What changed in this filing

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Item 1A. Risk Factors

2026-04-13 compared with 2025-09-11 · 132 added, 166 removed, 1224 unchanged (20% of the section changed)

19 unchanged sentences

Economic recessions could have a significant adverse impact on our business.

Intellectual property infringement claims could be costly and disrupt business operations.

A significant amount of accounts receivable could become uncollectible, affecting financial stability.

We may be subject to intellectual property infringement claims, which

may be expensive to defend and may disrupt our business and operations.

We have a significant amount of accounts receivable, which could become

uncollectible and affecting financial stability.

Cyclical industry dynamics could lead to harmful price fluctuations.

3 unchanged sentences

Adjustments in related party transaction pricing could lead to significant tax liabilities.

Revocation of tax treatments or government subsidies could necessitate paying additional taxes.

Interruptions from third-party suppliers could disrupt operations.

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Deteriorating U.S.-China relations could lower our stock price and complicate access to capital markets.

We may be subject to delisting from Nasdaq if we

fail to timely file periodic reports with the SEC or to maintain Nasdaq’s minimum bid price, which could materially and adversely

affect the liquidity and value of our common stock.

We may be subject to delisting from Nasdaq if we fail to timely file periodic reports with the SEC or to maintain Nasdaq’s minimum bid price, which could materially and adversely affect the liquidity and value of our common stock.

Risks Related to

31 unchanged sentences

the following material weaknesses in our internal control over financial reporting:

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 on a timely manner.

(i) the lack of sufficient 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 to address complex U.S.

GAAP accounting issues and related disclosures, in accordance with U.S.

GAAP and SEC financial reporting requirements;

limited functional internal audit department or personnel that monitors the consistencies of the preventive internal control procedures as well as insufficient policies and procedures in internal audit function to ensure that our policies and procedures have been carried out as planned

defined in the rules and regulations adopted by the SEC, a “material weakness” is a deficiency, or combination of deficiencies,

4 unchanged sentences

The remediation actions planned include:

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

Continue to cooperate with operation teams

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

Establish assessment of Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”) compliance requirements and improvement of overall internal control.

hiring more qualified accounting personnel with relevant U.S.

GAAP and SEC reporting experience and qualifications to strengthen our financial reporting function and to set up a financial and system control framework;

appointing Ms.

Xing Tang, who has extensive experience in financial reporting and internal controls, including familiarity with Nasdaq financial reporting and compliance requirements, as its Chief Financial Officer in July 2024, and who served as Chief Financial Officer of Elong Power Holdings Ltd.

ELPW) from August 2013 to June 2024.

strengthening accounting record system with access control and financial reporting procedures, including organizing regular training for our accounting staff, especially training related to U.S.

GAAP and SEC reporting requirements;

Continue to cooperate with operation teams to ensure a control environment in place, and monitor the effectiveness of operations on existing controls and procedures.

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

13 unchanged sentences

31, 2025, our top five customers accounted for approximately 24.3%, 17.3%, 15.6%, 13.3%, and 11.1%, respectively, of our total revenues.

For the year ended December 31, 2023, our top six customers accounted for approximately 22.5%, 16.5%, 15.6%, 14.1%, 11.3% and 10.1%, respectively,

of our total revenues.

For the year ended December

31, 2024, our top five customers accounted for approximately 22.0%, 19.1%, 15.3%, 14.5% and 11.5%, respectively, of our total revenues.

ability to attract new customers and retain existing customers cost-effectively, especially our top customers, is crucial to driving net

36 unchanged sentences

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

We are in the process of obtaining

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

However, there is no assurance that we will be able to obtain the required certificate of land use right in a timely manner,

The failure of obtaining the certificate will adversely affect our business operations.

Additionally, the development of this

site is subject to various regulatory approvals, including construction land planning permit (received in January 2022), construction

project planning permit (received in January 2022), and construction engineering license (received July 2022).

Failure to obtain additional

approvals from the local government, if required, will subject us to fines or suspension of the projects in accordance with relevant PRC

laws and regulations.

We will obtain the certificate of land

use right for the new parcel from the local government in the upon the completion of the new facility by the first half of 2027.

there is no assurance that we will be able to obtain the required certificate of land use right in a timely manner, or at all.

of obtaining the certificate will adversely affect our business operations.

