Wetouch Technology Inc. 10-K

ITEM 9A. 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. Management believes that the material weaknesses that were identified did not have an effect on our financial results. However, management believes that these weaknesses, if not properly remediated, could result in a material misstatement in our financial statements in future periods. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that 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. 71 Management’s Plan to Remediate the Material Weakness Management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions planned include: ● 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; and ● 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. 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. Changes in Internal Control over Financial Reporting 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. ITEM 9B. 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. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not applicable. 72 PART III ITEM 10. 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 Company. Name Age Position(s) Held Guangrong Cai 62 Chairman, Director Zongyi Lian 60 President and Chief Executive Officer Xing Tang 58 Chief Financial Officer Jian Feng 30 Secretary, Director Jing Chen* 59 Director Jiaxing Huang 25 Director Guijun Gan 56 Director Jing Guo** 35 Director * Jing Chen served from November 12, 2021 untill April 29, 2025 ** Jing Guo served from May 1, 2025 Guangrong Cai - Chairman and Director Mr. Guangrong Cai has served as our Chairman and Director since June 2024. Mr. Cai has served as a legal representative and director of the strategic planning department of Sichuan Vtouch Technology Co., Ltd since 2020. Mr. 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. Mr. 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 President Mr. 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 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. Mr. Lian holds a master’s degree in Automatic Control from National Yang Ming Chiao Tung University in 1982. Xing Tang - Chief Financial Officer Ms. 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. (Nasdaq: ELPW), a company focusing on high-power lithium-ion batteries for energy storage systems . From August 2010 to May 2023, Ms. Tang served as Finance Director of China XD Plastics Co., Ltd. From March 2010 to August 2010, she served as a director of Audit Coordination Department of Ashir Capital, Inc. Mrs. Tang obtained the Association of Chartered Certified Accountants certificate in June 1998. Ms. 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. 73 Jing Chen - Director Ms. 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 Co., Ltd. Ms. Chen also has served as an independent director and the chairperson of the audit committee of Erayak Power Solution Group Inc. (Nasdaq: RAYA) since November 2021, and Bon Natural Lift Limited (Nasdaq: BON) since October 2023. Ms. Chen served as an independent director and the chairperson of the audit committee of Jin Medical International Ltd. (Nasdaq: ZJYL) from August 2021 to December 2023. She also served as the Vice President of Future Fintech Group Inc. (Nasdaq: 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. Ms. Chen also served as an independent director of Hello iPayNow (Beijing) Company Ltd. from April 2019 to March 2021. 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. of China, which is a Chinese over-the-counter stock trading system. From June 2016 to July 2017, Ms. Chen served as Group Chief Financial Officer of Beijing AnWuYou Food Co., Ltd. Ms. Chen also served as Chief Financial Officer of Beijing DKI Investment Management Co., Ltd. from August 2012 to May 2016. Ms. 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. Ms. 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. Chen 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 - Director Mr. Jiaxing Huang has served as our director since June 2024. Mr. 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. Mr. 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 Mr. Gan has served as our director since June 2024, Mr. Gan has also served as a director of Chengdu Qili Water Treatment Technology Co. since 2019. 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. Mr. 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 Ms. Jing Guo, age 35, has served as the Human Resources Director (Vice President level) of All Home Furnishings Limited since December 2020. Ms. 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 There are no other family relationships between any of our directors or executive officers, except that former director Ms. Jiaying Cai is the niece of Mr. Guangrong Cai . There are no 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 We have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below. Audit Committee. Our audit committee consists of Jing Chen, Jiaxing Huang and Guijun Gan . Ms. Chen is the chairperson of the audit committee. We have determined that Ms. Chen, Mr. 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. Chen qualifies as an “audit committee financial expert.” 74 We 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 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 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; (c) retaining and terminating the Company’s 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. Compensation Committee. Our compensation committee consists of Jing Chen, Jiaxing Huang and Guijun Gan . Mr. Huang is the chairperson of our compensation committee. We have determined that Ms. Chen, Mr. Huang and Mr. Gan 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 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. We 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. 