What changed in this filing

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Item 9A. Controls and Procedures

2024-04-17 compared with 2023-04-17 · 800 added, 673 removed, 1133 unchanged (57% of the section changed)

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

have adopted an insider trading policy and a clawback policy.

Our insider trading policy clawback policy are available on our website

and are filed as exhibits to this Annual Report.

REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

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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.

Additionally, he serves as an independent director on the

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

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

2019 to December 2021, Mr.

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

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

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

2019, where he was responsible for marketing.

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

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

Lian - Chief Executive Officer and President

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

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.

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

In 2011, he co-founded Sichuan Wetouch and served

as Vice Technique General Manager.

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

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

He concurrently serves as Chief Financial Officer of Sichuan Wetouch,

a position he has held since March 2018.

From 2010 to 2013, he worked as an accountant at Liugong Group and, from 2014 to 2017, he served

as Financial Manager at Shanghai Oriental Pearl Group Co., Ltd.

Huang holds a Bachelor’s degree in accounting from Sichuan

Institute of Industrial Technology.

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

The Board believes

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

He concurrently serves as Chief Financial Officer of Sichuan

Wetouch, a position he has held since March 2018.

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

responsible for overseeing the finance department.

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

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

Huang holds a

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

He was qualified as a CPA in China in 2004

and as an auditor in 2014, respectively.

Cai - Secretary and Director

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resources department and purchasing department.

In April 2020, she joined Chengdu Haobot Technology Co., Ltd and has been serving as

its Legal Representative and General Manager until present.

Cai holds a Bachelor’s degree in Music from The Sichuan Conservatory

of Music and an EMBA degree from Sichuan University.

Cai’s role at Chengu Wetouch led to the conclusion that she should serve

as a director.

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

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

Cai holds a Bachelor’s degree in Music from

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

Chen - Director

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

She serves as the Group Vice President of Future

Fintech Group Inc.

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

Additionally, she serves as an independent

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

RAYA) since November

2021, of Jin Medical International Limited.

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

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

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

President of Future Fintech Group Inc.

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

From May 2019 to November 2020, Ms.

Chen served as the CFO of Future Fintech Group Inc.

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

She served as the CFO of AnZhiXinCheng

(Beijing) Technology Co., Ltd.

from August 2018 to May 2019.

Chen is an Independent Director of Hello

iPayNow (Beijing) Company Ltd.

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

since April 2019.

From August 2017 to July 2018, she served as CFO of Beijing Logis Technology Development

Co., Ltd., a company listed on The National Equities Exchange and Quotations Co., Ltd.

of China, which is a Chinese over-the-counter

stock trading system.

From June 2016 to July 2017, Ms.

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

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

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

2016 to July 2017, Ms.

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

Chen served as Chief Financial Officer of Beijing DKI Investment Management Co., Ltd.

Chen served as Chief Financial

Officer of Beijing DKI Investment Management Co., Ltd.

from August 2012 to May 2016.

Chen received

a Doctorate of Business Administration from Victoria University, Neuchatel, Switzerland and an MBA degree from City University of Seattle

in Washington, U.S.

Chen holds Fellow Membership of CPA Australia (FCPA), Fellow Membership of the Association of International Accountants

(FAIA) and is a Member of the Chartered Institute of Management Accountants (CIMA).

She is also a Senior Member of the International

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

The Board believes Ms.

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

Chen received a Doctorate of Business Administration

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

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

of the Chartered Institute of Management Accountants (CIMA).

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

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

Tang - Director

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

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

Limited (Nasdaq:

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

He has served as an attorney at Gaopeng &

Partners since 2019.

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

Tang received

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

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

Party School.

The Board believes Mr.

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

to the Board.

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

Immigration Inspection.

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

He received his master’s

degree in sociology from Jiangsu Provincial Party School.

Wang - Director

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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.

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

Relationships

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We have determined that Ms.

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

qualifies as an “audit committee financial expert.”

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

To assist board

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

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

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

independent registered public accounting firm engaged by us;

To (i) approve all audit

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

independent auditors or other registered public accounting firms.

At least annually, to evaluate

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

audit partner;

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

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

To review and discuss with

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

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

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

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

To review, approve and

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

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

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

To review with management

and the Company’s independent auditors:

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

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

(ii) any significant

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

the effects of alternative GAAP methods;

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

on the Company’s financial statements.

To assist and advise the

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

laws, rules and regulations.

The audit committee oversees our accounting and financial reporting processes

and the audits of the financial statements of our company.

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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;

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

and (d) make recommendations to the

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

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

To review and

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

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

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

To determine the objectives

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

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

To ensure appropriate corporate

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

and any related compensation earned.

To at least annually review

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

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

To review and approve any

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

To assist management in

complying with our proxy statement and annual report disclosure requirements;

To implement and enforce

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

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

any clawback.

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

consultants, as it deems appropriate, without seeking approval of the Board or management, including the authority to approve the fees

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

However, before engaging or receiving advice from a

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

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

and Corporate Governance Committee.

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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

(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;

and (j) overseeing the Company’s

compliance program.

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

and corporate governance committee, including:

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

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

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

● Coordinating

and overseeing Board, committee, and director evaluations.

review of the Company’s governance documents as appropriate.

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

of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search

firm’s fees and other retention terms.

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

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

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

Technology Inc., No.

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

Corporate Secretary.

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

by applicable laws.

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

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

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

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

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

in Certain Legal Proceedings

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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, 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

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

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

No securities of the Company are beneficially

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

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Option awards

All other compensation

Zongyi Lian, President, Chief Executive Officer

Yuhua Huang, Chief Financial 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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employment agreement has been assigned to our PRC subsidiary, Sichuan Vtouch.

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

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

We expect to enter into a new agreement with

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

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

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On November 11,

2020, the employment agreement with Mr, Huang was renewed for another three (3) years until October 31, 2023, with the similar terms

2020, the employment agreement with Mr.

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

and conditions.

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

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

of the term of employment of Mr.

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

to enter into a new agreement with Mr.

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

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

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or pursuant to the instruction of the Company;

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

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

(4) to keep other confidential obligations.

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

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

An executive officer is our chief executive officer, president,

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

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

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

As of the date of this

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

The clawback policy relates

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

of a financial reporting measure.

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

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

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

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

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

Questions as to “materiality” will be made

by the Compensation Committee in coordination with the Audit Committee.

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

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

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

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

on Nasdaq and on or after October 2, 2023.

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

the year ended December 31.

Equity Awards at Fiscal Year-End

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

table below shows the compensation paid to our non-employee directors during 2022 and 2021.

table below shows the compensation paid to our non-employee directors during 2023.

Fees Earned or Paid in Cash

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Nonqualified Deferred Compensation Earnings

Jiaying Cai became a director of the Company on June 18, 2020 and Mr.

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

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

Jeffrey Kone(1)

*Accrued and not paid.

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

following table lists, as of April 14, 2023, the number of shares of common stock beneficially owned by (i) each person, entity or group

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

more than 5% of the outstanding common stock;

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

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

of more than 5% of the outstanding common stock;

(ii) each of our directors (iii) each of our Named Executive Officers and (iv) all executive

officers and directors as a group.

information with respect to beneficial ownership has been furnished by the respective 5% or more stockholders, directors or executive

officers, as the case may be.

Unless otherwise noted, the mailing address of each listed beneficial owner is No.

29, Third Main Avenue,

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

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

Shares Beneficially Owned

Prior to the Offerings

Shares Beneficially Owned

After the Offerings

Name of Beneficial Owner

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Relationships and Related Transactions, and Director Independence

following is a description of transactions since January 1, 2021 to which we were a party in which (i) the amount involved exceeded or

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

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

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

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

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

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

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

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

Compensation.”

of Products to Related Parties

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

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

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

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

Wetouch Technology Co., Ltd.

(“Chengdu Wetouch”)

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

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.

