling $ 1,038,426 were converted into 69,228 shares

of common stock of the Company.

Two notes were fully converted.

the year ended December 31, 2023 and 2022, the Company recognized interest expenses of the Notes in the amount of US$ 252,325 and US$ 224,885 ,

respectively.

Company prepaid $ 10,000 legal deposit for each Note till the repayment of the Notes.

As of the date of the Report, the Company has repaid remaining Principal and interests accrued.

connection with the issuance of the Notes, the Company also issued to the lenders seven (7) three-year warrants (the “Note Warrants”)

to purchase an aggregate of 90,000 shares of the Company’s common stock (the “Warrant Shares”).

Note Warrants issued to the lenders granted the holders the rights to purchase up to 10,000 shares of common stock of the

Company at an exercise price of $ 25 per share.

However, if the Company closes an Uplist Offering on or before the 180 th calendar

date after the issuance date of the Note Warrants, then the exercise price shall be 125 % of the offering price of a share in the Uplist

If the adjusted exercise price as a result of the Uplist Offering is less than $ 25 per share, then the number of shares for

which the Warrants are exercisable shall be increased such that the total exercise price, after taking into account the decrease in the

per share exercise price, shall be equal to the total exercise price prior to such adjustment.

lenders have the right to exercise the Note Warrants on a cashless basis if the highest traded price of a share of common stock of the

Company during the 150 trading days prior to exercise of the Note Warrants exceeds the exercise price, unless there is an effective registration

statement of the Company which covers the resale of the Lenders.

the Company issues shares or any securities convertible into shares at an effective price per share lower than the exercise price of

the Note Warrants, the exercise price of the Note Warrants shall be reduced to such lower price, subject to customary exceptions.

lenders may not convert the Notes or exercise the Note Warrants if such conversion or exercise will result in each of the lenders, together

with any affiliates, beneficially owning in excess of 4.9 % of the Company’s outstanding shares of common stock immediately after

giving effect to such exercise unless such lender notifies the Company at least 61 days prior to such exercise.

the year ended December 31, 2022, three lenders exercised the Note Warrants cashlessly for 14,233 shares of common stock.

the year ended December 31, 2023, two lenders exercised the Note Warrants cashlessly for 22,338 shares of common stock.

fair values of these warrants as of December 31, 2023 were calculated using the Black-Scholes option-pricing model with the following

OF FAIR VALUE OF WARRANTS

December 31, 2023

Volatility (%)

Expected dividends yield (%)

Weighted average expected life (year)

Risk-free interest rate (%) (per annum)

Common stock purchase warrants liability as of December 31, 2022(US$)

Changes of fair value of common stock purchase warrants liability

(+ (loss)/(- (gain)(US$)

Common stock purchase warrants liability as of December 31, 2023 (US$)

Convertible Note - Talos Victory (Note 9 (a))

Convertible Note - Mast Hill (Note 9 (a))

Convertible Note - First Fire (Note 9 (a))

Convertible Note - LGH Note 9 (a))

Convertible Note - Fourth Man (Note 9 (ab))

Convertible Note - Jeffery Street Note 9 (a))

Convertible Note - Blue Lake Note 9 (a))

Registration Rights Agreements

to the terms of the Registration Rights Agreements between the Company and lenders of the Notes, the Company agreed to file a registration

statement with the Securities and Exchange Commission to register the shares of common stock underlying the Notes and the shares issuable

upon exercise of the Note Warrants within sixty days from the date of each Registration Rights Agreement.

The Company also granted the

lenders piggyback registration rights on such securities pursuant to the Purchase Agreements .

10— STOCKHOLDERS’ EQUITY

Company’s authorized shares of common stock was 15,000,000 shares with par value of $ 0.001 .

December 22, 2020, the Company issued 5,181 shares of common stock to The Crone Law Group, P.C.

or its designees for legal

services (see Note 11).

January 1, 2021, the Company issued an aggregate of 15,541 shares to a third party service provider for consulting services that had

been rendered.

April 14, April 27 and September 1, 2022, the Company issued 5,777 , 5,599 and 2,857 shares of common stock upon cashless exercise of

the Note Warrants to three lenders, respectively.

On February 23, 2024, immediately upon the closing of the 2024 Public

Offering, the Company made a full payment of $ 2,586,960 under the remaining five outstanding promissory notes, including the principal

of $ 1,400,750 and the related accrued interests and default charges of $ 1,186,210 .

During the years ended December 31, 2024 and 2023,

amortization of discounts and issuance cost of the notes were $ 5,715 and $ 33,655 , respectively.

years ended December 31 , 2024 and 2023, the Company recognized interest expenses of

the Notes in the amount of $ 1,169,974 and $ 252,325 , respectively.

Accounting for

In connection with the

issuance of the Notes, the Company also issued to the lenders seven (7) three-year warrants (the “Note Warrants”) to purchase

an aggregate of 90,000 shares of the Company’s common stock (the “Warrant Shares”).

The Note Warrants issued

to the lenders granted the holders the rights to purchase up to 10,000 shares of common stock of the Company at an exercise price of $ 25

However, if the Company closes an Uplist Offering on or before the 180 th calendar date after the issuance date of

the Note Warrants, then the exercise price shall be 125 % of the offering price of a share in the Uplist Offering.

If the adjusted exercise

price as a result of the Uplist Offering is less than $ 25 per share, then the number of shares for which the Warrants are exercisable

shall be increased such that the total exercise price, after taking into account the decrease in the per share exercise price, shall be

equal to the total exercise price prior to such adjustment.

The lenders have

the right to exercise the Note Warrants on a cashless basis if the highest traded price of a share of common stock of the Company during

the 150 trading days prior to exercise of the Note Warrants exceeds the exercise price, unless there is an effective registration statement

of the Company which covers the resale of the Lenders.