75 ● 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. The charter also provides that the compensation committee may select, retain and terminate independent legal counsel and other experts or consultants, as it deems appropriate, without seeking approval of the Board or management, including the authority to approve the fees 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. Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Jing Chen, Jiaxing Huang and Guijun Gan . Mr. Gan is the chairperson of our nominating and corporate governance committee. We have determined that each of Ms. Chen, Mr. Huang and Mr. Gan qualifies as “independent” as that term is defined by Nasdaq Listing Rule 5605(a)(2). We 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. The charter also provides that the nominating and corporate governance committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search firm’s fees and other retention terms. 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; Attention: Corporate Secretary. 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. 76 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. Jiaxing 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. Guijun Gan. ITEM 11. 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 Year Salary ($) Bonus ($) Stock awards ($) Option awards ($) All other compensation ($) Total ($) Zongyi Lian, President, Chief Executive Officer 2023 $ 20,336 - - - - $ 20,336 2024 $ 12,857 - - - - $ 12,857 Yuhua Huang, Chief Financial Officer (1) 2023 $ 18,642 - - - - $ 18,642 2024 $ 7,500 - - - - $ 7,500 Xing Tang, Chief Financial Officer (2) 2023 $ - - - - - $ - 2024 $ 28,150 $ 28,150 (1) Yuhua Huang resigned as Chief Financial Officer of the Company on July 8, 2024. (2) Xing Tang was appointed as Chief Financial Officer of the Company on July 8, 2024. 77 Employment Agreements Zongyi Lian On November 21, 2017, Sichuan Wetouch entered into an employment agreement with its Chief Executive Officer, Zongyi Lian, pursuant to which he receives an annual base salary of approximately $23,890 (equivalent to RMB168,000) plus other annual remuneration, including but not limited to position salary of approximately $17,070 (equivalent to RMB120,000), confidentiality fee of approximately $6,828 (equivalent to RMB48,000) and subsidies of approximately $9,104 (equivalent to RMB64,000). Mr. 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 similar terms and conditions. Amount reflects salary paid to Mr. Lian for services rendered to our former operating subsidiary, Sichuan Wetouch. 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. Lian as our CEO for another three years from November 21, 2023 under the same terms and conditions. We 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. Under 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. The 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 the employment for cause, with thirty days advance written notice and one month’s salary, for certain acts of the executive officer, such as illness or non-work related injury resulting in inability to work in the previous position or newly assigned position after recovery, inability to perform the assigned work and after training or adjustment of position, still failure to perform the assigned work. 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 regulations. Zongyi 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. Yuhua Huang On 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). Mr. 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. On July 8, 2024, Yuhua Huang resigned as Chief Financial Officer of the Company and ceased to be employed by us. Xing Tang On 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 information. 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. 78 Confidentiality and Non-Competition We entered into confidentiality and non-competition agreements with Mr. Lian 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 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 the Company; (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. Each 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 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. Each 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 disclosure of the confidential information, to Sichuan Vtouch for violation of the confidentiality and non-competition agreements. Clawback Policy Our 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 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 31, 2024. 79 Outstanding Equity Awards at Fiscal Year-End There are no outstanding equity awards to our executive officers as of December 31, 2024. Long-Term Incentive Plans There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers as of December 31, 2024. Director Compensation The table below shows the compensation paid to our non-employee directors during 2024. Name Year Fees Earned or Paid in Cash Stock Awards Option Awards Non-Equity Incentive Plan Compensation Nonqualified Deferred Compensation Earnings All other Compensation Total Fei Bai (1) 2024 - - - - - 17,143 $ 17,143 Xiaojin Tang(2) 2024 - - - - - 8,571 $ 8,571 Congjin Wang(3) 2024 - - - - - 8,571 $ 8,571 Jiaxing Huang (4) 2024 - - - - - 6,429 * $ 6,429 * Jing Chen 2024 - - - - - 20,571 * $ 20,571 * Guijun Gan (5) 2024 $ 6,429 * - - - - - 6,429 * Accrued and not paid, except Jing Chen’s. (1) Fei Bai resigned as Chairman and a director of the Company on June 3, 2024. (2) Xiaojin Tang resigned as a director of the Company on June 3, 2024. (3) Congjin Wang resigned as a director of the Company on June 3, 2024. (4) Jiaxing Huang was appointed as a director of the Company on June 28, 2024, effective July 1, 2024. (5) Guijun Gan was appointed as a director of the Company on June 28, 2024, effective July 1, 2024. 