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 utr:sqft

 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 Washington,
D.C. 20549

 FORM

 ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the transition period from _______ to __________

 Commission
File Number: 001-41957

Technology Inc.

 (Exact
Name of Registrant as Specified in Its Charter)

 Nevada

 20-4080330

 (State
 or Other Jurisdiction of

 Incorporation
 or Organization)

 (I.R.S.
 Employer

 Identification
 No.)

 No.
 29, Third Main Avenue

 Shigao
 Town, Renshou County

 Meishan,
 Sichuan, China

 620500

 (Address
 of Principal Executive Offices)

 (Zip
 Code)

 (86) 28-37390666

 (Registrant's
telephone number, including area code)

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Trading
 Symbol(s)

 Name
 of each exchange on which registered

 Common
 Stock, par value $0.001 per share

 WETH

 The
 Nasdaq Stock Market LLC

 Securities
registered pursuant to Section 12(g) of the Act: None.

by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the Registrant is not required to file Reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

 Note
– Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act from their obligations under those Sections.

by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

 Yes
 No

by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant
was required to submit such files). Yes No

by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a small Reporting company,
or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
Reporting company" or an "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a Report on and attestation to its management's assessment of the effectiveness
of its internal control over financial Reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

 Yes
 No

 The
aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant as of June 30, 2023 (the last
business date of the registrant's most recently completed second fiscal quarter), based on the last sale price of the registrant's
common stock on such date, was $ 77 million.

 As
of April 15, 2024, there were 11,931,534 shares of common stock of the registrant issued and outstanding.

TECHNOLOGY INC.

 ANNUAL
REPORT ON FORM 10-K

 FOR
THE YEAR ENDED DECEMBER 31, 2023

 TABLE
OF CONTENTS

 Page

 COMMONLY USED DEFINED TERMS

 ii

 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 iii

 ITEM 1. BUSINESS

 ITEM 1A. RISK FACTORS

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 ITEM 1C. CYBERSECURITY

 ITEM 2. PROPERTIES

 ITEM 3. LEGAL PROCEEDINGS

 ITEM 4. MINE SAFETY DISCLOSURES

 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 ITEM 6. [RESERVED]

 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 ITEM 9A. CONTROLS AND PROCEDURES

 ITEM 9B. OTHER INFORMATION

 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 ITEM 11. EXECUTIVE COMPENSATION

 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

 PART
 IV

 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 ITEM 16. FORM 10–K SUMMARY

 SIGNATURES

 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 i

 COMMONLY
USED DEFINED TERMS

 Unless
otherwise indicated or the context requires otherwise, references in this Annual Report on Form 10-K (the "Annual Report") to:

 "China,"
 "Chinese," or the "PRC" are to the People's Republic of China, including the special administrative
 regions of Hong Kong and Macau, and, for the purposes of this annual report only, excluding Taiwan;

 "BVI"
 are to the British Virgin Islands;

 "BVI
 Wetouch" are to Wetouch Holding Group Limited, a limited company organized under the laws of British Virgin Islands and a wholly
 owned subsidiary of Wetouch;

 "Hong
 Kong Wetouch" are to Hong Kong Wetouch Electronics Technology Limited (),
 a limited company organized under the laws of Hong Kong and a wholly owned subsidiary of BVI Wetouch. On June 18, 2021, Hong Kong
 Wetouch submitted its application for dissolution and was dissolved on March 18, 2022.

 "HK
 Wetouch" are to Hong Kong Wetouch Technology Limited (),
 a limited company organized under the laws of Hong Kong and a wholly owned subsidiary of BVI Wetouch;

 "Mainland
 China" are to the mainland of the People's Republic of China; excluding Taiwan and the special administrative regions
 of Hong Kong and Macau for the purposes of this prospectus only;

 "PRC
 laws and regulations" or "PRC laws" are to the laws and regulations of Mainland China;

 "Sichuan
 Wetouch" are to Sichuan Wetouch Technology Co., Ltd (),
 a limited liability company organized under the PRC laws and prior wholly foreign owned subsidiary of Hong Kong Wetouch. Sichuan
 Wetouch's business and operations have been assumed by Sichuan Vtouch;

 "Sichuan
 Vtouch" are to Sichuan Vtouch Technology Co., Ltd (),
 a limited liability company organized under the PRC laws and a wholly foreign owned subsidiary of HK Wetouch;

 "Shares,"
 "shares" or "shares of common stock" are to the shares of common stock of Wetouch Technology Inc., with par
 value of $0.001 per share;

 "Renminbi," "RMB" or "Chinese
Yuan" are to the legal currency of Mainland China; and

 "U.S. dollars," "dollars," "USD"
or "$" are to the legal currency of the United States.

 ii

 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 This
Annual Report, including, without limitation, statements under "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations," includes forward-looking statements within the meaning
of Section 27A of the Securities Act (as defined below) and Section 21E of the Exchange Act (as defined below). These forward-looking
statements can be identified by the use of forward-looking terminology, including the words "believes," "estimates,"
"anticipates," "expects," "intends," "plans," "may," "will,"
"potential," "projects," "predicts," "continue," or "should," or, in each
case, their negative or other variations or comparable terminology. There can be no assurance that actual results will not materially
differ from expectations. These statements are based on management's current expectations, but actual results may differ materially
due to various factors, including, but not limited to:

 Our
 reliance on our top customers is significant. Failure to attract new customers or retain existing ones cost-effectively could materially
 and adversely impact our business, financial condition, and results of operations.

 We
 hold a substantial amount of accounts receivable, which may become uncollectible.

 Our
 capacity to uphold the quality and safety standards of our products.

 Our
 ability to compete effectively within the touchscreen display industry.

 Without
 substantial additional financing, our ability to execute our business plan will be compromised.

 to secure a new parcel for constructing our new buildings and facilities, as well as acquiring and installing new production lines
 on the new parcel, could materially and adversely affect our business, financial condition, and results of operations.

 Revocation
 or unavailability of preferential tax treatments and government subsidies, or successful challenges to our tax liability calculation
 by PRC tax authorities, may necessitate payment of tax, interest, and penalties exceeding our tax provisions.

 Significant
 interruptions in the operations of our third-party suppliers could potentially disrupt our operations.

 Risks
 associated with fluctuations in the cost, availability, and quality of raw materials may adversely affect our results of operations.

 We
 are reliant on key executives and highly qualified managers, and retention cannot be assured.

 Absence
 of long-term contracts with our suppliers allows them to reduce order quantities or terminate sales to us at any time.

 to adopt new technologies to evolving customer needs or emerging industry standards may materially and adversely affect our business.

 Lack
 of business liability or disruption insurance exposes us to significant costs and business disruption.

 Adverse
 regulatory developments in Mainland China may subject us to additional regulatory review, restrictions, disclosure requirements,
 and regulatory scrutiny by the SEC, increasing compliance costs and hindering future securities offerings.

 Our
 common stock may be prohibited from trading in the U.S. under the Holding Foreign Companies Accountable Act if PCAOB inspection of
 our auditor is incomplete, leading to delisting or prohibition and potential decline in stock value.

 in China's economic, political, or social conditions or government policies may adversely affect our business and operations.

 Uncertainties
 regarding the PRC legal system, including enforcement and sudden changes in laws and regulations, could adversely affect us and limit
 legal protections.

 Fluctuations
 in exchange rates could materially and adversely affect our results of operations and your investment value.

 The
forward-looking statements contained in this Annual Report are based on our current expectations and beliefs concerning future developments
and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual
results or performance to be materially different from those expressed or implied by these forward-looking statements. Should one or
more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material
respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities
laws.

 iii

 PART
I

 ITEM
 1.

 BUSINESS.

 Overview

 Through
our wholly-owned subsidiaries, we are engaged in the research, development, manufacturing, sales and servicing of medium to large sized
projected capacitive touchscreens. We specialize in large-format touchscreens, which are developed and designed for a wide variety of
markets and used in the financial terminals, automotive, Point of Sales, gaming, lottery, medical, Human-Machine Interface ("HMI"),
and other specialized industries.

 Our
product portfolio comprises medium to large sized projected capacitive touchscreens ranging from 7.0 inch to 42 inch screens. In terms
of the structures of touch panels, we offer (i) Glass-Glass ("GG"), primarily used in GPS/car entertainment panels in mid-size
and luxury cars, industrial HMI, financial and banking terminals, POS and lottery machines; (ii) Glass-Film-Film ("GFF"),
mostly used in high-end GPS and entertainment panels, industrial HMI, financial and banking terminals, and the lottery and gaming industry;
(iii) Plastic-Glass ("PG"), typically adopted by touchscreens in GPS/entertainment panels, motor vehicle GPS, smart home,
robotics and charging stations; and (iv) Glass-Film ("GF"), mostly used in industrial HMI.

 Maintaining
the industry standards for product quality and sustainability is one of our core values. Touchscreens produced by us not only have long
life span with low maintenance, but also have strong anti-interference and anti-corrosion solutions, coupled with multi-touch capability
and high light-transmittance ratio and stability. As a high technology company, Sichuan Vtouch Technology Co., Ltd., our subsidiary in
Mainland China ("Sichuan Vtouch") has received certifications from domestic and
international institutions, such as ISO 9001 Quality Management Systems (QMS) Certification of Registration, ISO 14001 Environmental Management
System (EMS) Certification of Registration, and RoHS SGS Certification (Restriction of Hazardous Substance Testing Certification).

 We generate revenues through sales of our various touchscreen products.
For the year ended December 31, 2023 and 2022, we recognized approximately $39.7 million and $37.9 million, respectively, in revenues.

 We
sell our touchscreen products both domestically in China and internationally, covering major areas in Mainland China, including but not
limited to the eastern, southern, northern and southwest regions of Mainland China, Taiwan, South Korea, and Germany. We believe that
we have established a strong and diversified client base. For the year ended December 31, 2023 and 2022, our domestic sales accounted
for 69.6% and 69.7%, respectively, of our revenues, and our international sales accounted for 30.4% and 30.3%, respectively, of our revenues.

 Corporate
History and Structure

 We
were originally incorporated under the laws of the state of Nevada on August 31, 1992 as Gulf West Investment Properties, Inc, and were
dormant and had no operations for many years.

 On
February 26, 2019, the Eighth Judicial District Court in and for Clark County, Nevada, Case No. A-19-787151-B, appointed Custodian Ventures
LLC, an affiliate of David Lazar, as custodian of the Company (the "Custodian"). Mr. Lazar was appointed as the sole officer
and director of the Company. On March 11, 2019, 85,715 shares of common stock of the Company were issued to the Custodian in consideration
for the payment of cash and the issuance of a promissory note by the Custodian to the Company. Effective as of June 11, 2019, the court
discharged the Custodian's duties.

 On
June 18, 2020, we consummated the transactions contemplated by a Stock Purchase Agreement among the Company, the Custodian, Qixun
Technology (Samoa) Limited ("Qixun Samoa") and Qihong Technology (Samoa) Limited
 ("Qihong Samoa", Qixun Samoa and Qixun Samoa are referred to as the "Buyers"). Pursuant to the Stock Purchase
Agreement, the Buyers acquired all of the 85,715 shares of the Company owned by the Custodian, representing 50.47% of the issued and
outstanding shares of the Company. The Custodian and the Company agreed to indemnify the Buyers from any liabilities of the Company occurring
prior to June 18, 2020, and the promissory note issued by the Custodian to the Company was canceled. Immediately following the closing,
David Lazar resigned as the sole officer and director of the Company and Jiaying Cai was appointed as president, secretary and treasurer
of the Company and as the sole director.

 Name

 Effective
September 30, 2020, we changed our name from Gulf West Investment Properties, Inc. to Wetouch Technology Inc. by filing an Amended and
Restated Articles of Incorporation with the Nevada Secretary of State to give effect to a name change. As a result of the name change,
we changed our trading symbol from "GLFW" to "WETH," effective November 3, 2020.

 The
Amended and Restated Articles also effectuated a reverse split of our authorized, issued and outstanding shares of common stock on a
70 for 1 new basis whereby each 70 shares of outstanding common stock was exchanged for one (1) share of new common stock (the "Reverse
Split" and, for avoidance of doubt, all share amounts set forth herein shall be post Reverse Split unless otherwise specified)
and, consequently, our authorized common stock increased to 300,000,000 shares of common stock and 10,000,000 shares of preferred stock,
and our then issued and outstanding common shares decreased from 11,887,103 to 169,820 shares, all with a par value of $0.001 per
share.

 Reverse
Merger

 On
October 9, 2020, we entered into a share exchange agreement (the "Share Exchange Agreement") with Wetouch Holding Group Limited,
a British Virgin Islands company incorporated on August 14, 2020 under the laws of the British Virgin Islands ("BVI Wetouch"),
and all the shareholders of BVI Wetouch (each a "BVI Wetouch Shareholder" and collectively the "BVI Wetouch Shareholders"),
to acquire all the issued and outstanding capital stock of BVI Wetouch in exchange for the issuance to the BVI Wetouch Shareholders an
aggregate of 28 million shares of our common stock (the "Reverse Merger"). The Reverse Merger closed on October 9, 2020.
Immediately after the closing of the Reverse Merger, 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.

 On
October 12, 2020, Guangde Cai was appointed as an additional director and Chairman of the Company. On October 12, 2020, Mr. Zongyi Lian
was appointed as president and chief executive officer of the Company, and Mr. Yuhua Huang was appointed as chief financial officer of
the Company. On the same day, Jiaying Cai resigned from the capacity of president and treasurer of the Company but remains the secretary
and director of the Company.

 BVI
Wetouch was established under the laws of British Virgin Islands on August 14, 2020 to acquire all the shares of Hong Kong Wetouch Electronics
Technology Limited ("Hong Kong Wetouch"). On September 11, 2020, BVI Wetouch acquired all the outstanding shares of Hong
Kong Wetouch from the shareholders of Hong Kong Wetouch in consideration of HK$10,000 pursuant to instruments of transfer in accordance
with Hong Kong law. As a result of the acquisition, Hong Kong Wetouch became a wholly-owned subsidiary of BVI Wetouch. The shareholders
of Hong Kong Wetouch became the shareholders of BVI Wetouch in said transaction, and therefore the shareholders who controlled Hong Kong
Wetouch became the controlling shareholders of BVI Wetouch.

 Hong
Kong Wetouch was incorporated on May 5, 2016 under the laws of Hong Kong. On July 19, 2016, Hong Kong Wetouch acquired all the shares
of Sichuan Wetouch Technology Co., Ltd, a PRC company established in Meishan, Sichuan on May 6, 2011 ("Sichuan Wetouch").
As a result of the acquisition, Sichuan Wetouch became a wholly owned subsidiary of Hong Kong Wetouch.

 As
BVI Wetouch owns all the outstanding shares of Hong Kong Wetouch, which, in turn, owns all the outstanding shares of Sichuan Wetouch,
the Company owns indirectly all the business of Sichuan Wetouch. As a result of the Reverse Merger, Hong Kong Wetouch and Sichuan Wetouch become our indirect wholly-owned subsidiaries.

 Acquisition
of HK Wetouch

 Hong
Kong Wetouch Technology Limited, a limited company organized under the laws of Hong Kong ("HK Wetouch"), was incorporated on December 3, 2020 under the laws of Hong Kong. HK Wetouch was established
to own all the outstanding shares of Sichuan Vtouch Technology Co., Ltd., which was incorporated on December 30, 2020 in Chengdu, Sichuan,
under the laws of The People's Republic of China ("China," or the "PRC").

 On
March 12, 2021, BVI Wetouch, the Company's wholly owned subsidiary, acquired all the outstanding shares of HK Wetouch from the
sole shareholder of HK Wetouch, Guangde Cai, who was our former Chairman and Director in consideration of the payment of HK$10,000 pursuant
to the 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. Immediately following the acquisition of HK Wetouch, BVI Wetouch owned (i) all the outstanding shares of Hong Kong Wetouch,
which, in turn, owned all the outstanding shares of Sichuan Wetouch and (ii) all of the outstanding shares of HK Wetouch, which owned
all the shares of Sichuan Vtouch.

 On
March 2, 2021, HK Wetouch acquired all shares of Hong Kong Wetouch. On June 18, 2021, Hong Kong Wetouch submitted its application for
dissolution and was dissolved on March 18, 2022. In addition, as of March 31, 2021, Sichuan Wetouch's business and operations have
been assumed by Sichuan Vtouch.

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

 Corporate
Structure

 The
diagram below sets forth our corporate structure as of the date of this Annual Report.