If the Company issues

shares or any securities convertible into shares at an effective price per share lower than the exercise price of the Note Warrants, the

exercise price of the Note Warrants shall be reduced to such lower price, subject to customary exceptions.

The lenders may not convert

the Notes or exercise the Note Warrants if such conversion or exercise will result in each of the lenders, together with any affiliates,

beneficially owning in excess of 4.9 % of the Company’s outstanding shares of common stock immediately after giving effect to such

exercise unless such lender notifies the Company at least 61 days prior to such exercise.

During the year

ended December 31, 2023, two lenders exercised the Note Warrants cashlessly for 22,338 shares of common stock of the Company.

During the year

ended December 31, 2024, one lender exercised the Note Warrants cashlessly for 2,725 shares of common stock of the Company.

As of December 31, 2024, the remaining Note

Warrants of 34,028 were expired and the Company recorded $ 378,371 gain on changes in the fair value of common stock purchase warrants

liability using the Black-Scholes option-pricing model.

Rights Agreements

Pursuant to the

terms of the Registration Rights Agreements between the Company and lenders of the Notes, the Company agreed to file a registration statement

with the Securities and Exchange Commission to register the shares of common stock underlying the Notes and the shares issuable upon exercise

of the Note Warrants within sixty days from the date of each Registration Rights Agreement.

The Company also granted the lenders piggyback

registration rights on such securities pursuant to the Purchase Agreements.

NOTE 11— STOCKHOLDERS’ EQUITY

1) Common Stock

The Company’s authorized shares of common

stock was 15,000,000 shares with par value of $0.001as of the date of this annual report.

On December 22, 2020, the Company issued 5,181

shares of common stock to The Crone Law Group, P.C.

or its designees for legal services (see Note 11).

On January 1, 2021, the Company issued an aggregate

of 15,541 shares to a third party service provider for consulting services that had been rendered.

On April 14, April 27 and September 1, 2022, the

Company issued 5,777 , 5,599 and 2,857 shares of common stock upon cashless exercise of the Note Warrants to three lenders, respectively.

(see Note 9 (b)).

the year ended December 31, 2022, the Company issued 6,211 shares of common stock to a third party upon exercise of warrants (see Note

the year ended December 31, 2022, the Company issued 69,228 shares of common upon conversion of convertible promissory note payable (see

January 19, 2023, the Company sold an aggregate of 8,000,000 shares of common stock to purchasers in a private placement for an

aggregate purchase price of $ 40,000,000 , or $ 5.00 per share.

On January 20, 2023, the Company received net proceeds of

$ 40 million accordingly.

the year ended December 31, 2023, the Company issued 25,000 shares of common stock upon conversion of convertible promissory note payable

(see note 9 (a)).

the year ended December 31, 2023, the Company issued 22,338 shares to two third parties upon exercise of warrants (see Note 9(b)).

of December 31, 2023, the Company had 9,732,948 issued and outstanding shares of common stock.

During the year ended

December 31, 2022, the Company issued 6,211 shares of common stock to a third party upon exercise of warrants (see Note 11).

During the year ended

December 31, 2022, the Company issued 69,228 shares of common upon conversion of convertible promissory note payable (see note 9 (a)).

On January 19, 2023,

the Company sold an aggregate of 8,000,000 shares of common stock to purchasers in a private placement for an aggregate purchase price

of $ 40,000,000 , or $ 5.00 per share.

On January 20, 2023, the Company received net proceeds of $ 40 million accordingly.

During the year ended December 31, 2023, the Company issued 25,000

shares of common stock upon conversion of convertible promissory note payable (see note 9 (a)).During the year ended December 31, 2023,

the Company issued 22,338 shares of common stock to two third parties upon exercise of warrants (see Note 9(b)).

20, 2024, the Company issued 2,160,000 shares of common stock at a public offering price of $ 5.00 per share.

The Company’s common

stock began trading on the Nasdaq Capital Market under the ticker symbol “WETH” on February 21, 2024.

date of this Annual Report , there were 11,931,534 shares of common stock issued and outstanding .

2) Reverse Stock Split

February 17, 2023, the Company’s board of directors authorized a reverse stock split of common stock with a ratio of not less than

one to five (1:5) and not more than one to eighty (1:80), with the exact amount and the timing of the reverse stock split to be determined

by the Chairman of the Board.

Upon effectiveness of such reverse stock split, the number of authorized shares of the common stock of

the Company will also be decreased in the same ratio.

Pursuant to Section 78.209 of the Nevada Revised Statutes, the reverse stock split

does not have to be approved by the stockholders of the Company.

July 16, 2023, the Company’s board of directors approved the reverse stock split of the Company’s common stock at a ratio

On July 16, 2023, the Company filed a certificate of change (with an effective date of July 16, 2023) with the Nevada Secretary

of State pursuant to Section 78.209 of the Nevada Revised Statutes to effectuate a 1-for-20 reverse stock split of its common stock.

On September 11, 2023, the reverse stock split was approved by the Financial Industry Regulatory Authority and took effect on September

All share information included in this annual report has been adjusted as if the reverse stock split occurred as of the earliest

period presented.

Statutory Reserve and Restricted Net Assets

PRC rules and regulations, all companies in the PRC are required to appropriate 10% of their net income to a statutory surplus reserve

until the reserve balance reaches 50% of their registered capital.

The appropriation to this statutory surplus reserve must be made before

distribution of dividends can be made.

The statutory reserve is non-distributable, other than during liquidation, and can be used to

fund previous years losses, if any, and may be converted into share capital by issuing new shares to existing shareholders in proportion

to their shareholders or by increasing the par value of the shares currently outstanding, provided that the remaining balance of the

statutory reserve after such issue is not less than 25% of the registered capital.