80 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The 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 of more than 5% of the outstanding common stock; (ii) each of our directors (iii) each of our Named Executive Officers and (iv) all executive officers and directors as a group. All information with respect to beneficial ownership has been furnished by the respective 5% or more stockholders, directors or executive officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is No. 29, Third Main Avenue, Shigao Town, Renshou County, Meishan, Sichuan, China. The percentages below were calculated based on 11,931,534 shares of common stock issued and outstanding as of September 8, 2025. Shares Beneficially Owned Name of Beneficial Owner Shares Percentage Executive Officers and Directors: Guangrong Cai (1) 9,576 * Zongyi Lian (2) 5,657 * Jian Feng - - Guijun Gan - - Jiaxing Huang - - Jing Guo - - Xing Tang - - All officers and directors as a group (7 persons) 15,233 * 5% or Greater Holders: * Less than 1% (1) Represents 9,576 shares of common stock held of record by Guangrong Cai, Chairman of the Company. (2) Represents 5,657 shares of common stock held of record by Zongyi Lian, Chief Executive Officer of the Company. Changes in Control Agreements As 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 Item 403(c) of Regulation S-K. 81 On September 4, 2025, Jiaying Cai resigned as a member of the Board of Directors (the “Board”). Ms. 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. On April 29, 2025, Jing Chen resigned as a member of the Board of Directors (the “Board”). Ms. 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. On July 8, 2024, Mr. Yuhua Huang resigned as a Chief Financial Officer of Wetouch Technology Inc. (the “Company”). Mr. Huang’s 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. On June 3, 2024, Mr. Fei Bai resigned as a member of the Board of Directors (the “Board”) and as the Chairman of the Board. Mr. 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. On 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. Mr. 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. On 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. Mr. Wang’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. On September 5, 2025, the Board appointed Jian Feng to serve as a member of the Board. On 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. On 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. On July 8, 2024. the Board of Company appointed Xing Tang to serve as the Chief Financial Officer of the Company. On 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. On 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. On 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. 82 ITEM 13. 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 interest: 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. These 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. Other 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 5605(a)(2). 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. Ms. 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. 83 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. Audit Fees 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. Tax Fees 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. 84 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 1. 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. 2. 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. 3. Exhibits 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 S-K. Exhibit Number Description of Document 2.1 (1) Share Exchange Agreement dated October 9, 2020 among Wetouch Technology Inc. f/k/a Gulf West Investment Properties, Inc., Wetouch Holding Group Limited, the shareholders of Wetouch Holding Group Limited, Hong Kong Wetouch Electronics Technology Limited and Fengfei Zhang, as administrative agent for the sellers. 3.1 (1) Amended and Restated Articles of Incorporation of the Company, dated September 30, 2020. 3.2 (1) Bylaws of the Company. 4.1 (1) Specimen Common Stock Certificate. 4.2* Description of Registrant’s Securities. 85 4.3 (1) Form of Underwriter’s Warrants. 4.4 (1) Common Stock Purchase Warrant dated October 27, 2021 issued by Wetouch Technology Inc. 4.5 (1) Common Stock Purchase Warrant dated November 5, 2021 issued by Wetouch Technology Inc. 4.6 (1) Common Stock Purchase Warrant dated November 16, 2021 issued by Wetouch Technology Inc. 4.7 (1) Common Stock Purchase Warrant dated November 24, 2021 issued by Wetouch Technology Inc. 4.8 (1) Common Stock Purchase Warrant dated November 29, 2021 issued by Wetouch Technology Inc. 4.9 (1) Common Stock Purchase Warrant dated December 2, 2021 issued by Wetouch Technology Inc. 4.10 (1) Common Stock Purchase Warrant dated December 2, 2021 issued by Wetouch Technology Inc. 10.1.1 (1) English Translation of Employment Agreement between Sichuan Wetouch Technology Co., Ltd and Zongyi Lian. 10.1.2 (1) English Translation of Confidentiality and Non-Competition Agreement between Sichuan Wetouch Technology Co., Ltd and Zongyi Lian. 10.2.1 (2) Executive Officer Agreement between Wetouch Technology Inc. and Xing Tang. 10.3.1 (1) English Translation of Form of Sichuan Vtouch Technology Co., Ltd. Sales Framework Agreement. 10.4 (1) English Translation of Form of Sichuan Vtouch Technology Co., Ltd. Purchase Order with Suppliers. 10.5 (1) English Translation of Form of Loan Agreement between Sichuan Wetouch Technology Co., Ltd and Shareholder of Australia Vtouch Technology Co., Ltd. 10.6 (1) English Translation of Form of Supplemental Agreement to Loan Agreement between Sichuan Wetouch Technology Co., Ltd and Shareholder of Australia Vtouch Technology Co., Ltd. 10.7 (1) English Translation of Renewed Employment Agreement between Sichuan Wetouch Technology Co., Ltd and Zongyi Lian dated November 13, 2020. 