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Item 9A. Controls and Procedures

2023-04-17 compared with 2022-04-15 · 538 added, 461 removed, 1268 unchanged (44% of the section changed)

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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, 2021, 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.

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

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

We concluded that our disclosure controls and procedures were not effective

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

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

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

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

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

Report on Internal Control over Financial Reporting

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

OTHER INFORMATION.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Executive Officers and Corporate Governance

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Financial Officer

Cai - Chairman and Director

Cai has been our Company’s Chairman and Director since October 12, 2020.

Cai has extensive experience in financing and the

touchscreen industry.

From August 1992 to August 1996, he worked at Hong Kong Lixin Group, first serving as Financial Manager and later

as Financial Director of the group.

From September 1996 to June 2003, he worked as Financial Director at Guangdong Midea Group.

July 2003 to December 2015, he worked as Project Manager at Mictouch China, responsible for the research, development, production and

sales of infrared touchscreens.

In 2006, he co-founded Damai and acted as General Manager, focusing on the research, development, production

and sales of high-end five-wire resistive screen.

By the end of 2007, Damai was relocated to Chengdu and renamed as Chengdu Wetouch where

he works as General Manager.

In 2011, he co-founded Sichuan Wetouch and in 2012, he founded Meishan Wetouch.

Cai holds a Bachelor’s

degree in Accounting from Sun Yat-sen University and a Master’s degree in Economics from Zhongnan University of Economics and Law.

Cai’s management and extensive experience and his role as founder of Sichuan Wetouch led to the conclusion that he should serve

as a director.

Bai - Chairman and Director

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

Mr Bai has served as the general manager of the Nanjing

Branch of Shenzhen Jushenghua Co.

since July 2019, and is mainly responsible for private fundraising and sales funding of trust

Bai served as general manager of the business division of Heyi Asset from September 2015 to June 2019.

his bachelor’s degree in law from Nanjing Normal University in June 2006 and holds a securities/fund qualification issued by the

Securities Association of China since August 2015.

Lian - Chief Executive Officer and President

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

Wetouch) and served as Vice Technique General Manager.

In 2011, he co-founded Sichuan Wetouch and served as Vice Technique General Manager.

Wetouch Technology Co., Ltd) and served as Vice Technique General Manager.

In 2011, he co-founded Sichuan Wetouch and served as Vice

Technique General Manager.

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

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He was qualified as a CPA in China in 2004 and as an auditor in 2014, respectively.

The Board believes

Huang’s extensive knowledge and background in the financial field will make him a valuable addition to the Board.

Cai - Secretary and Director

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extensive public company and accounting experience makes her a valuable addition to the board.

Wei - Director

Wang was elected to our Company’s Board of Directors, effective November 12, 2021.

He has served as Vice Director of the Investment

Banking Department of Chengdu Energy Investment Group since 2017.

From 2007 to 2017, he has served as the Head of Technology (Touchscreen)

of Ofilm Group, specializing in touchscreen R&D and process engineering management.

Wang holds a BS in Engineering from the University

of Electronic Science and Technology of China.

Tang - Director

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

He has served as an attorney at Gaopeng &

Partners since 2019.

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

Tang received

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

He received his master’s degree in sociology from Jiangsu Provincial

Party School.

The Board believes Mr.

Wang’s extensive knowledge and background with regard to

touchscreen technology and management makes him a valuable addition to the Board.

Kone - Director

Kone was elected to our Company’s Board of Directors, effective November 12, 2021.

He has served as the founder of The Wall Street

Resource, LLC, a podcast platform for public companies since 2019.

From 2003 to 2019, Mr.

Kone served as the Managing Member of Wall

Street Capital Partners, L.P., an investment fund.

From 1984 to 1994, he served as a broker at E.F.

Hutton & Co., Merrill Lynch,

and Roth Capital.

Kone holds a BS in Business from the University of Southern California.

Tang’s extensive knowledge and background in the legal field will make him a valuable addition

to the Board.

Wang - Director

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

Wang has served as an attorney at Gaopeng

(Nanjing) Law Firm since June 2022.

From June 2021 through May 2022, Mr.

Wang worked for Guohao Law Firm.

He worked at Beijing Gaopeng

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

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

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

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

Wang received a bachelor’s degree from Anqing Normal

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

The Board believes Mr.

Kone’s extensive

experience in corporate finance and investment makes him a valuable addition to the Board.

Wang’s extensive knowledge and background in the legal field will make him a valuable addition to the Board.

Relationships

Jiaying Cai, the Secretary and Director of the Company, is the daughter of Mr.

Guange Cai, the Chairman and Director

of the Company, is the indirect majority shareholder of Qixun Technology (Samoa) Limited and the indirect sole shareholder of Qihong

Technology (Samoa) Limited, which together own 7.7% of the issued and outstanding shares of the Company.

as described above, there are no other family relationships between any of our directors or executive officers.

There are no arrangements

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

of the Company.

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

There are no arrangements or understandings between

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

have established three committees under the board of directors:

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Each committee’s members and functions are described

Our audit committee consists of Jing Chen, Wei Wang and Jeffrey Kone.

Chen is the chairperson of the audit committee.

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

Chen is the chairperson of the audit

We have determined that Ms.

Chen, Mr, Wang and Mr.

Kone each satisfy the “independence” requirements of Nasdaq Listing Rule

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

Wang each satisfy the “independence” requirements of Nasdaq

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

We have determined that Ms.

Chen qualifies as

an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and

the audits of the financial statements of our company.

qualifies as an “audit committee financial expert.” 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’

(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;

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and (e) approving related person transactions.

Our compensation committee consists of Jing Chen, Wei Wang and Jeffrey Kone.

Wang is the chairperson of our compensation

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

Tang is the chairperson of our

compensation committee.

We have determined that Ms.

Kone each are “independent,” as such term is defined for directors

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

Additionally, each qualify as “non-employee

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

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

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

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

Additionally, each qualify

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

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

The Committee has been established to:

(a) assist the Board in seeing that a proper system

of long-term and short-term compensation is in place to provide performance oriented incentives to attract and retain management, and

that compensation plans are appropriate and competitive and properly reflect the objectives and performance of management and the Company;

(a) assist the Board in seeing that

a proper system of long-term and short-term compensation is in place to provide performance oriented incentives to attract and retain

management, and that compensation plans are appropriate and competitive and properly reflect the objectives and performance of management

and the Company;

(b) assist the Board in discharging its responsibilities relating to compensation of the Company’s executive officers;

the Company’s Chief Executive Officer and set his or her remuneration package;

and (d) make recommendations to the Board with respect

to incentive compensation plans and equity-based plans.

and (d) make recommendations to the

Board with respect to incentive compensation plans and equity-based plans.

and Corporate Governance Committee.

Our nominating and corporate governance committee consists of Jing Chen, Wei Wang and Jeffrey

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

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

Congjin Wang.

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

We have determined that each of Ms.

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

The Committee is responsible

(a) assisting the Board in determining the desired experience, mix of skills and other qualities to provide for appropriate Board

composition, taking into account the current Board members and the specific needs of the Company and the Board;

(b) identifying qualified

individuals meeting those criteria to serve on the Board;

election by the shareholders at the Annual Meeting of Shareholders and nominees to fill vacancies and newly created directorships;

reviewing candidates recommended by shareholders for election to the Board and shareholder proposals submitted for inclusion in the Company’s

proxy materials;

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

The Committee is

responsible for:

(a) assisting the Board in determining the desired experience, mix of skills and other qualities to provide for appropriate

Board composition, taking into account the current Board members and the specific needs of the Company and the Board;

(b) identifying

qualified individuals meeting those criteria to serve on the Board;

nominees for election by the shareholders at the Annual Meeting of Shareholders and nominees to fill vacancies and newly created directorships;

(d) reviewing candidates recommended by shareholders for election to the Board and shareholder proposals submitted for inclusion in the

Company’s proxy materials;

(e) advising the Board regarding the size and composition of the Board and its committees;

(f) proposing to the Board

directors to serve as chairpersons and members on committees of the Board;

(g) coordinating matters among committees of the Board;

proposing to the Board the slate of corporate officers of the Company and reviewing the succession plans for the executive officers;

(f) proposing

to the Board directors to serve as chairpersons and members on committees of the Board;

(g) coordinating matters among committees of

(h) proposing to the Board the slate of corporate officers of the Company and reviewing the succession plans for the executive

(i) recommending to the Board and monitoring matters with respect to governance of the Company;

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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, 2021, the Reporting Persons timely filed all such reports, except that (i) Jing Chen, Wei Wang, and Jeffrey

Kone, directors of the Company, failed to timely file Forms 3 as newly appointed directors of the Company.