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

These advances

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

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

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 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,

under the laws of PRC.

March 12, 2021, BVI Wetouch acquired all the outstanding shares of HK Wetouch from the sole shareholder of HK Wetouch, Guangde Cai, in

consideration of the payment of HK$10,000 pursuant to instruments of transfer in accordance with Hong Kong law.

As a result of the acquisition,

HK Wetouch became a wholly-owned subsidiary of BVI Wetouch.

BVI Wetouch owns all the outstanding shares of HK Wetouch, which, in turn, owns all the outstanding shares of Sichuan Vtouch, HK Wetouch

and Sichuan Vtouch became our indirect wholly-owned subsidiaries.

are non-interest bearing and due on demand.

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.

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

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

Audit-Related

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

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

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

Statement Schedules

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of Item 601 of Regulation S-K.

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

f/k/a Gulf West Investment Properties, Inc., Wetouch Holding Group Limited, the shareholders of Wetouch Holding Group Limited, Hong Kong Wetouch Electronics Technology Limited and Fengfei Zhang, as administrative agent for the sellers.

Amended and Restated Articles of Incorporation of the Company, dated September 30, 2020.

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

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

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

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

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Description of Registrant’s Securities.

Promissory Note dated October 27, 2021 issued by Wetouch Technology Inc.

to Talos Victory Fund, LLC

Form of Underwriter’s Warrants.

Common Stock Purchase Warrant dated October 27, 2021 issued by Wetouch Technology Inc.

Promissory Note dated November 5, 2021 issued by Wetouch Technology Inc.

to Mast Hill Fund, L.P.

Common Stock Purchase Warrant dated November 5, 2021 issued by Wetouch Technology Inc.

Promissory Note dated November 16, 2021 issued by Wetouch Technology Inc.

to FirstFire Global Opportunities Fund, LLC.

Common Stock Purchase Warrant dated November 16, 2021 issued by Wetouch Technology Inc.

Promissory Note dated November 24, 2021 issued by Wetouch Technology Inc.

to LGH Investments, LLC.

Common Stock Purchase Warrant dated November 24, 2021 issued by Wetouch Technology Inc.

Promissory Note dated November 29, 2021 issued by Wetouch Technology Inc.

to Fourth Man, LLC.

Common Stock Purchase Warrant dated November 29, 2021 issued by Wetouch Technology Inc.

Promissory Note dated December 2, 2021 issued by Wetouch Technology Inc.

to Jefferson Street Capital LLC.

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

Promissory Note dated December 2, 2021 issued by Wetouch Technology Inc.

to Blue Lake Partners, LLC.

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

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

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

Sales Framework Agreement.

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

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

Purchase Order with Suppliers.

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

English Translation of Leaseback Agreement between Sichuan Vtouch Technology Co., Ltd and Meishan Huantian Industrial Co., Ltd.

(formerly known as Sichuan Renshou Shigao Tianfu Investment Co., Ltd) dated October 30, 2023.

Securities Purchase Agreement, dated as of October 27, 2021, between Wetouch Technology Inc.

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and FirstFire Global Opportunities Fund, LLC.

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

Securities 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

of subsidiaries of the Company.

Form of Securities Purchase Agreement.

English Translation of State-owned Construction Land Use Rights Transfer Contract, dated as of August 6, 2021, between Sichuan Vtouch Technology Co., Ltd and Wenjiang District, Chengdu City Co., Ltd.

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

Insider Trading Policy.

List of subsidiaries of the Company.

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

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

Executive Compensation Recovery Policy

Audit Committee Charter

Compensation Committee Charter

Nominating and Corporate Governance Committee Charter

XBRL Instance Document*

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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.

by reference to the Company’s Registration Statement on Form 10/A filed with the SEC on November 30, 2020.

by reference to the Company’s Registration Statement on Form 10-K filed with the SEC on March 24, 2021.

by reference to the Company’s Current Report on Form 8-K filed with the SEC on March 22, 2021.

by reference to the Company’s Registration Statement on Form S-1 filed with the SEC on September 13, 2021.

by reference to the Company’s Current Report on Form 8-K filed with the SEC on November 5, 2021.

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

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

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.

Furnished herewith

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

S-1, File No.

333-270726 and incorporated herein by reference.

FORM 10–K SUMMARY

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

behalf by the undersigned, thereunto duly authorized.

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

on its behalf by the undersigned, thereunto duly authorized.

April 16, 2024

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Financial and Accounting Officer)

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

registrant and in the capacities and on the dates indicated.

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

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

Executive Officer and

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AND SUBSIDIARIES

FINANCIAL STATEMENTS

31, 2022 AND 2021

TECHNOLOGY INC.

AND SUBSIDIARIES

TO CONSOLIDATED FINANCIAL STATEMENTS

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

Consolidated Statements of Changes in Shareholders’ Equity for years ended December 31, 2022 and 2021

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

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

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

of Independent Registered Public Accounting Firm

Report of Independent Registered

Public Accounting Firm

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

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

(the “Company”) as of December 31, 2022

and 2021, the related consolidated statements of income and comprehensive income, changes in stockholders’ equity, and cash flows

for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial

statements”).

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

Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the each of the two years in the period

ended December 31, 2022, in conformity with accounting principles generally accepted in the United States.

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

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

to as the “financial statements”).

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

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

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

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

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

financial statements based on our audits.

financial statements based on our audit.

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

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

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

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

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

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Accordingly, we express no such opinion.

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

or fraud, and performing procedures that respond to those risks.

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

fraud, and performing procedures that respond to those risks.

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

the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant

Our audit also included evaluating the accounting principles used and significant

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

We believe that our audits

provide a reasonable basis for our opinion.

Audit Matters

critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that

was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material

to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication

of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are

not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or

disclosures to which it relates.

Proceedings over Guarantee Obligations

described in Note 13 to the financial statements, management disclosed legal proceedings over the Company’s guarantee obligations

where liability is not probable or the amount of the liability is not estimable, or both, if management believes there is at least a

reasonable possibility that the Company has fulfilled the guarantee obligation or a loss may be incurred when the guarantee obligations

were not discharged.

principal considerations to determine that the legal proceedings over guarantee obligations is a critical audit matter as there was significant

judgment by management when assessing the likelihood of a loss being incurred and when estimating the loss or range of loss for each

claim, which in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s

assessment of the liabilities and disclosures related to legal proceedings on guarantee obligations.

the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial

These procedures included, among others, obtaining and evaluating the letters of audit inquiry with external legal counsel,

reviewing public accessible information regarding the Company’s litigation cases, evaluating the reasonableness of management’s

assessment regarding whether an unfavorable outcome is reasonably possible or probable and reasonably estimable, and evaluating the sufficiency

of the Company’s disclosures related to legal proceedings over guarantee obligations.

B F Borgers CPA PC

We believe that our audit provides

a reasonable basis for our opinion.