10.8 (1) English Translation of Renewed Confidentiality and Non-Competition Agreement between Sichuan Wetouch Technology Co., Ltd and Zongyi Lian dated November 13, 2020. 10.9 (1) English Translation of Form of Sichuan Wetouch Technology Co., Ltd. Supplemental Agreement to Sales Framework Agreement dated April 2024. 10.10 (1) English Translation of Leaseback Agreement between Sichuan Vtouch Technology Co., Ltd and Sichuan Renshou Shigao Tianfu Investment Co., Ltd dated March 16, 2021. 10.11 (4) English Translation of Leaseback Agreement between Sichuan Vtouch Technology Co., Ltd and Meishan Huantian Industrial Co., Ltd. (formerly known as Sichuan Renshou Shigao Tianfu Investment Co., Ltd) dated October 30, 2023. 10.12 (1) Securities Purchase Agreement, dated as of October 27, 2021, between Wetouch Technology Inc. and Talos Victory Fund, LLC 10.13 (1) Registration Rights Agreement dated as of October 27, 2021, between Wetouch Technology Inc. and Talos Victory Fund, LLC 10.14 (1) Securities Purchase Agreement, dated as of November 5, 2021, between Wetouch Technology Inc. and Mast Hill Fund, L.P. 86 10.15 (1) Registration Rights Agreement dated as of November 5, 2021, between Wetouch Technology Inc. and Mast Hill Fund, L.P. 10.16 (1) Securities Purchase Agreement, dated as of November 16, 2021, between Wetouch Technology Inc. and FirstFire Global Opportunities Fund, LLC. 10.17 (1) Registration Rights Agreement dated as of November 16, 2021, between Wetouch Technology Inc. and FirstFire Global Opportunities Fund, LLC. 10.18 (1) Securities Purchase Agreement, dated as of November 24, 2021, between Wetouch Technology Inc. and LGH Investments, LLC. 10.19 (1) Registration Rights Agreement dated as of November 24, 2021, between Wetouch Technology Inc. and LGH Investments, LLC. 10.20 (1) Securities Purchase Agreement, dated as of November 29, 2021, between Wetouch Technology Inc. and Fourth Man, LLC. 10.21 (1) Registration Rights Agreement dated as of November 29, 2021, between Wetouch Technology Inc. and Fourth Man, LLC. 10.22 (1) Securities Purchase Agreement, dated as of December 2, 2021, between Wetouch Technology Inc. and Jefferson Street Capital LLC. 10.23 (1) Registration Rights Agreement dated as of December 2, 2021, between Wetouch Technology Inc. and Jefferson Street Capital LLC. 10.24 (1) Securities Purchase Agreement, dated as of December 2, 2021, between Wetouch Technology Inc. and Blue Lake Partners, LLC. 10.25 (1) Registration Rights Agreement dated as of December 2, 2021, between Wetouch Technology Inc. and Blue Lake Partners LLC. 10.26 (1) Form of Securities Purchase Agreement. 10.27 (4) English Translation of State-owned Construction Land Use Rights Transfer Contract, dated as of August 6, 2021, between Sichuan Vtouch Technology Co., Ltd and Wenjiang District, Chengdu City Co., Ltd. 10.28 (4) 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. Ltd. 10.29 (3) Form of Director Offer Letter 10.30** English Translation of Lease Agreement, dated August 9, 2024, between Sichuan Vtouch Technology Co., Ltd and Sichuan Renshou Shigao Tianfu Investment Co., Ltd. 14 Code of Ethics (incorporated by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 2022) 19 (4) Insider Trading Policy. 21.1 (1) List of subsidiaries of the Company. 87 31.1* Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act. 31.2* Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Sarbanes-Oxley Act. 32.1** 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. 32.2** 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. 97 (4) Executive Compensation Recovery Policy 99.1 (4) Audit Committee Charter 99.2 (4) Compensation Committee Charter 99.3 (4) Nominating and Corporate Governance Committee Charter 101.INS Inline XBRL Instance Document* 101.SCH Inline XBRL Taxonomy Extension Schema Document* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document* 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * filed herewith ** Furnished herewith (1) Filed as an exhibit to the registrant’s registration statement on Form S-1, File No. 333-270726 and incorporated herein by reference. (2) Filed as an exhibit to the registrant’s current report on Form 8-K, f iled with the SEC on July 12, 2024. (3) Filed as an exhibit to the registrant’s current report on Form 8-K, f iled with the SEC on July 1, 2024. (4) Filed as an exhibit to the registrant’s annual report on Form 10-K, f iled with the SEC on April 16, 2024. ITEM 16. FORM 10-K SUMMARY None. 88 SIGNATURES 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. Date: September 10, 2025 WETOUCH TECHNOLOGY INC. By: /s/ Zongyi Lian Zongyi Lian President and Chief Executive Officer (Principal Executive Officer) By: /s/ Xing Tang 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 President September 10, 2025 Zongyi Lian Chief Executive Officer and Chairman(Principal Executive Officer) /s/ Xing Tang Chief Financial Officer September 10, 2025 Xing Tang (Principal Financial and Accounting Officer) /s/ Guangrong Cai Chairman and Director September 10, 2025 Guangrong Cai /s/ Jian Feng Director September 10, 2025 Jian Feng /s/ Jing Guo Director September 10, 2025 Jing Guo /s/ Jiaxing Huang Director September 10, 2025 Jiaxing Huang /s/ Guijun Gan Director September 10, 2025 Guijun Gan 89 WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm F-2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F-3 Consolidated Statements of Income and Comprehensive Income for the Years Ended December 31, 2024 and 2023 F-4 Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2024 and 2023 F-5 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024 and 2023 F-6 Notes to Consolidated Financial Statements as of December 31, 2024 and 2023 F-7 - F-28 F- 1 Report of Independent Registered Public Accounting Firm 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. GAAP”). 