No securities of the Company

are beneficially owned by Ms.

Kone, and such Forms 3 were subsequently filed;

Guangde Cai, the Chairman

of our Board and the indirect majority shareholder of Qixun Technology (Samoa) Limited (“Qixun Samoa”) and indirect sole

shareholder of Qihong Technology (Samoa) Limited (“Qihong Samoa”), failed to timely file Forms 4 to report the transfer without

consideration to certain former shareholders of Wetouch Holding Group Limited, a limited company

organized under the laws of British Virgin Islands, of 2,799,088 shares of the Company’s common stock owned by Qihong Samoa

and 1,490,792 shares of the Company’s common stock owned by Qixun Samoa, which Forms 4 were subsequently filed, and (iii) Jiaying

Cai, our secretary and director, failed to timely file a Form 4 to report the acquisition of 839,204 shares of the Company’s common

fiscal year ended December 31, 2022, the Reporting Persons timely filed all such reports, except that Fei Bai, Xiaojin Tang, and Congjin Wang, directors of the

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

No securities of the Company are beneficially owned

following table sets forth total compensation paid to our named executive officers for the years ended December 31, 2022 and 2021.

and principal position

Lian(1), President, Chief Executive Officer

Yuhua Huang, Chief Financial Officer

Lazar(2), Previous Sole Officer and Director

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

Lazar resigned as the sole officer and director of the Company on June 18, 2020.

Name and principal position

Option awards

Zongyi Lian, President, Chief Executive Officer

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

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Guangde Cai became a director of the Company on October 12, 2020.

David Lazar resigned as a director on June 18, 2020.

Guangde Cai resigned as a director on August 31, 2022 and Mr.

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

Tang became a director of the Company and Mr.

Fei Bai became a director and chairman of the board of the directors of the Company on

August 31, 2022.

Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

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officers and directors as a group.

percentages below are calculated based on 31,811,523 shares of common stock issued and outstanding as of the date of this Form

percentages below are calculated based on 193,604,965 shares of common stock issued and outstanding as of April 14, 2023.

Shares Beneficially Owned

Prior to the Offerings

Beneficially Owned

Shares Beneficially Owned

After the Offerings

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Executive Officers and Directors:

Guangde Cai(1)

Jiaying Cai(2)

All officers and directors as a group (7 persons)

5% or Greater Holders:

Qihong Technology (Samoa) Limited(1)

Qixun Technology (Samoa) Limited(1)

Guangde Cai, the Chairman of our Board, is the indirect majority shareholder of Qixun Technology (Samoa) Limited and indirect sole shareholder

of Qihong Technology (Samoa) Limited.

The number indicated includes the shares of the Company owned by each of Qixun Technology (Samoa)

Limited and Qihong Technology (Samoa) Limited.

Jiaying Cai, our director and secretary, owns 839,204 shares in the Company.

Her father, Mr.

Guangde Cai, is the indirect majority shareholder

of Qixun Technology (Samoa) Limited and indirect sole shareholder of Qihong Technology (Samoa) Limited.

Cai disclaims beneficial

ownership of the shares owned by Qixun Technology (Samoa) Limited and Qihong Technology (Samoa) Limited.

in Control Agreements

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For the years ended December 31, 2022 and 2021, sales from

Sichuan Wetouch to Meishan Wetouch were approximately $87,367 and nil, respectively.

Sichuan Wetouch to Meishan Wetouch were approximately nil and $87,367, respectively.

There are no written agreements between Sichuan

Wetouch and Meishan Wetouch.

Guangde Cai, Chairman and director of the Company and our indirect majority shareholder, owns 95% of

Meishan Wetouch.

Guangde Cai, former Chairman and director of the Company, owns 95% of Meishan Wetouch.

Wetouch Technology Co., Ltd.

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Wetouch sells capacitive touchscreens to Chengdu Wetouch from time to time.

For the twelve-month period ended December 31, 2021, sales

from Sichuan Wetouch to Chengdu Wetouch were approximately $10,483.

There are no written agreements between Sichuan Wetouch and

Chengdu Wetouch.

Guangde Cai, Chairman and director of the Company and our indirect majority shareholder, owns 94% of Chengdu Wetouch.

due from Related Parties

the years ended December 31, 2021 and 2020, the total amounts due from related parties were nil and $76,619, respectively.

advances are non-interest bearing and due on demand.

The breakdown of the amount due from related parties are as below:

of June 30, 2020, there were $43,453 employee advances granted by the Company to Mr.

Guangde Cai, our Chairman.

Said advances were the

Company’s expenses given to Mr.

Cai who utilized such funds on behalf of the Company for international payments to third-party

consultants of the Company.

Since the employee advances are not loans from the Company to Mr.

Cai, no payments are due to the Company

Cai for these advances.

As of December 31, 2021 and December 31, 2020, there is no amount due from Mr.

Guangde Cai to the Company.

Shengyong Li is the general manager of Sichuan Wetouch.

For the years ended December 31, 2021 and 2020, the employee advances due from

Shengyong Li were nil and $72, respectively.

These employee advances are non-interest bearing and due on demand.

Touch Technology AG

the years ended December 31, 2021 and 2020, the operating expense advances due from Vision Touch Technology AG were $nil and $76,619,

respectively.

These operating expense advances are non-interest bearing and due on demand.

Vision Touch Technology is solely owned by

Yong Yang, a sales director of Sichuan Wetouch.

For the years ended December 31, 2022 and 2021, sales from

Sichuan Wetouch to Chengdu Wetouch were approximately nil and $10,483, respectively.

There are no written agreements between Sichuan

Wetouch and Chengdu Wetouch.

Guangde Cai, former Chairman and director of the Company, owns 94% of Chengdu Wetouch.

due to Related Parties

the years ended December 31, 2022 and 2021, the total amounts due to related parties were $1,665 and $34,669, respectively.

These advances are non-interest bearing and due on demand, with the details provided below:

Wetouch Technology Co., Ltd (“Chengdu Wetouch”)

the years ended December 31, 2021 and 2020, the operating expenses advanced by Chengdu Wetouch to Sichuan Wetouch were $nil and

$134,616, respectively.

These advances are non-interest bearing and due on demand.

Wetouch specializes in the research, development, manufacturing and sales of resistive touchscreens widely used in HMI and military industries.

There are no written agreements between Sichuan Wetouch and Chengdu Wetouch.

Guangde Cai is the majority shareholder of Chengdu Wetouch.

the years ended December 31, 2021 and 2020, the operating expenses advanced by Meishan Wetouch to Sichuan Wetouch were $nil and

$68,402, respectively.

These advances are non-interest bearing and due on demand.

Guangde Cai, Chairman and director of the Company

and our indirect majority shareholder, owns 95% of Meishan Wetouch.

the years ended December 31, 2021 and 2020, Sichuan Wetouch owed Mr.

Guangde Cai $32,867 and $326,042, respectively.

These advances

are non-interest bearing and due on demand.

are non-interest bearing and due on demand, with the details provided below:

the years ended December 31, 2022 and 2021, Sichuan Wetouch owed Mr.