 Recent
Developments

 Private
Placement

 On
January 19, 2023, we entered into a securities purchase agreement with certain investors, pursuant to which we sold to such investors
an aggregate of 160,000,000 shares of the common stock of the Company 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. The issuance of the shares in the private placement was exempted from registration
pursuant to Section 4(a)(2) and/or Regulation S as promulgated by the U.S. Securities and Exchange
Commission under the Securities Act. The securities are subject to transfer restrictions, and the certificates evidencing the shares
will contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered
or sold absent registration or pursuant to an exemption therefrom.

 Private
Placement Consent Agreement

 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 a private placement. If the private placement is not completed
by November 1, 2023, the representatives under the agreement reserve their rights to pursue any and all claims, actions or remedies available
to them under the engagement between the Company and the private placement representatives. The Company made the full payment in February,
2024.

 Reverse
Stock Split

 On
February 17, 2023, our board of directors (the "Board") authorized a reverse stock split of our common stock at 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. 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.

 On
July 16, 2023, the Company's board of directors approved the reverse stock split of the Company's common stock at a ratio
of 1-for-20. On July 16, 2023, the Company filed a certificate of change (with an effective date of July 16, 2023) with the Nevada Secretary
of State pursuant to Section 78.209 of the Nevada Revised Statutes to effectuate a 1-for-20 reverse stock split of its common stock.
On September 11, 2023, the reverse stock split was approved by the Financial Industry Regulatory Authority and took effect on September
12, 2023. All share information included in this annual report has been adjusted as if the reverse stock split occurred as of the earliest
period presented.

 Public
Offering

 On
February 20, 2024, we entered into an underwriting agreement with WestPark Capital, Inc. and Craft Capital Management LLC, as
representatives (the "Public Offering Representatives") of the underwriters listed in the underwriting agreement (the
"Underwriters"), pursuant to which the Company agreed to sell to the Underwriters in a firm commitment underwritten
public offering (the "Offering") up to an aggregate of 2,484,000 shares
of our common stock, par value $0.001 per share, at a public offering price of $5.00 per share. The Offering was conducted pursuant
to a Registration Statement on Form S-1, as amended (SEC filed No. 333-270726), which was declared effective on February 14, 2024.
In connection with the Offering, our common stock began trading on the Nasdaq Capital Market under the symbol WETH on February 21,
2024. The Offering closed on February 23, 2024 and generated gross proceeds of $10.8 million. We paid a total of approximately $0.8
million in underwriting discounts and commissions, and approximately $0.8 million for other costs and expenses related to the
Offering. Our net proceeds from the Offering, after deducting the underwriting discount, the Underwriters' fees and expenses,
and our Offering expenses, were approximately $9.2 million. We also issued the Representatives' Warrants (the "Public
Offering Representatives' Warrants") to the Public Offering Representatives to purchase 43,200 shares of Common Stock at
an exercise price equal to 125.0% of the public offering price.

 Our
Products

 We
offer medium to large sized projected capacitive touchscreens, which can be categorized as set forth below:

 Type

 Description

 Application

 type GG

 This
 is a double glass layer product, with a solid clear adhesive (SCA) between a layer of conductive glass and a layer of tempered glass.
 This type of touch screen has the advantage of being able to be easily manufactured, with relatively low cost. However, products
 of this type in large sizes will require a greater degree of signal penetration and long distance transmission technology which will
 be more technically challenging to achieve.

 Medium
 and high end GPS/car entertainment, finance, POS and lottery machines.

 type GFF

 This
 product uses a double layer of conductive films, with an optically clear adhesive (OCA) between a layer of tempered glass. The product's
 functionality comes from the interaction between the multiple layers of conductive film and glass, which does not require extensive
 coating, lithography and etching. This type of product is anti- explosive and has relatively low manufacturing cost. However, products
 of this type in large sizes will require greater degree of signal penetration and long distance transmission technology which will
 be more technically challenging to achieve.

 Financial,
 gaming and lottery, and medical industries

 type PG

 This
 product uses a layer of conductive glass, with an optically clear adhesive (OCA) between a layer of surface intensify PMMA (Poly
 Methyl methacrylate acid). The product's functionality relies on the interaction between the layers of conductive glass. Like
 the GFF type, this product does not require extensive coating, lithography and etching and has relatively low manufacturing cost.

 Motor
 vehicle GPS, smart home, robots and charging stations

 type GF

 This
 product uses a layer of conductive film, with an optically clear adhesive (OCa) between a layer of tempered glass. The product's
 functionality relies on the interaction between the layers of conductive glass. Like the GFF type, this product does not require
 extensive coating, lithography and etching and has relatively low manufacturing cost.

 Industrial
 HMI

 As
of December 31, 2023, product types GFF and GG constitute our main stream products, accounting for approximately an average
of 41.8% and 51.7%, respectively, of our total revenues, with product types GF and PG and other raw materials accounting for
2.0%, 2.4% and 2.1%, respectively, of our total revenues. As of December 31, 2022, product types GFF and GG
constitute our main stream products, accounting for approximately an average of 38.5% and 52.68%, respectively, of our total
revenues, with product types GF and PG and other raw materials accounting for 2.55%, 4.4% and 1.87%, respectively, of our total
revenues.

 Applications
of the Company's Products

 Our
products are used and applied in the production of a variety of products in a wide range of industries. Our products' areas of
common application are set out below.

 Point
of Sale ("POS") Machines

 POS
 machines are used in a variety of retailers, including in department stores, supermarkets, convenience
 stores, boutiques, restaurants, hotels, banks, logistics, telecommunication and other service industries. Due to the frequent use
 of touchscreens on POS machines, Wetouch has adopted the use of high-end materials which give its products' a competitive advantage
 through their anti-scratch, high temperature resistance and long use life qualities.

 Car
Navigators and Entertainment Systems

 Touchscreen
 products for car navigation and entertainment systems take advantage of the popularity of touchscreen consoles in motor vehicles.
 Wetouch touchscreens are particularly suitable for motor vehicles GPS and entertainment systems, due to their resistance to temperature
 variation. These touchscreens may be used in both inbuilt and external car systems.

 ATM
Machines and Other Financial Machines

 ATMs
 and other similar machines use touchscreens or have a touchscreen function. The touchscreens need to have high-endurance capacities
 as they are used by the general public and are often located outdoors, such that these screens must withstand weathering. Our
 products are particularly suited to use in these machines as they are highly durable.

 Industrial
Equipment

 Touchscreens
 in the industrial sector have broad application, and play an important role in industrial HMI. Industrial HMI systems and equipment
 often require touchscreen functions. These touchscreens must be resistant to interference, stable and have good touch sensitivity.
 Our products fully meet these requirements, being temperature variation resistant, dustproof and waterproof.

 Gaming
Machines

 The
 new generation of gambling machines are commonly adopting a touchscreen function. Gaming machines with a touchscreen function provide
 an enhanced experience for uses via multi-touch sensory touch systems. Our products are therefore popular amongst gambling
 machine manufacturers.

 Lottery
Machines

 The
 self-service lottery ticket vending machine is provided with an operator-oriented touch display device, an input device, a modem,
 a cash register, printer and security authentication function. The touchscreen display facilitates easy and user-friendly operation
 of the lottery machine.

 Ticket
Machines and Kiosks

 Self-service
 ticket machines and kiosks contain touchscreen interfaces which are durable and have a long use life. These self-service machines
 are used in daily lives, and as such there is a continuous demand for high quality and effective touchscreens. Our products
 are widely used in these ticketing machines and kiosks.

 For
the year ended December 31, 2023, we had approximately $9.8 million in revenues generated from the sales of automotive touchscreens,
accounting for 24.6% of our total revenues, with industrial HMI touchscreens accounting for 19.9%, POS touchscreens for 16.7%, gaming
touchscreens accounting for 14.2%, medical touchscreens for 14.6%, and multi-functional printer touchscreens for 10.1%, of our total
revenues. For the year ended December 31, 2022, we had approximately $9.3 million in revenues generated from the sales of automotive
touchscreens, accounting for 24.5% of our total revenues, with industrial HMI touchscreens accounting for 21.1%, POS touchscreens for
6.6%, gaming touchscreens accounting for 5.2%, multi-functional printer touchscreens for 3.8%, of our total revenues.

 Our
Customers

 We
have six and six customers each accounting for more than 10% of our revenues for the year ended December 31, 2023 and 2022,
respectively.

 For
the year ended December 31, 2023, our top five customers, namely (1) Siemens Industrial Automation Products (Chengdu) Co., Ltd., (2)
Shanghai Sigang Electronics Co., Ltd., (3) E-Lead Electronic Co. Ltd., (4) MultimediaLink Inc., and (5) Suzhou Weinview Co., Ltd.,
accounted for approximately 22.5%, 16.5%, 15.7%, 14.1% and 11.3%, respectively, of our total revenues.

 For
the year ended December 31, 2022, our top six customers, namely (1) Siemens Industrial Automation Products (Chengdu) Co., Ltd., (2)
Shanghai Sigang Electronics Co., Ltd., (3) E-Lead Electronic Co. Ltd., (4) MultimediaLink Inc., (5) Suzhou Weinview Co., Ltd., and
(6) Canon (Suzhou) Ltd. accounted for approximately 21.2%, 16.1%, 14.8%, 13.7%, 11.9% and 10.1%, respectively, of our total
revenues.

 As
Sichuan Wetouch's business and operations have been assumed by Sichuan Vtouch, Sichuan Vtouch entered into sales framework
agreements, which were entered into by Sichuan Wetouch previously, with our top customers on December 31, 2021. The material
terms of the sales framework agreements with our top five customers provide:

 The
 term of each sales framework agreement is four years, which may be renewed by a separate agreement upon expiration.

 The customer shall purchase an annual
 minimum purchase amount for period from January 1 to December 31 each year as specified in the agreement. If the customer fails to purchase the minimum purchase amount in the applicable agreement,
the customer will be deprived of the most favorable price treatment for the following year and rebate rewards for the current year.

 We
 will send the price list to the customers at the beginning of each year. The specific execution price is subject to the order signed
 by the parties.

 We
 have the right to adjust the price due to the market or other factors. When there is any adjustment, we shall send a written notice
 of such adjustment with 30 days in advance. Upon receipt of this notice, the customer may choose to accept the price adjustment or
 terminate the sales frame agreement.

 For
 the first year, we grant the customers a credit limit of $1.5 million and a credit term of 3 months. During supply, the portion of
 payment that exceeds the credit line shall be paid before goods are delivered. In the next year, the credit will be increased according
 to the sales of the previous year, which shall be subject to the negotiation of both parties.

 The
 customers shall make payment in full and on time according to the payment method and time of the purchase order and shall not delay
 or refuse to pay. If the customers fail to make payment within the agreed period of the purchase order and still fail to make payment
 after being urged by us, we may stop the supply and have the right to demand payment of a late fee of 0.3% of the contract amount
 per day from the customers; If the customers still refuse to make payment after 30 days of notice from us, we have the right to file
 a lawsuit with the court. The customers shall bear the litigation costs, lawyer's fees, and other debt recovery costs.

 We
 are required to provide products to customers pursuant to the delivery date and quantity, requirements included in the purchase orders
 and shall negotiate with customers if we are unable to so provide.

 The
 customers are entitled to compensation of losses due to our failure to provide after-sale services.

 Any
 violation of the terms of the agreements may result in the termination of the agreements and the breaching party shall be responsible
 for all business and economic losses and legal liabilities arising therefrom.

 We
do not typically enter into sales framework agreements with other customers but sell products to them through purchase orders.

 The
key terms of our purchase order typically include the following:

 The
 product name, specification, quantity, price, order amount and delivery date are specified in each order.

 Delivery
 method and packaging requirements are specified in each order

 Payment
 terms are specified in each order.

 Breach
 of order terms by customers in some orders.

 Guaranty
 terms in some orders.

Vtouch is obligated to provide 1) products per the specific requirements of the orders, and 2) unconditional defect warranty for our
products. Any violation of the order terms may result in termination of the orders or replacement of our products.

 For
the years ended December 31, 2023 and 2022, we did not provide any extended payment terms to any of our customers. Our customers are
required to make full payment within three to six months from the delivery date. As a result of the COVID-19 outbreak in January 2020, collection activities from some of our customers affected by the
pandemic resulted in longer payment terms.

 Sales
and Marketing

 We
source our customers through multiple channels: (i) from our own research through Search Engine Optimization ("SEO") and
outreach, (ii) through referrals from our present customers, (iii) through our websites, which provide product information for sale,
as well as telephone and email contact information; and (iv) through industry exhibitions/expos.

 Our
main target markets are economically developed countries and regions, including eastern, southern, northern and southwest regions of
Mainland China, South Korea, and Germany. We believe that we have established a strong client base, including global well-known institutional
customers. Overseas sales were approximately $12.1 million in 2023 as compared to $11.5 million in 2022.

 We
target these overseas customers mainly via our online marketing efforts. In order to market our products, occupy more market share and
secure more quality customers, we frequently participate in, and promote our products at, specific touchscreen technology exhibitions
held internationally.

 Our
products are produced to order and are marketed directly by our own sales personnel. We do not rely on distributors to sell our
products.

 For
the year ended December 31, 2023, the revenues generated from our domestic customers amounted to approximately $27.6 million,
constituting approximately 69.6% of our total revenues, with overseas customers accounting for approximately $12.1 million, constituting approximately 30.4% of our total revenues, respectively. For the year
ended December 31, 2022, the revenues generated from our domestic customers amounted to approximately $26.4 million,
constituting approximately 69.7% of our total revenues, with overseas customers accounting for approximately $11.5 million, constituting approximately 30.3% of our total revenues, respectively.

 Our
Suppliers

 Sichuan Vtouch does not typically enter into supply agreements with our suppliers. We can utilize any supplier we determine and there are no minimum
purchase requirements when we place orders with our suppliers.

 We
place purchase orders with suppliers of raw materials for the production of our products. The general terms of the purchase order include
specifications for product name, quantity, price, order amount, and delivery date, as well as delivery methods, packaging, inspection
procedures, breach terms, and dispute resolution, all tailored to each order. Payment terms are also specified in each order. Additionally,
all products must meet nationally or industry-prescribed quality standards, with each order requiring a supplier's quality certification.
The supplier must unconditionally accept returns and either refund the purchase price in full or provide replacements if the products
do not meet the required quality standards, are damaged, or significantly differ from what was ordered.

 We
do not consider any of our suppliers to be material to our business and we can utilize any supplier we determine at our sole
discretion. Although we can utilize any supplier we determine, we believe that we have established healthy and stable relationships
with our significant suppliers.

 We purchase our raw materials through various suppliers. Raw material purchases from one and four suppliers, each
of which individually exceeded 10% of the Company's total raw material purchases, accounted for approximately 13.3% and 47.2% of
the Company's total raw material purchases for the year ended December 31, 2023 and 2022, respectively.

 The
general terms of the purchase order include specifications for product name, quantity, price, order amount, and delivery date, as well
as delivery methods, packaging, inspection procedures, breach terms, and dispute resolution, all tailored to each order. Payment terms
are also defined per order. Additionally, all products must meet nationally or industry-prescribed quality standards, with each order
requiring a supplier's quality certification. The supplier must unconditionally accept returns and either refund the purchase price
in full or provide replacements if the products do not meet the required quality standards, are damaged, or significantly differ from
what was ordered.

 Production and Quality Control

 The
Company has adopted a made-to-order production model as follows:

 This
process is subject to continuous review and monitoring by the management team in consultation with engineers, electricians and other
technical experts to ensure that finished products are of the highest quality and meet customer requirements and ISO 9001 Quality Management
Systems (QMS) standard.

 In
order to maintain product safety and a high standard of product quality, the Company implements a strict set of quality control policies
and inspection protocols. These policies and protocols are enforced by the Company's senior management and officers along every
step of the production to post-production process. Their management guidelines along with key company quality policies are set out below:

 The
Company has strict production standards in place that govern what constitutes acceptable quality for its products. This ensures that
the Company's products fulfill product certification standards. The production team adheres to the following criteria when making
its product standard assessment:

 Item

 Industry
 Standards

 Our
 Standards

 Reaction
 time

 Less
 than or equal to 5 milliseconds

 Less
 than or equal to 5 milliseconds

 Surface
 hardness

 6H

 7H~9H

 Operational
 temperature

 0~70
 degrees Celsius

 -30~80
 degrees Celsius

 EsD
 requirement

 6~12KV

 8~15KV

 Transparency

 86%

 88%

 Touch
 conditions

 Normal
 touch and ordinary conditions

 Waterproof
 and anti-saline solution and anti-corrosion and Anti interference

 The
products are inspected before they are delivered to our customers. All products must pass the following inspections:

 Cosmetic
 inspection: conducted under optimum temperatures (20-22 degrees Celsius) and white fluorescent lighting. The product is observed
 by the naked eye to spot for any defects, scratches and cracks, panel discoloration, opacity, foreign fibers and spots. The Company
 has in place quantitative standards with respect to each of these areas to determine the level of cosmetic acceptability.