BF Borgers CPA PC (PCAOB ID 5041 )

have served as the Company’s auditor since 2019

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As of December 31,

CURRENT ASSETS

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Property, plant and equipment, net

LIABILITIES AND SHAREHOLDERS’ EQUITY

$ 119,641,398

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES

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Loan from a third party

Due to related parties

Due to a related party

Income tax payable

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STOCKHOLDERS’ EQUITY

Common stock, $ 0.001 par value, 300,000,000 shares authorized, 33,604,965 and 31,811,523 issued and outstanding as of December 31, 2022 and 2021, respectively

Common stock, $ 0.001

par value, 15,000,000 shares authorized,

9,732,948 and 1,680,248

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

Additional paid in capital *

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Retained earnings

Accumulated other comprehensive income

Accumulated other comprehensive loss

( 7,275,432 )

( 2,977,524 )

TOTAL STOCKHOLDERS’ EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$ 119,641,398

* Retrospectively restated for effect

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

see Note 10 (2)

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

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STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

For the years ended December 31,

Revenue from customers

Revenues from related parties

Total Revenues

The Years Ended December 31,

COST OF REVENUES

Cost of revenues from customers

( 22,515,219 )

( 23,872,632 )

Cost of revenues related parties

Total Cost of revenues

( 23,872,632 )

( 22,354,492 )

OPERATING EXPENSES

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Research and development expenses

Share-based compensation

( 3,149,106 )

Total operating expenses

OPERATING EXPENSES

( 4,540,436 )

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INCOME FROM OPERATIONS

OTHER INCOME (EXPENSES)

Interest income

Interest expense

Government grant

Gain on asset disposal

Other expense

Loss on conversion of convertible promissory notes payable

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

TOTAL OTHER INCOME, NET

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

TOTAL OTHER INCOME (EXPENSE), NET

INCOME BEFORE INCOME TAX EXPENSE

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( 4,297,908 )

COMPREHENSIVE INCOME

( 5,242,692 )

COMPREHENSIVE INCOME (LOSS)

EARNINGS PER COMMON SHARE *

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING *

* Retrospectively restated

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

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

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THE YEARS ENDED DECEMBER 31, 2023 AND 2022

(income) loss

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 )

Common stock at

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stockholders’

(income) loss

Balance at December 31 2022 *

$ ( 2,977,524 )

Appropriation to statutory reserve

Exercise of warrants issued in conjunction with legal services in 2020

( 1,154,131 )

Shares issued to private placement

Fraction shares issued due to reverse stock split

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

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( 4,297,908 )

Balance at December 31 2022

Balance at September 30, 2023

$ ( 7,275,432 )

$ 112,920,610

$ ( 7,275,432 )

$ 112,920,610

* Retrospectively restated

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

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

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Adjustments to reconcile net income to cash provided by operating activities

Bad debts reversal

Inventory write-off

Depreciation and amortization

Asset disposal gain

( 7,648,423 )

Loss of input VAT credits

Share-based compensation

Loss on convertible promissory notes payable

Amortization of discounts and issuance cost of the notes

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

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

Changes in operating assets and liabilities:

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( 1,497,237 )

Amounts due from related parties

Due from a related party

Prepaid expenses and other current assets

( 2,258,602 )

Accounts payable

Loans from a third party

Amounts due to related parties

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Accrued expenses and other current liabilities

Deferred grants

Net cash provided by operating activities

Cash flows from investing activities

Purchase of property and equipment

Purchase of property, plant and equipment

( 2,263,549 )

Proceeds from assets disposal

Net cash provided by investing activities

Net cash used in investing activities

( 2,263,549 )

Cash flows from financing activities

Proceeds from issuance of convertible promissory notes payable

Payments of issue costs of convertible promissory note

Proceeds from stock issuance of private placement

Repayments of convertible promissory notes payable

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( 3,615,791 )

( 2,846,807 )

Net increase in cash

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Income taxes paid

Non-cash investing activities

Warrants issued to third parties in conjunction with debt issuance

Non-cash financing activities

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

to the BVI Shareholders an aggregate of 28,000,000 shares of our common stock (the “Reverse Merger”).

In the Reverse Merger,

each ordinary share of BVI Wetouch was exchanged for 2,800 shares of common stock of Wetouch.

Immediately after the closing of the Reverse

Merger on October 9, 2020, we had a total of 31,396,394 issued and outstanding shares of common stock.

As a result of the Reverse Merger,

BVI Wetouch is now our wholly-owned subsidiary.

Holding Group Limited (“BVI Wetouch”), is a holding company whose only asset, held through a subsidiary, is 100 % of the registered

capital of Sichuan Wetouch Technology Co.

(“Sichuan Wetouch”), a limited liability company organized under the laws

of the People’s Republic of China (“China” or “PRC”).

Sichuan Wetouch is primarily engaged in the business

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.

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

(the “Reverse Merger”).

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

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

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

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

As a result of the

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

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

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

(“China” or the “PRC”).

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

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

The touchscreen products, which are manufactured

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

(HMI) , and other specialized industries

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

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

adjusted according.

adjusted accordingly.

History of BVI Wetouch

Holding Group Limited (“BVI Wetouch”) was incorporated under the laws of British Virgin Islands on August 14, 2020.

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

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

It became the holding company of Hong Kong Wetouch

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

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

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

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

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

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

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

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

Wetouch Technology Co.

(“Sichuan Wetouch”) was formed on May 6, 2011 in the People’s Republic of China (“PRC”)

and became Wholly Foreign-Owned Enterprise in PRC on February 23, 2017.

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

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

December 30, 2020, Sichuan Vtouch Technology Co., Ltd.

(“Sichuan Vtouch”) was incorporated in Chengdu, Sichuan, under the

laws of the People’s Republic of China.

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 end

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

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

the government directed relocation order.

Sichuan Vtouch took over the operating business of Sichuan Wetouch.

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

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

following diagram illustrates the Company’s current corporate structure:

2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

B asis of Presentation and Principles of Consolidation

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

Deconsolidation

of Sichuan Wetouch

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

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

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

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

SCHEDULE OF DISPOSAL GROUPS, INCLUDING DISCONTINUED OPERATIONS

Total assets as of deconsolidated date

Total liabilities as of deconsolidated date

Total gain or loss from deconsolidation

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

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

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

The disposal of Sichuan Wetouch did not represent a strategic

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

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

December 31, 2023.

Uses of estimates

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

allowance for estimated uncollectible receivables, fair values of financial instruments,

inventory valuations, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision

necessary for contingent liabilities, revenue recognition and realization of deferred tax assets.

Actual results could differ from those

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

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

recognition and realization of deferred tax assets.

Actual results could differ from those estimates.

Cash and cash equivalents

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

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

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

Convertible Promissory Notes

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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

proceeds or net settled investment, the management assessed that the Notes did not meet the definition of a derivative instruments

and an embedded feature would not be bifurcated.

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instruments for purposes of ASC 815-40.

Company concluded that the Warrants issued in November and December 2021 financing should be treated as a derivative liability because

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.

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.

Company concluded that the warrants issued in the financings in November and December 2021 should be treated as a derivative liability

because these warrants are entitled to a price adjustment to allow the exercise price to be increased or reduced in the event the Company

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

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

According to ASC 815-40,

the “Down-round protection” provision is not considered to be an input to the fair value of a fixed-for-fixed option on equity

shares which leads the warrants to fail to be qualified as indexed to the Company’s own stock and then to fail to meet the scope

exceptions of ASC 815.

Therefore, the Company accounted for the warrants as derivative liabilities under ASC 815.

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, 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

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

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

As of December 31, 2023 and 2022, the Company recorded $ 378,371 and $ 256,957 common stock purchase warrant liability, respectively, and

$ 121,413 loss and $ 871,677 gain on changes of fair value of common stock purchase warrant liability for the year ended December 31, 2023

and 2022, respectively.

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OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT

Machinery and equipment

Office and electric equipment

and equipment

and electric equipment

for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred.

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fair value less costs to sell, and are no longer depreciated.

There were nil impairment of intangible assets recognized for the years

There was nil impairment of intangible assets recognized for the years

ended December 31, 2023 and 2022.

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is Hong Kong dollar.

The functional currency of Sichuan Wetouch is the Chinese Yuan (“RMB”).

The functional currency of Sichuan Vtouch is the Chinese Yuan (“RMB”).

The Company’s consolidated

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OF CURRENT EXCHANGE RATES

Year-end spot rate

US$1=RMB 6.8972

US$1=RMB 6.3726

US$1=RMB 6.7312

US$1=RMB 6.4505

Revenue Recognition

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

administrative expenses represents primarily payroll and benefits costs for administrative employees, rent and operating costs of office

administrative expenses represent primarily payroll and benefits costs for administrative employees, rent and operating costs of office

premises, depreciation and amortization of office facilities, professional fees and other administrative expenses.