Zongyi Lian $1,802 and nil, respectively.

These advances

are non-interest bearing and due on demand.

Guangde Cai nil and $32,867, respectively.

These advances are non-interest

bearing and due on demand.

the years ended December 31, 2022 and 2021, Sichuan Wetouch owed Mr.

Zongyi Lian $1,665 and $1,802, respectively.

These advances are

non-interest bearing and due on demand.

of HK Wetouch

Wetouch, an affiliate of Guangde Cai, our chairman and director, was incorporated on December 3, 2020 under the laws of Hong Kong, which

in turn owns all the outstanding shares of Sichuan Vtouch.

Wetouch, an affiliate of Guangde Cai, our former chairman and director, was incorporated on December 3, 2020 under the laws of Hong Kong,

which in turn owns all the outstanding shares of Sichuan Vtouch.

Sichuan Vtouch was incorporated on December 30, 2020 in Chengdu, Sichuan,

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and Sichuan Vtouch became our indirect wholly-owned subsidiaries.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

each fiscal year of 2021 and 2020, we incurred aggregate fees and expenses of $105,000 and $105,000, respectively, from

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

ACCOUNTING FEES AND SERVICES.

each fiscal year of 2022 and 2021, we incurred aggregate fees and expenses of $164,000 and $105,000, respectively, from B F Borgers CPA

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

Audit-Related

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incurred aggregate fees and expenses of $0 and $0 for each fiscal year of 2022 and 2021, respectively.

incurred other fees of $0 for each fiscal year of 2021 and 2020.

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

and Financial Statements Schedules

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Common Stock Purchase Warrant dated December 2, 2021 issued by Wetouch Technology Inc.

Amendment to Promissory Note dated April 27, 2022 issued by Wetouch Technology Inc.

to Talos Victory Fund, LLC

English Translation of Employment Agreement between Sichuan Wetouch Technology Co., Ltd and Zongyi Lian.

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and FirstFire Global Opportunities Fund, LLC.

Securities Purchase Agreement, dated as of November 24, 2021, between Wetouch Technology Inc.

Purchase Agreement, dated as of November 24, 2021, between Wetouch Technology Inc.

and LGH Investments, LLC.

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and Blue Lake Partners LLC.

Securities Purchase Agreement, dated as of January 19, 2023, between Wetouch Technology Inc.

and the buyers indicated herein

Code of Ethics

List of subsidiaries of the Company.

of subsidiaries of the Company.

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

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

Certification

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

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

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

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XBRL Taxonomy Extension Presentation Linkbase Document*

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

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

by reference to the Company’s Registration Statement on Form 10 filed with the SEC on October 15, 2020.

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by reference to the Company’s Current Report on Form 8-K filed with the SEC on December 15, 2021.

by reference to the Company’s Current Report on Form 8-K filed with the SEC on May 3, 2022.

by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 25, 2023.

Incorporated by reference to the Company’s Current Report on Form

10-K filed with the SEC on April 15, 2022.

FORM 10–K SUMMARY

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TO CONSOLIDATED FINANCIAL STATEMENTS

of Independent Registered Public Accounting Firm (PCAOB ID:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of December 31, 2022 and 2021

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Accounts receivable, net

Due from related parties

Prepaid expenses and other current assets

1 unchanged sentence

Property, plant and equipment, net

Intangible assets, net

LIABILITIES AND SHAREHOLDERS’ EQUITY

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Accounts payable

Loan from a third party

Due to related parties

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Accrued expenses and other current liabilities

Deferred grants

Convertible promissory notes payable

TOTAL CURRENT LIABILITIES

Deferred grants-non current

Common stock purchase warrants liability

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Accumulated other comprehensive income

( 2,977,524 )

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

Retrospectively

restated for effect of recapitalization, see Note 1

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

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STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

the years ended

For the years ended December 31,

Revenue from customers

Revenues from related parties

Total Revenues

COST OF REVENUES

Cost of revenues from customers

( 23,872,632 )

( 22,256,642 )

Cost of revenues related parties

Cost of revenues

and administrative expenses

and development expenses

Total Cost of revenues

( 23,872,632 )

( 22,354,492 )

OPERATING EXPENSES

FROM OPERATIONS

INCOME (EXPENSES)

on asset disposal

on changes in fair value of common stock purchase

warrants liability

OTHER (EXPENSES), NET

BEFORE INCOME TAX EXPENSE

COMPREHENSIVE INCOME (LOSS)

currency translation adjustment

COMPREHENSIVE

PER COMMON SHARE

AVERAGE NUMBER OF SHARES OUTSTANDING*

* Retrospectively restated

for effect of recapitalization, see Note 1

Selling expenses

( 1,288,467 )

General and administrative expenses

( 1,262,093 )

( 1,937,374 )

Research and development expenses

Share-based compensation

( 3,149,106 )

Total operating expenses

( 2,635,811 )

( 5,806,460 )

INCOME FROM OPERATIONS

OTHER INCOME (EXPENSES)

Interest income

Interest expense

Government grant

Gain on asset disposal

Loss on conversion of convertible promissory notes payable

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

TOTAL OTHER INCOME, NET

INCOME BEFORE INCOME TAX EXPENSE

INCOME TAX EXPENSE

( 3,352,802 )

( 4,409,589 )

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustment

( 5,242,692 )

COMPREHENSIVE INCOME

EARNINGS PER COMMON SHARE

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING*

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

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Balance at December 31, 2020

$ ( 1,734,988 )

Recapitalization -10/9/2020

Fraction shares issued due to stock split

Appropriation to statutory reserve

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Share-based compensation

Warrants issued to third parties in conjunction with debt issuance

( 1,888,106 )

Foreign currency translation adjustment

Balance at December 31 2021

* Retrospectively

restated for effect of recapitalization, see Note 1

Common stock at

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Appropriation to statutory reserve

( 2,005,084 )

Share-based compensation

Warrants issued to third parties in conjunction with debt issuance

Exercise of warrants issued in conjunction with legal services in 2020

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

Stock issuance for convertible promissory notes payable

Foreign currency translation adjustment

( 5,242,692 )

Foreign currency translation adjustment

Balance at December 31 2022

$ ( 2,977,524 )

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

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Share-based compensation

Loss on convertible promissory notes payable

Amortization of discounts and issuance cost of the notes

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Accounts receivable

( 1,497,237 )

Amounts due from related parties

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Accrued expenses and other current liabilities

( 1,884,578 )

Deferred grants

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Payments of issue costs of convertible promissory note

Repayment of bank borrowings

Repayment of advances from related parties

Repayments of convertible promissory notes payable

( 1,038,426 )

Proceeds from interest-free advances from a third party

Net cash provided by (used in) financing activities

( 4,703,796 )

Effect of changes of foreign exchange rates on cash

( 2,846,807 )

Net increase in cash

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Cash, end of year

disclosures of cash flow information

investing activities

liabilities acquired due to recapitalization

Warrants issued to third parties

in conjunction with debt issuance

Supplemental disclosures of cash flow information

Interest paid

Income taxes paid

Non-cash investing activities

Warrants issued to third parties in conjunction with debt issuance

Non-cash financing activities

Cashless stock issuance for convertible promissory notes payable

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

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Sichuan Wetouch is primarily engaged in the business

of research development, manufacture, distribution of touchscreen displays to customers both in PRC and overseas.

The touchscreen products,

which are manufactured by the Company, are primarily for use in the computer components.

of research development, manufacture, and distribution of touchscreen displays to customers both in PRC and overseas.

The touchscreen

products, which are manufactured by the Company, are primarily for use in computer components.

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

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

was under the government directed relocation order, and started its dissolution process which is estimated to be completed by the second

quarter of 2022.

was under the government directed relocation order, and started its dissolution process which is estimated to be completed by the end

Sichuan Vtouch took over the operating business of Sichuan Wetouch.