Appropriations

to the discretionary surplus reserve are made at the discretion of the board of directors.

The statutory reserve may be applied against

prior year losses, if any, and may be used for general business expansion and production or increase in registered capital, but are not

distributable as cash dividends.

the years ended December 31, 2023 and 2022, the Company made appropriations to the reserve fund of RMB 8,172,303 (equivalent to US$ 1,154,131 )

and RMB 6,554,271 (equivalent to US$ 973,718 ), respectively.

11- SHARE BASED COMPENSATION

Company applied ASC 718 and related interpretations in accounting for measuring the cost of share-based compensation over the period

during which the consultants are required to provide services in exchange for the issued shares.

The fair value of above award was estimated

at the grant date using the Black-Scholes model for pricing the share compensation expenses.

December 22, 2020, the Board of Directors of the Company authorized the issuance of an aggregate of 5,181 shares and warrants to purchase

10,518 shares of common stock to The Crone Law Group, P.C.

On February 17, 2023, the Company’s

board of directors authorized a reverse stock split of common stock with a ratio of not less than one to five (1:5) and not more than

one to eighty (1:80), with the exact amount and the timing of the reverse stock split to be determined by the Chairman of the Board.

effectiveness of such reverse stock split, the number of authorized shares of the common stock of the Company will also be decreased in

the same ratio.

Pursuant to Section 78.209 of the Nevada Revised Statutes, the reverse stock split does not have to be approved by the

stockholders of the Company.

On July 16, 2023, the Company’s board of

directors approved the reverse stock split of the Company’s common stock at a ratio of 1-for-20.

On July 16, 2023, the Company filed

a certificate of change (with an effective date of July 16, 2023) with the Nevada Secretary of State pursuant to Section 78.209 of the

Nevada Revised Statutes to effectuate a 1-for-20 reverse stock split of its common stock.

On September 11, 2023, the reverse stock split

was approved by the Financial Industry Regulatory Authority and took effect on September 12, 2023.

All share information included in this

report has been adjusted as if the reverse stock split occurred as of the earliest period presented.

3) Closing of the 2024 Public Offering

23, 2024, the Company closed its offering of 2,160,000 shares of common stock at a public offering price of $ 5.00 per share, for aggregate

gross proceeds of $ 10.8 million before deducting underwriting discounts, and other offering expenses.

The Company complies with the requirements of

FASB ASC Topic 340-10-S99-1, “Other Assets and Deferred Costs – SEC Materials” (“ASC 340-10-S99”) and SEC

Staff Accounting Bulletin Topic 5A, “Expenses of Offering”, and charged issuance costs of $ 1,810,246 to additional paid-in

capital during the year ended December 31, 2024.

3) Statutory Reserve and Restricted Net

Under PRC rules and regulations,

all companies in the PRC are required to appropriate 10 % of their net income to a statutory surplus reserve until the reserve balance

reaches 50 % of their registered capital.

The appropriation to this statutory surplus reserve must be made before distribution of dividends

The statutory reserve is non-distributable, other than during liquidation, and can be used to fund previous years losses,

if any, and may be converted into share capital by issuing new shares to existing shareholders in proportion to their shareholders or

by increasing the par value of the shares currently outstanding, provided that the remaining balance of the statutory reserve after such

issue is not less than 25 % of the registered capital.

Appropriations to the discretionary surplus reserve

are made at the discretion of the board of directors.

The statutory reserve may be applied against prior year losses, if any, and may

be used for general business expansion and production or increase in registered capital, but are not distributable as cash dividends.

For the years ended December

31, 2024 and 2023, the Company made appropriations to the reserve fund of RMB 6,324,130 (equivalent to US$ 878,876 ) and RMB 8,172,303 (equivalent

to US$ 1,154,131 ), respectively.

NOTE 12- SHARE BASED COMPENSATION

The Company applied ASC

718 and related interpretations in accounting for measuring the cost of share-based compensation over the period during which the consultants

are required to provide services in exchange for the issued shares.

The fair value of above award was estimated at the grant date using

the Black-Scholes model for pricing the share compensation expenses.

On December 22,

2020, the board of directors of the Company authorized the issuance of an aggregate of 5,181 shares and warrants to purchase an aggregate

of 10,518 shares of common stock to The Crone Law Group, P.C.

or its designees for legal services that had been rendered.

1 unchanged sentence

warrants are exercisable at one cent per share.

shares of common stock underlying such warrants were vested on December 22, 2020 and 6,211 shares were issued upon exercise of these

warrants on September 21, 2022 and warrant to purchase 4,307 shares remained outstanding for The Crone law Group, P.C.

or its designees

for legal services.

The fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation

The fair value of the Black-Scholes model includes the following assumptions:

expected life of 2.5 years, expected dividend

rate of 0 %, volatility of 43.5 % and an average interest rate of 0.11 %.

January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 15,541 shares and warrants to purchase

31,554 shares of common stock to a third party service provider for consulting services that had been rendered.

These warrants have a

five-year term and are exercisable at one cent per share.

15,541 shares of common stock and warrants to purchase 31,554 shares of commons stock

on January 1, 2021.

fair value of the above warrants was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses.

5,181 shares of

common stock underlying such warrants were vested on December 22, 2020 and 6,211 shares were issued upon exercise of these warrants on

September 21, 2022 and warrant to purchase 4,307 shares remained outstanding for The Crone law Group, P.C.

or its designees for legal

The fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses.