 Function
 tests: all products undergo functionality testing. Touchscreen products are connected electronically via standard cabling systems
 to computers, to measure and test for effective functionality and to screen for any abnormalities.

 Stress
 testing: all products undergo product stress testing by being subject to humidity, temperature and corrosion stress testing. The
 products are tested for their functionality in high and low humidity environments as well as in extreme temperatures. The products
 are inspected to determine whether damage or physical change is caused by exposure to high and low temperatures.

 Internal teams will conduct independent testing for hazardous substances. The products are also tested for their corrosive
 resistance to saline solutions.

 Seasonality

 There
is no significant seasonality in our business.

 Research
and Development

 We
are committed to our own research and development projects as well as partnership initiatives in order to continuously and systematically
upgrade our touchscreen technology. As of the date of this Annual Report, we have 11 employees in our R&D department.

 Intellectual
Property

 Our
business is dependent on a combination of trademarks, patents, domain names, trade names, trade secrets and other proprietary rights
in order to protect our intellectual property rights. As of the date of this Annual Report, Sichuan Vtouch has one registered trademark in Mainland
China and five pending patent applications.

 Trademarks

 Set
forth below is a detailed description of our current trademark:

 Country

 Trademark

 Application
 Date

 Registration
 Number

 Registration
 Date

 Classes

 Assignment
 Application Number

 Owner

 Status

 China

 WeTouch

 09/28/2011

 10019079

 01/28/2013

 20210000091399

 Registered

 Patents

 Sichuan Vtouch has applied for five patents with the Patent Office of China National Intellectual Property Administration.
As of the date of this Annual Report, the patent applications are still pending.

 Set
forth below is a detailed description of our pending patent applications:

 Application No.

 Name

 Application Date

 Type

 Applicant

 Status

 202120500187.7

 Low
 cost anti-rupture projected capacitive touchscreen

 03/09/2021

 Utility
 Model

 202120500188.1

 High
 performance and anti-electromagnetic radiation projected capacitive touchscreen

 03/09/2021

 Utility
 Model

 202120500155.7

 Full-lamination
 projected capacitive touchscreen

 03/09/2021

 Utility
 Model

 202110256476.1

 Anti-scratch
 glass structure capacitive touchscreen

 03/09/2021

 Invention

 202111206650.8

 An
 enhanced anti-static projection capacitive screen

 10/17/2021

 Invention

 Patents
registered in Mainland China cannot be enforced in other jurisdictions to which the Company supplies its products. We currently have
pending patent applications only in Mainland China. We plan to submit patent registration applications in our target market jurisdictions including
United States, Europe, Australia, Japan, Korea, Taiwan, India and Russia by the end of 2024.

 Environmental
Matters

 Our
business in Mainland China is subject to various pollution control regulations in Mainland China with respect to noise, water and air
pollution and the disposal of waste. Specifically, the major environmental regulations applicable to us include the PRC Environmental
Protection Law, the PRC Law on the Prevention and Control of Water Pollution, the PRC Law on the Prevention and Control of Air Pollution,
the PRC Law on the Prevention and Control of Solid Waste Pollution, and the PRC Law on the Prevention and Control of Noise Pollution.

Vtouch originally received the Pollutant Discharge Permit from Renshou County environmental protection agency, which expired on May 15,
2019. Pursuant to a Statement on Change of Pollutant Discharge Permit to Stationary Pollution Source Registration Form dated September
1, 2020, the environmental protection system in Renshou County, Sichuan, was changed from permission to registration due to local administrative
division change. Sichuan Vtouch is registered under the new system by the issuance
of the Stationary Pollution Source Registration Form as of the date of this Annual Report.

 The
Company is not aware of any investigations, prosecutions, disputes, claims or other proceedings in respect of environmental protection,
nor has the Company been punished or can foresee any punishment to be made by any environmental administration authorities of the PRC.

 Competition

 The
markets for touchscreen products are highly competitive and subject to rapid technological change. The Company believes that the principal
competitive factors in its markets are product characteristics such as touch performance, durability, optical clarity and price, as well
as supplier characteristics such as quality, service, delivery time and reputation. The Company believes that it competes favorably with
respect to these factors, although there can be no assurance that the Company will be able to continue to compete successfully in the
future.

 Despite
that touchscreen products are highly competitive as a whole, we face fewer competitors, as we produce medium to large size touchscreens
which are specially tailored to certain industries, such as industrial HMI, gaming, financing, lottery, automotive, medical, and POS,
among others, and require more stable supply and longer guaranty and life span, compared with small size touchscreens, which are characterized
by shorter life cycles and guaranty but more demand in quantity.

 We
believe the following companies may be our competitors:

 Apex
 Material Technology Corp., founded in 1998, is committed to the development and innovation of resistive and projected capacitive
 (PCI or PCAP) total touch solutions. With its headquarters based in Keelung, Taiwan and a subsidiary located in Milwaukee, Wisconsin,
 it designs and manufactures advanced high-performance touch products for industrial and medical applications. Compared with us, although
 it has a longer history and geographical advantages, it mainly focuses on resistive touch panels and recently started production
 of capacitive touchscreens mostly applicable to the industrial HMI and medical industries, while our products are more widely used
 in a variety of industries.

 Elo
 Touch Systems Inc., based and headquartered in the United States, has a history of over 40 years in the production of touchscreens.
 Its product portfolio includes a broad selection of interactive touchscreen displays from 10-70 inches, all-in-one touchscreen computers,
 OEM touchscreens and touchscreen controllers and touchscreen monitors. Compared with us, although it has a longer history and geographical
 advantages when it comes to the competition for U.S. customers and other international customers, it recently started the production
 of capacitive touchscreens mostly applicable to POS and inquiry machines, while our products are more widely used in a variety of
 industries.

 AbonTouch
 System Inc, established in 2005, mainly focuses on manufacturing and sales of mid to large size (7"~86") "Projective
 Capacitive Sensors," (7"~21.5") "Five-Wire Resistive Zero-Bezel Touch Panels" and (5"~21.5")
 "Five-Wire Resistive Touch Panels." Compared with us, although it has a longer history and geographical advantages, it
 mainly focuses on resistive touch panels and recently started production of capacitive touchscreens mostly applicable to POS, inquiry
 machines and industrial HMI, while our products are more widely used in a variety of industries.

 Industry

 Since
inception, we have positioned ourselves in the professional touchscreen display industry. Touchscreen is an input and output device and
layered on top of an electronic visual display of an information processing system, allowing individuals to access information and interact
with the device simply by touching the device's screen with a finger or a specialized tool. Accordingly, the ease of use offered
by touchscreen-based systems makes the systems well suited both for applications for the general public and for specialized applications
for institutional users and trained computer users.

 Although
touchscreen has become mainstream only over the last decade, the concept of a touch-sensitive computer display was developed as early
as 1965. Since the introduction of Apple's iPhone in 2007, touchscreen technology has made rapid inroads into various electronics
markets, with a number of other significant companies also incorporating this technology into their products (as opposed to using a mouse,
keyboard, keypad or trackball). Viewed today as the most important tool to facilitate interaction between the individual and machine,
touchscreen technology is now an integral part of a wide range of computing products.

 Overview

 We
operate our business in Mainland China under a legal regime consisting of the National People's Congress, which is the country's
highest legislative body, the State Council, which is the highest authority of the executive branch of the PRC central government, and
several ministries and agencies under its authority, including the Ministry of Industry and Information Technology, the State Administration
for Market Regulation ("SAMR") and their respective local offices.

 This
section sets forth a summary of the most significant rules and regulations that affect our business activities in Mainland China.

Relating to Foreign Investment in Mainland China

 On
March 15, 2019, the National People's Congress promulgated the Foreign Investment Law, which came into effect on January 1, 2020
and replaced three existing laws on foreign investments in China, namely, the PRC Equity Joint Venture Law, the PRC Cooperative Joint
Venture Law, and the Wholly Foreign-Owned Enterprise Law, together with their implementation rules and ancillary regulations. The Foreign
Investment Law embodies an expected Mainland China regulatory trend to rationalize its foreign investment regulatory regime in line with
prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign- and domestic-invested
enterprises in Mainland China. The Foreign Investment Law establishes the basic framework for the access to, and the promotion, protection,
and administration of foreign investments in view of investment protection and fair competition.

to the Foreign Investment Law, "foreign investment" refers to investment activities directly or indirectly conducted by one
or more natural persons, business entities, or otherwise organizations of a foreign country within Mainland China, or foreign investors,
and the investment activities include the following situations: (i) a foreign investor, individually or collectively with other investors,
establishes an Foreign Investment Entity ("FIE") in Mainland China; (ii) a foreign investor acquires stock shares, equity
shares, shares in assets, or other similar rights and interests of an enterprise within Mainland China; (iii) a foreign investor, individually
or collectively with other investors, invests in a new project in Mainland China; and (iv) investments in other means as provided by
laws, administrative regulations, or the State Council.

 Investment
activities in Mainland China by foreign investors are principally governed by the Guidance Catalogue of Industries for Foreign Investment,
or the Catalogue, which was promulgated and is amended from time to time by the Ministry of Commerce, or the MOFCOM, and the National
Development and Reform Commission, or the NDRC. Restricted and prohibited industries are listed in the Catalogue. The Catalogue sets
out a unified basis for the special administrative measures for foreign investment access. Fields not mentioned in the list for foreign
investment access, including touchscreen manufacturing, are administered under the principle of equal treatment for domestic and foreign
capital.

 Industries
not listed in the Catalogue are generally deemed as constituting a "permitted" category. According to the Catalogue, touchscreen
manufacturing is classified as industry where foreign investments are permitted.

 Furthermore,
the Foreign Investment Law provides that FIEs established according to the existing laws regulating foreign investment may maintain their
structure and corporate governance within five years after the implementation of the Foreign Investment Law.

 In
addition, the Foreign Investment Law also provides several protective rules and principles for foreign investors and their investments
in Mainland China, including, among others, that local governments must abide by their commitments to the foreign investors; FIEs are
allowed to issue stocks and corporate bonds; expropriation or requisition of the investment of foreign investors is prohibited except
for special circumstances, in which case statutory procedures must be followed and fair and reasonable compensation must be made in a
timely manner; mandatory technology transfer is prohibited; and the capital contributions, profits, capital gains, proceeds out of asset
disposal, licensing fees of intellectual property rights, indemnity or compensation legally obtained, or proceeds received upon settlement
by foreign investors in Mainland China may be freely remitted inward and outward in Renminbi or foreign currencies. Also, foreign investors
or FIEs should be imposed legal liabilities for failing to report investment information in accordance with the requirements.

 On
December 26, 2019, the PRC State Council approved the Implementation Rules of Foreign Investment Law, which came into effect on January
1, 2020. The Implementation Rules of Foreign Investment Law restates certain principles of the Foreign Investment Law and further provides
that, among others, (i) if the legal form or the governing structure of an FIE established prior to the effective date of the Foreign
Investment Law does not comply with the compulsory provisions of the PRC Company Law or the PRC Partnership Enterprises Law, such FIE
should complete amendment registration accordingly no later than January 1, 2025; if it fails to do so, the enterprise registration authority
will not process other registration matters of the FIE and may publicize such non-compliance; and (ii) the provisions regarding transfer
of equity interests, distribution of profits and remaining assets as stipulated in the joint venture contracts of an existing FIE may
survive the Foreign Investment Law during its joint venture term.

on Environmental Protection

 Environmental
Protection Law

 The
 Environmental Protection Law of the PRC, or the Environmental Protection Law, was promulgated and effective on December 26, 1989,
and most recently amended on April 24, 2014, which amendments became effective January 1, 2015. This Environmental Protection Law has
been formulated for the purpose of protecting and improving both the living environment and the ecological environment, preventing and
controlling pollution, other public hazards and safeguarding people's health.

 According
to the provisions of the Environmental Protection Law, in addition to other relevant laws and regulations of the PRC, the Ministry
of Environmental Protection and its local counterparts take charge of administering and supervising said environmental protection matters.
Pursuant to the Environmental Protection Law, the environmental impact statement on any construction project must assess the pollution
that the project is likely to produce and its impact on the environment, and stipulate preventive and curative measures; the statement
shall be submitted to the competent administrative department of environmental protection for approval. Installations for the prevention
and control of pollution in construction projects must be designed, built and commissioned together with the principal part of the project.

 Permission
to commence production at or utilize any construction project shall not be granted until its installations for the prevention and control
of pollution have been examined and confirmed to meet applicable standards by the appropriate administrative department of environmental
protection that examined and approved the environmental impact statement. Installations for the prevention and control of pollution shall
not be dismantled or left idle without authorization. Where it is absolutely necessary to dismantle any such installation or leave it
idle, prior approval shall be obtained from the competent local administrative department of environmental protection.

 The
 Environmental Protection Law makes it clear that the legal liabilities of any violation of said law include warning, fine, rectification
within a time limit, compulsory cease operation, compulsory reinstallation of dismantled installations of the prevention and control
of pollution or compulsory reinstallation of those left idle, compulsory shutout or closedown, or even criminal punishment.

 Order
on Ecosystem by The Ministry of Ecology and Environment 2019 Classification-based Management on Fixed Pollutant Source

to the Order on Ecosystem by The Ministry of Ecology and Environment, which was issued on July 28, 2017 and most recently amended on
December 20, 2019, The Ministry of Ecology and Environment implements a classification-based management on the environmental impact assessment,
or EIA, of pollutants according to pollutant amount and the impact of the pollutants on the environment as below

 For
 those pollutant discharge units with large amount of pollutants and significant environmental impacts, the key management on a pollutant
 discharge permit is required;

 For
 those pollutant discharge units with small amount of pollutants and small environmental impacts, the simplified management on a pollutant
 discharge permit is required; and

 For
 those pollutant discharge units with very small amount of pollutants and very small environmental impacts, the pollutant discharge
 registration form is required.

 The
touchscreen manufacturing is classified as to fill in a Registration Form. Pursuant to a Statement on Change of Pollutant Discharge Permit
to Stationary Pollution Source Registration Form by the local government dated September 1, 2020, the environmental protection system
in Renshou County, Sichuan, was changed from permission to registration due to local administrative division change. Therefore, upon
submission of all required documentation, we are registered under the new system by filling in Stationary Pollution Source Registration
Form.

on Consumer Rights Protection

 Our
business is subject to a variety of consumer protection laws, including the PRC Consumer Rights and Interests Protection Law, which was
amended in 2013 and became effective on March 15, 2014. It imposes stringent requirements and obligations on business operators. Failure
to comply with these consumer protection laws could subject us to administrative sanctions, such as the issuance of a warning, confiscation
of illegal income, imposition of fines, an order to cease business operations, revocation of business licenses, and potential civil or
criminal liabilities.

 As
of the date of this Annual Report, we are not aware of any warning, investigations, prosecutions, disputes, claims or other proceedings
in respect of customer rights protection, nor have we been punished or can foresee any punishment to be made by any government authorities
of the PRC.

on Intellectual Property Rights

on Trademark

 Trademarks
are protected by the PRC Trademark Law adopted in 1982 and subsequently amended as well as the Implementation Regulations for the Trademark
Law of the PRC in 2002 and subsequently amended in 2014 and 2019. The Trademark Office of the SAMR is responsible for the registration
and administration of trademarks and the Trademark Review and Adjudication Committee established by the SAMR is responsible for resolving
trademark disputes in Mainland China. Registered trademarks are valid for ten years from the date the registration is approved. A registrant
may apply to renew a registration within twelve months before the expiration date of the registration. If the registrant fails to apply
in a timely manner, a grace period of six additional months may be granted. If the registrant fails to apply before the grace period
expires, the registered trademark shall be deregistered. Renewed registrations are valid for ten years. In April 2014, the State Council
issued the revised Implementation of the Trademark Law, which specified the requirements of applying for trademark registration and review.
As of the date of this Annual Report, we had 1 registered trademark in Mainland China.

on Patent Law

 According
to the PRC Patent Law, which was issued by the Standing Committee of the National People's Congress in 1984 and last amended on
October 17, 2020, effective on June 1, 2021, and Implementation Rules of the Patent Law of the People's Republic of China, which
were promulgated by the State Council in 2001 and last amended on January 9, 2010. Draft amendments to the Implementation Rules of the
Patent Law are currently under review. The Patent Law and its implementation rules provide for three types of patents: "invention,"
"utility model" and "design." "Invention" refers to any new technical solution relating to a product,
a process or improvement thereof; "utility model" refers to any new technical solution relating to the shape, structure,
or their combination, of a product, which is suitable for practical use; and "design" refers to any new design of the whole
or partial shape, pattern, color or the combination of any two of them, of a product, that creates an aesthetical feeling and is suitable
for industrial application. Invention patents are valid for 20 years, while design patents and utility model patents are valid for 15
years and 10 years, respectively, each calculated from the date of application. To be patentable, invention or utility models must meet
three criteria: novelty, inventiveness and practicability. Except under certain specific circumstances provided by law, any third-party
user must obtain consent or a proper license from the patent owner to use the patent. Otherwise, the use constitutes an infringement
of the patent rights. As of the date of this Annual Report, we had five pending patent applications.

on Foreign Exchange

 General
Administration of Foreign Exchange

 Under
the PRC Foreign Currency Administration Rules promulgated on January 29, 1996 and most recently amended on August 5, 2008 and various
regulations issued by the SAFE, and other relevant PRC government authorities, Renminbi is convertible into other currencies for current
account items, such as trade-related receipts and payments and payment of interest and dividends. The conversion of Renminbi into other
currencies and remittance of the converted foreign currency outside Mainland China for capital account items, such as direct equity investments,
loans, and repatriation of investment, requires the prior approval from the SAFE or its local office.