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2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

B asis of Presentation and Principles of Consolidation

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

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

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

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

owned subsidiaries.

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

Nil and US$ 66,944 inventory write-off was recorded for the years ended December 31, 2021 and 2020, respectively.

$ 74,100 and nil inventory write-off was recorded for the years ended December 31, 2022 and 2021, respectively.

Convertible Promissory Notes

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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;

the Company considered the three characteristics

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

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

provisions or both;

(ii) requiring no initial net investment;

(iii) permitting net settlement;

the Company’s notes have fixed interest rate, specified notional principal and settlement date, which no other events would affect specified

settlement, and the Company received net proceeds after issuance costs and discount, which the Company recorded as the net proceeds or

net settled investment, the management assessed that the Notes did not do 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

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 do not meet the definition of a derivative instruments

and an embedded feature would not be bifurcated.

The discounts on the convertible notes, are amortized to interest expense, using the

effective interest method, over the terms of the related convertible notes.

Common stock purchase warrants

Company also analyzed the Warrants in accordance with ASC 815, to determine whether the Warrants meet the definition of a derivative

and, if so, whether the Warrants meet the scope exception of ASC 815-40, which is that contracts issued or held by the reporting

entity that are both (1) indexed to its own stock and (2) classified in stockholders’ equity shall not be considered to be derivative

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.

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the Warrants are entitled to a price adjustment provision 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 more or less

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.

issues or sells any additional shares of common stock at a price per share more or less than the then-applicable exercise price or without

consideration, which is typically referred to as a “Down-round protection” or “anti-dilution” provision.

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.

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.

Company used an black-scholes-pricing model to estimate the fair values of common stock purchase warrants at the balance sheet dates.

As of December 31, 2021, the Company recorded $ 1,128,635 common stock purchase warrants liability and $ 759,471 gain on changes of

fair value of common stock purchase liability warrants for the year ended December 31, 2021.

(h) 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:

As of December 31, 2022 and 2021, the Company recorded $ 256,957 and $ 1,128,635 common stock purchase warrants liability, respectively,

and $ 871,677 and $ 759,471 gain on changes of fair value of common stock purchase liability warrants for the year ended December 31, 2022

and 2021, respectively.

Fair value of financial instruments

value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between

market participants at the measurement date.

A three-level fair value hierarchy prioritizes the inputs used to measure fair value.

hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.

The three levels of

inputs used to measure fair value are as follows:

1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in

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as of December 31, 2022 and 2021 based upon the nature of the assets and liabilities.

Property, plant and equipment,

Property, plant and equipment, net

plant and equipment are stated at cost less accumulated depreciation and amortization.

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statements of income and other comprehensive income in other income or expenses.

Intangible assets, net

Company’s intangible assets primarily includes land use rights and patent right.

A land use right in the PRC represents an exclusive

right to occupy, use and develop a piece of land during the contractual term of the land use right.

The cost of a land use right is usually

paid in one lump sum at the date the right is granted.

The prepayment usually covers the entire period of the land use right.

sum advance payment is capitalized and recorded as land use right and then charged to expense on a straight-line basis over the period

of the right, which is normally 50 years.

are recognized at cost of acquisition.

They have a finite life and are carried at cost less any accumulated amortization and any impairment

OF FINITE LIVED INTANGIBLE ASSETS

Impairment of long-lived Assets

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years ended December 31, 2022 and 2021 are disclosed in Note 14 to the financial statements.

Selling, General and Administrative

Selling, General and Administrative Expenses

expenses represents primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses.

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decrease loss per share) are excluded from the calculation of diluted EPS.

As of December 31, 2021, warrants were included for the dilutive

EPS calculation.

As of December 31, 2022 and 2021, warrants were included for

the dilutive EPS calculation, respectively.

Comprehensive income (loss)

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effective for interim and annual reporting periods beginning within 2021 with early adoption permitted.

October 2021, the FASB issued ASU No.

2021-08, which will require companies to apply the definition of a performance obligation under

ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers

that are acquired in a business combination.

Under current U.S.

GAAP, an acquirer generally recognizes assets acquired and liabilities

assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers,

at fair value on the acquisition date.

2021-08 will result in the acquirer recording acquired contract assets and liabilities

on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606.

2021-08 is effective

for fiscal years beginning after December 15, 2022, with early adoption permitted.

The Company is currently evaluating the impact of

this ASU on its financial statements and the effects will be based upon the contract assets and liabilities acquired in the future.

time to time, the FASB or other standards setting bodies issue new accounting pronouncements.

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Deferred marketing expenses

Prepayment for land use right/ (i)

Security deposit (ii)

Others receivable (iii)

Prepayment for land use right/ (i) (i)

Security deposit (ii) (ii)

Others receivable (iii) (iii)

Prepaid expenses and other current assets

(i) On July 23,

2021, Sichuan Vtouch entered into a contract with Chengdu Wenjiang District Planning and Natural Resources Bureau for purchasing a land

use right of 131,010 square

feet with a consideration of RMB 3,925,233

(equivalent to $ 615,955 )

for the new facility.

The Company made a full prepayment by November 18, 2021 .

Upon a certificate of land use right issued by the local

government, which is estimated to be obtained by the fourth quarter of 2022, the Company will reclassify this prepayment to intangible

assets accordingly.

July 23, 2021, Sichuan Vtouch entered into a contract with Chengdu Wenjiang District Planning and Natural Resources Bureau for purchasing

a land use right of 131,010 square feet with a consideration of RMB 3,925,233 (equivalent to $ 569,105 ) for the new facility.

made a full prepayment by November 18, 2021.

Upon a certificate of land use right issued by the local government, which is estimated

to be obtained by the fourth quarter of 2023, the Company will reclassify this prepayment to intangible assets accordingly.

(ii) On July 28, 2021,

2021, Sichuan Vtouch made a security deposit of RMB 393,000 (equivalent to $ 61,670 )

to Chengdu Cross-Strait Science and Technology Industry Development Park Management Committee to obtain a construction license for new

This deposit will be refunded upon the issuance of the construction license by end of April, 2022.

(iii) Other receivables

Sichuan Vtouch made a security deposit of RMB 393,000 (equivalent to $ 56,979 ) to Chengdu Cross-Strait Science and Technology Industry

Development Park Management Committee to obtain a construction license for new facility.

This deposit will be refunded upon the issuance

of the construction license by end of 2023.

(i) Other receivables

are mainly employee advances, and prepaid expenses.

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OF PROPERTY , PLANT AND EQUIPMENT

Machinery, equipment and furniture

Construction in progress

accumulated depreciation

( 6,670,042 )

Property, plant and equipment, net

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the Company recorded a gain of $ 7,648,423 for the asset disposal including $ 872,045 loss of asset disposal of intangible assets .

(see Note 6).

March 16, 2021, in order to minimize interruption of our business, Sichuan Vtouch entered into a leasing agreement with Sichuan Renshou

Shigao Tianfu Investment Co., Ltd., a limited company owned by the local government, to lease the property, and all buildings, facilities

and equipment thereon (“Demised Properties) of Sichuan Wetouch, commencing from April 1, 2021 until December 31, 2021, at a monthly

rent of RMB 300,000 ($ 47,076 ) for the use of the Demised Properties.

6 – INTANGIBLE ASSETS, NET

assets, net mainly consist of the following:

OF INTANGIBLE ASSETS

Land use rights

accumulated amortization for patents

Accumulated amortization for land use right

Intangible assets, net

expense was $ 113,908 and $ 76,141 for the years ended December 31, 2021 and 2020, respectively.

to the relocation pursuit to the Compensation Fund agreement with the local government (See Note 6), the Company accelerated the

amortization expense and recorded a loss of $ 872,045 for the asset disposal of intangible assets during the three-month period

ended March 31, 2021, as the Company plans to deregister Sichuan Wetouch and the newly set up Sichuan Vtouch will use new techniques

with new equipment, as a result, the Company estimates no remaining useful life for the existing patents.