Additionally, the development of this site is subject to various

regulatory approvals, including construction land planning permit (received in January 2022), construction project planning permit (received

in January 2022), and construction engineering license (received July 2022).

Failure to obtain additional approvals from the local government,

if required, will subject us to fines or suspension of the projects in accordance with relevant PRC laws and regulations.

In addition, our ability to

5 unchanged sentences

As of the date of this Annual

Report, we estimate to complete the building construction by the end of 2025 and commence production in the first quarter of 2026, assuming

Report, we estimate to complete the building construction by the first half of 2027 and commence production in by the end of 2027, assuming

we have obtained the land use right by then, but there is no assurance and we may need extended time to achieve our business plan.

6 unchanged sentences

As of the date of this Annual Report, we estimate receiving

the certificate of land use right from the local government in the first quarter of 2026.

We plan to complete the building construction

by the end of 2025 and commence production in the first quarter of 2026.

the certificate of land use right from the local government in the first half of 2027.

We plan to complete the building construction by

first half of 2027 and commence production by the end of 2027.

The construction could experience

54 unchanged sentences

amount of accounts receivable, which could become uncollectible .

As of December 31, 2024, we

had approximately $7.5 million in accounts receivable.

Our accounts receivable primarily include balance due from customers when our products

are sold and delivered to customers.

Our customers are required to make full payment within three to six months from delivery date, although

our industry typical payment term is 180 days from delivery.

For the years ended December 31, 2024 and 2023, we did not provide any extended

payment terms to any of our customers.

Deteriorating conditions in, bankruptcies, or financial difficulties of a customer or within their

industries generally may impair the financial condition of our customers and hinder their ability to pay us on a timely basis or at all,

and accounts receivable are written off against allowances only after exhaustive collection efforts.

The failure or delay in payment by

one or more of our customers could reduce our cash flows and adversely affect our liquidity and results of operations.

As of December 31, 2025,

we had approximately $6.5 million in accounts receivable.

Our accounts receivable primarily include balance due from customers when our

products are sold and delivered to customers.

Our customers are required to make full payment within three to six months from delivery

date, although our industry typical payment term is 180 days from delivery.

For the years ended December 31, 2025 and 2024, we did not

provide any extended payment terms to any of our customers.

Deteriorating conditions in, bankruptcies, or financial difficulties of a

customer or within their industries generally may impair the financial condition of our customers and hinder their ability to pay us

on a timely basis or at all, and accounts receivable are written off against allowances only after exhaustive collection efforts.

failure or delay in payment by one or more of our customers could reduce our cash flows and adversely affect our liquidity and results

of operations.

Our industry is

69 unchanged sentences

We are in the process of obtaining the certificate of land

use right for the new parcel and expect to receive the certificate from the local government in the first quarter of 2026.

of the date of this Annual Report, we estimate to finish the building construction by the end of 2025 and commence production in the first

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

use right for the new parcel and expect to receive the certificate from the local government in the first half of 2027.

of the date of this Annual Report, we estimate to finish the building construction by the first half of 2027 and commence production by

the end of 2027, but there is no assurance and we may need extended time to achieve our business plan.

If we fail to complete such acquisition

24 unchanged sentences

Our net income may be materially reduced if our tax liabilities increase.

If our preferential

tax treatments and government subsidies are revoked or become unavailable or if the calculation of our tax liability is successfully challenged

by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions.

Chinese government has provided tax incentives to our former subsidiary in Mainland China, Sichuan Wetouch, including reduced enterprise

income tax rates.

For example, under the PRC Enterprise Income Tax Law and its implementation rules, the statutory enterprise income tax

However, the income tax of an enterprise that has been determined to be a qualified enterprise located in western region

of Mainland China can be reduced to a preferential rate of 15%.

The qualification of preferential tax rate is effective for a renewable

three-year permitted.

As we have dissolved Sichuan Wetouch, and its business and operations have been assumed by Sichuan Vtouch, Sichuan

Vtouch is planning to apply for the preferential rate of 15% as a qualified enterprise with the PRC tax authorities.

As of the date of

this Annual Report, we have not applied for the preferential rate of 15%.