 Payments
for transactions that take place in Mainland China must be made in Renminbi. Unless otherwise approved, Mainland China companies may
not repatriate foreign currency payments received from abroad or retain the same abroad. FIEs may retain foreign exchange in accounts
with designated foreign exchange banks under the current account items subject to a cap set by the SAFE or its local branch. Foreign
exchange proceeds under the current accounts may be either retained or sold to a financial institution engaged in settlement and sale
of foreign exchange pursuant to relevant SAFE rules and regulations. For foreign exchange proceeds under the capital accounts, approval
from the SAFE is generally required for the retention or sale of such proceeds to a financial institution engaged in settlement and sale
of foreign exchange.

to the Circular of the SAFE on Notice of State Administration of Foreign Exchange on Further Improvements and Adjustments to Foreign
Exchange Control Policies for Direct Investment, which was promulgated on November 19, 2012, became effective on December 17, 2012, and
was further amended on May 4, 2015, October 10, 2018, and December 30, 2019, approval of the SAFE is not required for opening a foreign
exchange account and depositing foreign exchange into the accounts relating to the direct investments. This circular also simplifies
foreign exchange-related registration required for foreign investors to acquire equity interests of PRC companies and further improve
the administration on foreign exchange settlement for FIEs.

 The
Notice of the State Administration of Foreign Exchange on Further Simplifying and Improving the Foreign Exchange Management Policies
for Direct Investment, or SAFE Circular 13, which became effective on June 1, 2015 and was amended on December 30, 2019, cancels the
administrative approvals of foreign exchange registration of direct domestic investment and direct overseas investment and simplifies
the procedure of foreign exchange-related registration. Pursuant to SAFE Circular 13, investors should register with banks for direct
domestic investment and direct overseas investment.

 The
Notice of the State Administration of Foreign Exchange on Reforming the Administration of Foreign Exchange Settlement of Capital of Foreign-invested
Enterprises, which was promulgated on March 30, 2015, became effective on June 1, 2015, and was amended on December 30, 2019, provides
that an FIE may, according to its actual business needs, settle with a bank the portion of the foreign exchange capital in its capital
account for which the relevant foreign exchange administration has confirmed monetary capital contribution rights and interests (or for
which the bank has registered the injection of the monetary capital contribution into the account). Pursuant to this circular, for the
time being, FIEs are allowed to settle 100% of their foreign exchange capital on a discretionary basis; an FIE should truthfully use
its capital for its own operational purposes within the scope of its business; where an ordinary FIE makes domestic equity investment
with the amount of foreign exchanges settled, the FIE must first go through domestic re-investment registration and open a corresponding
account for foreign exchange settlement pending payment with the foreign exchange administration or the bank at the place where it is
registered.

 The
Notice of the State Administration of Foreign Exchange on Policies for Reforming and Regulating the Control over Foreign Exchange Settlement
under the Capital Account, which was promulgated and became effective on June 9, 2016, provides that enterprises registered in Mainland
China may also convert their foreign debts from foreign currency into Renminbi on a self-discretionary basis. This circular also provides
an integrated standard for conversion of foreign exchange under capital account items (including, but not limited to, foreign currency
capital and foreign debts) on a self-discretionary basis, which applies to all enterprises registered in Mainland China.

 On
January 26, 2017, SAFE promulgated the Notice of State Administration of Foreign Exchange on Improving the Check of Authenticity and
Compliance to further Promote Foreign Exchange Control, which stipulates several capital control measures with respect to the outbound
remittance of profit from domestic entities to offshore entities, including: (i) banks should check board resolutions regarding profit
distribution, the original version of tax filing records, and audited financial statements pursuant to the principle of genuine transactions;
and (ii) domestic entities should hold income to account for previous years' losses before remitting the profits. Moreover, pursuant
to this circular, domestic entities should make detailed explanations of the sources of capital and utilization arrangements, and provide
board resolutions, contracts, and other proof when completing the registration procedures in connection with an outbound investment.

 On
October 25, 2019, the SAFE promulgated the Notice of the State Administration of Foreign Exchange on Further Promoting the Facilitation
of Cross-border Trade and Investment, which, among other things, allows all FIEs to use Renminbi converted from foreign currency-denominated
capital for equity investments in Mainland China, as long as the equity investment is genuine, does not violate applicable laws, and
complies with the negative list on foreign investment. However, since this circular is newly promulgated, it is unclear how the SAFE
and competent banks will carry it out in practice.

 According
to the Regulations of the PRC on Administration of Company Registration, which were promulgated by the State Council on June 24, 1994,
became effective on July 1, 1994, and were amended on February 6, 2016, and other laws and regulations governing FIEs and company registrations,
the establishment of an FIE and any capital increase and other major changes in an FIE should be registered with the State Administration
for Market Regulation or its local counterparts and filed via the enterprise registration system.

to SAFE Circular 13 and other laws and regulations relating to foreign exchange, when setting up a new FIE, the enterprise should register
with the bank located at its registered place after obtaining the business license, and if there is any change in capital or other changes
relating to the basic information of the FIE, including, without limitation, any increase in its registered capital or total investment,
the FIE must register such changes with the bank located at its registered place after obtaining approval from or completing the filing
with relevant authorities. Pursuant to the relevant foreign exchange laws and regulations, such foreign exchange registration with the
banks will typically take less than four weeks upon the acceptance of the registration application.

 Based
on the foregoing, if we intend to provide funding to our wholly foreign-owned subsidiaries through capital injection at or after their
establishment, we must register the establishment of and any follow-on capital increase in our wholly foreign-owned subsidiaries with
the State Administration for Market Regulation or its local counterparts, file such via the enterprise registration system, and register
such with the local banks for the foreign exchange related matters.

on Offshore Financing

 Under
the Circular of the SAFE on Issues Concerning the Foreign Exchange Administration over the Overseas Investment and Financing and Round-Trip
Investment by Domestic Residents via Special Purpose Vehicles, or SAFE Circular 37, effective on July 4, 2014, Mainland China residents
are required to register with the local SAFE branch prior to the establishment or control of an offshore special purpose vehicle, which
is defined as an offshore enterprise directly established or indirectly controlled by Mainland China residents for investment and financing
purposes, with the enterprise assets or interests Mainland China residents hold in Mainland China or overseas. The term "control"
means to obtain the operation rights, right to proceeds, or decision-making power of a special purpose vehicle through acquisition, trust,
holding shares on behalf of others, voting rights, repurchase, convertible bonds, or other means. At the same time, the SAFE has issued
the Operation Guidance for the Issues Concerning Foreign Exchange Administration over Round-Trip Investment regarding the procedures
for SAFE registration under SAFE Circular 37, which became effective on July 4, 2014 as an attachment of SAFE Circular 37.

 The
Mainland China residents are also required to amend the registration or filing with the local SAFE branch any material change in the
offshore company, such as any change of basic information (including change of such Mainland China residents, name and operation term),
increase or decreases in investment amount, transfers or exchanges of shares, or merger or divisions. On February 28, 2015, SAFE promulgated
the Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which
became effective on June 1, 2015. Pursuant to SAFE Notice 13, instead of applying for approvals regarding foreign exchange registrations
of foreign direct investment and overseas direct investment from SAFE as required under current laws, entities and individuals will be
required to apply for such foreign exchange registrations, including those required under the SAFE Circular 37, from qualified banks.
The qualified banks, under the supervision of SAFE, will directly examine the applications and conduct the registration.

to comply with the registration procedures set forth in the SAFE Circular 37, or making misrepresentation on or failure to disclose controllers
of foreign-invested enterprise that is established through round-trip investment, may result in restrictions being imposed on the foreign
exchange activities of the relevant onshore company, including the increase of its registered capital, the payment of dividends and other
distributions to its offshore parent or affiliate and the capital inflow from the offshore entities, and may also subject relevant Mainland
China residents to penalties under Mainland China foreign exchange administration regulations. Mainland China residents who directly
or indirectly hold any shares in our company from time to time are required to register with SAFE in connection with their investments
in us. We have requested Mainland China residents holding direct or indirect interest in our company to our knowledge to make the necessary
applications, filings and amendments as required under the SAFE Circular 37 and other related rules.

 As
of the date of this Annual Report, the Mainland China residents have either not completed, or have not applied for, foreign exchange
registration under the SAFE Circular 37 and other related rules. Although they are either in the process of making foreign exchange registration
or plan to make foreign exchange registrations, they may still be faced with the above possible fines in accordance with the PRC Laws.

on Dividend Distribution

 The
principal laws and regulations regulating the distribution of dividends by FIEs in Mainland China include the PRC Company Law, as amended
in 2004, 2005, 2013, and 2018, and the 2019 PRC Foreign Investment Law and its Implementation Rules. Under the current regulatory regime
in Mainland China, FIEs in Mainland China may pay dividends only out of their retained earnings, if any, determined in accordance with
Mainland China accounting standards and regulations. A Mainland China company is required to set aside as statutory reserve funds at
least 10% of its after-tax profit, until the cumulative amount of such reserve funds reaches 50% of its registered capital unless laws
regarding foreign investment provide otherwise. A Mainland China company cannot distribute any profits until any losses from prior fiscal
years have been offset. Profits retained from prior fiscal years may be distributed together with distributable profits from the current
fiscal year.

 We
currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our
business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment
in our common stock as a source for any future dividend income.

on M&A and Overseas Listing

 In
August 2006, six PRC governmental agencies jointly promulgated the Provisions on Foreign-funded Mergers and Acquisitions of Domestic
Enterprises, or the M&A Rule, as most recently amended in 2009. The M&A Rule requires offshore special purpose vehicles formed
to pursue overseas listing of equity interests in Mainland China companies and controlled directly or indirectly by Mainland China companies
or individuals to obtain the approval of the China Securities Regulatory Commission ("CSRC") prior to the listing and trading
of such special purpose vehicle's securities on any stock exchange overseas.

 The
M&A Rule further requires that the Ministry of Commerce, or MOFCOM, be notified in advance of any change-of-control transaction in
which a foreign investor acquires control of a Mainland China domestic enterprise or a foreign company with substantial Mainland China
operations, if certain thresholds under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, issued
by the State Council, are triggered. Moreover, the Anti-Monopoly Law promulgated by the Standing Committee of the NPC requires that transactions
which are deemed concentrations and involve parties with specified turnover thresholds be cleared by the MOFCOM before they can be completed.

 On
February 17, 2023, with the approval of the State Council, the CSRC released the Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies, or the Trial Administrative Measures, and five supporting guidelines, which came into effect
on March 31, 2023. According to the Trial Administrative Measures, (1) domestic companies that seek to offer or list securities overseas,
both directly and indirectly, should fulfill the filing procedure and report relevant information to the CSRC; (2) if the issuer meets
both of the following conditions, the overseas offering and listing shall be determined as an indirect overseas offering and listing
by a domestic company: (i) any of the total assets, net assets, revenues or profits of the domestic operating entities of the issuer
in the most recent accounting year accounts for more than 50% of the corresponding figure in the issuer's audited consolidated
financial statements for the same period; (ii) its major operational activities are carried out in Mainland China or its main places
of business are located in Mainland China, or the senior managers in charge of operation and management of the issuer are mostly Chinese
citizens or are domiciled in Mainland China; and (3) where a domestic company seeks to indirectly offer and list securities in an overseas
market, the issuer shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and where an
issuer makes an application for initial public offering and listing in an overseas market, the issuer shall submit filings with the CSRC
within three business days after such application is submitted. According to the relevant provisions of the Trial Administrative Measures
and its supporting guidelines, the Company is required to fulfill the filing procedures with the CSRC within three days of the closing
of the Offering. According to the Trial Administrative Measures, the Company has submitted the filing materials to the CSRC, but the
materials were not complete due to lack of a commitment letter from the Company's lead underwriter for the Offering, and the
Company withdrew the filing from the CSRC. The Company will submit the filing materials again when the materials are ready. However,
given that the Trial Administrative Measures were recently promulgated, there remain substantial uncertainties as to their interpretation,
application, and enforcement and there is no guarantee that the relevant PRC government agencies, including the CSRC, would reach the
same conclusion that we and our PRC counsel have reached. If the CSRC has determined that we have failed to comply with the post-offering
filing obligations imposed by the Trial Administrative Measures or make a misrepresentation, misleading statement or material omission
in the materials we submit to the CSRC, the CSRC would have the right to order rectification, issue a warning and impose a fine on us
of between RMB 1 million and RMB 10 million and issuing a warning to the parties responsible for such failure, misrepresentation or material
omission and impose a fine on each of such individuals ranging from RMB 500,000 to RMB 5 million.

 On February 17, 2023, the CSRC held a press conference for the release of the Trial Administrative Measures and issued
the Notice on Administration for the Filing of Overseas Offering and Listing by Domestic Companies, which, among others, clarifies that
(1) a six-month transition period will be granted to domestic companies which, prior to the effective date of the Trial Administrative
Measures, have already obtained the approval from overseas regulatory authorities or stock exchanges, such as completion of registration
in the market of the United States, but have not completed the indirect overseas listing; and (2) domestic companies that have already
submitted valid applications for overseas offering and listing but have not obtained approval from overseas regulatory authorities or
stock exchanges on or prior to the effective date of the Trial Administrative Measures, may reasonably arrange the timing for submitting
their filing applications with the CSRC, and shall complete the filing before the completion of their overseas offering and listing.

on Taxation

 Enterprise
Income Tax

 On
March 16, 2007, the National People's Congress promulgated the PRC Enterprise Income Tax Law, which was amended on February 24,
2017 and December 29, 2018. On December 6, 2007, the State Council enacted the Regulations for the Implementation of the Enterprise Income
Tax Law, which became effective on January 1, 2008 and amended on April 23, 2019. Under the Enterprise Income Tax Law and the relevant
implementation regulations, both resident enterprises and non-resident enterprises are subject to tax in Mainland China. Resident enterprises
are defined as enterprises that are established in Mainland China in accordance with PRC laws, or that are established in accordance
with the laws of foreign countries but are actually or in effect controlled from within Mainland China. Non-resident enterprises are
defined as enterprises that are organized under the laws of foreign countries and whose actual management is conducted outside Mainland
China, but have established institutions or premises in Mainland China, or have no such established institutions or premises but have
income generated from inside Mainland China. Under the Enterprise Income Tax Law and relevant implementing regulations, a uniform corporate
income tax rate of 25% is applied. However, if non-resident enterprises have not formed permanent establishments or premises in Mainland
China, or if they have formed permanent establishment or premises in Mainland China but there is no actual relationship between the relevant
income derived in Mainland China and the established institutions or premises set up by them, enterprise income tax is set at the rate
of 10% with respect to their income sourced from inside Mainland China.