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effective for public entities which meet the definition of a smaller reporting company are effective for fiscal years, and interim periods

within those fiscal years, beginning after December 15, 2023, including

interim periods within those fiscal years.

Early application of the guidance will be permitted for all entities for fiscal years beginning

after December 15, 2020, including interim periods within those fiscal years .

The Company adopted

ASU 2020-06 effective January 1, 2021.

within those fiscal years, beginning after December 15, 2023, including interim periods within those fiscal years.

Early application

of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2020, including interim periods within

those fiscal years.

The Company adopted ASU 2020-06 effective January 1, 2021.

June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the

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The Company adopted ASU 2016-13 utilizing the modified

retrospective transition method.

The adoption of ASU 2016-13 did not have a material impact on the Company’s condensed consolidated

financial statements.

retrospective transition method on January 1, 2022.

The adoption of ASU 2016-13 did not have a material impact on the Company’s

consolidated financial statements.

December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740):

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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.

The Company adopted ASU No.

2021-08 on January 1,

The adoption of ASU No.

2021-08 did not have a material impact on the Company’s consolidated financial statements.

November 2021, the FASB issued ASU No.

2021-10, Government Assistance (Topic 832).

This ASU requires business entities to disclose information

about government assistance they receive if the transactions were accounted for by analogy to either a grant or a contribution accounting

The disclosure requirements include the nature of the transaction and the related accounting policy used, the line items on the

balance sheets and statements of operations that are affected and the amounts applicable to each financial statement line item and the

significant terms and conditions of the transactions.

The ASU is effective for annual periods beginning after December 15, 2021.

disclosure requirements can be applied either retrospectively or prospectively to all transactions in the scope of the amendments that

are reflected in the financial statements at the date of initial application and new transactions that are entered into after the date

of initial application.

The ASU is currently not expected to have a material impact on the Company’s financial results or financial

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

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adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption.

issued accounting pronouncements not yet adopted

March 2020, the FASB issued ASU No.

2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate

Reform on Financial Reporting”, which provides optional expedients and exceptions for applying U.S.

GAAP on contract modifications

and hedge accounting to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected

to be discontinued because of reference rate reform, if certain criteria are met.

These optional expedients and exceptions provided in

2020-04 are effective for the Company as of March 12, 2020 through December 31, 2022.

In December 2022, the FASB issued ASU 2022-06,

Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”), which deferred the application

dates of Topic 848 to December 31, 2024.

The Group currently does not have any financial instrument that reference to LIBOR and does

not anticipate the adoption will have a material impact to the Group’s combined and consolidated financial statements.

November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-07, Improvements to Reportable Segment

Disclosures (Topic 280).

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable

segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported

measure of a segment’s profit or loss.

This ASU also requires disclosure of the title and position of the individual identified

as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance

and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods

within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented

in the financial statements.

Early adoption is also permitted.

This ASU will likely result in the group including the additional required

disclosures when adopted.

The Group is currently evaluating the provisions of this ASU and expect to adopt them for the year ending December

December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures (Topic 740).

The ASU requires disaggregated information

about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

effective on a prospective basis for annual periods beginning after December 15, 2024.

Early adoption is also permitted for annual financial

statements that have not yet been issued or made available for issuance.

The Group has evaluated this ASU and expects to add additional

disclosures to our combined and consolidated financial statements, once adopted.

ACCOUNTS RECEIVABLE

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— PREPAID EXPENSES AND OTHER CURRENT ASSETS

expenses and other current assets consists of the following:

expenses and other current assets consist of the following:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

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Issue cost related to convertible promissory notes

Deferred marketing expenses

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

Security deposit (ii) (ii)

Others receivable (iii) (iii)

Prepayment for land use right (i)

Security deposit (ii)

Others receivable (iv)

Prepaid expenses and other current assets

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.

(i) On July 23, 2021,

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

of a land use right of a parcel of land of 131,010 square feet for a consideration of RMB 3,925,233 (equivalent to $ 537,998 ) for the Company’s

new facility.

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

Upon issuance of a certificate of land use right by the

local government, which is estimated to be obtained by the fourth quarter of 2024, the Company will reclassify this prepayment to intangible

assets accordingly.

(ii) On July 28, 2021,

Sichuan Vtouch made a security deposit of RMB 393,000 (equivalent to $ 53,865 ) to Chengdu Cross-Strait Science and Technology Industry

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

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

This deposit will be refunded upon the issuance

of the construction license by end of 2023.

(i) Other receivables

of the construction license by the end of 2024.

(iv) Other receivables

are mainly employee advances, and prepaid expenses.

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OF PROPERTY , PLANT AND EQUIPMENT

September 30,

Machinery and equipment

Construction in progress

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Property, plant and equipment, net

expense was $ 9,891 and $ 5,117 for the years ended December 31, 2022 and 2021, respectively.

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

expense was $ 9,465 and $ 9,891 for the year ended December 31, 2023 and 2022, respectively.

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

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

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to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received a compensation

of RMB 115.2 million ($ 16.7 million) (“Compensation Funds”) for the withdrawal of the right to use of state-owned land and

the demolition of all buildings, facilities, equipment and all other appurtenances on the land.

During the year ended December 31, 2021,

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

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.

(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.

of RMB 115.2 million ($ 16.2 million) (the “Compensation Funds”) for the withdrawal of the right to use of state-owned land

(the “property”) and the demolition of all buildings, facilities, equipment and all other appurtenances on the land.

March 16, 2021, in order to minimize interruption of the Company’s business, Sichuan Vtouch entered into a leasing agreement with

Sichuan Renshou Shigao Tianfu Investment Co., Ltd.

(later renamed as Meishan Huantian Industrial Co., Ltd.), a limited liability company

owned by the local government, to lease the property, and all buildings, facilities and equipment thereon (the “Demised Properties)

of Sichuan Wetouch, commencing from April 1, 2021 until December 31, 2021 at a monthly rent of RMB 300,000 ($ 42,254 ).

The lease was renewed

on December 31, 2021 at a monthly rent of RMB 400,000 ($ 56,339 ) with a term from January 1, 2022 to October 31, 2024 for the use of the

Demised Properties.

6 – RELATED PARTY TRANSACTIONS

related party transactions are summarized as follows:

OF REVENUES FROM RELATED PARTY TRANSACTIONS

Revenues resulting from related parties:

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

Sales to Meishan Wetouch Electronics Technology Co., Ltd.

(“Meishan Wetouch”)

Total revenue

Company sells capacitive touchscreens to Chengdu Wetouch and Meishan Wetouch from time to time.

There are no written agreements between

the Company and Meishan Wetouch.

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

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

due to related parties are as follows :

due to a related party are as follows:

OF RELATED PARTY TRANSACTIONS

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Payable to employee

Former Chairman of the Company

Payable to employee

7 — INCOME TAXES

Technology Inc.

is subject to a tax rate of 21 % per beginning 2018, and files a U.S.

federal income tax return.

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

In addition, no British Virgin Islands withholding tax will be imposed upon the payment of dividends by the Company to its shareholders.

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

the current laws of the British Virgin Islands, BVI Wetouch, a wholly owned subsidiary of Wetouch, is not subject to tax on its income

or capital gains.

In addition, no British Virgin Islands withholding tax will be imposed upon the payment of dividends by the Company

to its shareholders.

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

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

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25 % according to the Corporate Income Tax (“CIT”) Law which was passed by the National People’s Congress on March 16,

PRC CIT Law, domestic enterprises and Foreign Investment Enterprises (“FIEs”) are usually subject to a unified 25% enterprise

PRC CIT Law, domestic enterprises and foreign investment enterprises (the “FIEs”) are usually subject to a unified 25% enterprise

income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis by local government

as preferential tax treatment to High and New Technology Enterprises (“HNTEs”).