If Sichuan Vtouch later applies but its application for the

qualification of preferential tax rate benefit is not approved, our PRC subsidiary will still be subject to the statutory enterprise income

tax rate of 25%.

Further, in the ordinary course of our business, we are subject to complex income tax and other tax regulations, and

significant judgment is required in the determination of a provision for income taxes.

Although we believe our tax provisions are reasonable,

if the PRC tax authorities successfully challenge our position and we are required to pay tax, interest, and penalties in excess of our

tax provisions, our financial condition and results of operations would be materially and adversely affected.

A significant interruption

99 unchanged sentences

in our claims history or due to material price increases in the insurance market in general.

We may not be able

to adequately protect and maintain our intellectual property.

success will depend on our ability to continue to develop and market our products.

We have five pending patent applications as of the

date of this Annual Report.

No assurance can be given that such patents will not be challenged, invalidated, infringed or circumvented,

or that such intellectual property rights will provide a competitive advantage to us.

Also, litigation may be necessary to enforce our

intellectual property rights or determine the validity and scope of the proprietary rights of others.

The outcome of such potential litigation

may not be in our favor and any success in litigation may not be able to adequately protect our rights.

Such litigation may be costly

and divert management attention away from our business.

An adverse determination in any such litigation would impair our intellectual

property rights and may harm our business, prospects and reputation.

Enforcement of judgments in China is uncertain and even if we are

successful in such litigation it may not provide us with an effective remedy.

Our introduction

53 unchanged sentences

Protection Law.

As of the date of this Report, no official guidance or related implementation rules have been issued yet and the

interpretation of these opinions remains unclear at this stage.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures,

which took effect on March 31, 2023.

The Trial Administrative Measures further stipulate the rules and requirements for overseas offering

and listing conducted by PRC domestic companies.

As of the date of this Report, no official guidance or related implementation rules have been issued yet and the interpretation

of these opinions remains unclear at this stage.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures, which took

effect on March 31, 2023.

The Trial Administrative Measures further stipulate the rules and requirements for overseas offering and listing

conducted by PRC domestic companies.

July 10, 2021, the Cyberspace Administration of China issued the Measures for Cybersecurity Review (Revision Draft for Comments), or the

128 unchanged sentences

the PCAOB, is subject to laws in the United States.

On December 29,

2022, the Consolidated Appropriations Act, 2023, was signed into law, which amended the HFCAA (i) to reduce the number of consecutive

non-inspection years required for triggering the prohibitions under the HFCAA from three years to two, and (ii) so that

any foreign jurisdiction could be the reason why the PCAOB does not have complete access to inspect or investigate a company’s auditor.

As it was originally enacted, the HFCAA applied only if the PCAOB’s inability to inspect or investigate was due to a position taken

by an authority in the foreign jurisdiction where the relevant public accounting firm is located.

As a result of the Consolidated Appropriations

Act, 2023, the HFCAA now also applies if the PCAOB’s inability to inspect or investigate the relevant accounting firm is due to

a position taken by an authority in any foreign jurisdiction.

The denying jurisdiction does not need to be where the accounting firm is

If the PCAOB determines in the future that it is unable to completely inspect or investigate our auditor and we continue to use

such auditor to issue an audit report on our financial statements filed with the SEC, our securities will be delisted from the stock exchange.

The delisting of our common stock or the threat of their being delisted, may materially and adversely affect the value of your investment.

These risks could result in a material adverse change in our operations and the value of our common stock, significantly limit or completely

hinder our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline

or become worthless.

On December 29, 2022, the

Consolidated Appropriations Act, 2023, was signed into law, which amended the HFCAA (i) to reduce the number of consecutive non-inspection

years required for triggering the prohibitions under the HFCAA from three years to two, and (ii) so that any foreign jurisdiction could

be the reason why the PCAOB does not have complete access to inspect or investigate a company’s auditor.

As it was originally enacted,

the HFCAA applied only if the PCAOB’s inability to inspect or investigate was due to a position taken by an authority in the foreign

jurisdiction where the relevant public accounting firm is located.

As a result of the Consolidated Appropriations Act, 2023, the HFCAA

now also applies if the PCAOB’s inability to inspect or investigate the relevant accounting firm is due to a position taken by an

authority in any foreign jurisdiction.