 Value-Added
Tax

 The
PRC Provisional Regulations on Value-Added Tax were promulgated by the State Council on December 13, 1993, which became effective on
January 1, 1994 and were subsequently amended from time to time. The Detailed Rules for the Implementation of the PRC Provisional Regulations
on Value-Added Tax (2011 Revision) was promulgated by the Ministry of Finance on December 25, 1993 and subsequently amended on December
15, 2008 and October 28, 2011. On November 19, 2017, the State Council promulgated the Decisions on Abolishing the PRC Provisional Regulations
on Business Tax and Amending the PRC Provisional Regulations on Value-Added Tax. Pursuant to these regulations, rules and decisions,
all enterprises and individuals engaged in sale of goods, provision of processing, repair, and replacement services, sales of services,
intangible assets, real property, and the importation of goods within Mainland China territory are VAT taxpayers. On March 21, 2019,
the Ministry of Finance, the SAT, and the General Administration of Customs jointly issued the Announcement on Relevant Policies on Deepen
the Reform of Value-Added Tax. Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price
and VAT rates range up to 17%, starting from May 1, 2018, VAT rate was lowered to 16%, and starting from April 1, 2019, VAT rate was
further lowered to 13%.

 Dividend
Withholding Tax

 The
Enterprise Income Tax Law provides that since January 1, 2008, an income tax rate of 10% will normally be applicable to dividends declared
to non-Mainland China resident investors that do not have an establishment or place of business in Mainland China, or that have such
establishment or place of business but the relevant income is not effectively connected with the establishment or place of business,
to the extent such dividends are derived from sources within Mainland China.

to the Arrangement Between the Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and
the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital, and other applicable PRC laws, if a Hong Kong resident
enterprise is determined by the competent Mainland China tax authority to have met the relevant conditions and requirements under this
arrangement and other applicable laws, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a Mainland
China resident enterprise may be reduced to 5%. However, based on the Circular on Certain Issues with Respect to the Enforcement of Dividend
Provisions in Tax Treaties issued on February 20, 2009, if the relevant Mainland China tax authorities determine, in their discretions,
that a company benefits from such reduced income tax rate due to a structure or arrangement that is primarily tax-driven, such Mainland
China tax authorities may adjust the preferential tax treatment. Pursuant to the Circular on Several Questions regarding the "Beneficial
Owner" in Tax Treaties, which was issued on February 3, 2018 by the SAT and became effective on April 1, 2018, when determining
the applicant's status as the "beneficial owner" regarding tax treatments in connection with dividends, interests,
or royalties in the tax treaties, several factors, including, without limitation, whether the applicant is obligated to pay more than
50% of his or her income in twelve months to residents in third country or region, whether the business operated by the applicant constitutes
the actual business activities, and whether the counterparty country or region to the tax treaties does not levy any tax or grant any
tax exemption on relevant incomes or levy tax at an extremely low rate, will be taken into account, and such factors will be analyzed
according to the actual circumstances of the specific cases. This circular further provides that an applicant who intends to prove his
or her status as the "beneficial owner" must submit the relevant documents to the relevant tax bureau pursuant to the Announcement
on Issuing the Measures for the Administration of Non-Resident Taxpayers' Enjoyment of the Treatment under Tax Agreements.

on Employment Laws

 In
accordance with the PRC National Labor Law, which became effective in January 1995 and amended from time to time, and the PRC Labor Contract
Law, which became effective in January 2008, as amended subsequently, employers must execute written labor contracts with full-time employees
in order to establish an employment relationship. All employers must compensate their employees equal to at least the local minimum wage
standards. All employers are required to establish a system for labor safety and sanitation, strictly abide by state rules and standards
and provide employees with appropriate workplace safety training. In addition, employers in Mainland China are obliged to pay contributions
to the social insurance plan and the housing fund plan for employees.

 On
December 28, 2021, the Measures for Cybersecurity Review (2021 version) were promulgated and became effective on February 15, 2022 (the
"Measures"), which iterates that any "online platform operators" controlling personal information of more than
one million users that seeks to list on a foreign stock exchange shall also be subject to cybersecurity review. As we are neither an
"operator of critical information infrastructure" nor a "data processor" carrying out data processing activities
that affect or may affect national security, we believe that the Measures are not applicable to us even after they take effect in current
form. The PRC government is increasingly focused on data security, recently launching cybersecurity review against a number of mobile
apps operated by several US-listed Chinese companies and prohibiting these apps from registering new users during the review period.
There are great uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations regarding data and privacy
security. We may be required to change our data and other business practices and be subject to regulatory investigations, penalties,
and increased cost of operations as a result of these laws and policies.

 Employees

 As
of the date of this Annual Report, we had 131 employees. We have no part time employees or independent contractors.

 As
required by regulations in China, Sichuan Vtouch participates in various employee social security plans that are organized
by local governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance
and housing insurance. Sichuan Vtouch is required under Chinese law to make contributions to employee benefit plans at
specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local
government from time to time.

 Our
employees are not represented by a labor organization or covered by a collective bargaining agreement. We believe that we maintain a
good working relationship with our employees and to date, we have not experienced any significant labor disputes.

 ITEM
 1A.

 RISK
 FACTORS

 Investing
in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together
with all of the other information contained in this Annual Report, before deciding to invest in our securities. If any of the following
risks materialize, our business, financial condition, results of operation and prospects will likely be materially and adversely affected.
In that event, the market price of our common stock could decline, and you could lose all or part of your investment.

 Summary
of Risks Affecting Our Company

 The
following summarizes key risks and uncertainties that could materially adversely affect us. You should read this summary together with
the more detailed description of each risk factor contained below.

 Risks
Related to Our Business and Industry

 Weaknesses
 identified in our financial reporting during audits could impair our ability to accurately report financial results.

 Dependency
 on major customers presents risks if we cannot retain or attract new customers effectively.

 Our operating history may not be indicative of our future growth or financial results and we may not be able to sustain our historical growth rates.

 to secure new land for facilities could severely impact our operations and financial health.

 We are subject to risks related to construction of our factory in Sichuan
Province, China.

 The COVID-19 pandemic and other crises could disrupt operations and negatively
affect our business, financial condition, and results.

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

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

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

 Cyclical
 industry dynamics could lead to harmful price fluctuations.

 to maintain product quality and safety could damage our reputation and financial standing.

 Intense
 competition in the touchscreen display industry could reduce market share and profitability.

 Inadequate
 financing could restrict our ability to execute our business plan.

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

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

 Interruptions
 from third-party suppliers could disrupt operations.

 Fluctuations
 in the cost and availability of raw materials could negatively affect results.

 Dependency
 on key executives and the lack of long-term supplier contracts pose risks.

 to adopt new technologies might affect competitiveness.

 Liability
 claims or adverse publicity could impact customer confidence and business results.

 Losses
 on inventories and lack of business insurance could expose us to significant costs.

 Risks
Related to Doing Business in China

 Regulatory
 changes in China could increase compliance costs and complicate capital raising.

 The
 HFCAA could lead to delisting of our common stock if audits are not inspected properly.

 We may be subject to substantial fine if the CSRC has determined that we
have failed to comply with the post-offering filing obligations.

 in U.S.-China trade policies could adversely impact our business operations.

 PRC
 regulation of loans and currency conversion could delay or prevent capital usage, affecting liquidity.

 Labor
 laws in the PRC might negatively impact our operational flexibility and financial results.

 Liabilities
 under the Foreign Corrupt Practices Act and Chinese anti-corruption law could lead to penalties.

 Bankruptcy
 or liquidation of our PRC subsidiary could significantly disrupt operations.

 Economic
 and policy changes in China could limit our ability to offer securities.

 Uncertainties
 in the PRC legal system could limit legal protections.

 Difficulties
 in enforcing foreign judgments in China could undermine contractual protections.

 Government
 control of currency conversion and fluctuations in exchange rates could impact financial results and investments.

 The
 Chinese government's substantial influence over business operations could lead to significant operational changes.

 Risks
Related to Our Common Stock

 Volatility
 in the price of our common stock may not reflect our operating performance.

 By-laws
 limiting the judicial forum for disputes could restrict stockholder litigation options.

 Manipulative
 short selling could drive down our stock price.

 Direct
 exposure to negative publicity involving U.S.-listed Chinese companies could harm our business and reputation.

 Large
 volumes of our common stock being sold could negatively affect the market price.

 Non-payment
 of dividends means stockholders must rely on stock price appreciation for returns.

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

 Risks
Related to Our Business and Industry

 The
COVID-19 pandemic, as well as other epidemics, natural disasters, terrorist activities, political unrest, and other outbreaks could disrupt
our delivery and operations, which could materially and adversely affect our business, financial condition, and results of operations.

 COVID-19
has had a global economic impact on the financial markets. The global spread of COVID-19 pandemic may result in global economic distress,
and the extent to which it may affect our results of operations will depend on future developments, which are highly uncertain and cannot
be predicted. We cannot assure you that the COVID-19 pandemic can be eliminated or contained in the near future, or at all, or a similar
outbreak will not occur again. If the COVID-19 pandemic and the resulting disruption to our business were to extend over a prolonged
period, it could materially and adversely affect our business, financial condition, and results of operations.

 In
addition, global pandemics, epidemics in Mainland China or elsewhere in the world, or fear of spread of contagious diseases, such as
Ebola virus disease (EVD), Middle East respiratory syndrome (MERS), severe acute respiratory syndrome (SARS), H1N1 flu, H7N9 flu, and
avian flu, as well as hurricanes, earthquakes, tsunamis, or other natural disasters could also disrupt our business operations, reduce
or restrict our supply of products and services, incur significant costs to protect our employees and facilities, or result in regional
or global economic distress, which may materially and adversely affect our business, financial condition, and results of operations.
Actual or threatened war, terrorist activities, political unrest, civil strife, and other geopolitical uncertainty could have a similar
adverse effect on our business, financial condition, and results of operations. Any one or more of these events may impede our production
and delivery efforts and adversely affect our sales results, or even for a prolonged period of time, which could materially and adversely
affect our business, financial condition, and results of operations.

 We
are also vulnerable to natural disasters and other calamities. We cannot assure you that we are adequately protected from the effects
of fire, floods, typhoons, earthquakes, power loss, telecommunications failures, break-ins, war, riots, terrorist attacks, or similar
events. Any of the foregoing events may give rise to interruptions, damage to our property, delays in production, breakdowns, system
failures, technology platform failures, or internet failures, which could cause the loss or corruption of data or malfunctions of our
manufacturing facility as well as adversely affect our business, financial condition, and results of operations.

 In
connection with the audits of our consolidated financial statements as of and for the years ended December 31, 2022 and 2023, we identified
certain material weaknesses in our internal control over financial reporting. If we fail to develop and maintain an effective system
of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud.

 The
SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company to include a management
report on such company's internal controls over financial reporting, which contains management's assessment of the effectiveness
of internal controls over financial reporting.

 Our
reporting obligations as a public company place a significant strain on our management and operational and financial resources and systems.
Effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports
and are important to prevent fraud. As a result, our failure to achieve and maintain effective internal controls over financial reporting
may result in the loss of investor confidence in the reliability of our financial statements, which in turn may harm our business and
negatively impact the trading price of our stock. Furthermore, we anticipate that we will continue to incur considerable costs and use
significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley
Act.

 In
connection with the auditing of our consolidated financial statements as of and for the years ended December
31, 2023 and 2022, we identified the following material weaknesses in our internal control over financial reporting:

 Inadequate
 segregation of duties consistent with control objectives;

 Lack
 of formal policies and procedures;

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

 As
defined in the rules and regulations adopted by the SEC, a "material weakness" is a deficiency, or combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual
or interim financial statements will not be prevented or detected on a timely basis.

has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness
are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions planned include:

 Continue
 to search for and evaluate qualified independent outside directors;

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

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

 We
have also engaged with a third-party financial consulting firm during the year to assist with the preparation of SEC reporting. We are
committed to maintaining a strong internal control environment, and believe that these remediation efforts will deliver improvements
in our control environment. Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness
of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing
additional enhancements or improvements, as necessary and as funds allow.

 However,
the implementation of these measures may not fully address these weaknesses in our internal control over financial reporting, and we
cannot conclude that they have been fully remedied. Our failure to correct these weakness and deficiencies or our failure to discover
and address any other weakness and deficiencies could result in our inability to accurately report our financial results, prevent or
detect fraud or provide timely and reliable financial and other information pursuant to the reporting obligations we have as a public
company, which could have a material adverse effect on our business, financial condition and results of operations. Further, it could
cause our investors to lose confidence in the information we report, which could adversely affect the price of our shares.

 We
are heavily dependent on our top customers. If we fail to acquire new customers or retain existing customers in a cost-effective manner,
our business, financial condition and results of operations may be materially and adversely affected.

 We
are heavily dependent on our top customers, each of which accounted for 10% or more of our revenues. We currently sell our products primarily
to customers in the PRC and to a lesser extent, overseas customers in European countries and East Asia such as South Korea and
Taiwan. For the year ended December 31, 2023, four customers accounted for 31.7%, 16.2%, 15.8% and 11.5% of the total accounts receivable
balance, respectively. For the year ended December 31, 2022, three customers accounted for 32.2%, 22.8%, and 14.0% of the
total accounts receivable balance, respectively.

 Our
ability to attract new customers and retain existing customers cost-effectively, especially our top customers, is crucial to driving
net revenues growth and achieving profitability. We have invested significantly in branding, sales and marketing to acquire and retain
customers since our inception. For example, we attend domestic and international expos and exhibitions to market our products and attract
new customers. We also expect to continue to invest significantly to acquire new customers and retain existing ones, especially
our top customers. There can be no assurance that new customers will stay with us, or the net revenues from new customers we acquire
will ultimately exceed the cost of acquiring those customers. In addition, if our existing customers, especially our existing top customers
no longer find our products appealing, or if our competitors offer more attractive products, prices, discounts or better customer services,
our existing customers may lose interest in us, decrease their orders or even stop ordering from us. If we are unable to retain our existing
customers, especially our top customers or to acquire new customers in a cost-effective manner, our revenues may decrease and our results
of operations will be adversely affected.

 Our
operating history may not be indicative of our future growth or financial results and we may not be able to sustain our historical growth
rates.

 Our
operating history may not be indicative of our future growth or financial results. There is no assurance that we will be able to grow
in future periods. Our growth rates may decline for any number of possible reasons and some of them are beyond our control, including
decreasing customer demand, increasing competition, declining growth of the touchscreen display industry in general, emergence of alternative
business models, or changes in government policies or general economic conditions. We will continue to expand our sales network and product
offerings to bring greater convenience to our customers and to increase our customer base and number of transactions. However, the execution
of our expansion plan is subject to uncertainty and the total number of items sold and number of transacting customers may not grow at
the rate we expect for the reasons stated above. If our growth rates decline, investors' perceptions of our business and prospects
may be adversely affected and the market price of our common stock could decline.

to secure a new parcel of land for the construction of our new buildings and facilities, and failure to acquire and install new production
lines on the new parcel may materially and adversely affect our business, financial condition and results of operations.

the year ended December 31, 2021, our use right to the Property was withdrawn by the local government and all ownership certificates
pertaining to the buildings on the Property were returned to the local government for cancellation.

 In
order to minimize the interruption of our business, Sichuan Vtouch entered into a Leaseback Agreement with Sichuan Renshou on March
16, 2021. The Leaseback Agreement entitles us to lease back the Properties commencing from April 1, 2021 until December 31, 2021, at
a monthly rent of RMB300,000 (approximately $46,154), which period has been extended to October 31, 2022. On October 16, 2022,
Sichuan Vtouch entered an extension to the Leaseback Agreement with Sichuan Renshou to extend the period it granted Sichuan Vtouch
to lease back the Properties until October 31, 2023, then subsequently extended to October 31, 2024, at a monthly rent of RMB400,000
(approximately $59,941). The management believes that the Company can further renew the lease if necessary.

 On July 23, 2021, Sichuan Vtouch entered into a contract with the Chengdu Wenjiang District Planning and Natural
Resources Bureau for the purchase of a land use right for a parcel of land spanning 131,010 square feet, for a consideration of RMB3,925,233
(equivalent to $537,998) for the Company's new facility. The Company paid the consideration in full on November 18, 2021. The Company
estimates receiving the certificate of land use right from the local government in the fourth quarter of 2024.

 As
of the date of this Annual Report, we estimate to finish the building construction by the end of 2024 and commence production in the third quarter of 2025, but there is no assurance and we may need extended time to achieve our
business plan. If we fail to complete such construction prior to estimated period and the extended period, if any, we will have to
cease all or part of our operations, and as a result, our business, financial condition and results of operations may be materially
and adversely affected.

 We
are subject to risks related to construction of our factory in Sichuan Province, China.

 We
are constructing new facilities and office buildings, located in Sichuan Province, China. As of the date of this Annual Report, we
estimates receiving the certificate of land use right from the local government in the fourth quarter of 2024. We plan to finish the
building construction by the end of 2024 and commence production in the third quarter of 2025.