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. 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. /s/ ST & PARTNERS PLT (PCAOB ID 7261 ) We have served as the Company’s auditor since 2025. Petaling Jaya, Malaysia September 10, 2025 F- 2 WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Currency expressed in United States Dollars(“US”), except for number of shares) As of December 31, 2024 2023 ASSETS CURRENT ASSETS Cash $ 103,760,324 $ 98,040,554 Accounts receivable, net 7,504,630 7,455,252 Inventories 112,327 222,102 Prepaid expenses and other current assets 2,762,580 1,063,627 TOTAL CURRENT ASSETS 114,139,861 106,781,535 Property, plant and equipment, net 12,782,997 12,859,863 Operating right-of-use assets 1,055,208 - Deferred tax assets 41,397 - TOTAL ASSETS $ 128,019,463 $ 119,641,398 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 1,263,981 $ 640,795 Due to related parties - 469,591 Due to a related party 149,211 - Accrued expenses and other current liabilities 966,461 3992,905 Convertible promissory notes payable - 1,239,126 Operating lease liabilities- current 571,539 - TOTAL CURRENT LIABILITIES 2,951,192 6,342,417 Common stock purchase warrants liability - 378,371 Operating lease liabilities- non current 482,606 - TOTAL LIABILITIES $ 3,433,798 $ 6,720,788 COMMITMENTS AND CONTINGENCIES (Note 13) STOCKHOLDERS’ EQUITY 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* $ 11,932 $ 9,733 Additional paid in capital* 52,501,680 43,514,125 Statutory reserve 8,073,968 7,195,092 Retained earnings 74,629,374 69,477,092 Accumulated other comprehensive loss ( 10,631,289 ) ( 7,275,432 ) TOTAL STOCKHOLDERS’ EQUITY 124,585,665 112,920,610 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 128,019,463 $ 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. F- 3 WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Currency expressed in United States Dollars(“US”), except for number of shares) The Years Ended December 31, 2024 2023 REVENUES $ 42,280,373 $ 39,705,939 COST OF REVENUES ( 28,673,574 ) ( 22,515,219 ) GROSS PROFIT 13,606,799 17,190,720 OPERATING EXPENSES Selling expenses ( 752,795 ) ( 608,524 ) General and administrative expenses ( 3,536,597 ) ( 3,847,361 ) Research and development expenses - ( 84,551 ) OPERATING EXPENSES ( 4,289,392 ) ( 4,540,436 ) INCOME FROM OPERATIONS 9,317,407 12,650,284 Interest income 152,336 117,719 Interest expense ( 1,169,974 ) ( 252,325 ) Other income (expense) 10,708 ( 47,328 ) Gain (loss)on changes in fair value of common stock purchase warrants liability 378,371 ( 121,413 ) TOTAL OTHER EXPENSE, NET ( 628,559 ) ( 303,347 ) INCOME BEFORE INCOME TAX EXPENSE 8,688,848 12,346,937 INCOME TAX EXPENSE ( 2,657,690 ) ( 4,082,606 ) NET INCOME $ 6,031,158 $ 8,264,331 OTHER COMPREHENSIVE INCOME (LOSS) Foreign currency translation adjustment ( 3,355,857 ) ( 4,297,908 ) COMPREHENSIVE INCOME $ 2,675,301 $ 3,966,423 EARNINGS PER COMMON SHARE* Basic $ 0.52 $ 0.89 Diluted $ 0.52 $ 0.89 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING* Basic 11,630,358 9,285,815 Diluted 11,681,063 9,375,105 * 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. F- 4 WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023 (Currency expressed in United States Dollars(“US”),except for number of shares) Common stock at Par value $0.001 Additional paid-in Statutory Retained Accumulated other comprehensive Total stockholders’ Shares Amount capital reserve Earnings loss equity Balance at December 31 2022* 1,680,248 $ 1,680 $ 3,402,178 $ 6,040,961 $ 62,366,892 $ ( 2,977,524 ) $ 68,834,187 Appropriation to statutory reserve - - - 1,154,131 ( 1,154,131 ) - - Shares issued to private placement 8,000,000 8,000 39,992,000 - - - 40,000,000 Fraction shares issued due to reverse stock split 5,362 6 ( 6 ) - - - - Exercise of warrants issued to third parties in conjunction with debt issuance in 2021 22,338 22 ( 22 ) - - - - Stock issuance for convertible promissory notes payable 25,000 25 119,975 - - - 120,000 Net income - - - - 8,264,331 - 8,264,331 Foreign currency translation adjustment - - - - - ( 4,297,908 ) ( 4,297,908 ) Balance at December 31, 2023 9,732,948 $ 9,733 $ 43,514,125 $ 7,195,092 $ 69,477,092 $ ( 7,275,432 ) $ 112,920,610 Common stock at Par value $0.001 Additional paid-in Statutory Retained Accumulated other comprehensive Total stockholders’ Shares Amount capital reserve Earnings loss equity Balance as of December 31 2023* 9,732,948 $ 9,733 $ 43,514,125 $ 7,195,092 $ 69,477,092 $ ( 7,275,432 ) $ 112,920,610 Issuance of common stock from the 2024 Public Offering, net of issuance costs 2,160,000 2,160 8,987,594 - - - 8,989,754 Exercise of warrants issued in conjunction with legal/consultant services in 2020 and 2021 35,861 36 ( 36 ) - - - - Exercise of warrants issued to third parties in conjunction with debt issuance in 2021 2,725 3 ( 3 ) - - - - Appropriation to statutory reserve - - - 878,876 ( 878,876 ) - - Net income - - - - 6,031,158 - 6,031,158 Foreign currency translation adjustment - - - - - ( 3,355,857 ) ( 3,355,857 ) Balance as of December 31, 2024 11,931,534 $ 11,932 $ 52,501,680 $ 8,073,968 $ 74,629,374 $ ( 10,631,289 ) $ 124,585,665 * 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. F- 5 WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Currency expressed in United States Dollars(“US”),except for number of shares) For the Years Ended December 31, 2024 2023 Cash flows from operating activities Net income $ 6,031,158 $ 8,264,331 Adjustments to reconcile net income to cash provided by operating activities Allowance for credit losses 44,862 - Provision for obsolete inventory 54,873 - Depreciation 9,805 9,403 