Under this preferential tax treatment, HNTEs

are entitled to an income tax rate of 15 %, subject to a requirement that they re-apply for their HNTE status every three years.

to an approval from the local tax authority in October 2017, Sichuan Wetouch became a qualified enterprise located in the western region

of the PRC, entitled it to a preferential income tax rate of 15 % from October 11, 2017 to October 11, 2020.

October 21, 2020, Sichuan Wetouch was granted on a case-by-case basis by Sichuan Provincial government as preferential tax treatment

High and New Technology Enterprises (“HNTEs”), entitled to a reduced income tax rate of 15% beginning October 21, 2020 until

October 20, 2023.

Vtouch is entitled to 25 % of income tax rate.

as preferential tax treatment to High and New Technology Enterprises (the “HNTEs”).

Under this preferential tax treatment,

HNTEs are entitled to an income tax rate of 15 %, subject to a requirement that they re-apply for their HNTE status every three years.

Pursuant to an approval from the local tax authority in October 2017, Sichuan Wetouch became a qualified enterprise located in the western

region of the PRC, entitled it to a preferential income tax rate of 15 % from October 11, 2017 to October 11, 2020.

October 21, 2020, Sichuan Wetouch was granted on a case-by-case basis by Sichuan Provincial government as an HNTE , entitled to a reduced

income tax rate of 15% from October 21, 2020 until October 20, 2023.

Vtouch is subject to a 25 % income tax rate.

CIT Law and its implementation rules impose a withholding income tax at 10%, unless reduced by a tax treaty or arrangement, on the amount

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Income tax provision

following table reconciles the China statutory rates to the Company’s effective tax rate for the years ended December 31, 2022

following table reconciles the PRC statutory rates to the Company’s effective tax rate for the years ended December 31, 2023 and

OF INCOME TAX RATE

For the Years Ended December 31,

For the Years Ended

PRC statutory income tax rate

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Effective tax rate

Company’s has no deferred tax assets are as of December 31, 2022 and 2021, respectively.

Company’s had no deferred tax assets are as of December 31, 2023 and 2022, respectively.

Company follows ASC 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected

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Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative

As of December 31, 2022 and 2021, Sichuan Wetouch and Sichuan Vtouch remains open for statutory examination by PRC tax authorities.

As of December 31, 2023 and 2022, taxes for Sichuan Wetouch and Sichuan Vtouch remained open for statutory examination by PRC

tax authorities.

8— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Advance from customers

Advance from customers (i)

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 private placement agent fees (ii)

Accrued consulting fees (iii)

Accrued litigation charges (iv)

Accrued professional fees

Accrued director fees

Other tax payables (v)

Other payable to a former stockholder (vi)

Accrued expenses and other current liabilities

(i) Other tax payables

are mainly value added tax payable.

(ii) Other payable to

(i) RMB 2,587,825 (equivalent to $ 365,465 ) of the beginning balance of advance from customers was recognized as revenues

for the year ended December 31, 2023

(ii) On March 18, 2023,

the Company entered into a private placement consent agreement with a third-party investment bank firm (see Note 10) on the agent fees

of US$ 1.2 million, payable only on the completion of the private placement .

The Company made the full payment in February, 2024.

(iii) In May, 2023, the

Company entered into two third-party consulting service agreements for a fee of $ 1.35 million and $ 3.1 million, respectively, payable

only on the completion of an underwriting offering.

The Company made the full payment in February 2024.

(iv) As of December

31, 2023, the Company accrued litigation compensation of RMB 324,501 ($ 45,705 ) and court fee of RMB 10,627 ($ 1,497 ).

For the details, please

see NOTE 13 — COMMITMENTS AND CONTINGENCIES - Legal Proceedings - vii) and viii).

(v) Other tax payables

are mainly VAT payable.

(vi) Other payable to

a former shareholder was paid in March 2023.

(iii) Others mainly represent

(vii) Others mainly represent

accrued employee reimbursement payable and other accrued miscellaneous operating expenses.

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Convertible promissory notes

October, November, and December 2021, the Company, issued seven (7) convertible promissory notes

of US$ 2,250,000 aggregate principal amount, due in one year (the ‘Notes’) with issuance price discounted 90.0 %.

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

24, November 29 and December 2 of 2022.

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

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:

October, November, and December 2021, the Company, issued seven (7) convertible promissory notes (the “Notes”) of an aggregate

principal amount of US$ 2,250,000 , due in one year with issuance price discounted 90.0 %.

The Notes bore interest at a rate

of 8.0 % per annum, payable in one year and matured on October 27, November 5, November 16, November 29 and December 2 of 2022.

after debt issuance costs and debt discounts were approximately US$ 1,793,000 .

Debt issuance costs in the amount of US$ 162,000 are recorded

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 the Notes are as follows:

the Notes are converted, the principal amounts of the Notes, and accrued interest at the rate of 8 % per annum, are payable on the one-year

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shall pay a 10 % prepayment penalty.

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):

following table summarizes the outstanding promissory notes as of December 31, 2023 and December 31, 2022:

OF OUTSTANDING PROMISSORY NOTES

Interest rate

Principal Amount

Carrying Amount

Principal Amount

Carrying Amount

December 31, 2023

December 31, 2022

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

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

Amortization of discounts for year ended December 31, 2022

Amortization of Discounts for the Year Ended December 31, 2023

Convertible Promissory Notes payable as of December 31, 2023

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

December 28, 2022 to April 6, 2023, the lenders of five outstanding Notes and the Company entered into an amendment to the Notes (“Amendment

to Promissory Note”) extending the term of the Notes for an additional 6 months.

August 29 to September 9, 2023, the lenders of the outstanding Notes and the Company entered into an amendment to the Notes (“Amendment

to Promissory Note”) that the Company’s ordinary shares on the Nasdaq Capital Market (the “Uplist”), the Company

shall within three (3) business days after the Uplist, pay to the Holders amounts equal to 105% of the total outstanding balance of the

Convertible Debenture.

the year ended December 31, 2023, principal and default charges totaling $ 1,200,000 were converted into 25,000 shares of common stock

of the Company.

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

69,228 shares of common stock of the Company.

And two notes were fully converted.

Two notes were fully converted

the year ended December 31, 2023 and 2022, the Company recognized interest expenses of the Notes in the amount of US$ 252,325 and US$ 224,885 ,

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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”).

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

at an exercise price of $ 1.25 per share.

As of the date of the Report, the Company has repaid remaining Principal and interests accrued.

connection with the issuance of the Notes, the Company also issued to the lenders seven (7) three-year warrants (the “Note Warrants”)

to purchase an aggregate of 90,000 shares of the Company’s common stock (the “Warrant Shares”).

Note Warrants issued to the lenders granted the holders the rights to purchase up to 10,000 shares of common stock of the

Company at an exercise price of $ 25 per share.

However, if the Company closes an Uplist Offering on or before the 180 th calendar

date after the issuance date of the Warrants, then the exercise price shall be 125 % of the offering price of a share in the Uplist Offering.

If the adjusted exercise price as a result of the Uplist Offering is less than $ 1.25 per share, then the number of shares for which the

Warrants are exercisable shall be increased such that the total exercise price, after taking into account the decrease in the per share

exercise price, shall be equal to the total exercise price prior to such adjustment.

Lenders have the right to exercise the Warrants on a cashless basis if the highest traded price of a share of common stock of the Company

during the 150 trading days prior to exercise of the Warrants exceeds the exercise price, unless there is an effective registration statement

of the Company which covers the resale of the Lenders.

date after the issuance date of the Note Warrants, then the exercise price shall be 125 % of the offering price of a share in the Uplist

If the adjusted exercise price as a result of the Uplist Offering is less than $ 25 per share, then the number of shares for

which the Warrants are exercisable shall be increased such that the total exercise price, after taking into account the decrease in the

per share exercise price, shall be equal to the total exercise price prior to such adjustment.

lenders have the right to exercise the Note Warrants on a cashless basis if the highest traded price of a share of common stock of the

Company during the 150 trading days prior to exercise of the Note Warrants exceeds the exercise price, unless there is an effective registration

statement of the Company which covers the resale of the Lenders.

the Company issues shares or any securities convertible into shares at an effective price per share lower than the exercise price of

the Warrants, the exercise price of the Warrants shall be reduced to such lower price, subject to customary exceptions.