 The
construction could experience delays or other difficulties, and will require significant capital. We may not generate sufficient cash
flow to satisfy our capital expenditure commitments. We may need to raise additional capital to fund a portion of our capital expenditures,
and such capital may not be available when needed or on terms favorable to our company. The construction may not be completed on schedule
due to various reasons, such as supply chain issues and increased difficulty for workforce recruitment, which could result in increased
expenses and construction costs, and may result in reduced profitability of the project. Any failure to complete the construction plan
on schedule and within budget could adversely affect our financial condition and results of operations.

 The
construction may be subject to legal claims and proceedings instituted by contractors, workers and other parties involved in such project
from time to time. Such claims and proceedings may include claims in respect of personal injuries and labor compensation in relation
to the construction project. The construction of a factory is also subject to risks related to health and safety incidents and site accidents
and any non-compliance with building codes and other local regulations. If any of the aforementioned incidents or accidents were to occur,
it could have a substantial negative impact on our success and result in a material adverse effect on our financial condition or results
of operations.

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

 Our
revenues are generated from sales of our capacitive touchscreen products both domestically and internationally and we anticipate that
revenues from such sales will continue to represent the substantial portion of our total revenues in the near future. Our sales and earnings
can also be affected by changes in the general economy.

 The
touchscreen display industry historically has experienced cyclical fluctuations in financial results due to economic recession, downturns in
business cycles of our customers, interest rate fluctuations, and other economic factors beyond our control. Deterioration in the economic
environment subjects our business to various risks, which may have a material and adverse impact on our operating results and cause us
to not reach our long-term growth goals. For example, a downturn in the economy could directly affect the discretionary spending power
of our customers and in turn, depress the number of orders for our products.

 We
may be subject to intellectual property infringement claims, which may be expensive to defend and may disrupt our business and operations.

 We
cannot be certain that our operations or any aspects of our business do not or will not infringe upon or otherwise violate intellectual
property rights held by third parties. We have not but in the future may be, subject to legal proceedings and claims relating to the
intellectual property rights of others. There could also be existing intellectual property of which we are not aware that our products
may inadvertently infringe. We cannot assure you that holders of intellectual property purportedly relating to some aspect of our technology
or business, if any such holders exist, would not seek to enforce such intellectual property against us in China, or any other jurisdictions.
If we are found to have violated the intellectual property rights of others, we may be subject to liability for our infringement activities
or may be prohibited from using such intellectual property, and we may incur licensing fees or be forced to develop alternatives of our
own. In addition, we may incur significant expenses, and may be forced to divert management's time and other resources from our
business and operations to defend against these infringement claims, regardless of their merits. Successful infringement or licensing
claims made against us may result in significant monetary liabilities and may materially disrupt our business and operations by restricting
or prohibiting our use of the intellectual property in question, and our business, financial position and results of operations could
be materially and adversely affected.

 Further,
the application and interpretation of China's patent laws and the procedures and standards for granting patents in China are still
evolving and are uncertain, and we cannot assure you that PRC courts or regulatory authorities would agree with our analysis.

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

 As
of December 31, 2023, we had approximately $7.5 million in accounts receivable. Our accounts receivable primarily include
balance due from customers when our products are sold and delivered to customers. Our customers are required to make full payment within
three to five months from delivery date, although our industry typical payment term is 180 days from delivery. For the years ended December
31, 2023 and 2022, we did not provide any extended payment terms to any of our customers. Deteriorating conditions in, bankruptcies,
or financial difficulties of a customer or within their industries generally may impair the financial condition of our customers and
hinder their ability to pay us on a timely basis or at all, and accounts receivable are written off against allowances only after exhaustive
collection efforts. The failure or delay in payment by one or more of our customers could reduce our cash flows and adversely affect
our liquidity and results of operations.

 Our
industry is cyclical, with recurring periods of capacity increases. As a result, price fluctuations in response to supply and demand
imbalances could harm our results of operations.

 The
touchscreen display industry in general is characterized by cyclical market conditions. From time to time, the industry has been subject
to imbalances between excess supply and a slowdown in demand, and in certain periods, resulting in declines in selling prices. In addition,
capacity expansion anticipated in the touchscreen display industry may lead to excess capacity. Capacity expansion in the industry may
be due to scheduled ramp-up of new manufacturing facilities, and any large increases in capacity as a result of such expansion could
further drive down the selling prices of our products, which would affect our results of operations. We cannot assure you that any continuing
or further decrease in selling prices or future downturns resulting from excess capacity or other factors affecting the industry will
not be severe or that any such continuation, decrease or downturn would not seriously harm our business, financial condition and results
of operations.

 Our
ability to maintain or increase our revenues will primarily depend upon our ability to maintain market share, increase unit sales of
existing products and introduce and sell new products that offset the anticipated fluctuation and long-term declines in the selling prices
of our existing products. We cannot assure you that we will be able to maintain or expand market share, increase unit sales, and introduce
and sell new products, to the extent necessary to compensate for market oversupply.

to maintain the quality and safety of our products could have a material and adverse effect on our reputation, financial condition and
results of operations.

 The
quality and safety of our products are critical to our success. We pay close attention to quality control, monitoring each step in the
process from procurement to production and from warehouse to delivery. Yet, maintaining consistent product quality depends significantly
on the effectiveness of our quality control system, which in turn depends on a number of factors, including but not limited to, the design
of our quality control system, employee training to ensure that our employees adhere to and implement our quality control policies and
procedures and the effectiveness of monitoring any potential violation of our quality control policies and procedures. There can be no
assurance that our quality control system will always prove to be effective.

 In
addition, the quality of the products or services provided by our suppliers or service providers is subject to factors beyond our control,
including the effectiveness and the efficiency of their quality control system, among others. There can be no assurance that our suppliers
or service providers may always be able to adopt appropriate quality control systems and meet our stringent quality control requirements
in respect of the products or services they provide. Any failure of our suppliers or service providers to provide satisfactory products
or services could harm our reputation and adversely impact our operations. In addition, we may be unable to receive sufficient compensation
from suppliers and service providers for the losses caused by them.

 We
face intense competition in the touchscreen display industry in general. If we fail to compete effectively, we may lose market share and customers,
and our business, financial condition and results of operations may be materially and adversely affected.

 The
touchscreen display industry is intensely competitive in general. We face less competition as we produce medium to large size capacitive touchscreens
which are specially tailored to certain industries, such as industrial HMI, gaming, financing, lottery, automotive, medical, and POS,
and requires more stable supply, longer guaranty and life span, compared with small size touchscreens which are characteristic with shorter
life cycle and guaranty but more demand in quantity. However, we still have some competitors competing in China and globally with us.
Our competitors may have more financial, technical, geographical advantage, marketing and other resources than we do and may be more
experienced and able to devote greater resources to the development, promotion and support of their business. Some competitors are well-established
in China and globally and any defensive measures they take in response to our expansion could hinder our growth and adversely affect
our sales and results of operations.

 Furthermore,
increased competition may reduce our market share and profitability and require us to increase our sales and marketing efforts and capital
commitment in the future, which could negatively affect our results of operations or force us to incur further losses. Although we have
accumulated some and continuously growing our customer base, there is no assurance that we will be able to continue to do so in the future
against current or future competitors, and such competitive pressures may have a material adverse effect on our business, financial condition
and results of operations.

 If
we do not obtain substantial additional financing, our ability to execute our business plan may be impaired.

 Due
to the withdrawal of the land use right to the Property and cancellation of our ownership certificates pertaining to the buildings on
the Property by the local government pursuant to the Guidelines and the Compensation Agreement, on July 23, 2021, Sichuan Vtouch entered
into a contract with the Chengdu Wenjiang District Planning and Natural Resources Bureau for the purchase of a land use right for a parcel
of land spanning 131,010 square feet, for a consideration of RMB3,925,233 (equivalent to $537,998) for the Company's new facility.
The Company paid the consideration in full on November 18, 2021. The Company estimates receiving the certificate of land use right from
the local government in the fourth quarter of 2024.

 As
of the date of this Annual Report, we estimate to finish the building construction by the end of 2024 and commence production in the third quarter of 2025, but there is no assurance and we may need extended time to achieve our
business plan. If we fail to complete such acquisition and construction within the estimated period, if any, we will have to cease
all or part of our operations, and as a result, our business, financial condition and results of operations may be materially and
adversely affected.

 In
addition, our plans may call for significant new investments in research and development, marketing, expanded productions capacity,
and working capital for raw materials and other items. Should our capital needs be higher than our estimation, we will be required
to seek additional investments, loans or debt financing to fully pursue our business plans. Such additional investment may not be
available to us on terms which are favorable or acceptable. Should we be unable to meet our full capital needs, our ability to fully
implement our business plan will be impaired.

 Any
adjustment of related party transaction pricing could lead to additional taxes, and therefore substantially reduce our consolidated net
income and the value of your investment.

 The
tax regime in China is rapidly evolving and there is significant uncertainty for taxpayers in China as PRC tax laws may be interpreted
in significantly different ways. The PRC tax authorities may assert that we or our subsidiaries owe and/or are required to pay additional
taxes on previous or future revenue or income. In particular, under applicable PRC laws, rules and regulations, arrangements and transactions
among related parties may be subject to audit or challenge by the PRC tax authorities. If the PRC tax authorities determine that any
contractual arrangements were not entered into on an arm's length basis and therefore constitute a favorable transfer pricing,
the PRC tax liabilities of the relevant subsidiaries could be increased, which could increase our overall tax liabilities. In addition,
the PRC tax authorities may impose late payment interest. Our net income may be materially reduced if our tax liabilities increase.

 If
our preferential tax treatments and government subsidies are revoked or become unavailable or if the calculation of our tax liability
is successfully challenged by the PRC tax authorities, we may be required to pay tax, interest and penalties in excess of our tax provisions.

 The
Chinese government has provided tax incentives to our former subsidiary in Mainland China, Sichuan Wetouch, including reduced enterprise
income tax rates. For example, under the PRC Enterprise Income Tax Law and its implementation rules, the statutory enterprise income
tax rate is 25%. However, the income tax of an enterprise that has been determined to be a qualified enterprise located in western region
of Mainland China can be reduced to a preferential rate of 15%. The qualification of preferential tax rate is effective for a renewable
three-year permitted. As we have dissolved Sichuan Wetouch, and its business and operations have been assumed by Sichuan Vtouch, Sichuan Vtouch has reapplied for the preferential rate of 15% as a qualified enterprise. Such application is currently
pending with the PRC tax authorities. If Sichuan Vtouch's application for the qualification of preferential
tax rate benefit is not approved, our PRC subsidiary will be subject to the statutory enterprise income tax rate of 25%. Further, in
the ordinary course of our business, we are subject to complex income tax and other tax regulations, and significant judgment is required
in the determination of a provision for income taxes. Although we believe our tax provisions are reasonable, if the PRC tax authorities
successfully challenge our position and we are required to pay tax, interest, and penalties in excess of our tax provisions, our financial
condition and results of operations would be materially and adversely affected.

 A
significant interruption in the operations of our third-party suppliers could potentially disrupt our operations.

 We
have limited control over the operations of our third-party suppliers and other business partners and any significant interruption in
their operations may have an adverse impact on our operations. For example, a significant interruption in the operations of our supplier's
manufacturing facilities could cause delays or termination of shipments of the raw materials to us, which may cause delays or termination
of shipments of our products to our customers, thus resulting in penalties or fines due to our breach of contract. If we could not solve
the impact of the interruptions of operations of our third-party suppliers, our business operations and financial results may be materially
and adversely affected.

 We
face the risk of fluctuations in the cost, availability and quality of our raw materials, which could adversely affect our results of
operations.

 The
cost, availability and quality of the raw materials, such as indium tin oxide glasses and panels, are important to our operations. If
the cost of raw materials increases due to large market price fluctuation or due to any other reason, our business and results of operations
could be adversely affected. Lack of availability of these raw materials, whether due to shortages in supply, delays or interruptions
in processing, failure of timely delivery or otherwise, could interrupt our operations and adversely affect our financial results.

 We
are dependent upon key executives and highly qualified managers and we cannot assure their retention.

 Our
success depends, in part, upon the continued services of key members of our management. Our executives' and managers' knowledge
of the market, our business and our Company represents a key strength of our business, which cannot be easily replicated. The success
of our business strategy and our future growth also depend on our ability to attract, train, retain and motivate skilled managerial,
sales, administration, development and operating personnel.

 There
can be no assurance that our existing personnel will be adequate or qualified to carry out our strategy and operations, or that we will
be able to hire or retain experienced, qualified employees to carry out our strategy and operations. The loss of one or more of our key
management or operating personnel, or the failure to attract and retain additional key personnel, could have a material adverse effect
on our business, financial condition and results of operations.

 We
do not have long-term contracts with our suppliers and they can reduce order quantities or terminate their sales to us at any time.

 Our
PRC subsidiary does not have long term contracts with our suppliers. At any time, our suppliers can reduce the quantities of products
they sell to us, or cease selling products to us altogether. Such reductions or terminations could have a material adverse impact on
our revenues, profits and financial condition.

 If
we fail to adopt new technologies to evolving customer needs or emerging industry standards, our business may be materially and adversely
affected.

 To
remain competitive, we must continue to stay abreast of the constantly evolving industry trends and to enhance and improve our technology
accordingly. Our success will depend, in part, on our ability to identify, develop, acquire or license leading technologies useful in
our business. There can be no assurance that we will be able to use new technologies effectively or meet customer's requirements.
If we are unable to adapt in a cost-effective and timely manner in response to changing market conditions or customer preferences, whether
for technical, legal, financial or other reasons, our business may be materially and adversely affected.

 We
may experience significant liability claims or complaints from customers, or adverse publicity involving our products
and our services.

 We
face an inherent risk of liability claims or complaints from our customers. We take our customers' complaints seriously and endeavor
to reduce such complaints by implementing various remedial measures. Nevertheless, we cannot assure you that we can successfully prevent
or address all customer complaints.

 Any
complaints or claims against us, even if meritless and unsuccessful, may divert management attention and other resources from our business
and adversely affect our business and operations. Customers may lose confidence in us and our brand, which may adversely affect our business
and results of operations. Furthermore, negative publicity including but not limited to negative online reviews on social media and crowd-sourced
review platforms, industry findings or media reports related to safety and quality of our products, whether or not accurate, and whether
or not concerning our products, can adversely affect our business, results of operations and reputation.

 We
may experience losses on inventories.

 Frequent
new product introductions in the technology industry can result in a decline in the selling prices of our products and the obsolescence
of our existing inventory. This can result in a decrease in the stated value of our inventory, which we value at the lower of cost or
net realizable value.

 We
manage our inventory based on our customers' and our own forecasts. Although we regularly make adjustments based on market conditions,
we typically deliver our goods to our customers several weeks after a firm order is placed. While we maintain open channels of communication
with our top customers to avoid unexpected decreases in firm orders or subsequent changes to placed orders, and try to minimize our inventory
levels, such actions by our customers may have a material adverse effect on our inventory management and our results of operations.

 We
have no business liability or disruption insurance, which could expose us to significant costs and business disruption.

 The
insurance industry in China is still at an early stage of development, and insurance companies in China currently offer limited business-related
insurance products. We do not have any business liability or disruption insurance to cover our operations. We have determined that the
costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable terms make
it impractical for us to have such insurance. Any uninsured risks may result in substantial costs and the diversion of resources, which
could adversely affect our results of operations and financial condition.

 We
may incur liabilities that are not covered by insurance.

 While
we seek to maintain appropriate levels of insurance, not all claims are insurable and we may experience major incidents of a nature
that are not covered by insurance. We do not have any insurance that cover, among other things, employee-related accidents and injuries,
product or business liability and other property damage and liability deriving from our activities. Furthermore, insurance companies
in China currently do not offer as extensive an array of insurance products as insurance companies in more developed economies. We have
determined that the costs of insuring for these risks and the difficulties associated with acquiring such insurance on commercially reasonable
terms make it impractical for us to have such insurance. We maintain an amount of insurance protection that we believe is adequate, but
there can be no assurance that such insurance will continue to be available on acceptable terms or that our insurance coverage will be
sufficient or effective under all circumstances and against all liabilities to which we may be subject. If we were to incur substantial
losses or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of
operations could be materially and adversely affected. We could, for example, be subject to substantial claims for damages upon the occurrence
of several events within one calendar year. In addition, our insurance costs may increase over time in response to any negative
development in our claims history or due to material price increases in the insurance market in general.

 We
may not be able to adequately protect and maintain our intellectual property.