Amortization of discounts and issuance cost of the notes 5,715 33,655 (Gain) loss on changes in fair value of common stock purchase warrants liability ( 378,371 ) 121,413 Amortization of operating Right-of-use assets 98,387 - Changes in operating assets and liabilities: Accounts receivable ( 256,681 ) 1,347,497 Inventories 50,328 187,532 Due from a related party - ( 51 ) Prepaid expenses and other current assets ( 1,771,602 ) 333,415 Deferred tax assets ( 41,993 ) - Accounts payable 649,915 ( 704,696 ) Loans from a third party ( 135,000 ) 84,025 Amounts due to related parties 149,211 ( 1,665 ) Income tax payable - ( 21,578 ) Accrued expenses and other current liabilities ( 3,343,142 ) 3,071,108 Operating lease liabilities ( 98,387 ) - Net cash provided by operating activities 1,069,078 12,724,389 Cash flows from investing activities Purchase of property, plant and equipment ( 271,830 ) ( 2,263,549 ) Net cash used in investing activities ( 271,830 ) ( 2,263,549 ) Cash flows from financing activities Proceeds from issuance of public offerings, net of expenses 8,989,754 - Proceeds from stock issuance of private placement - 40,000,000 Repayments of convertible promissory notes payable ( 1,400,750 ) ( 55,000 ) Net cash provided by (used in) financing activities 7,589,004 39,945,000 Effect of changes of foreign exchange rates on cash ( 2,666,482 ) ( 3,615,791 ) Net increase in cash 5,719,770 46,790,049 Cash, beginning of year 98,040,554 51,250,505 Cash, end of year $ 103,760,324 $ 98,040,554 Supplemental disclosures of cash flow information Interest paid $ 1,186,210 $ - Income taxes paid $ 2,890,222 $ 4,104,184 Supplemental disclosures of non-cash flow information Cashless stock issuance for convertible promissory notes payable $ - $ 22,338 Issue costs charged to additional paid-in capital $ 1,810,246 $ - Exercise of warrant shares $ 38,586 $ - Lease liabilities arising from obtaining right-of-use assets $ 1,168,788 - The accompanying notes are an integral part of these consolidated financial statements. F- 6 WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES 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. (“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 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. Through its 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. 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. F- 7 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. 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 POLICIES (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. GAAP”) 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. F- 8 The deconsolidated Sichuan Wetouch had assets, liabilities and the non-controlling interest on disposal date as the following: March 30, 2023 Total assets as of deconsolidated date $ - Total liabilities as of deconsolidated date - Total gain or loss from deconsolidation $ - 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. 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, operating lease, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition and realization of deferred tax assets. Actual results could differ from those estimates. (c) Cash and cash equivalents 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. In assessing 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. F- 9 (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 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 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. $ 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: Useful life 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. The 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 Topic 815. 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; 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 notes. (see details in NOTE 10 – CONVERTIBLE PROMISSORY NOTES PAYABLE-a) Convertible promissory notes). There were no convertible promissory notes as of December 31, 2024. F- 10 (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 ASC 815-40. 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 exceptions of ASC 815. Therefore, the Company accounted for the warrants as derivative liabilities under ASC 815. Pursuant to ASC 815, derivatives are measured at fair value and re-measured at fair value with changes in fair value recorded in earnings at each reporting period. 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 date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. 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 follows: ● 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. When 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. F- 11 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 fair value. 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 Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Level 2 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 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 liabilities. 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. The 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 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 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. F- 12 (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$. 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). 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: December 31, 2024 December 31, 2023 Year-end spot rate US$ 1 =RMB 7.2993 US$ 1 =RMB 7.0999 Average rate 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. 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. F- 13 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 Expenses 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. (o) ) Lease The Company adopts ASU No. 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. F- 14 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”). 