Lenders may not convert the Notes or exercise the Warrants if such conversion or exercise will result in each of the Lenders, together

with any affiliates, beneficially owning in excess of 4.9 % of the Company’s outstanding common stock immediately after giving effect

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.

the Note Warrants, the exercise price of the Note Warrants shall be reduced to such lower price, subject to customary exceptions.

lenders may not convert the Notes or exercise the Note Warrants if such conversion or exercise will result in each of the lenders, together

with any affiliates, beneficially owning in excess of 4.9 % of the Company’s outstanding shares of common stock immediately after

giving effect to such exercise unless such lender notifies the Company at least 61 days prior to such exercise.

the year ended December 31, 2022, three lenders exercised the Note Warrants cashlessly for 14,233 shares of common stock.

the year ended December 31, 2023, two lenders exercised the Note Warrants cashlessly for 22,338 shares of common stock.

fair values of these warrants as of December 31, 2023 were calculated using the Black-Scholes option-pricing model with the following

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Changes of fair value of common stock purchase warrants liability

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

(+ (loss)/(- (gain)(US$)

Common stock purchase warrants liability as of December 31, 2023 (US$)

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Registration Rights Agreements

to the terms of the Registration Rights Agreement dated as of contract date of each convertible promissory note, 2021, executed between

the Company and Lender, the Registration Rights Agreement dated as of each contract date, executed between the Company and Lenders, the

Company agreed to file a registration statement with the Securities and Exchange Commission to register the shares of common stock underlying

the Notes and the shares issuable upon exercise of the Warrants within sixty days from the date of each Registration Rights Agreement.

The Company also granted the Lenders piggyback registration rights on such shares pursuant to the Purchase Agreements.

10— SHAREHOLDERS’ EQUITY

Company’s authorized number of ordinary shares was 300,000,000 shares with par value of $ 0.001 .

to the terms of the Registration Rights Agreements between the Company and lenders of the Notes, the Company agreed to file a registration

statement with the Securities and Exchange Commission to register the shares of common stock underlying the Notes and the shares issuable

upon exercise of the Note Warrants within sixty days from the date of each Registration Rights Agreement.

The Company also granted the

lenders piggyback registration rights on such securities pursuant to the Purchase Agreements .

10— STOCKHOLDERS’ EQUITY

Company’s authorized shares of common stock was 15,000,000 shares with par value of $ 0.001 .

December 22, 2020, the Company issued 5,181 shares of common stock to The Crone Law Group, P.C.

or its designees for legal services

(see Note 11).

or its designees for legal

services (see Note 11).

January 1, 2021, the Company issued an aggregate of 15,541 shares to a third party service provider for consulting services that had

been rendered.

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

respectively.

April 14, April 27 and September 1, 2022, the Company issued 5,777 , 5,599 and 2,857 shares of common stock upon cashless exercise of

the Note Warrants to three lenders, respectively.

(see Note 9 (b)).

the year ended December 31, 2022, the Company issued 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.

reserve and restricted net assets

PRC rules and regulations, all subsidiaries of Wetouch in the PRC are required to appropriate

10% of their net income to a statutory surplus reserve until the reserve balance reaches 50% of their registered capital.

The appropriation

to this statutory surplus reserve must be made before distribution of dividends can be made.

The statutory reserve is non-distributable,

other than during liquidation, and can be used to fund previous years losses, if any, and may be converted into share capital by issuing

new shares to existing shareholders in proportion to their shareholders or by increasing the par value of the shares currently outstanding,

provided that the remaining balance of the statutory reserve after such issue is not less than 25% of the registered capital.

the year ended December 31, 2022, the Company issued 6,211 shares of common stock to a third party upon exercise of warrants (see Note

the year ended December 31, 2022, the Company issued 69,228 shares of common upon conversion of convertible promissory note payable (see

January 19, 2023, the Company sold an aggregate of 8,000,000 shares of common stock to purchasers in a private placement for an

aggregate purchase price of $ 40,000,000 , or $ 5.00 per share.

On January 20, 2023, the Company received net proceeds of

$ 40 million accordingly.

the year ended December 31, 2023, the Company issued 25,000 shares of common stock upon conversion of convertible promissory note payable

(see note 9 (a)).

the year ended December 31, 2023, the Company issued 22,338 shares to two third parties upon exercise of warrants (see Note 9(b)).

of December 31, 2023, the Company had 9,732,948 issued and outstanding shares of common stock.

Reverse Stock Split

February 17, 2023, the Company’s board of directors authorized a reverse stock split of common stock with a ratio of not less than

one to five (1:5) and not more than one to eighty (1:80), with the exact amount and the timing of the reverse stock split to be determined

by the Chairman of the Board.

Upon effectiveness of such reverse stock split, the number of authorized shares of the common stock of

the Company will also be decreased in the same ratio.

Pursuant to Section 78.209 of the Nevada Revised Statutes, the reverse stock split

does not have to be approved by the stockholders of the Company.

July 16, 2023, the Company’s board of directors approved the reverse stock split of the Company’s common stock at a ratio

On July 16, 2023, the Company filed a certificate of change (with an effective date of July 16, 2023) with the Nevada Secretary

of State pursuant to Section 78.209 of the Nevada Revised Statutes to effectuate a 1-for-20 reverse stock split of its common stock.

On September 11, 2023, the reverse stock split was approved by the Financial Industry Regulatory Authority and took effect on September

All share information included in this annual report has been adjusted as if the reverse stock split occurred as of the earliest

period presented.

Statutory Reserve and Restricted Net Assets

PRC rules and regulations, all companies in the PRC are required to appropriate 10% of their net income to a statutory surplus reserve

until the reserve balance reaches 50% of their registered capital.

The appropriation to this statutory surplus reserve must be made before

distribution of dividends can be made.

The statutory reserve is non-distributable, other than during liquidation, and can be used to

fund previous years losses, if any, and may be converted into share capital by issuing new shares to existing shareholders in proportion

to their shareholders or by increasing the par value of the shares currently outstanding, provided that the remaining balance of the

statutory reserve after such issue is not less than 25% of the registered capital.

Appropriations

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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

to The Crone Law Group, P.C.

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

December 22, 2020, the Board of Directors of the Company authorized the issuance of an aggregate of 5,181 shares and warrants to purchase

10,518 shares of common stock to The Crone Law Group, P.C.

or its designees for legal services that had been rendered.

The five-year warrants are exercisable at one

cent per share.

shares of 103,610 were vested on December 22, 2020 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 43.5 % and an average interest rate

January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 310,830 shares and 631,080 warrants

to a third party service provider for consulting services that had been rendered.

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 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

price of $ 0.01 ;

The five-year

warrants are exercisable at one cent per share.

shares of common stock underlying such warrants were vested on December 22, 2020 and 6,211 shares were issued upon exercise of these

warrants on September 21, 2022 and warrant to purchase 4,307 shares remained outstanding for The Crone law Group, P.C.

or its designees

for legal services.

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

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

expected life of 2.5 years, expected dividend

rate of 0 %, volatility of 43.5 % and an average interest rate of 0.11 %.

January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 15,541 shares and warrants to purchase

31,554 shares of common stock to a third party service provider for consulting services that had been rendered.

These warrants have a

five-year term and are exercisable at one cent per share.

15,541 shares of common stock and warrants to purchase 31,554 shares of commons stock

on January 1, 2021.