The fair value of the Black-Scholes model includes the following assumptions:

1 unchanged sentence

volatility of 43.5 % and an average interest rate of 0.11 %.

of December 31, 2023, the Company had warrants outstanding to purchase 35,861 shares of common stock related to above mentioned services

with i) weighted average exercise price of $ 0.2 ;

ii) weighted average remaining contractual life of 0.2 years;

and iii) aggregate intrinsic

value of $ 0.3 million.

On January 1, 2021,

the board of directors of the Company authorized the issuance of an aggregate of 15,541 shares and warrants to purchase 31,554 shares

of common stock to a third party service provider for consulting services that had been rendered.

These warrants have a five-year term

and are exercisable at one cent per share.

The 15,541 shares of common stock and warrants

to purchase 31,554 shares of commons stock vested on January 1, 2021.

The fair value of the above warrants was

estimated at the grant date using Black-Scholes model for pricing the share compensation expenses.

The fair value of the Black-Scholes

model includes the following assumptions:

expected life of 2.5 years, expected dividend rate of 0 %, volatility of 51.3 % and an average

interest rate of 0.12 %.

During the year ended December 31, 2024,

warrants for 35,861 shares of common stock related to above mentioned services were exercised.

There were no warrants related to services

remaining as of December 31, 2024.

As of December 31, 2024 and 2023, the Company

recognized relevant share-based compensation expense of nil and nil for the vested shares, and nil and nil for the warrants, respectively.

WEIGHTED AVERAGE NUMBER OF SHARES

October 2020, the Company entered into a reverse merger transaction.

The Company computes the weighted-average number of shares of common

stock outstanding in accordance with ASC 260 states that in calculating the weighted average shares when a reverse merger takes place

in the middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be

computed on the basis of the weighted-average number of shares of common stock of the legal acquiree (accounting acquirer) outstanding

during the period multiplied by the exchange ratio established in the merger agreement.

The number of shares of common stock outstanding

from the acquisition date to the end of that period shall be the actual number of shares of common stock of the legal acquirer (the accounting

acquiree) outstanding during that period.

13 - RISKS AND UNCERTAINTIES

Risk – The carrying amount of accounts receivable included in the balance sheet represents the Company’s exposure

to credit risk in relation to its financial assets.

In October 2020, the Company entered into a reverse

merger transaction.

The Company computes the weighted-average number of shares of common stock outstanding in accordance with ASC 260

states that in calculating the weighted average shares when a reverse merger takes place in the middle of the year, the number of common

shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number

of shares of common stock of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established

in the merger agreement.

The number of shares of common stock outstanding from the acquisition date to the end of that period shall be

the actual number of shares of common stock of the legal acquirer (the accounting acquiree) outstanding during that period.

NOTE 14 — RISKS AND

UNCERTAINTIES

Credit Risk – The carrying

amount of accounts receivable included in the balance sheet represents the Company’s exposure to credit risk in relation to its

financial assets.

No other financial asset carries a significant exposure to credit risk.

performs ongoing credit evaluations of each customer’s financial condition.

The Company maintains allowances for doubtful accounts

and such allowances in the aggregate have not exceeded management’s estimates.

Company has its cash in bank deposits primarily at state owned banks located in the PRC.

Historically, deposits in PRC banks have been

secured due to the state policy of protecting depositors’ interests.

The PRC promulgated a Bankruptcy Law in August 2006, effective

June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks.

The bank deposits with financial

institutions in the PRC are insured by the government authority for up to RMB 500,000 .

Rate Risk – The Company is exposed to the risk arising from changing interest rates, which may affect the ability of repayment

of existing debts and viability of securing future debt instruments within the PRC.

Risk - A majority of the Company’s revenue and expense transactions are denominated in RMB and a significant portion of

the Company’s assets and liabilities are denominated in RMB.

The Company performs ongoing credit evaluations

of each customer’s financial condition.

The Company maintains allowances for doubtful accounts and such allowances in the aggregate

have not exceeded management’s estimates.

The Company has its cash in bank deposits primarily

at state owned banks located in the PRC.

Historically, deposits in PRC banks have been secured due to the state policy of protecting depositors’

The PRC promulgated a Bankruptcy Law in August 2006, effective June 1, 2007, which contains provisions for the implementation

of measures for the bankruptcy of PRC banks.

The bank deposits with financial institutions in the PRC are insured by the government authority

for up to RMB 500,000 .

Interest Rate Risk – The Company

is exposed to the risk arising from changing interest rates, which may affect the ability of repayment of existing debts and viability

of securing future debt instruments within the PRC.

Currency Risk - A majority of the

Company’s revenue and expense transactions are denominated in RMB and a significant portion of the Company’s assets and liabilities

are denominated in RMB.

RMB is not freely convertible into foreign currencies.

certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates

set by the People’s Bank of China (“PBOC”).

Remittances in currencies other than RMB by the Company in China must be

processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order

to affect the remittance.

Concentrations

- The Company sells its products primarily through direct customers in the PRC and to some extent, the overseas customers in

European countries and East Asia such as South Korea and Taiwan.

In the PRC, certain foreign exchange transactions are required

by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”).

Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory

bodies which require certain supporting documentation in order to affect the remittance.

Concentrations - The Company sells

its products primarily through direct customers in the PRC and to some extent, the overseas customers in European countries and East Asia

such as South Korea and Taiwan.

For the year ended December 31, 2024, five customers accounted for 22.0 %, 19.1 %, 15.3 %, 14.5 %, and 11.5 %,

respectively, of the Company’s revenue.

For the year ended December 31, 2023, six customers accounted for 22.5 %, 16.5 %, 15.6 %, 14.1 %,

11.3 % and 10.1 %, respectively, of the Company’s revenue.