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 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. 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. 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. F- 15 (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. 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 income. (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 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 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): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”), which deferred the application dates of Topic 848 to December 31, 2024. The 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. This 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. 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. F- 16 NOTE-3 — ACCOUNTS RECEIVABLE Accounts receivable and credit losses consists of the following: December 31, 2024 December 31, 2023 Accounts receivable $ 7,504,630 $ 7,455,252 Allowance for credit losses - - Accounts receivable, net $ 7,504,630 $ 7,455,252 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: December 31, 2024 December 31, 2023 Current $ 3,726,124 $ 3,740,488 1-3 months past due 2,536,815 2,635,045 4-6 months past due 1,241,691 1,079,719 Total accounts receivable $ 7,504,630 $ 7,455,252 NOTE-4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: December 31, 2024 December 31, 2023 Advance to suppliers $ 252,618 $ 334,852 Issuance cost related to convertible promissory notes - 64,802 Prepayment for land use right (i) 537,755 　 537,998 　 Security deposit (ii) 53,840 53,865 Prepaid consulting service fees (iii) 884,687 - Prepaid market research fees (iv) 955,000 - Others receivable (v) 78,680 72,110 Prepaid expenses and other current assets $ 2,762,580 $ 1,063,627 (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 $ 537,755 ) 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 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. F- 17 NOTE 5— PROPERTY, PLANT AND EQUIPMENT, NET December 31, 2024 December 31, 2023 Buildings $ 11,798 $ 12,130 Machinery and equipment 7,672 3,944 Vehicles 40,114 41,241 Construction in progress 12,755,791 12,825,896 Subtotal 12,815,375 12,883,211 Less: accumulated depreciation ( 32,378 ) ( 23,348 ) Property, plant and equipment, net $ 12,782,997 $ 12,859,863 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. The Company 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 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 ($ 41,100 ), which period was extended to October 31, 2022. The lease 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 of 2026. 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 December 31, 2024 2023 Lease expense Operating lease expense $ 667,065 $ - Short-term lease expense - 677,870 Total lease expense $ 667,065 $ 677,870 F- 18 The balances for the operating leases where the Company is the lessee are presented as follows: As of December 31, 2024 2023 Operating lease right-of-use assets $ 1,055,208 $ - Lease liabilities – current 571,539 - Lease liabilities – non-current 482,606 - Total operating lease liabilities $ 1,054,145 $ - The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2024: Operating leases 2025 lease payment $ 482,606 Less: imputed interest - Present value of lease liabilities $ 482,606 Lease term and discount rate: For the Years ended December 31, 2024 2023 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 December 31, 2024 2023 Cash payments for operating leases $ 98,387 $ - Lease liabilities arising from obtaining right-of-use assets 1,168,788 - NOTE 7 – RELATED PARTY TRANSACTIONS Amounts due to a related party are as follows: Relationship December 31, 2024 December 31, 2023 Note 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 $ - F- 19 NOTE 8 — INCOME TAXES Wetouch Wetouch is subject to a tax rate of 21 % per beginning 2018, and files a U.S. federal income tax return. BVI Wetouch 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. Hong Kong HK Wetouch is subject to profit taxes in Hong Kong at a progressive rate of 16.5 %. PRC 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 rate. 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. Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding income tax. F- 20 The Company’s provision for income taxes credit (expenses) consisted of: For the Years Ended December 31, PRC income tax 2024 2023 Income tax provision $ 2,699,683 $ 4,082,606 Deferred income tax expenses (credit) ( 41,993 ) - Total $ 2,657,690 $ 4,082,606 BVI - - Hong Kong - - China - - - - Income tax provision $ 2,657,690 $ 4,082,606 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 December 31, 2024 2023 PRC statutory income tax rate 25.0 % 25.0 % Income tax computed at PRC statutory corporate income tax rate of 25 % 32.9 % 31.6 % Tax rate differential on entities not subject to PRC income ( 1.3 )% ( 1.1 )% R&D additional deduction - ( 0.2 )% Change in valuation allowance ( 1.1 )% 0.2 % Temporary differences ( 0.5 )% 0.1 % Non-deductible expenses 0.5 % 2.5 % Effective tax rate 30.6 % 33.1 % 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 December 31, 2024 2023 Income before income taxes $ 8,688,848 $ 12,346,937 Income tax computed at PRC statutory corporate income tax rate of 25 % 2,861,613 3,905,978 Reconciling items: Tax rate differential on entities not subject to PRC income tax ( 110,304 ) ( 131,079 ) R&D additional deduction - ( 21,138 ) Change in valuation allowance ( 94,593 ) 30,353 Temporary differences ( 41,993 ) 17,610 Non-deductible expenses 42,967 280,882 Income tax provision $ 2,657,690 $ 4,082,606 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. F- 21 The Company’s deferred tax assets consisted of the following