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

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 %.

of December 31, 2023, the Company had warrants outstanding to purchase 35,861 shares of common stock related to above mentioned services

with i) weighted average exercise price of $ 0.2 ;

ii) weighted average remaining contractual life of 0.2 years;

and iii) aggregate intrinsic value of $ 0.2 million.

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

and iii) aggregate intrinsic

value of $ 0.3 million.

WEIGHTED AVERAGE NUMBER OF SHARES

October 2020, the Company entered into a reverse merger transaction.

The Company computes the weighted-average number of common shares

outstanding in accordance with ASC 260 states that in calculating the weighted average shares when a reverse merger takes place in the

middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be computed

on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period

multiplied by the exchange ratio established in the merger agreement.

The number of common shares outstanding from the acquisition date

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

The Company computes the weighted-average number of shares of common

stock outstanding in accordance with ASC 260 states that in calculating the weighted average shares when a reverse merger takes place

in the middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be

computed on the basis of the weighted-average number of shares of common stock of the legal acquiree (accounting acquirer) outstanding

during the period multiplied by the exchange ratio established in the merger agreement.

The number of shares of common stock outstanding

from the acquisition date to the end of that period shall be the actual number of shares of common stock of the legal acquirer (the accounting

acquiree) outstanding during that period.

13 - RISKS AND UNCERTAINTIES

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

26 unchanged sentences

16.5 %, 15.6 %, 14.1 %, 11.3 % and 10.1 %, respectively, of the Company’s revenue.

For the year ended December 31, 2021, five customers

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.

1 unchanged sentence

2023 and 2022, respectively.

of December 31, 2023, four customers accounted for 31.7 %, 16.2 %, 15.8 % and 11.5 % of the total accounts receivable balance, respectively.

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

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.

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 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.

10% of the Company’s total raw material purchases, accounted for approximately 13.3 % (one supplier) and 13.2 %, 12.7 %, 10.7 % and

10.6 %(four suppliers) of the Company’s total raw material purchases for the years ended December 31, 2023 and 2022,

respectively.

14 — COMMITMENTS AND CONTINGENCIES

time to time, the Company and its 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 )

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

Hong Kong Wetouch, Sichuan Wetouch, the deconsolidated subsidiary of the Company (see Note 2- (a) - Deconsolidation of Sichuan Wetouch) ,

Sichuan Vtouch and Mr.

Guangde Cai, the former Chairman and director of the Company, were named as defendants in several litigation matters,

as of the date of this report, all such matters have been settled and Sichuan Wetouch, Hong Kong Wetouch and Mr.

Guangde Cai were unconditionally

and fully discharged and released therefrom Accordingly, there are no pending material legal proceedings against the Company as of the

date of this report.

equity dispute case with Yunqing Su with a disputed amount of RMB 1,318,604 (equivalent to $ 185,721 )

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

that Yunqing Su would invest RMB 1 million (equivalent to $ 140,847 ) to purchase 370,370.37 original listed shares of the target company,

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, and provided for the exit mechanism in the agreement.

However, the target company failed to be listed prior to December

31, 2017 as agreed.

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

shall repurchase all of Yunqing Su’s equity interest and pay the interest.

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

(equivalent to $ 30,986 ) and the principal of RMB 128,000 (equivalent to $ 18,028 ) in November 2018.

The repayment period set forth in the

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

Su sued Sichuan Wetouch and Guangde Cai in the Renshou County People’s Court of Sichuan Province, and the case was filed on February

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

and Guangde Cai agreed to repay Yunqing Su the principal and interest in the total amount of RMB 1,318,604 (equivalent to $ 185,721 ).

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

case with Chengdu SME Credit Guarantee Co., Ltd.

on a court acceptance fee of RMB 338,418

(equivalent to $ 49,066 )

on a court acceptance fee of RMB 338,418 (equivalent to $ 47,665 )

July 5, 2013, Sichuan Wetouch obtained a one-year loan of RMB 60.0 million (equivalent to $ 8.5 million) from Bank of Chengdu, at an annual

1 unchanged sentence

Chengdu SME Credit Guarantee Co., Ltd (“Chengdu SME”), a third party, provided a 70% guarantee and

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

Guangde Cai provided joint and several liability guarantee for

100% of the loan .

Bank of Chengdu retained 30% of the risk, while Chengdu Wetouch , a related party company, owned by Mr.

Guangde Cai and Mr.

Guangde Cai provided joint and several liability guarantee for 100% of the loan.

July 31, 2014, Sichuan Wetouch repaid RMB 5.0 million (equivalent to $ 0.7 million).

12 unchanged sentences

related liabilities, of $ 1.7 million.

SME applied to the Chengdu High-tech Court for enforcement for the above-mentioned loan default penalties of RMB 5.8 million (equivalent

SME applied to the Chengdu High-tech Court for enforcement of the above-mentioned loan default penalties of RMB 5.8 million (equivalent

to $ 0.8 million) and RMB 6.0 million (equivalent to $ 0.8 million) on December 30, 2018.

5 unchanged sentences

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.

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

Wetouch agreed to pay the court acceptance fee of RMB 338,418 (equivalent to $ 47,665 ).

On March 17, 2023, Chengdu Wetouch made a full

payment of the above court fee to Chengdu SME.

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

and Sichuan Wetouch, Chengdu Wetouch,

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

on a court acceptance

fee of RMB RMB 250,470

to $ 36,315 )

and Sichuan Wetouch, Chengdu Wetouch, Meishan Wetouch and Xinjiang Wetouch

Electronic Technology Co., Ltd.

on a court acceptance fee of RMB 250,470 (equivalent to $ 35,278 )

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

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

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

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

shall be RMB 20

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

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

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

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

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

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.

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

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

of the production equipment owned by Chengdu Wetouch at a purchase price, the purchase price/lease principal shall be RMB 20 million,

the rental interest rate of the leased equipment shall be 8 % per year, and the lease term shall be 24 months.

Upon the expiration of

the lease term, Lifan Financial shall transfer the leased property to Chengdu Wetouch or a third party designated by Chengdu Wetouch

at the price of RMB0 after Chengdu Wetouch has fully fulfilled its obligations, including, without limitation, the payment of the rent,

liquidated damages (if any) and other contractual obligations.

Guangde Cai, Sichuan Wetouch, Meishan Wetouch, an affiliated company to

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

(“Xinjiang Wetouch”) provided Lifan Financial

with joint and several liability guarantee.

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

in the Chengdu Intermediate People’s Court.

The court ruled that:

1) the Financial Lease Contract (Sale and Leaseback)

was terminated;

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;

3) Chengdu Wetouch shall pay Lifan Financial all outstanding rent and interest thereon

in the total amount of RMB 22,905,807 (equivalent to $ 3.2 million) as well as the difference between the liquidated damages and the value

of the leased property recovered;

parties executed a settlement agreement on March 7, 2023, in which the parties confirmed that the outstanding payment of RMB 22,905,807

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 $ 3.2 million) has been fully paid up on December 23, 2021 and the above cases have been settled.

As for the court acceptance

fees that were not previously agreed upon by the parties, Chengdu Wetouch agreed to pay the court acceptance fee of RMB 250,470

(equivalent to $ 35,278 ).

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

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

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

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

on a court acceptance fee of

RMB 103,232 (equivalent to $ 14,540 )

March 19, 2014, Chengdu Wetouch, a related party, obtained a two and half-year loan of RMB 15.0 million (equivalent to $ 2.1 million) from

23 unchanged sentences

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.

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

On March 10, 2023, pursuant to an enforcement

4 unchanged sentences

case with Chengdu High Investment Financing Guarantee Co.

on a court acceptance fee of RMB 250,000

(equivalent to $ 36,246 )

on a court acceptance fee of RMB 250,000 (equivalent to $ 35,211 )

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

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

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

for the debt payable by Chengdu Wetouch.