For the year ended December 31, 2022, six customers

accounted for 21.2 %, 16.1 %, 14.8 %, 13.7 %, 11.9 % and 10.1 %, respectively, of the Company’s revenue.

the Company’s top 10 customers aggregately accounted for 99.7 % and 98.7 % of the total revenue for the years ended December 31,

2023 and 2022, respectively.

of December 31, 2023, four customers accounted for 31.7 %, 16.2 %, 15.8 % and 11.5 % of the total accounts receivable balance, respectively.

of December 31, 2022, three customers accounted for 32.2 %, 22.8 %, and 14.0 % of the total accounts receivable balance, respectively.

Company purchases its raw materials through various suppliers.

Raw material purchases from these suppliers which individually exceeded

10% of the Company’s total raw material purchases, accounted for approximately 13.3 % (one supplier) and 13.2 %, 12.7 %, 10.7 % and

10.6 %(four suppliers) of the Company’s total raw material purchases for the years ended December 31, 2023 and 2022,

respectively.

14 — COMMITMENTS AND CONTINGENCIES

time to time, the Company and its subsidiaries are parties to various legal actions arising in the ordinary course of business.

Hong Kong Wetouch, Sichuan Wetouch, the deconsolidated subsidiary of the Company (see Note 2- (a) - Deconsolidation of Sichuan Wetouch) ,

Sichuan Vtouch and Mr.

Guangde Cai, the former Chairman and director of the Company, were named as defendants in several litigation matters,

as of the date of this report, all such matters have been settled and Sichuan Wetouch, Hong Kong Wetouch and Mr.

Guangde Cai were unconditionally

and fully discharged and released therefrom Accordingly, there are no pending material legal proceedings against the Company as of the

date of this report.

equity dispute case with Yunqing Su with a disputed amount of RMB 1,318,604 (equivalent to $ 185,721 )

June 22, 2017, Yunqing Su, a former shareholder, entered an Equity Investment Agreement with Sichuan Wetouch and Guangde Cai, agreed

that Yunqing Su would invest RMB 1 million (equivalent to $ 140,847 ) to purchase 370,370.37 original listed shares of the target company,

Sichuan Wetouch, and provided for the exit mechanism in the agreement.

However, the target company failed to be listed prior to December

31, 2017 as agreed.

On June 22, 2017, Guangde Cai and Yunqing Su entered into a supplementary agreement, pursuant to which Guangde Cai

shall repurchase all of Yunqing Su’s equity interest and pay the interest.

Sichuan Wetouch repaid Yunqing Su the interest of RMB 220,000

(equivalent to $ 30,986 ) and the principal of RMB 128,000 (equivalent to $ 18,028 ) in November 2018.

The repayment period set forth in the

supplementary agreement expired, but Sichuan Wetouch and Guangde Cai failed to pay the principal and interest owed to Yunqing Su.

Su sued Sichuan Wetouch and Guangde Cai in the Renshou County People’s Court of Sichuan Province, and the case was filed on February

May 9, 2022, pursuant to a civil mediation statement issued by the Renshou County People’s Court of Sichuan Province, Sichuan Wetouch

and Guangde Cai agreed to repay Yunqing Su the principal and interest in the total amount of RMB 1,318,604 (equivalent to $ 185,721 ).

Sichuan Wetouch fully paid the aforesaid amount on March 15, 2023.

case with Chengdu SME Credit Guarantee Co., Ltd.

on a court acceptance fee of RMB 338,418 (equivalent to $ 47,665 )

July 5, 2013, Sichuan Wetouch obtained a one-year loan of RMB 60.0 million (equivalent to $ 8.5 million) from Bank of Chengdu, at an annual

interest rate of 8.61 %.

Chengdu SME Credit Guarantee Co., Ltd (“Chengdu SME”), a third party, provided a 70% guarantee and

Bank of Chengdu retained 30% of the risk, while Chengdu Wetouch , a related party company, owned by Mr.

Guangde Cai and Mr.

Guangde Cai provided joint and several liability guarantee for 100% of the loan.

July 31, 2014, Sichuan Wetouch repaid RMB 5.0 million (equivalent to $ 0.7 million).

The remaining loan of RMB 55.0 million (equivalent

to $ 7.7 million) was twice extended to be due on August 22, 2018.

Upon the loan becoming due, but unpaid by the Company, Chengdu SME

paid the outstanding balance of RMB 55 million (equivalent to $ 7.7 million) to Bank of Chengdu.

The Company subsequently repaid RMB 55

million (equivalent to $ 7.7 million) to Chengdu SME;

however, Chengdu SME filed two separate lawsuits against the Company to recover

loan default penalties from the Company.

The loan default penalties were (a) RMB 5.8 million (equivalent to $ 0.8 million) related to the

30% of the remaining loan balance repaid by Chengdu SME and (b) RMB 6.0 million (equivalent to $ 0.8 million) related to the 70% of the

remaining loan balance repaid by Chengdu SME.

During the year ended December 31, 2017, the Company recorded loan default penalties, and

related liabilities, of $ 1.7 million.

SME applied to the Chengdu High-tech Court for enforcement of the above-mentioned loan default penalties of RMB 5.8 million (equivalent

to $ 0.8 million) and RMB 6.0 million (equivalent to $ 0.8 million) on December 30, 2018.

On March 12, 2020, the Enforcement Settlement

Agreement issued by the Chengdu High-tech Court confirmed that Sichuan Wetouch still owed RMB 5.8 million (equivalent to $ 0.8 million)

and RMB 6.0 million (equivalent to $ 0.8 million) of loan default penalties.

The agreement did not specify which party shall pay the court

September 16, 2020, Sichuan Wetouch made a full repayment of RMB 11.8 million (equivalent to $ 1.7 million) of the above loan default penalties

to Chengdu SME.