 Our
success will depend on our ability to continue to develop and market our products. We have been have five pending patent
applications as of the date of this Annual Report. No assurance can be given that such patents will not be challenged, invalidated,
infringed or circumvented, or that such intellectual property rights will provide a competitive advantage to us. Also, litigation
may be necessary to enforce our intellectual property rights or determine the validity and scope of the proprietary rights of
others. The outcome of such potential litigation may not be in our favor and any success in litigation may not be able to adequately
protect our rights. Such litigation may be costly and divert management attention away from our business. An adverse determination
in any such litigation would impair our intellectual property rights and may harm our business, prospects and reputation.
Enforcement of judgments in China is uncertain and even if we are successful in such litigation it may not provide us with an
effective remedy.

 Our
introduction of new technologies and products may increase the likelihood that third parties will assert claims that our products infringe
upon their proprietary rights.

 The
rapid technological changes that characterize our industry require that we quickly implement new processes and components with respect
to our products. Often with respect to recently developed processes and components, a degree of uncertainty exists as to who may rightfully
claim ownership rights in such processes and components. Uncertainty of this type increases the risk that claims alleging that such components
or processes infringe upon third party rights may be brought against us. Although we take and will continue to take steps to ensure that
our new products do not infringe upon third party rights, if our products or manufacturing processes are found to infringe upon third
party rights, we may be subject to significant liabilities and be required to change our manufacturing processes or be prohibited from
manufacturing certain products, which could have a material adverse effect on our operations and financial condition.

 We
may be required to defend against charges of infringement of patent or other proprietary rights of third parties. Although patent and
other intellectual property disputes in our industry have often been settled through licensing or similar arrangements, such defense
could require us to incur substantial expense and to divert significant resources of our technical and management personnel, and could
result in our loss of rights to develop or make certain products or require us to pay monetary damages or royalties to license proprietary
rights from third parties. Furthermore, we cannot be certain that the necessary licenses would be available to us on acceptable terms,
if at all. Accordingly, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could
prevent us from manufacturing and selling certain of our products. Any such litigation, whether successful or unsuccessful, could result
in substantial costs to us and diversions of our resources, either of which could adversely affect our business.

 Risks
Related to Doing Business in China

 Adverse
regulatory developments in China may subject us to additional regulatory review and expose us to government restrictions, and additional
disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments
in China may impose additional compliance requirements for companies with significant China-based operations, all of which could increase
our compliance costs, subject us to additional disclosure requirements, and/or suspend or terminate our future securities offerings,
making capital-raising more difficult.

 As
substantially all of our operations are based in China, we are subject to a wide range of relevant PRC laws. The recent regulatory developments
in China, in particular with respect to restrictions on China-based companies raising capital offshore and the government-led cybersecurity
reviews of certain companies, may lead to additional regulatory review in China over our financing and capital raising activities in
the United States. In addition, we may become subject to industry-wide regulations that may be adopted by the relevant PRC authorities,
which may have the effect of limiting our product and service offerings, restricting the scope of our operations in China, or causing
the suspension or termination of our business operations in China entirely, all of which will materially and adversely affect our business,
financial condition and results of operations. We may have to adjust, modify, or completely change our business operations in response
to adverse regulatory changes or policy developments, and we cannot assure you that any remedial action adopted by us can be completed
in a timely, cost-efficient, or liability-free manner or at all.

 On
July 6, 2021, the relevant PRC government authorities published the Opinions on Strictly Cracking Down Illegal Securities Activities
in Accordance with the Law. These opinions call for strengthened regulation over illegal securities activities and supervision on overseas
listings by China-based companies and propose to take effective measures, such as promoting the construction of relevant regulatory systems
to deal with the risks and incidents faced by China-based overseas-listed companies. On December 24, 2021, the CSRC released the Administrative
Provisions of the State Council Regarding the Overseas Issuance and Listing of Securities by Domestic Enterprises (Draft for Comments)
(the "Draft Administrative Provisions") and the Measures for the Overseas Issuance of Securities and Listing Record-Filings
by Domestic Enterprises (Draft for Comments) (the "Draft Filing Measures", together with the Draft Administrative Provisions,
the "Draft Rules"). The Draft Rules lay out the filing regulations for both direct and indirect overseas listings and clarify
the determination criteria for indirect overseas listings in overseas markets. Among other requirements, if a domestic enterprise intends
to indirectly offer and list securities in an overseas market, the record-filing obligation shall be completed within three working days
after the overseas listing application is submitted. On February 17, 2023, the CSRC promulgated the Trial Administrative Measures, which took effect on
March 31, 2023. The Trial Administrative Measures further stipulate the rules and requirements for overseas offering and listing conducted
by PRC domestic companies. Upon the effectiveness of the Trial Administrative Measures, we could be required to go through the filing
procedure. If required, we cannot assure you that we will be able to complete such process on time or at all.

 On
July 10, 2021, the Cyberspace Administration of China issued the Measures for Cybersecurity Review (Revision Draft for Comments), or
the Measures, for public comments, which propose to authorize the relevant government authorities to conduct cybersecurity review on
a range of activities that affect or may affect national security, including listings in foreign countries by companies that possess
the personal data of more than one million users. On December 28, 2021, the Measures for Cybersecurity Review (2021 version) were promulgated
and became effective on February 15, 2022 (the "Measures"), which iterates that any "online platform operators"
controlling personal information of more than one million users that seeks to list on a foreign stock exchange shall also be subject
to cybersecurity review. As we are neither an "operator of critical information infrastructure" nor a "data processor"
carrying out data processing activities that affect or may affect national security, we believe that the Measures are not applicable
to us even after they take effect in current form. The PRC government is increasingly focused on data security, recently launching cybersecurity
review against a number of mobile apps operated by several US-listed Chinese companies and prohibiting these apps from registering new
users during the review period. There are great uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations
regarding data and privacy security. We may be required to change our data and other business practices and be subject to regulatory
investigations, penalties, and increased cost of operations as a result of these laws and policies.

 On
July 30, 2021, in response to the recent regulatory developments in China and actions adopted by the PRC government, the Chairman of
the SEC issued a statement asking the SEC staff to seek additional disclosures from offshore issuers associated with China-based operating
companies before their registration statements will be declared effective, including whether the China-based operating company and the
issuer, when applicable, received or were denied permission from Chinese authorities to list on U.S. exchanges and the risks that such
approval could be denied or rescinded. On August 1, 2021, the China Securities Regulatory Commission stated in a statement that it had
taken note of the new disclosure requirements announced by the SEC regarding the listings of Chinese companies and the recent regulatory
development in China, and that both countries should strengthen communications on regulating China-related issuers. We are subject to
a variety of PRC laws and may be subject to tightened regulatory review and exposed to government restrictions in China. In light of
the recent regulatory and policy developments in China and government actions taken by the PRC government, including possible imposition
of restrictions and/or approval requirements on China-based companies raising capital offshore, the offering of our securities may be
subject to additional disclosure requirements and review that the SEC or other regulatory authorities in the United States may adopt
for companies with China-based operations.

 We
are subject to the Trial Administrative Measures, as the Company has: (i) 50% or more of the issuer's operating revenue, total
profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year
is accounted for by PRC domestic companies; and (ii) the main parts of the issuer's business activities are conducted in mainland
China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management
are mostly Chinese citizens or domiciled in mainland China; and, if required, we cannot assure you that we will be able to complete such
process on time or at all.

 On
February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies
(the "Trial Administrative Measures"), which took effect on March 31, 2023. Compared to the Draft Rules, the Trial Administrative
Measures further clarified and emphasized several aspects, including: (i) comprehensive determination of the "indirect overseas
offering and listing by Mainland China domestic companies" in compliance with the principle of "substance over form"
and particularly, an issuer will be required to go through the filing procedures under the Trial Administrative Measures if the following
criteria are met at the same time: a) 50% or more of the issuer's operating revenue, total profit, total assets or net assets as
documented in its audited consolidated financial statements for the most recent accounting year is accounted for by Mainland China domestic
companies, and b) the main parts of the issuer's business activities are conducted in Mainland China, or its main places of business
are located in Mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens
or domiciled in Mainland China; (ii) exemptions from immediate filing requirements for issuers that a) have already been listed or registered
but not yet listed in foreign securities markets, including U.S. markets, prior to the effective date of the Trial Administrative Measures,
and b) are not required to re-perform the regulatory procedures with the relevant overseas regulatory authority or the overseas stock
exchange, c) whose such overseas securities offering or listing shall be completed before September 30, 2023. However, such issuers shall
carry out filing procedures as required if they conduct refinancing or are involved in other circumstances that require filing with the
CSRC; (iii) a negative list of types of issuers banned from listing overseas, such as issuers under investigation for bribery and corruption;
(iv) regulation of issuers in specific industries; (v) issuers' compliance with national security measures and the personal data
protection laws; and (vi) certain other matters such as: an issuer must file with the CSRC within three business days after it submits
an application for initial public offering to competent overseas regulators; and subsequent reports shall be filed with the CSRC on material
events, including change of control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.
Our PRC counsel has advised that because our common stock currently trades in the U.S., we were not required to submit filings to the
CSRC before the Offering was completed and the Offering was not conditioned on CSRC approval. Rather, within three days of the closing
of the Offering, we are required to submit filings to the CSRC in accordance with the Trial Administrative Measures. According to the
relevant provisions of the Trial Administrative Measures and its supporting guidelines, the Company is required to fulfill the filing
procedures with the CSRC within three days of the closing of the Offering. According to the Trial Administrative Measures, the Company
has submitted the filing materials to the CSRC, but the materials were not complete due to lack of a commitment letter from the lead
underwriter for the Offering, and the Company withdrew the filing from the CSRC. The Company will submit the filing materials again
when the materials are ready. However, given that the Trial Administrative Measures were recently promulgated, there remain substantial
uncertainties as to their interpretation, application, and enforcement and there is no guarantee that the relevant PRC government agencies,
including the CSRC, would reach the same conclusion that we and our PRC counsel have reached. If the CSRC has determined that
we have failed to comply with the post-offering filing obligations imposed by the Trial Administrative Measures or make a misrepresentation,
misleading statement or material omission in the materials we submit to the CSRC, the CSRC would have the right to order rectification,
issue a warning and impose a fine on us of between RMB 1 million and RMB 10 million and issuing a warning to the parties responsible
for such failure, misrepresentation or material omission and impose a fine on each of such individuals ranging from RMB 500,000 to RMB
5 million.

 Our
common stock will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA,
if it is later determined that the PCAOB is unable to inspect and investigate completely our auditor. The delisting of and prohibition
from trading of our common stock, or the threat of their being delisted and prohibited from trading, may cause the value of our common
stock to significantly decline or be worthless.

to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been
subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities
exchange or in the over-the-counter trading market in the United States.

 On
December 18, 2020, the HFCAA was signed into law. The HFCAA has since then been subject to amendments by the U.S. Congress and interpretations
and rulemaking by the SEC. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act (the "AHFCAA"),
which proposes to reduce the period of time for foreign companies to comply with PCAOB audits from three to two consecutive years, thus
reducing the time period before the securities of such foreign companies may be prohibited from trading or delisted. On December 29,
2022, the Consolidated Appropriations Act, 2023 was signed into law, which contained, among other things, an identical provision to the
AHFCAA, and reduced the number of consecutive non-inspection years required for triggering the prohibitions under the HFCAA from three
years to two.

 On
December 16, 2021, the PCAOB issued a report to notify the SEC of its determination relating to the PCAOB's inability to inspect
or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong. The inability of the PCAOB
to conduct inspections of auditors in China made it more difficult to evaluate the effectiveness of these accounting firms' audit
procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections, which could
cause existing and potential investors in issuers operating in China to lose confidence in such issuers' procedures and reported
financial information and the quality of financial statements.

 On
December 15, 2022, the PCAOB released a statement confirming it has secured complete access to inspect and investigate registered public
accounting firms headquartered in mainland China and Hong Kong, and it issued the 2022 HFCAA Determination Report to vacate its precious
determinations to the contrary. The PCAOB is continuing to demand complete access, and it will act immediately to reconsider such determinations
should China obstruct, or otherwise fail to facilitate the PCAOB's access, at any time.

 Our
auditor, the independent registered public accounting firm that issues the audit report, as an auditor of companies that are traded publicly
in the United States and a firm registered with the PCAOB, is subject to laws in the United States, pursuant to which the PCAOB conducts
regular inspections to assess its compliance with the applicable professional standards. Our auditor is headquartered in Lakewood, Colorado
and has been inspected by the PCAOB on a regular basis.

 Further
developments related to the HFCAA could add uncertainties to our offering. We cannot assure you what further actions the SEC, the PCAOB
or the stock exchanges will take to address these issues and what impact such actions will have on companies that have significant operations
in the PRC and have securities listed on a U.S. stock exchange (including a national securities exchange or over-the-counter stock market).
In addition, any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit
information could create uncertainty for investors, the market price of our common stock could be adversely affected, and we could be
delisted if we and our auditor are unable to meet the PCAOB inspection requirement. Such a delisting would substantially impair your
ability to sell or purchase our common stock when you wish to do so, and would have a negative impact on the price of our shares.

 We
may be subject to substantial fine if the CSRC has determined that we have failed to comply with the post-offering filing obligations
imposed by the Trial Administrative Measure.

 On
February 17, 2023, the CSRC promulgated the Trial Administrative Measures that require issuers to carry out filing procedures as required
if they conduct refinancing or are involved in other circumstances that require filing with the CSRC; (iii) a negative list of types
of issuers banned from listing overseas, such as issuers under investigation for bribery and corruption; (iv) regulation of issuers in
specific industries; (v) issuers' compliance with national security measures and the personal data protection laws; and (vi) certain
other matters such as: an issuer must file with the CSRC within three business days after it submits an application for initial public
offering to competent overseas regulators; and subsequent reports shall be filed with the CSRC on material events, including change of
control or voluntary or forced delisting of the issuer(s) who have completed overseas offerings and listings.

 Our
PRC counsel has advised that because our common stock currently trades in the U.S., we were not required to submit filings to the CSRC
before the Offering was completed and the Offering was not conditioned on CSRC approval. Rather, within three days of the closing of
the Offering, we are required to submit filings to the CSRC in accordance with the Trial Administrative Measures. We have submitted the
filing materials to the CSRC, but the materials were not complete due to lack of a commitment letter from the lead underwriter for the
Offering, and we withdrew the filing from the CSRC. We will submit the filing materials again when the materials are ready. However,
given that the Trial Administrative Measures were recently promulgated, there remain substantial uncertainties as to their interpretation,
application, and enforcement and there is no guarantee that the relevant PRC government agencies, including the CSRC, would reach the
same conclusion that we and our PRC counsel have reached. If
the CSRC has determined that we have failed to comply with the post-offering filing obligations imposed by the Trial Administrative Measures
or make a misrepresentation, misleading statement or material omission in the materials we submit to the CSRC, the CSRC would have the
right to order rectification, issue a warning and impose a fine on us of between RMB 1 million and RMB 10 million and issuing a warning
to the parties responsible for such failure, misrepresentation or material omission and impose a fine on each of such individuals ranging
from RMB 500,000 to RMB 5 million. Our operations may be negatively affected, which could materially and adversely affect our liquidity
and our ability to fund and expand our business.

in U.S. and international trade policies, particularly with regard to China, may adversely impact our business and operating results.

 The
U.S. government has recently made statements and taken certain actions that may lead to potential changes to U.S. and international trade
policies, including recently-imposed tariffs affecting certain products manufactured in China. It is unknown whether and to what extent
new tariffs (or other new laws or regulations) will be adopted, or the effect that any such actions would have on us or our industry
and customers. Although cross-border business may not be an area of our focus, if we plan to sell our products internationally in the
future, any unfavorable government policies on international trade, such as capital controls or tariffs, may affect the demand for our
products and services, impact the competitive position of our products or prevent us from being able to sell products in certain countries.
If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular,
if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse
effect on our business, financial condition, results of operations.

 PRC
regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion
may delay or prevent us from using the proceeds of any offerings or financings to make loans or additional capital contributions to our
Chinese subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

 We
conduct substantially all of our operations in China. We may make loans to our PRC subsidiary, subject to the approval, registration,
and filing with governmental authorities and limitation of amount, or we may make additional capital contributions to our wholly foreign-owned
subsidiary in China. Any loans to our wholly foreign-owned subsidiary in China, which is treated as a foreign-invested enterprise under
PRC law, are subject to foreign exchange loan registrations. In addition, a foreign invested enterprise shall use its capital pursuant
to the principle of authenticity and self-use within its business scope. The capital of a foreign invested enterprise shall not be used
for the following purposes: (i) directly or indirectly used for payment beyond the business scope of the enterprises or the payment prohibited
by relevant laws and regulations; (ii) directly or indirectly used for investment in securities or investments other than banks'
principal-secured products unless otherwise provided by relevant laws and regulations; (iii) the granting of loans to non-affiliated
enterprises, except where it is expressly permitted in the business license; and (iv) paying the expenses related to the purchase of
real estate that is not for self-use (except for the foreign-invested real estate enterprises).