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

of RMB 17,467,042

(equivalent to $ 2,617,491 ),

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

of RMB 17,467,042 (equivalent to $ 2,460,181 ), interest, liquidated damages, liquidated damages for late performance, etc.

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

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

(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.

that Chengdu High Investment had received RMB 17,547,197 (equivalent to $ 2,471,471 ) on October 27, 2020 paid by Chengdu Wetouch,

and the above case has been settled.

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

agreed to pay the court acceptance fee of RMB 250,000 (equivalent to $ 35,211 ).

Chengdu Wetouch paid the aforesaid fees to Chengdu High

Investment on March 20, 2023.

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

on a product payment of

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

on a product payment of RMB 157,714 (equivalent to $ 22,213 )

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

(“Hubei Lai’en) multiple times

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

for the purchased products.

On April 6, 2022,

Hubei Lai’en filed a lawsuit against Sichuan Wetouch 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.

(“Hubei Lai’en) multiple times from

March to June 2019, but failed to pay the corresponding amount of RMB 137,142.7 for the purchased products.

On April 6, 2022, Hubei Lai’en

filed a lawsuit against Sichuan Wetouch in the Renshou County People’s Court of Sichuan Province, requesting payment of overdue

payment for the products and liquidated damages.

On May 31, 2022, the Renshou County People’s Court rendered a judgment that Sichuan

Wetouch shall pay Hubei Lai’en the price of goods of RMB 137,143 and liquidated damages of RMB 20,571 .

Sichuan Wetouch paid the

above amount to Hubei Lai’en on March 15, 2023.

Legal case with Chengdu Hongxin Shunda Trading Co., Ltd.

on settlement of accounts payable and related fund interests totalling RMB 3,021,294

March 2022, Sichuan Vtouch purchase steel products from Chengdu Hongxin Shunda Trading Co., Ltd.

(“Chengdu Hongxin”) for

facility construction, but failed to settle the accounts payable on time.

In July 2023, Chengdu Hongxin filed a lawsuit to a local district

court against the Company and its new facility constructors (“the three defendants”) requesting the settlement of the remaining

accounts payable and the corresponding fund interests, penalties and legal fees, totalling of RMB 3,021,294 ($ 425,540 ).

The court judged

Sichuan Vtouch to pay and ordered the freezing of bank accounts of these three defendants.

On September 25, 2023, the Company appealed

to Chengdu Municipal Intermediate People’s Court, arguing the calculation of fund interests and penalties ordered by the lower

court unfair and not in line with the law regulations.

As of the date of this report, the management assessed that possibility and

amount of contingency cannot be estimated given the current status.

Legal case with Mr.

Guangchuang Liu on a refund of equity transfer price and related interests totalling RMB 324,501 ($ 45,705 )

July 2022 Mr.

Liu entered into an equity transfer agreement with Mr.

Guangde Cai and Sichuan Vtouch with the intention to subscribe the

Company’s shares of 20,000 for RMB 315,245 ($ 44,104 ).

In April, 2023, Mr.

Liu filed a lawsuit to Shenzhen Nanshan District People’s

Court against Mr.

Guangde Cai and Sichuan Vtouch requesting the refund of this equity transfer price and related fund interests totalling

RMB 324,501 ($ 45,705 ).

Per the court decision of December 13, 2023, the defendants were ordered to make the payments by the end of 2023.

As of December 31, 2023, the Company recorded the liabilities of RMB 324,501 ($ 45,705 ) and subsequently, the Company has made the payment

in full in January, 2024.

Legal case with Sichuan Yali Cement Manufacturing Co., Ltd.

and Sichuan Chunqiu Development & Construction Group Co.

payable of RMB RMB 1,656,480 (equivalent to $ 233,310 ) and related interest, legal fees and penalties.

August 10, 2022, Sichuan Yali Cement Manufacturing Co., Ltd.

(“Yali Co.”) and Sichuan Chunqiu Development & Construction

(“ Chunqiu Co.”) entered into construction materials contract for Sichuan Vtouch’s new facility.

this contract, Sichuan Vtouch was listed as the joint responsibility party for the payment settlement between Yali Company and Chunqiu

February 15, 2023, Yali Co.

filed a lawsuit against Chunqiu Co.

to the Chengdu Wenjiang District People’s Court, claiming that

should pay the remaining debt of RMB RMB 1,656,480 (equivalent to $ 233,310 ) and related interest, legal fees and penalties,

and that Sichuan Vtouch should assume the guarantee liability for the debt payable by Chunqiu Co.

On August 12, 2023, the court rendered

a judgment ordering Chunqiu Co.

to pay to Yali Co.

for above mentioned amount.

Sichuan Vtouch was ordered joint liability of such aforesaid

August 22, 2023, Chunqiu Co.

appealed to Chengdu Municipal Intermediate People’s Court against Yali Co.

and Sichuan Vtouch requesting

Sichuan Vtouch to be responsible for this debt payable.

On October 30, 2023, the court ordered Chunqiu Co.

to pay pack all the debts,

and Sichuan Vtouch to bear the joint and several liability for the above debts of Chunqiu Co.

including a court fee of RMB 10,627 ($ 1,497 )

with Chunqiu liability.

As of December 31, 2023, Sichuan Vtouch accrued this court fee of RMB 10,627 ($ 1,497 ).

Expenditure Commitment

December 20, 2021, the Company entered into a contract with Shenzhen Municipal Haoyutuo Decoration & Cleaning Engineering Company

Limited to purchase a facility decoration contract of RMB 20.0 million (equivalent to US$ 3.1 million).

As of December 31, 2022, the Company

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 the end of 2023.

of December 31, 2023, the Company has no capital expenditure commitment.

15 — REVENUES

1 unchanged sentence

OF GEOGRAPHICAL REVENUE INFORMATION

For the Years Ended December 31,

For the Years Ended

Sales in Overseas

2 unchanged sentences

16 — 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.

February 20, 2024, Wetouch entered into an underwriting agreement (the “Underwriting Agreement”) with WestPark Capital, Inc.

and Craft Capital Management LLC, as representatives (the “Representatives”) of the underwriters listed therein (the “Underwriters”),

pursuant to which the Company agreed to sell to the Underwriters in a firm commitment underwritten public offering (the “Offering”)

an aggregate of 2,160,000 shares of the Company’s common stock at a public offering price of $ 5.00 per share.

In addition, the

Underwriters were granted an over-allotment option for a period of 45 days to purchase up to an additional 324,000 shares of common stock.

The Offering closed on February 23, 2024.

The common stock began trading on the Nasdaq Capital Market under the symbol WETH on February

Company conducted the Offering pursuant to a Registration Statement on Form S-1 (File No.

333-270726), as amended, which was declared

effective by the United States Securities and Exchange Commission on February 14, 2024 (the “Registration Statement”).

Offering was closed on February 23, 2024.

net proceeds to the Company from the Offering, after deducting the underwriting discount, the Underwriters’ fees and expenses,

and the Company’s Offering expenses, are approximately $ 9.2 million.

Proceeds from the Offering will be used for the construction

of a new factory, facilities and office buildings, the purchase of two production lines in the new factory, research and development,

the repayment of the remaining five convertible promissory notes, and working capital and general corporate purposes.

February 23, 2024, pursuant to the Underwriting Agreement, the Company issued the Representatives’ Warrants (the “Representatives’

Warrants”) to the Representatives to purchase a number of shares of Common Stock equal to 2.0 % of the total number of shares of

Common Stock (including any shares sold in the Offering to cover over-allotments) sold in the Offering at an exercise price equal to

125.0 % of the public offering price.

The Representatives’ Warrants will not be exercised, sold, transferred, assigned, pledged,

or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective

economic disposition of the securities for a period of 180 days beginning on the date of commencement of sales of the Offering.

the Representatives’ Warrants will not be exercisable for more than five years from the commencement of sales of the Offering.

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