Shigao Tianfu Investment Co., Ltd.

(later renamed as Meishan Huantian Industrial Co., Ltd.), a limited company owned by the local government,

to lease the property, and all buildings, facilities and equipment thereon (“Demised Properties) of Sichuan Wetouch, commencing

from April 1, 2021 until December 31, 2021 at a monthly rent of RMB 300,000 ($ 43,496 ), and renewed on December 31, 2021 at a monthly rent

of RMB 400,000 ($57,994) from January 1, 2022 till October 31, 2023 for the use of the Demised Properties.

6 – RELATED PARTY TRANSACTIONS

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Guangde Cai, Chairman and director of the Company and our indirect majority shareholder, owns 94 %

of Chengdu Wetouch and Meishan Wetouch, respectively.

OF RELATED PARTY TRANSACTIONS

due from related parties are as follows:

Vision Touch Technology AG

100% owned by Mr.

Yong Yang, Sales Director of Sichuan Wetouch

Operating expense paid on behalf of the related party/Company

and 95 % of Chengdu Wetouch and Meishan Wetouch, respectively.

due to related parties are as follows :

Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”)

94% owned by Mr.

Guangde Cai & 2% by Mr.

Operating expense paid on behalf of the Company

Meishan Vtouch Electronics

Technology Co., Ltd.

95% owned by Mr.

Guangde Cai and 5% by Chengdu Wetouch

Operating expense paid on behalf of the Company

Chengdu Vtouch Intelligence Science & Technology Co., Ltd.

100% owned by HK Vtouch Holding Group Co., Ltd.

Operating expenses paid on behalf of the Company

OF RELATED PARTY TRANSACTIONS

President and CEO of the Company

Payable to employee

Former Chairman of the Company

Payable to employee

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federal income tax return.

No provision for income

tax for Wetouch has been made as it incurred losses for the years ended December 31, 2021 and 2020.

the current laws of the British Virgin Islands, BVI Wetouch, subsidiaries of Wetouch, is not subject to tax on its income or capital

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Wetouch is incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a progressive rate of 16.5 %.

Wetouch did not generate any assessable profits derived from Hong Kong sources for the fiscal years ended December 31, 2021 and 2020,

and accordingly no provision for Hong Kong profits tax has been made in these periods.

Wetouch and Sichuan Vtouch files income tax returns in the PRC.

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components of the income tax provision are as follows:

OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFITS)

OF COMPONENTS OF THE INCOME TAX PROVISION

For the Years Ended

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OF INCOME TAX RATE

For the Years Ended

For the Years Ended December 31,

PRC statutory income tax rate

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expenses and other current liabilities consist of the following:

SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

from customers

payroll and employee benefits

interest expenses

tax payables (i)

expenses and other current liabilities

Other tax payables are mainly value added tax payable.

Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses.

10— DEFERRED GRANTS

January 14, 2013 and January 27, 2014, Sichuan Wetouch received RMB 11.2 million (equivalent to US$ 1.8 million) and RMB 4.8 million (equivalent

to US$ 0.8 million) government subsidies, respectively, from Sichuan Provincial Government in supporting the initial set-up and construction

of its production facility.

The Company completed the construction of the plant in June 2013 and there were no other unfulfilled conditions

and/or other contingencies attaching to government assistance which has been recognized as income.

the funding is related to the construction of long-term assets, the amounts were recognized as government grant, which is included in

deferred grants on the consolidated balance sheets, and to be recognized as other income in the consolidated statements of comprehensive

income (loss) over the periods and in the proportions in which depreciation expense on the long-term assets is recognized.

the year ended December 31, 2021, the Company recognized the remaining balance of deferred grant as income due to the government directed

relocation order disclosed in Note 4.

OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Advance from customers

Accrued payroll and employee benefits

Accrued interest expenses

Other tax payables (i) (i)

Other payable to a former shareholder (ii) (ii)

Others (iii) (iii)

Accrued expenses and other current liabilities

(i) Other tax payables

are mainly value added tax payable.

(ii) Other payable to

a former shareholder was paid in March, 2023.

(iii) Others mainly represent

accrued employee reimbursement payable and other accrued miscellaneous operating expenses.

9 – CONVERTIBLE PROMISSORY NOTES PAYABLE

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Notes bear interest at a rate of 8.0 % per annum, payable in one year and will mature on October 27, November 5, November 16, November

29 and December 2 of 2022.

24, November 29 and December 2 of 2022.

Net proceeds after debt issuance costs and debt discount were approximately US$ 1,793,000 .

Debt issuance costs

in the amount of US$ 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

issuance costs in the amount of US$ 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.

details of convertible notes are as follows:

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shall pay a 10 % prepayment penalty.

the year ended December 31, 2021, the Company recognized interest expenses of the Notes in the amount of US$ 27,447 .

following is the summary of outstanding promissory notes as of December 31, 2021:

April 27, 2022, the Company entered into an amendment to the Note (“Amendment to Promissory Note”) issued to the Lender and,

on May 3, 2022, an amendment to the Registration Rights Agreement by and between the Company and the Lender (“Amendment to Registration

Rights Agreement”), extending the number of days the Company shall have in order to cause the registration statement covering the

resale of the Common Stock to become effective.

following table summarizes the outstanding promissory notes as of December 31, 2022 and 2021 (dollars in thousands):

OF OUTSTANDING PROMISSORY NOTES

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Principal Amount

Warrants Shares

Maturity Date

Convertible Note- Tarlos Victory (Note 9 (b))

October 27, 2022

Carrying Amount

Principal Amount

Carrying Amount

Convertible Note- Talos Victory (Note 9 (b))

Convertible Note-Mast Hill (Note 9 (b))

November 5, 2022

Convertible Note-First Fire (Note 9 (b))

November 16, 2022

Convertible Note-LGH Note 9 (b))

November 24, 2022

Convertible Note -Fourth Man (Note 9 (b))

November 29, 2022

Convertible Note-Jeffery Street Note 9 (b))

December 2, 2022

Convertible Note -Blue Lake Note 9 (b))

December 2, 2022

Debt Discounts

Amortization of discounts for the year ended December 31, 2021

Convertible Note -Blue Lake Note 9 (b))Total

Amortization of discounts for year ended December 31, 2022

Convertible promissory notes payable as of December 31,2022

December 28, 2022 to January 18, 2023, the remaining five (5) lenders and the Company entered into an amendment to the Note (“Amendment

to Promissory Note”) extending maturity date for additional 6 months.

the year ended December 31, 2022, principal, accrued and unpaid interest and default charges totalling $ 1,038,426 was converted into

1,384,564 shares of common stock of the Company.

And two notes were fully converted.

the year ended December 31, 2022 and 2021, the Company recognized interest expenses of the Notes in the amount of US$ 224,885 and US$ 27,447 ,

respectively.

Company prepaid $ 10,000 legal deposit for each note till the repayment of the notes.

connection with the issuance of a convertible promissory notes (see Note 11 (a) in

October, November and December, 2021, the Company also issued seven (7) three-year warrant (the

“Warrant”) to purchase an aggregate of 1,800,000 shares of the Company’s common stock (the “Warrant Shares”).

connection with the issuance of a convertible promissory notes (see Note 11 (a) in October,

November and December, 2021, the Company also issued seven (7) three-year warrant (the “Warrant”) to purchase an aggregate of 1,800,000 shares of the Company’s common stock (the “Warrant Shares”).

Warrants issued to the Lenders granted each of the Lenders the right to purchase up to 200,000 shares of common stock of the Company

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to such exercise unless the Lenders notify the Company at least 61 days prior to such exercise.