The denying jurisdiction does not need to be where the accounting firm is located.

determines in the future that it is unable to completely inspect or investigate our auditor and we continue to use such auditor to issue

an audit report on our financial statements filed with the SEC, our securities will be delisted from the stock exchange.

The delisting

of our common stock or the threat of their being delisted, may materially and adversely affect the value of your investment.

could result in a material adverse change in our operations and the value of our common stock, significantly limit or completely hinder

our ability to offer or continue to offer securities to investors, or cause the value of such securities to significantly decline or become

developments related to the HFCAA could add uncertainties to our future offerings.

66 unchanged sentences

and the United States may intensify in the future, resulting in the imposition of more tariffs or other trade restrictions.

cross-border business is currently not an area of our focus, if we plan to sell products internationally in the future, any unfavorable

government policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services,

impact the competitive position of our products or prevent us from being able to sell products in certain countries.

If any new tariffs,

legislation and/or regulations are implemented, or if existing trade agreements are renegotiated, such changes could have an adverse effect

on our business, financial condition, or results of operations.

In addition, future actions or escalations by either the United States

or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on our business.

Although cross-border

business is currently not an area of our focus, if we plan to sell products internationally in the future, any unfavorable government

policies on international trade, such as capital controls or tariffs, may affect the demand for our products and services, impact the

competitive position of our products or prevent us from being able to sell products in certain countries.

If any new tariffs, legislation

and/or regulations are implemented, or if existing trade agreements are renegotiated, such changes could have an adverse effect on our

business, financial condition, or results of operations.

In addition, future actions or escalations by either the United States or China

that affect trade relations may cause global economic turmoil and potentially have a negative impact on our business.

In addition, recent economic

and trade sanctions threatened and/or imposed by the U.S.

government on a number of China-based companies have raised concerns as

to whether, in the future, there may be additional regulatory challenges or enhanced restrictions involving other China-based companies

in areas such as data security, information technology or other business activities.

Similar or more expansive restrictions, including

relating to export controls, that may be imposed by the United States or other jurisdictions in the future, may materially and adversely

affect our ability to acquire technologies, systems or products that may be important to our technology infrastructure, product and service

offerings and business operations.

government on a number of China-based companies have raised concerns as to whether,

in the future, there may be additional regulatory challenges or enhanced restrictions involving other China-based companies in areas such

as data security, information technology or other business activities.

Similar or more expansive restrictions, including relating to export

controls, that may be imposed by the United States or other jurisdictions in the future, may materially and adversely affect our ability

to acquire technologies, systems or products that may be important to our technology infrastructure, product and service offerings and

business operations.

Furthermore, we may also face

2 unchanged sentences

The Entity List maintained by the U.S.

Department of Commerce identifies foreign

parties that are prohibited from acquiring — whether by export, reexport, or transfer in-country — some or all items subject

Export Administration Regulations (“EAR”), unless the exporter secures a license.

Licenses, and exceptions

to the license requirement, are rarely granted to exporters.

Exporting, reexporting or transferring items subject to the EAR in violation

of licensing requirements could result in criminal and/or civil penalties.

These restrictions, and similar or more expansive restrictions

or sanctions that may be imposed by the United States or other jurisdictions in the future, may adversely affect our ability to work

with certain future customers and business partners, which would harm our business.

Furthermore, our association with customers or business

partners that are or become subject to U.S.

regulatory scrutiny or export controls- or sanctions-related restrictions could subject

us to actual or perceived reputational harm among current or prospective investors, suppliers or customers, other parties doing business

with us, or the general public.

Any such reputational harm could result in the loss of investors, suppliers or customers, which could

harm our business, financial conditions or prospects.

Department of Commerce identifies foreign parties

that are prohibited from acquiring - whether by export, reexport, or transfer in-country - some or all items subject to the U.S.

Administration Regulations (“EAR”), unless the exporter secures a license.

Licenses, and exceptions to the license requirement,

are rarely granted to exporters.

Exporting, reexporting or transferring items subject to the EAR in violation of licensing requirements

could result in criminal and/or civil penalties.

These restrictions, and similar or more expansive restrictions or sanctions that may

be imposed by the United States or other jurisdictions in the future, may adversely affect our ability to work with certain future customers

and business partners, which would harm our business.