March 16, 2023, pursuant to an Enforcement Settlement Agreement entered among Chengdu SME, Sichuan Wetouch and Chengdu Wetouch, Chengdu

Wetouch agreed to pay the court acceptance fee of RMB 338,418 (equivalent to $ 47,665 ).

On March 17, 2023, Chengdu Wetouch made a full

payment of the above court fee to Chengdu SME.

case with Lifan Financial Leasing (Shanghai) Co., Ltd.

and Sichuan Wetouch, Chengdu Wetouch, Meishan Wetouch and Xinjiang Wetouch

Electronic Technology Co., Ltd.

on a court acceptance fee of RMB 250,470 (equivalent to $ 35,278 )

November 20, 2014, Lifan Financial Lease (Shanghai) Co., Ltd.

(“Lifan Financial”) and Chengdu Wetouch entered into a Financial

Lease Contract (Sale and Leaseback), which stipulated that Lifan Financial shall lease the equipment to Chengdu Wetouch after the purchase

of the production equipment owned by Chengdu Wetouch at a purchase price, the purchase price/lease principal shall be RMB 20 million,

the rental interest rate of the leased equipment shall be 8 % per year, and the lease term shall be 24 months.

Upon the expiration of

the lease term, Lifan Financial shall transfer the leased property to Chengdu Wetouch or a third party designated by Chengdu Wetouch

at the price of RMB0 after Chengdu Wetouch has fully fulfilled its obligations, including, without limitation, the payment of the rent,

liquidated damages (if any) and other contractual obligations.

Guangde Cai, Sichuan Wetouch, Meishan Wetouch, an affiliated company to

Guangde Cai and Xinjiang Wetouch Electronic Technology Co., Ltd.

(“Xinjiang Wetouch”) provided Lifan Financial

with joint and several liability guarantee.

August 9, 2021, Lifan Financial filed a lawsuit against Chengdu Wetouch, Guangde Cai, Sichuan Wetouch, Meishan Wetouch and Xinjiang Wetouch

in the Chengdu Intermediate People’s Court.

The court ruled that:

1) the Financial Lease Contract (Sale and Leaseback) was terminated;

2) the leased property was owned by Lifan Financial;

3) Chengdu Wetouch shall pay Lifan Financial all outstanding rent and interest thereon

in the total amount of RMB 22,905,807 (equivalent to $ 3.2 million) as well as the difference between the liquidated damages and the value

of the leased property recovered;

parties executed a settlement agreement on March 7, 2023, in which the parties confirmed that the outstanding payment of RMB 22,905,807

(equivalent to $ 3.2 million) has been fully paid up on December 23, 2021 and the above cases have been settled.

As for the court acceptance

fees that were not previously agreed upon by the parties, Chengdu Wetouch agreed to pay the court acceptance fee of RMB 250,470

(equivalent to $ 35,278 ).

Chengdu Wetouch paid the aforesaid fees to Lifan Financial on March 10, 2023.

case with Sichuan Renshou Shigao Tianfu Investment Co., Ltd and Renshou Tengyi Landscaping Co., Ltd.

on a court acceptance fee of

RMB 103,232 (equivalent to $ 14,540 )

March 19, 2014, Chengdu Wetouch, a related party, obtained a two and half-year loan of RMB 15.0 million (equivalent to $ 2.1 million) from

Chengdu Bank Co., Ltd.

Gaoxin Branch (“Chengdu Bank Gaoxin Branch”) , with Chengdu Hi-tech Investment Group Co., Ltd.

Investment”) acting as guarantor to pay off the loan principal and related interests, while Sichuan Wetouch and Hong Kong Wetouch

as guarantors, were jointly and severally liable for such debts.

the loan due in January 2017, Chengdu Wetouch defaulted the loan, thus, CDHT Investment filed a lawsuit against Chengdu Wetouch, Sichuan

Wetouch, and Hong Kong Wetouch demanding a full repayment of such debts.

support the local economic development as well as Chengdu Wetouch, two government-backed companies, Sichuan Renshou Shigao Tianfu Investment

(“Sichuan Renshou”) and Renshou Tengyi Landscaping Co., Ltd.

(“Renshou Tengyi”) provided their bank

deposits of RMB 12.0 million (equivalent to $ 1.7 million) as pledge, while Mr.

Guangde Cai and Sichuan Wetouch also provided counter-guarantee.

the expiration of the guarantee, Chengdu Wetouch still defaulted on repayment of the above pledge.

As a result, CDHT Investment levied

this collateral of RMB 12.0 million.

On November 21, 2019.

Subsequently, Sichuan Renshou and Renshou Tengyi filed with Chengdu Intermediate

People’s Court a lawsuit demanding an asset recovery of RMB 12.0 million (equivalent to $ 1.7 million) pursuant to the counter guarantee

December 2, 2019, pursuant to the reconciling agreement issued by Chengdu Intermediate People’s Court, the parties agreed to cancel

the demand to seize property of Sichuan Wetouch rather than the property of Chengdu Wetouch, and to waive freezing Guangde Cai’s

60% shareholding equity in Xinjiang Wetouch Electronic Technology Co., Ltd.

October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch, Hong Kong Wetouch and Guangde Cai are fully discharged

and released from any and all obligations under the outstanding debts, and from all liabilities under guarantee with Chengdu Wetouch

being responsible for the outstanding debts by December 31, 2020.

October 27, 2020, Chengdu Wetouch made a full payment of the above debts.

settlement and release agreement did not specify which party shall pay the court acceptance fee.

On March 10, 2023, pursuant to an enforcement

settlement agreement entered among Sichuan Renshou, Renshou Tengyi, Sichuan Wetouch, Chengdu Wetouch, and other relevant parties, Sichuan

Wetouch agreed to pay the court acceptance fee of RMB 103,232 (equivalent to $ 14,540 ).