January 17, 2022, we closed a private offering of ordinary shares and warrants to purchase ordinary shares.

A total of 2,750,000 ordinary

shares (the “Shares”) were issued to a total of five (5) investors (the “Investors”) at a subscription price

of $ 0.80 per share, for total subscription proceeds of $ 2,200,000 .

In addition, for each share subscribed for by the Investors, we issued

one (1) warrant to purchase one (1) ordinary share at an exercise price of $ 0.88 per share, exercisable for a period of twenty-four (24)

months (the “Warrants”).

We have agreed to register the Investors’ re-sale of the Shares by way of a prospectus supplement

to our currently effective unallocated shelf registration statement on Form F-3, (SEC File No.

The offer and sale of the

Shares and the Warrants was exempt under Rule 506 of Regulation D under the Securities Act of 1933 (the “Securities Act”).

We engaged in no general solicitation or advertising with regard to the offering and the offering was made solely to “Accredited

Investors” as defined in Rule 501 of Regulation D under the Securities Act.

April 14, April 27, and September 1, 2022, three lenders exercised cashless for 115,540 (4th Man), 111,972 (Talos) and 57,142 (Blue

lake) warrant shares, respectively.

fair values of these warrants as of December 31, 2022 were calculated using the Black-Scholes option-pricing model with the following

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Risk-free interest rate (%) (per annum)

Initial value of common stock purchase warrants liability

Changes of fair value of common stock purchase warrants

liability (- (gains)/+ losses(US$)

Common stock purchase sarrants liability as of December

31, 2021(US$)

Convertible Note- Tarlos Victory (Note 9 (a))

Common stock purchase warrants liability as of December 31, 2021(US$)

Changes of fair value of common stock purchase warrants liability

(+ (gains)/- losses(US$)

Common stock purchase warrants liability as of December 31, 2022 (US$)

Convertible Note- Talos Victory (Note 9 (a))

Convertible Note-Mast Hill (Note 9 (a))

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been rendered.

April 14, April 27, 2022 and September 1, 2022, the Company issued cashless warrant shares of 115,540 , 111,972 and 57,142 to three lenders

respectively.

(see Note 9 (b)).

the year ended December 31, 2022, the Company issued 124,223 shares to a third party for warrant exercise (see Note 11).

the year ended December 31, 2022, the Company issued 1,384,564 shares of common stock for the conversion of convertible promissory note

payable (see note 9 (a)).

of December 31, 2022, the Company had 33,604,965 issued and outstanding shares.

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distributable as cash dividends.

the years ended December 31, 2021 and 2020, the Company made appropriations to the reserve fund of RMB 12,933,795 (equivalent to

US$ 2,005,084 ) and RMB 6,907,298 (equivalent to US$ 1,058,590 ), respectively.

the years ended December 31, 2022 and 2021, the Company made appropriations to the reserve fund of RMB 6,554,271 (equivalent to US$ 973,718 )

and RMB 12,933,795 (equivalent to US$ 2,005,084 ), respectively.

11- SHARE BASED COMPENSATION

Company applied ASC 718 and related interpretations in accounting for measuring the cost of share-based compensation over

the period during which the consultants are required to provide services in exchange for the issued shares.

value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation

Company applied ASC 718 and related interpretations in accounting for measuring the cost of share-based compensation over the period

during which the consultants are required to provide services in exchange for the issued shares.

The fair value of above award was estimated

at the grant date using Black-Scholes model for pricing the share compensation expenses.

December 22, 2020, the Board of Directors of the Company authorized the issuance of an aggregate of 103,610 shares and 210,360 warrants

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The five-year warrants are exercisable at one cent

310,830 shares of common stock and 631,080 warrants were vested on January 1, 2021 and no warrants were exercised.

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 51.3 %

and an average interest rate of 0.12 %.

310,830 shares of common stock and 631,080 warrants were vested on January 1, 2021 and during the year ended December 31, 2022, 124,223

shares were exercised.

fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses.

fair value of the Black-Scholes model includes the following assumptions:

expected life of 1.5 years, expected dividend rate of 0 %, volatility

of 215.4 % and an average interest rate of 2.96 %.

of December 31, 2022, the Company had 841,440 warrants outstanding related to above mentioned services with i) weighted average exercise

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and iii) aggregate intrinsic value of $ 0.2 million.

years ended December 31, 2021 and 2020, the Company recognized relevant share-based compensation expense of $ 1,041,281 and $ 351,238 for

the vested shares, and $ 2,107,825 and $ 713,120 for the warrants, respectively.

the year ended December 31, 2022 and 2021, the Company recognized relevant share-based compensation expense of nil and $ 1,041,281 for

the vested shares, and nil and $ 2,107,825 for the warrants, respectively

WEIGHTED AVERAGE NUMBER OF SHARES

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to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during

15- RISKS AND UNCERTAINTIES

Risk – The carrying amount of accounts receivable included in the balance sheet represents the Company’s exposure

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European countries and East Asia such as South Korea and Taiwan.

For the year ended December 31, 2021, five customers accounted for 19.5 %,

For the year ended December 31, 2022, six customers accounted for 21.2 %,

16.1 %, 14.8 %, 13.7 %, 11.9 % and 10.1 %, respectively, of the Company’s revenue.

For the year ended December 31, 2020, five customers accounted

for 17.8 %, 15.9 %, 14.6 %, 12.7 %, and 12.2 %, respectively, of the Company’s revenue .

For the year ended December 31, 2021, five customers

accounted for 19.5 %, 17.3 %, 14.5 %, 14.2 %, and 11.1 %, respectively, of the Company’s revenue.

the Company’s top 10 customers aggregately accounted for 98.7 % and 97.5 %% of the total revenue for the years ended December 31,

2022 and 2021, respectively.

of December 31, 2022 three customers accounted for 32.2 %, 22.8 %, and 14.0 % of the total accounts receivable balance, respectively.

of December 31, 2021, six customers accounted for 25.7 %, 18.6 %, 12.5 %, 11.5 %, 11.3 % and 10.2 % of the total accounts receivable balance,

respectively.

of December 31, 2020 three customers accounted for 18.2 %, 16.0 %, and 13.2 % of the total accounts receivable balance, respectively.

Company purchases its raw materials through various suppliers.

Raw material purchases from these suppliers which individually exceeded

10 % of the Company’s total raw material purchases, accounted for approximately 11.2 % (one supplier) and 37.5 % (three suppliers)

10% of the Company’s total raw material purchases, accounted for approximately 47.2 % (four suppliers) and 11.2 % (one supplier)

of the Company’s total raw material purchases for the years ended December 31, 2022 and 2021, respectively.

13 — COMMITMENTS AND CONTINGENCIES

time to time, the Company is a party to various legal actions arising in the ordinary course of business.

The Company accrues costs associated

with these matters when they become probable and the amount can be reasonably estimated.

Legal costs incurred in connection with loss

contingencies are expensed as incurred.

the year ended December 31, 2020, the Company had several legal claims or litigation that, individually or in aggregate, could have a

material adverse impact on the Company’s consolidated financial position, results of operations and cash flows.

Legal case with Chengdu SME Credit Guarantee Co., Ltd.

on a loan default penalty of RMB 11.8 million (equivalent to $ 1.7 million)

time to time, the Company and its affiliates are parties to various legal actions arising in the ordinary course of business.

Sichuan Wetouch and Hong Kong Wetouch, the previous subsidiaries of the Company, and our former Chairman and director Mr.

were named as defendants in several litigation matters, as of the date of this report, all such matters have been settled and Sichuan

Wetouch, Hong Kong Wetouch and Mr.

Guangde Cai were unconditionally and fully discharged and released therefrom (See Item 13- Legal

Proceedings).

Accordingly, there are no pending material legal proceedings against the Company.