Furthermore, our association with customers or business partners that are or become

subject to U.S.

regulatory scrutiny or export controls- or sanctions-related restrictions could subject us to actual or perceived reputational

harm among current or prospective investors, suppliers or customers, other parties doing business with us, or the general public.

such reputational harm could result in the loss of investors, suppliers or customers, which could harm our business, financial conditions

or prospects.

PRC regulation

549 unchanged sentences

and value of our common stock .

Nasdaq Listing Rule 5250(c)(1) requires timely

filing of periodic reports with the SEC.

Between April and August in 2025, we received Nasdaq notices for late filings of our Form 10-K

for the year ended December 31, 2024 and our Forms 10-Q for the quarters ended March 31 and June 30, 2025.

At Nasdaq’s request,

we submitted a compliance plan on June 18, 2025;

Nasdaq accepted the plan on June 26, 2025 and granted us an extended compliance period

through October 13, 2025 to file all outstanding reports.

Following Nasdaq’s delinquency notice relating to the June 30, 2025 Form

10-Q, we submitted an updated compliance plan on August 28, 2025, reaffirming the steps in our original plan.

We are working diligently

with our auditors, legal counsel, and finance team to complete the required filings as promptly as practicable and remain committed to

regaining and maintaining compliance.

If we do not complete the required filings within the compliance period, however, our common stock

may be delisted, subject to our right to appeal to a Nasdaq Hearings Panel.

Separately, on July 15, 2025, we received a Nasdaq

notice that our bid price had closed below $1.00 for 30 consecutive business days, triggering noncompliance with Nasdaq’s minimum

bid price requirement.

Nasdaq has provided us a 180-calendar-day period to regain compliance, which generally requires a closing bid price

of at least $1.00 for a minimum of ten consecutive business days during that period.

We are monitoring the bid price closely and diligently

considering available options, including potential corporate actions, to regain compliance within the allotted period.

If we do not regain

compliance (and are not granted additional time), our securities may be subject to delisting, also subject to appeal rights.

Although these notices had no immediate effect

on the listing or trading of our common stock, there can be no assurance that we will regain or maintain compliance within the permitted

Any delisting would likely reduce the liquidity of our common stock, impair our ability to raise capital, and negatively

impact investor confidence and our business, financial condition, and results of operations.

Nasdaq Listing Rule 5250(c)(1)

requires timely filing of periodic reports with the SEC.

Between April and August in 2025, we received Nasdaq notices for late filings

of our Form 10-K for the year ended December 31, 2025 and our Forms 10-Q for the quarters ended March 31 and June 30, 2025.

request, we submitted a compliance plan on June 18, 2025;

Nasdaq accepted the plan on June 26, 2025 and granted us an extended compliance

period through October 13, 2025 to file all outstanding reports.

Following Nasdaq’s delinquency notice relating to the June 30,

2025 Form 10-Q, we submitted an updated compliance plan on August 28, 2025, reaffirming the steps in our original plan.

We are working

diligently with our auditors, legal counsel, and finance team to complete the required filings as promptly as practicable and remain committed

to regaining and maintaining compliance.

If we do not complete the required filings within the compliance period, however, our common

stock may be delisted, subject to our right to appeal to a Nasdaq Hearings Panel.

Separately, on July 15, 2025,

we received a Nasdaq notice that our bid price had closed below $1.00 for 30 consecutive business days, triggering noncompliance with

Nasdaq’s minimum bid price requirement.

Nasdaq has provided us a 180-calendar-day period to regain compliance, which generally requires

a closing bid price of at least $1.00 for a minimum of ten consecutive business days during that period.

We are monitoring the bid price

closely and diligently considering available options, including potential corporate actions, to regain compliance within the allotted

If we do not regain compliance (and are not granted additional time), our securities may be subject to delisting, also subject

to appeal rights.

Although these notices had

no immediate effect on the listing or trading of our common stock, there can be no assurance that we will regain or maintain compliance

within the permitted time frames.

Any delisting would likely reduce the liquidity of our common stock, impair our ability to raise capital,

and negatively impact investor confidence and our business, financial condition, and results of operations.

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

What changed 10-K

Item 1A. Risk Factors