On March 17, 2023, Chengdu Wetouch made a full

payment of the above court fee to Sichuan Renshou.

case with Chengdu High Investment Financing Guarantee Co.

on a court acceptance fee of RMB 250,000 (equivalent to $ 35,211 )

March 22, 2019, Chengdu High Investment Financing Guarantee Co., Ltd, (“Chengdu High Investment”) filed a lawsuit against

Hong Kong Wetouch in the Chengdu Intermediate People’s Court, claiming that Hong Kong Wetouch should assume the guarantee liability

for the debt payable by Chengdu Wetouch.

On May 21, 2020, the court rendered a judgment ordering Hong Kong Wetouch to pay compensation

of RMB 17,467,042 (equivalent to $ 2,460,181 ), interest, liquidated damages, liquidated damages for late performance, etc.

March 16, 2023, Chengdu Wetouch, Sichuan Wetouch and Chengdu High Investment entered into a settlement enforcement agreement, confirming

that Chengdu High Investment had received RMB 17,547,197 (equivalent to $ 2,471,471 ) on October 27, 2020 paid by Chengdu Wetouch,

and the above case has been settled.

As for the court acceptance fees that were not previously agreed upon by the parties, Chengdu Wetouch

agreed to pay the court acceptance fee of RMB 250,000 (equivalent to $ 35,211 ).

Chengdu Wetouch paid the aforesaid fees to Chengdu High

Investment on March 20, 2023.

case with Hubei Lai’en Optoelectronics Technology Co., Ltd.

on a product payment of RMB 157,714 (equivalent to $ 22,213 )

Wetouch purchased products from Hubei Lai’en Optoelectronics Technology Co., Ltd.

(“Hubei Lai’en) multiple times from

March to June 2019, but failed to pay the corresponding amount of RMB 137,142.7 for the purchased products.

On April 6, 2022, Hubei Lai’en

filed a lawsuit against Sichuan Wetouch in the Renshou County People’s Court of Sichuan Province, requesting payment of overdue

payment for the products and liquidated damages.

On May 31, 2022, the Renshou County People’s Court rendered a judgment that Sichuan

Wetouch shall pay Hubei Lai’en the price of goods of RMB 137,143 and liquidated damages of RMB 20,571 .

Sichuan Wetouch paid the

above amount to Hubei Lai’en on March 15, 2023.

Legal case with Chengdu Hongxin Shunda Trading Co., Ltd.

on settlement of accounts payable and related fund interests totalling RMB 3,021,294

March 2022, Sichuan Vtouch purchase steel products from Chengdu Hongxin Shunda Trading Co., Ltd.

(“Chengdu Hongxin”) for

facility construction, but failed to settle the accounts payable on time.

In July 2023, Chengdu Hongxin filed a lawsuit to a local district

court against the Company and its new facility constructors (“the three defendants”) requesting the settlement of the remaining

accounts payable and the corresponding fund interests, penalties and legal fees, totalling of RMB 3,021,294 ($ 425,540 ).

The court judged

Sichuan Vtouch to pay and ordered the freezing of bank accounts of these three defendants.

On September 25, 2023, the Company appealed

to Chengdu Municipal Intermediate People’s Court, arguing the calculation of fund interests and penalties ordered by the lower

court unfair and not in line with the law regulations.

As of the date of this report, the management assessed that possibility and

amount of contingency cannot be estimated given the current status.

Legal case with Mr.

Guangchuang Liu on a refund of equity transfer price and related interests totalling RMB 324,501 ($ 45,705 )

July 2022 Mr.

Liu entered into an equity transfer agreement with Mr.

Guangde Cai and Sichuan Vtouch with the intention to subscribe the

Company’s shares of 20,000 for RMB 315,245 ($ 44,104 ).

In April, 2023, Mr.

Liu filed a lawsuit to Shenzhen Nanshan District People’s

Court against Mr.

Guangde Cai and Sichuan Vtouch requesting the refund of this equity transfer price and related fund interests totalling

RMB 324,501 ($ 45,705 ).

Per the court decision of December 13, 2023, the defendants were ordered to make the payments by the end of 2023.

As of December 31, 2023, the Company recorded the liabilities of RMB 324,501 ($ 45,705 ) and subsequently, the Company has made the payment

in full in January, 2024.

Legal case with Sichuan Yali Cement Manufacturing Co., Ltd.

and Sichuan Chunqiu Development & Construction Group Co.

payable of RMB RMB 1,656,480 (equivalent to $ 233,310 ) and related interest, legal fees and penalties.

August 10, 2022, Sichuan Yali Cement Manufacturing Co., Ltd.

(“Yali Co.”) and Sichuan Chunqiu Development & Construction

(“ Chunqiu Co.”) entered into construction materials contract for Sichuan Vtouch’s new facility.

this contract, Sichuan Vtouch was listed as the joint responsibility party for the payment settlement between Yali Company and Chunqiu

February 15, 2023, Yali Co.

filed a lawsuit against Chunqiu Co.

to the Chengdu Wenjiang District People’s Court, claiming that

should pay the remaining debt of RMB RMB 1,656,480 (equivalent to $ 233,310 ) and related interest, legal fees and penalties,

and that Sichuan Vtouch should assume the guarantee liability for the debt payable by Chunqiu Co.

On August 12, 2023, the court rendered

a judgment ordering Chunqiu Co.

to pay to Yali Co.

for above mentioned amount.

Sichuan Vtouch was ordered joint liability of such aforesaid

August 22, 2023, Chunqiu Co.

appealed to Chengdu Municipal Intermediate People’s Court against Yali Co.

and Sichuan Vtouch requesting

Sichuan Vtouch to be responsible for this debt payable.