An equity dispute case with Yunqing Su with a disputed amount

of RMB 1,318,604 (equivalent to $ 191,180 )

June 22, 2017, Yunqing Su, a former shareholder, entered an Equity Investment Agreement with Sichuan Wetouch and Guangde Cai, agreed

that Yunqing Su would invest RMB 1 million (equivalent to $ 149,853 ) to purchase 370,370.37 original listed shares of the target company,

and provided for the exit mechanism in the agreement.

However, the target company failed to be listed prior to December 31, 2017 as agreed.

On June 22, 2017, Guangde Cai and Yunqing Su entered into a supplementary agreement, pursuant to which Guangde Cai shall repurchase all

of Yunqing Su’s equity interest and pay the interest.

Sichuan Wetouch repaid Yunqing Su the interest of RMB 220,000 (equivalent

to $ 32,968 ) and the principal of RMB 128,000 (equivalent to $ 19,181 ) in November 2018.

The repayment period set forth in the supplementary

agreement expired, but Sichuan Wetouch and Guangde Cai failed to pay the principal and interest owed to Yunqing Su.

Yunqing Su sued Sichuan

Wetouch and Guangde Cai to the Renshou County People’s Court of Sichuan Province, and the case was filed on February 9, 2022.

May 9, 2022, pursuant to a civil mediation statement issued by the Renshou County People’s Court of Sichuan Province, Sichuan

Wetouch and Guangde Cai agreed to repay Yunqing Su the principal and interest in the total amount of RMB 1,318,604

(equivalent to $ 191,180 ).

Sichuan Wetouch fully paid the aforesaid amount on March 15, 2023.

case with Chengdu SME Credit Guarantee Co., Ltd.

on a court acceptance fee of RMB 338,418

(equivalent to $ 49,066 )

July 5, 2013, Sichuan Wetouch obtained a one-year loan of RMB 60.0 million (equivalent to $ 9.8 million) from Bank of Chengdu, at an annual

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Bank of Chengdu retained 30% of the risk, while Chengdu Wetouch and Mr.

Guangde Cai (related parties, see Note 4) provided joint and

several liability guarantee for 100% of the loan.

Guangde Cai provided joint and several liability guarantee for

100% of the loan .

July 31, 2014, Sichuan Wetouch repaid RMB 5.0 million (equivalent to $ 0.8 million).

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and RMB 6.0 million (equivalent to $ 0.9 million) of loan default penalties.

September 16, 2020, Sichuan Wetouch made a full repayment of RMB 11.8 million (equivalent to US$ 1.7 million) of the above loan default

penalties to Chengdu SME.

Legal case with Sichuan Renshou Shigao Tianfu Investment Co., Ltd and Renshou Tengyi Landscaping Co., Ltd.

on an asset recovery of RMB 12.0

million (equivalent to $ 1.7 million)

The agreement did not specify which party shall pay the court

September 16, 2020, Sichuan Wetouch made a full repayment of RMB 11.8 million (equivalent to $ 1.7 million) of the above loan default penalties

to Chengdu SME.

March 16, 2023, pursuant to an Enforcement Settlement Agreement entered among Chengdu SME, Sichuan Wetouch and Chengdu Wetouch,

Chengdu Wetouch agreed to pay the court acceptance fee of RMB 338,418

(equivalent to $ 49,066 ).

On March 17, 2023, Chengdu Wetouch made a full payment of the above court fee to Chengdu SME.

case with Zhuhai Hongguang Technology Co., Ltd on the total amount of RMB 131,859 (equivalent

to $ 19,118 ) for goods and liquidated damages

September 2016, Sichuan Wetouch started purchasing components from Hongguang Technology Co., Ltd (“Hongguang Technology”)

by sending a Purchase Order to Hongguang Technology and agreed to bear 20% of the breach of contract as liquidated damages.

30, 2021, Hongguang Technology filed a complaint with Renshou County People’s Court of Sichuan Province, requesting Sichuan Wetouch

to pay RMB 109,883.2

(equivalent to $ 16,466 )

in arrears and liquidated damages of RMB 21,976.64

(equivalent to $ 3,293 ).

Thereafter, the parties entered into a settlement agreement, pursuant to which Sichuan Wetouch agreed to pay the principal of outstanding

payment and liquidated damages in the total amount of RMB 131,859

(equivalent to $ 19,118 )

on a lump-sum basis.

Sichuan Wetouch paid the entire aforesaid amount to Hongguang Technology on February 16, 2022.

case with Lifan Financial Leasing (Shanghai) Co., Ltd.

and Sichuan Wetouch, Chengdu Wetouch,

Meishan Wetouch and Xinjiang Wetouch Electronic Technology Co., Ltd.

on a court acceptance

fee of RMB RMB 250,470

to $ 36,315 )

November 20, 2014, Lifan Financial Lease (Shanghai) Co., Ltd.

(“Lifan Financial”) and Chengdu Wetouch entered into a

Financial Lease Contract (Sale and Leaseback), which stipulated that Lifan Financial shall lease the equipment to Chengdu Wetouch

after the purchase of the production equipment owned by Chengdu Wetouch at a purchase price, the purchase price/lease principal

shall be RMB 20

million, the rental interest rate of the leased equipment shall be 8 %

per year, and the lease term shall be 24 months.

Upon the expiration of the lease term, Lifan Financial shall transfer the leased

property to Chengdu Wetouch or a third party designated by Chengdu Wetouch at the price of RMB0 after Chengdu Wetouch has fully

fulfilled its obligations, including, without limitation, the payment of the rent, liquidated damages (if any) and other contractual

Guangde Cai, Sichuan Wetouch, Meishan Wetouch and Xinjiang Wetouch Electronic Technology Co., Ltd.

Wetouch”) provided Lifan Financial with joint and several liability guarantee.

August 9, 2021, Lifan Financial filed a lawsuit against Chengdu Wetouch, Guangde Cai, Sichuan Wetouch, Meishan Wetouch and Xinjiang

Wetouch to the Chengdu Intermediate People’s Court.

The court ruled that:

1) the Financial Lease Contract (Sale and Leaseback)

was terminated;

2) the leased property was owned by Lifan Financial;

3) Chengdu Wetouch shall pay Lifan Financial all outstanding

rent and interest thereon in the total amount of RMB 22,905,807.12

as well as the difference between the liquidated damages and the value of the leased property recovered;

parties executed a settlement agreement on March 7, 2023, in which the parties confirmed that the outstanding payment of RMB 22,905,807.12

has been fully paid up on December 23, 2021 and

the above cases have been settled.

As for the court acceptance fees that were not previously agreed upon by the parties, Chengdu Wetouch

agreed to pay the court acceptance fee of RMB 250,470

(equivalent to $ 36,315 ).

Chengdu Wetouch paid the aforesaid fees to Lifan Financial on March 10, 2023.

case with Sichuan Renshou Shigao Tianfu Investment Co., Ltd and Renshou Tengyi Landscaping

on a court acceptance fee of RMB 103,232 (equivalent to $ 14,967 )

March 19, 2014, Chengdu Wetouch, a related party, obtained a two and half-year loan of RMB 15.0 million (equivalent to $ 2.2 million) from

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support the local economic development as well as Chengdu Wetouch, two government-backed companies, Sichuan Renshou Shigao Tianfu Investment

(“Shigaotianfu Investment”) and Renshou Tengyi Landscaping Co., Ltd.

(“Renshou Tenyi”) provided their

bank deposits of RMB 12.0 million (equivalent to US$ 1.7 million) as pledge, while Mr.

(“Sichuan Renshou”) and Renshou Tengyi Landscaping Co., Ltd.

(“Renshou Tengyi”) provided their bank

deposits of RMB 12.0 million (equivalent to $ 1.7 million) as pledge, while Mr.

Guangde Cai and Sichuan Wetouch also provided counter-guarantee .

the expiration of the guarantee, Chengdu Wetouch still defaulted repayment of above pledge.