components: December 31, 2024 2023 Deferred tax assets: Credit loss on advance to vendors $ 11,056 $ - Provision of obsolete inventory 30,607 - Leasing liabilities 263,536 Total gross deferred tax assets 305,199 - Less valuation allowance - Deferred tax assets net of valuation allowance 305,199 - Deferred tax liabilities: Right-of-use assets ( 263,802 ) - Deferred tax liabilities ( 263,802 ) - Deferred tax assets, net $ 41,397 $ - 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 LIABILITIES Accrued expenses and other current liabilities consist of the following: December 31, 2024 December 31, 2023 Advance from customers $ 166,535 $ 182,277 Accrued payroll and employee benefits 81,837 84,280 Accrued interest expenses - 240,805 Accrued private placement agent fees (i) - 1,200,000 Accrued consulting fees (ii) - 1,370,972 Accrued legal compensation charges (iii) 35,356 45,828 Accrued professional fees 57,173 330,180 Accrued director fees 66,734 106,824 Other payable 147,102 143,035 Other tax payables (iv) 162,888 Others (v) 248,836 288,704 Accrued expenses and other current liabilities $ 966,461 $ 3,992,905 (i) On 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. (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. The Company 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. the Company recorded $ 1,370,972 as consulting service fee for the year ended December 31, 2024. (iii) As of December 31, 2024, the Company accrued litigation compensation charges of RMB 258,075 ($ 35,356 ). (iv) Other tax payable mainly represent value added tax payable. (v) Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses. F- 22 NOTE 10 — CONVERTIBLE PROMISSORY NOTES PAYABLE a) Convertible promissory notes 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. Net proceeds 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. The debt discount and debt issuance costs are amortized into interest expense using the effective interest method over the terms of the Notes. 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 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; 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. 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 No. 1 to Promissory Note”) extending the term of the Notes for an additional 6 months. 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. 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. For the 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. F- 23 b) Warrants Accounting for Warrants 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 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 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. (c) Registration 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. F- 24 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)). 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)). On February 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. As of the date of this Annual Report , there were 11,931,534 shares of common stock issued and outstanding . 2) Reverse Stock Split 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. 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. 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. F- 25 3) Closing of the 2024 Public Offering On February 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 Assets 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 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. 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. The five-year warrants are exercisable at one cent per share. 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 services. 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: expected life of 2.5 years, expected dividend rate of 0 %, volatility of 43.5 % and an average interest rate of 0.11 %. 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. F- 26 NOTE 13. WEIGHTED AVERAGE NUMBER OF SHARES 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. 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’ 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 . 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. 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. 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 is subject. 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. F- 27 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 on U.S. 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 (“PRC”). and substantially all of the Company’s long-lived assets are located in the PRC. 1) The Company’s geographical revenue information is set forth below: For the Years Ended December 31, 2024 2023 Sales in PRC $ 27,340,555 $ 27,668,985 Sales in Overseas -Republic of China (ROC, or Taiwan) 8,317,810 6,255,602 -South Korea 6,462,723 5,619,228 -Others 159,285 162,124 Sub-total 14,939,818 12,036,954 Total revenues $ 42,280,373 $ 39,705,939 2) Segment information is set forth below: For the Years Ended December 31, 2024 2023 Revenues $ 42,280,373 $ 39,705,939 Less: Cost of revenues 28,673,574 22,515,219 Allowance for credit losses 44,862 - Provision of obsolete inventory 54,873 - Staff cost 1,379,481 1,155,617 (Gain) loss on changes in fair value of common stock purchase warrants liability. ( 378,371 ) 121,413 Amortization of discounts and issue cost of the notes 5,715 33,655 Depreciation expense 9,805 9,403 Lease expense 98,387 - Interest expense 1,169,974 252,325 Charges of contract default penalty expense 35,865 46,573 Income tax expense 2,657,690 4,082,606 Other segment items* 2,497,360 3,224,797 Segment net income 6,031,158 8,264,331 Consolidated net income $ 6,031,158 $ 8,264,331 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. Ltd. 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 machine R&D. 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. F- 28