On October 30, 2023, the court ordered Chunqiu Co.

to pay pack all the debts,

and Sichuan Vtouch to bear the joint and several liability for the above debts of Chunqiu Co.

including a court fee of RMB 10,627 ($ 1,497 )

with Chunqiu liability.

As of December 31, 2023, Sichuan Vtouch accrued this court fee of RMB 10,627 ($ 1,497 ).

Expenditure Commitment

of December 31, 2023, the Company has no capital expenditure commitment.

15 — REVENUES

Company’s geographical revenue information is set forth below:

OF GEOGRAPHICAL REVENUE INFORMATION

And the Company’s top 10 customers aggregately

accounted for 99.3 % and 99.7 % of the total revenue for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, five customers accounted

for 26.6 %, 24.5 %, 12.0 %, 11.4 % and 10.8 % of the total accounts receivable balance, respectively.

As of December 31, 2023, four customers accounted

for 31.7 %, 16.2 %, 15.8 % and 11.5 % of the total accounts receivable balance, respectively.

The Company purchases its raw materials through

various suppliers.

Raw material purchases from these suppliers which individually exceeded 10% of the Company’s total raw material

purchases, accounted for approximately 15.5 %, 12.2 % and 11.5 % (three customers) and 13.3 % (one supplier) of the Company’s total

raw material purchases for the year ended December 31, 2024 and 2023, respectively.

NOTE 15 — COMMITMENTS AND CONTINGENCIES

i) Legal Proceedings

We may from time to time be subject to various

legal or administrative claims and proceedings arising in the ordinary course of business.

Litigation or any other legal or administrative

proceeding, regardless of the outcome, can result in substantial cost and the diversion of our resources, including our management’s

time and attention.

As of the date of this Report, we are not aware

of any material, active, pending or threatened to which the Company or any of its subsidiaries is a party, or to which any of their property

ii) Capital Expenditure Commitment

As of December 31, 2024, the Company had commitment

of RMB 5.0 million (equivalent to $ 0.7 million) for construction in progress.

NOTE 16 — SEGMENT REPORTING

The Company’s chief operating decision maker

has been identified as the Chief Executive Officer (“CEO”), who reviews financial information of operating segments based

GAAP amounts when making decisions about allocating resources and assessing performance of the Company.

The Company determined that it operated in one operating segment of

touch screen business.

The Company primarily operates in People’s Republic of China

and substantially all of the Company’s long-lived assets are located in the PRC.

1) The Company’s geographical revenue information is set

For the Years Ended

2 unchanged sentences

Total revenues

16 — SUBSEQUENT EVENTS

February 20, 2024, Wetouch entered into an underwriting agreement (the “Underwriting Agreement”) with WestPark Capital, Inc.

and Craft Capital Management LLC, as representatives (the “Representatives”) of the underwriters listed therein (the “Underwriters”),

pursuant to which the Company agreed to sell to the Underwriters in a firm commitment underwritten public offering (the “Offering”)

an aggregate of 2,160,000 shares of the Company’s common stock at a public offering price of $ 5.00 per share.

In addition, the

Underwriters were granted an over-allotment option for a period of 45 days to purchase up to an additional 324,000 shares of common stock.

The Offering closed on February 23, 2024.

The common stock began trading on the Nasdaq Capital Market under the symbol WETH on February

Company conducted the Offering pursuant to a Registration Statement on Form S-1 (File No.

333-270726), as amended, which was declared

effective by the United States Securities and Exchange Commission on February 14, 2024 (the “Registration Statement”).

Offering was closed on February 23, 2024.

net proceeds to the Company from the Offering, after deducting the underwriting discount, the Underwriters’ fees and expenses,

and the Company’s Offering expenses, are approximately $ 9.2 million.

Proceeds from the Offering will be used for the construction

of a new factory, facilities and office buildings, the purchase of two production lines in the new factory, research and development,

the repayment of the remaining five convertible promissory notes, and working capital and general corporate purposes.

February 23, 2024, pursuant to the Underwriting Agreement, the Company issued the Representatives’ Warrants (the “Representatives’

Warrants”) to the Representatives to purchase a number of shares of Common Stock equal to 2.0 % of the total number of shares of

Common Stock (including any shares sold in the Offering to cover over-allotments) sold in the Offering at an exercise price equal to

125.0 % of the public offering price.

The Representatives’ Warrants will not be exercised, sold, transferred, assigned, pledged,

or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective

economic disposition of the securities for a period of 180 days beginning on the date of commencement of sales of the Offering.

the Representatives’ Warrants will not be exercisable for more than five years from the commencement of sales of the Offering.

2) Segment information is set forth below:

For the Years Ended

Cost of revenues

Allowance for credit losses

Provision of obsolete inventory

(Gain) loss on changes in fair value of common stock purchase warrants liability.

Amortization of discounts and issue cost of the notes

Depreciation expense

Lease expense

Interest expense

Charges of contract default penalty expense

Income tax expense

Other segment items*

Segment net income

Consolidated net income

Consolidated total assets

$ 128,019,463

$ 119,641,398

* Other segment items include remaining selling expense, general

and administration expenses, research & development, and interest income.

NOTE 17 — SUBSEQUENT EVENTS

On April 11, 2025, Sichuan Vtouch entered into

a supplemental construction contract with Sichuan Chunqiu Development & Construction Group Co.

for a total consideration of RMB 4,633,118

(equivalent to $ 0.6 million) for completion of the Company’s facility construction project on the capacitive touch screen and touch

Pursuant to the contract, the Company is required to prepay 50 % of the contract within three months and the remaining

amount payable upon the completion of the project settlement.

As of the date of this Annual

Report, the Company has prepaid the 50 % of the contract value.

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 9A. Controls and Procedures