As a result, CDHT Investment levied this

collateral of RMB12.0 million On November 21, 2019.

Subsequently, Shigaotianfu Investment and Renshou Tengyi filed with Chengdu Intermediate

the expiration of the guarantee, Chengdu Wetouch still defaulted on repayment of the above pledge.

As a result, CDHT Investment levied

this collateral of RMB 12.0 million.

On November 21, 2019.

Subsequently, Sichuan Renshou and Renshou Tengyi filed with Chengdu Intermediate

People’s Court a lawsuit demanding an asset recovery of RMB 12.0 million (equivalent to $ 1.7 million) pursuant to the counter guarantee

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the demand to seize property of Sichuan Wetouch rather than the property of Chengdu Wetouch, and to waive freezing Guangde Cai’s

60% shareholding equity in Xinjiang Wetouch.

60% shareholding equity in Xinjiang Wetouch Electronic Technology Co., Ltd.

October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch, Hong Kong Wetouch and Guangde Cai are fully discharged

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October 27, 2020, Chengdu Wetouch made a full payment of the above debts.

settlement and release agreement did not specify which party shall pay the court acceptane fee.

On March 10, 2023, pursuant to an enforcement

settlement agreement entered among Sichuan Renshou, Renshou Tengyi, Sichuan Wetouch, Chengdu Wetouch, and other relevant parties, Sichuan

Wetouch agreed to pay the court acceptance fee of RMB 103,232 (equivalent to $ 14,967 ).

On March 17, 2023, Chengdu Wetouch made a full

payment of the above court fee to Sichuan Renshou.

case with Chengdu High Investment Financing Guarantee Co.

on a court acceptance fee of RMB 250,000

(equivalent to $ 36,246 )

March 22, 2019, Chengdu High Investment Financing Guarantee Co., Ltd, (“Chengdu High Investment”) filed a lawsuit against

Hong Kong Wetouch to the Chengdu Intermediate People’s Court, claiming that Hong Kong Wetouch should assume the guarantee liability

for the debt payable by Chengdu Wetouch.

On May 21, 2020, the court rendered a judgment ordering Hong Kong Wetouch to pay compensation

of RMB 17,467,042

(equivalent to $ 2,617,491 ),

interest, liquidated damages, liquidated damages for late performance, etc.

March 16, 2023, Chengdu Wetouch, Sichuan Wetouch and Chengdu High Investment entered into a settlement enforcement agreement, confirming

that Chengdu High Investment had received RMB 17,547,197.5

(equivalent to $ 2,629,503 )

on October 27, 2020, and the above case has been settled.

As for the court acceptance fees that were not previously agreed upon by the

parties, Chengdu Wetouch agreed to pay the court acceptance fee of RMB 250,000

(equivalent to $ 36,246 ).

Chengdu Wetouch paid the aforesaid fees to Chengdu High Investment on March 20, 2023.

case with Hubei Lai’en Optoelectronics Technology Co., Ltd.

on a product payment of

RMB 157,714 (equivalent to $ 22,866 )

Wetouch purchased products from Hubei Lai’en Optoelectronics Technology Co., Ltd.

(“Hubei Lai’en) multiple times

from March to June 2019, but failed to pay the corresponding amount of RMB 137,142.7

for the purchased products.

On April 6, 2022,

Hubei Lai’en filed a lawsuit against Sichuan Wetouch to the Renshou County People’s Court of Sichuan Province, requesting

payment of overdue payment for the products and liquidated damages.

On May 31, 2022, the Renshou County People’s Court rendered

a judgment that Sichuan Wetouch shall pay Hubei Lai’en the price of goods of RMB 137,143

and liquidated damages of RMB 20,571 .

Sichuan Wetouch paid the above amount to Hubei Lai’en on March 15, 2023.

case with Shenzhen Helitong Technology Co., Ltd.

on a product payment of RMB 229,513 (equivalent

to $ 34,393 )

Wetouch purchased products from Shenzhen Helitong Technology Co., Ltd.

(“Shenzhen Helitong”) multiple times from January

to June 2020, but failed to pay some of the purchase fee for the products.

On October 21, 2021, Shenzhen Helitong filed a lawsuit against

Sichuan Wetouch to the Renshou County People’s Court of Sichuan Province, requesting payment of overdue payment for the products

and interests.

On October 10, 2021, pursuant to a civil mediation letter issued by the Renshou County People’s Court, both parties

agree that Sichuan Wetouch shall pay a total of RMB 229,513

(equivalent to $ 34,393 )

to Shenzhen Helitong, and the other claims waived by Shenzhen Helitong.

As of February 16, 2022, Sichuan Wetouch made a full payment

of RMB 229,513

(equivalent to $ 33,276 )

to Shenzhen Helitong.

case with Xinjiang Weiyida Real Estate Development Co., Ltd on a loan payment of RMB 17,318,625

(equivalent to $ 2,510,964 )

Weiyida Real Estate Development Co., Ltd (“Weiyida Real Estate”) filed a lawsuit against Meishan Wetouch, Guangde Cai, Sichuan

Wetouch, Xinjiang Wetouch, Sichuan Yitong Financing Guarantee Co., Ltd to the Renshou County People’s Court of Sichuan Province

and applied for property preservation on February 14, 2022 with respect to the dispute over recovery right in connection with the loan

The parties entered into a settlement agreement and agreed that Meishan Wetouch shall repay the principal of RMB$ 17,318,625

(equivalent to $ 2,595,250 ) and liquidated damages to Weiyida Real Estate in a lump sum.

On March 14, 2022, Meishan Wetouch paid RMB$ 17,318,625

(equivalent to $ 2,510,964 ) to Weiyida Real Estate.

expenditure commitment

3 unchanged sentences

has prepaid RMB 15.0 million (equivalent to US$ 2.2 million) and recorded as construction in progress (see Note 5) and had a remaining

balance of RMB 5.0 million (equivalent to US$ 0.7 million) to be paid by July 30, 2022.

balance of RMB 5.0 million (equivalent to US$ 0.7 million) to be paid by the end of 2023.

14 — REVENUES

Company’s geographical revenue information is set forth below:

SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION

OF GEOGRAPHICAL REVENUE INFORMATION

For the Years Ended December 31,

2 unchanged sentences

Total revenues

to the COVID-19 pandemic, the Company’s subsidiary Sichuan Wetouch was temporarily shut down from early February 2020 to early

March 2020 in accordance with the requirement of the local governments.

The Company’s business was negatively impacted and generated

lower revenue and net income during the period from February to April 2020.

Our business was gradually recovered to its normal level

during the year ended December 31, 2021, due to our proactive efforts to in marketing new models such as POS touchscreens and penetrate

into new customers into new regions.

15 — SUBSEQUENT EVENTS

Private Placement

January 19, 2023, Wetouch Technology Inc., a Nevada corporation (the “Company”), entered into a Securities Purchase Agreement

(the “Agreement”) with the buyers indicated therein (collectively, the “Buyers”), pursuant to which the Company

sold to the Buyers an aggregate of 160,000,000 shares of the common stock of the Company (the “Shares”) for an aggregate

purchase price of $ 40,000,000 , or $ 0.25 per share.

The net proceeds of the offering (after deducting legal and accounting fees and expenses)

shall be used by the Company for working capital and general corporate purposes and the repayment of debt.

January 20, 2023, the Company received net proceeds of $ 40 million accordingly.

Reverse Stock Split

February 17, 2023, the Board authorized a reverse stock split 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 as determined by the Chairman of the Board.

such reverse stock split becoming effective, the number of authorized shares of the common stock of the Company will also be decreased

in the same ratio.

Pursuant to Nevada Revised Statutes Section 78.209, the reverse stock split does not have to be approved by the shareholders

of the Company.

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

What changed 10-K

Item 9A. Controls and Procedures