 In
light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies,
we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals
or filings on a timely basis, if at all, with respect to future loans by us to our PRC subsidiary or with respect
to future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals,
our ability to use the proceeds from the Offering and to capitalize or otherwise fund our Chinese operations may be negatively affected,
which could materially and adversely affect our liquidity and our ability to fund and expand our business.

 PRC
regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial
owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary'
ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.

 In
July 2014, SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents' Offshore
Investment and Financing and Roundtrip Investment Through Special Purpose Vehicles, or SAFE Circular 37, to replace the Notice on Relevant
Issues Concerning Foreign Exchange Administration for Domestic Residents' Financing and Roundtrip Investment Through Offshore Special
Purpose Vehicles, or SAFE Circular 75, which ceased to be effective upon the promulgation of SAFE Circular 37. SAFE Circular 37 requires
PRC residents (including PRC individuals and PRC corporate entities) to register with SAFE or its local branches in connection with their
direct or indirect offshore investment activities. SAFE Circular 37 is applicable to our shareholders who are PRC residents and may be
applicable to any offshore acquisitions that we make in the future.

 Under
SAFE Circular 37, PRC residents who make, or have prior to the implementation of SAFE Circular 37 made, direct or indirect investments
in offshore special purpose vehicles, or SPVs, will be required to register such investments with SAFE or its local branches. In addition,
any PRC resident who is a direct or indirect shareholder of an SPV is required to update its filed registration with the local branch
of SAFE with respect to that SPV, to reflect any material change. Moreover, any subsidiary of such SPV in China is required to urge the
PRC resident shareholders to update their registration with the local branch of SAFE. If any PRC shareholder of such SPV fails to make
the required registration or to update the previously filed registration, the subsidiary of such SPV in China may be prohibited from
distributing its profits or the proceeds from any capital reduction, share transfer or liquidation to the SPV, and the SPV may also be
prohibited from making additional capital contributions into its subsidiary in China. On February 13, 2015, the SAFE promulgated a Notice
on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective
on June 1, 2015. Under SAFE Notice 13, applications for foreign exchange registration of inbound foreign direct investments and outbound
overseas direct investments, including those required under SAFE Circular 37, will be filed with qualified banks instead of SAFE. The
qualified banks will directly examine the applications and accept registrations under the supervision of SAFE.

 We
may not be fully informed of the identities of all our beneficial owners who are PRC residents. For example, because the investment in
or trading of our shares will happen in an overseas public or secondary market where shares are often held with brokers in brokerage
accounts, it is unlikely that we will know the identity of all of our beneficial owners who are PRC residents. Furthermore, we have no
control over any of our future beneficial owners and we cannot assure you that such PRC residents will be able to complete the necessary
approval and registration procedures required by the Administrative Measures on Individual Foreign Exchange.

 Some
of our shareholders that we are aware of are subject to SAFE regulations, and we expect all of these shareholders will have completed
all necessary registrations with the local SAFE branch or qualified banks as required by SAFE Circular 37. We cannot assure you,
however, that all of these shareholders may continue to make required filings or updates in a timely manner, or at all. We can provide
no assurance that we are or will in the future continue to be informed of identities of all PRC residents holding direct or indirect
interest in our company. Any failure or inability by such shareholders to comply with SAFE regulations may subject us to fines or legal
sanctions, such as restrictions on our cross-border investment activities or our PRC subsidiary' ability to distribute dividends
to, or obtain foreign exchange-denominated loans from, our company or prevent us from making distributions or paying dividends. As a
result, our business operations and our ability to make distributions to you could be materially and adversely affected.

 Furthermore,
as these foreign exchange regulations are still relatively new and their interpretation and implementation have been constantly evolving,
it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted,
amended and implemented by the relevant government authorities. For example, we may be subject to a more stringent review and approval
process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings,
which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company,
we cannot assure you that we or the owners of such company, as the case may be, will be able to obtain the necessary approvals or complete
the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our
acquisition strategy and could adversely affect our business and prospects.

 As
of the date of this Annual Report, the PRC residents have either not completed, or have not applied for, foreign exchange registration
under the SAFE Circular 37 and other related rules. Although they are either in the process of making foreign exchange registration or
plan to make foreign exchange registrations, they may still face with the above said possible fines in accordance with the PRC Laws.

 Labor
laws in the PRC may adversely affect our results of operations.

 The
PRC National People's Congress promulgated the Labor Contract Law which became effective on January 1, 2008 and was amended on
December 28, 2012 (the "Labor Contract Law"), and the State Council promulgated implementing regulations for the labor contract
law on September 18, 2008. The Labor Contract Law and the implementing regulations impose requirements concerning, among others, the
execution of written contracts between employers and employees, the time limits for probationary periods, and the length of employment
contracts. The interpretation and implementation of these regulations are still evolving, our employment practices may violate the Labor
Contract Law and related regulations and we could be subject to penalties, fines or legal fees as a result. If we are subject to severe
penalties or incur significant legal fees in connection with labor law disputes or investigations, our business, financial condition
and results of operations may be adversely affected.

 Further,
the Labor Contract Law requires certain terminations be based upon seniority and not merit. In the event that we decide to significantly
change or decrease our workforce, the Labor Contract Law could adversely affect our ability to enact such changes in a manner that is
most advantageous to our business or in a timely and cost-effective manner, thus materially and adversely affecting our financial condition
and results of operations.

 We
may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.

 We
are subject to the U.S. Foreign Corrupt Practices Act (the "FCPA") and other laws that prohibit improper payments or offers
of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for
the purpose of obtaining or retaining business. We are also subject to Chinese anti-corruption laws, which strictly prohibit the payment
of bribes to government officials. We have operations, agreements with third parties, and make sales in China, which may experience corruption.
Our activities in China may create the risk of unauthorized payments or offers of payments by one or more of the employees of our company,
because such employees might act against our policies, outside of our control. Violations of the FCPA or Chinese anti-corruption laws
may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business,
operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA
violations committed by companies in which we invest or that we acquire.

 Our
business may be materially and adversely affected if our PRC subsidiary declares bankruptcy or becomes subject to a dissolution or liquidation
proceeding.

 The
Enterprise Bankruptcy Law of the PRC, or the Bankruptcy Law, came into effect on June 1, 2007. The Bankruptcy Law provides that an enterprise
will be liquidated if the enterprise fails to settle its debts as and when they fall due and if the enterprise's assets are, or
are demonstrably, insufficient to clear such debts.

 Our
PRC subsidiary holds certain assets that are important to our business operations. If our PRC subsidiary undergoes a voluntary or involuntary
liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability
to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

 According
to the SAFE's Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration
Policies for Direct Investment, effective on December 17, 2012, and the Provisions for Administration of Foreign Exchange Relating to
Inbound Direct Investment by Foreign Investors, effective May 13, 2013, if our PRC subsidiary undergoes a voluntary or involuntary liquidation
proceeding, prior approval from the SAFE for remittance of foreign exchange to our shareholders abroad is no longer required, but we
still need to conduct a registration process with the SAFE local branch. It is not clear whether "registration" is a mere
formality or involves the kind of substantive review process undertaken by SAFE and its relevant branches in the past.

in China's economic, political or social conditions or government policies could have a material adverse effect on our business
and operations. The PRC government has recently indicated an intent to exert more oversight and control over overseas securities offerings
and other capital markets activities and foreign investment in China-based companies like us. Any such action, once taken by the PRC
government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause
the value of such securities to significantly decline or in extreme cases, become worthless.

 Substantially
all of our assets and operations are located in China. Accordingly, our business, financial condition, results of operations and prospects
may be influenced to a significant degree by political, economic and social conditions in China generally. The Chinese economy differs
from the economies of most developed countries in many respects, including the level of government involvement, level of development,
growth rate, control of foreign exchange and allocation of resources. Although the Chinese government has implemented measures emphasizing
the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of
improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the government.
In addition, the Chinese government continues to play a significant role in regulating industry development by imposing industrial policies.

 The
PRC government has significant authority to exert influence on the ability of a China-based company, such as us, to conduct its business,
accept foreign investments or list on an U.S. or other foreign exchanges. For example, we face risks associated with regulatory approvals
of offshore offerings, anti-monopoly regulatory actions, as well as oversight on cybersecurity and data privacy. Such risks or any actions
by the PRC government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based
issuers could result in a material change in our operations and/or the value of our common stock or could significantly limit or completely
hinder our ability to offer or continue to offer our common stock and/or other securities to investors and cause the value of such securities
to significantly decline or be worthless. The PRC government has significant authority, oversight and discretion over the conduct of
our business and may intervene with or influence our operations as the government deems appropriate to further regulatory, political
and societal goals. The PRC government has recently published new policies that significantly affected certain industries such as the
education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies
regarding our industry that could adversely affect our business, financial condition and results of operations. Furthermore, the PRC
government has recently indicated an intent to exert more oversight and control over overseas securities offerings and other capital
markets activities and foreign investment in China-based companies like us. Any such action, once taken by the PRC government, could
significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such
securities to significantly decline or in extreme cases, become worthless.

 The
Chinese government also exercises significant control over China's economic growth through allocating resources, controlling payment
of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or
companies.

 While
the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various
sectors of the economy. Any adverse changes in economic conditions in China, in the policies of the Chinese government or in the laws
and regulations in China could have a material adverse effect on the overall economic growth of China. Such developments could adversely
affect our business and operating results, lead to reduction in demand for our services and adversely affect our competitive position.
The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these
measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results
of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in
the past the Chinese government has implemented certain measures, including interest rate adjustment, to control the pace of economic
growth. These measures may cause decreased economic activity in China, which may adversely affect our business and operating results.

 Uncertainties
with respect to the PRC legal system, including uncertainties regarding the enforcement of laws and sudden and unexpected changes in
laws and regulations in China, could adversely affect us and limit the legal protections available to you and us.

 Our
operations in China are governed by PRC laws and regulations. Our wholly foreign-owned PRC operating subsidiary Sichuan Vtouch is subject
to laws and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes.
Unlike the common law system, prior court decisions under the civil law system may be cited for reference but have limited precedential
value. In addition, any new or changes in PRC laws and regulations related to foreign investment in China could affect the business environment
and our ability to operate our business in China.

 Since
the PRC legal system continues to evolve rapidly, the interpretations of many laws, regulations and rules are not always uniform and
enforcement of these laws, regulations and rules involves uncertainties, which may limit legal protections available to us. Uncertainties
due to evolving laws and regulations could also impede the ability of a China-based company, such as our company, to obtain or maintain
permits or licenses required to conduct business in China. In the absence of required permits or licenses, governmental authorities could
impose material sanctions or penalties on us. In addition, some regulatory requirements issued by certain PRC government authorities
may not be consistently applied by other PRC government authorities (including local government authorities), thus making strict compliance
with all regulatory requirements impractical, or in some circumstances impossible. From time to time, we may have to resort to administrative
and court proceedings to enforce our legal rights. Any administrative and court proceedings in China may be protracted, resulting in
substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have significant
discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome
of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. These uncertainties
may impede our ability to enforce the contracts we have entered into and could materially and adversely affect our business and results
of operations.

 The
PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or at
all and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime
after the violation. Such unpredictability towards our contractual, property and procedural rights could adversely affect our business
and impede our ability to continue our operations.

 Furthermore,
if China adopts more stringent standards with respect to environmental protection or corporate social responsibilities, we may incur
increased compliance costs or become subject to additional restrictions in our operations. Intellectual property rights and confidentiality
protections in China may also not be as effective as in the United States or other countries. In addition, we cannot predict the effects
of future developments in the PRC legal system on our business operations, including the promulgation of new laws, or changes to existing
laws or the interpretation or enforcement thereof. These uncertainties could limit the legal protections available to us and our investors,
including you. Moreover, any litigation in China may be protracted and result in substantial costs and diversion of our resources and
management attention.

 You
may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us
or our management based on foreign laws.

 We
are a company incorporated under the laws of the United States and we conduct substantially all of our operations in China. In addition,
our officers and directors reside within China and are PRC nationals. As a result, it may be difficult for you to effect service of process
upon us or those persons inside mainland China. It may also be difficult for you to enforce in U.S. courts judgments obtained in U.S.
courts based on the civil liability provisions of the U.S. federal securities laws against us and our officers and directors as none
of them currently resides in the United States or has substantial assets located in the United States. In addition, there is uncertainty
as to whether the courts of the PRC would recognize or enforce judgments of U.S. courts against us or such persons predicated upon the
civil liability provisions of the securities laws of the United States or any state.

 The
recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce
foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the
country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms
of written arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition,
according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our directors and officers
if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a
result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

 Government
control of currency conversion may affect the value of your investment.

 The
PRC government imposes controls on the convertibility of the Renminbi, or "RMB," into foreign currencies and, in certain
cases, the remittance of currency out of China. We receive some revenue and incur some expenses in U.S. dollars but incur other expenses
primarily in RMB. Although our main business is based in mainland China with our Chinese operating
subsidiary, some of our business may require us to use U.S. dollars. Under
existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures
from trade-related transactions, can be made in foreign currencies without prior approval from SAFE, by complying with certain procedural
requirements. Approval from appropriate government authorities is required where Renminbi is to be converted into foreign currency and
remitted out of the PRC to pay capital expenses such as the repayment of loans denominated in foreign currencies. The PRC government
may, at its discretion, impose restrictions on access to foreign currencies for current account transactions and if this occurs in the
future, we may not be able to pay in foreign currencies, and our business and operations may be adversely affected.

 Fluctuations
in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.

 The
value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political
and economic conditions in China and by China's foreign exchange policies. On July 21, 2005, the PRC government changed its decade-old
policy of pegging the value of the Renminbi to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over
the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the
U.S. dollar remained within a narrow band. Since June 2010, the Renminbi has fluctuated against the U.S. dollar, at times significantly
and unpredictably. On November 30, 2015, the Executive Board of IMF completed the regular five-year review of the basket of currencies
that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a
freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese
yen and the British pound. In the fourth quarter of 2016, the Renminbi has depreciated significantly in the backdrop of a surging U.S.
dollar and persistent capital outflows of China. This depreciation halted in 2017, and the RMB appreciated approximately 7% against the
U.S. dollar during this one-year period. With the development of the foreign exchange market and progress towards interest rate liberalization
and Renminbi internationalization, the PRC government may in the future announce further changes to the exchange rate system, and we
cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It
is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the
U.S. dollar in the future.

 Significant
revaluation of the Renminbi may have a material and adverse effect on our operations. For example, to the extent that we need to convert
U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the
Renminbi amount we would receive from the conversion. Conversely, if we decide to convert our Renminbi into U.S. dollars for the purpose
of making payments for dividends on our shares of Common Stock or for other business purposes, appreciation of the U.S. dollar against
the Renminbi would have a negative effect on the U.S. dollar amount available to us.

 Very
limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we have not entered into
any hedging transactions in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging
transactions in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge
our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict
our ability to convert Renminbi into foreign currency.

 Governmental
control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.

 The
PRC government imposes controls on the convertibility of the Renminbi into foreign currencies and, in certain cases, the remittance of
currency out of China. We receive substantially all of our revenues in Renminbi. Under existing PRC foreign exchange regulations, payments
of current account items, including profit distributions, interest payments and trade and service-related foreign exchange transactions,
can be made in foreign currencies without prior approval of SAFE by complying with certain procedural requirements. Specifically, under
the existing exchange restrictions, without prior approval of SAFE, cash generated from the operations of our PRC subsidiary in China
may be used to pay dividends to our company. However, approval from or registration with appropriate government authorities is required
where Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of loans
denominated in foreign currencies. As a result, we need to obtain SAFE approval to use cash generated from the operations of our PRC
subsidiary to pay off their respective debt in a currency other than Renminbi owed to entities outside China, or to make other capital
expenditure payments outside China in a currency other than Renminbi.

 In
light of the flood of capital outflows of China, the PRC government may from time to time impose more restrictive foreign exchange policies
and step up scrutiny of major outbound capital movement. More restrictions and substantial vetting process may be required by SAFE or
other government authorities to regulate cross-border transactions falling under the capital account. The PRC government may at its discretion
restrict access to foreign currencies for current account transactions in the future. If the foreign exchange control system prevents
us from obtaining sufficient foreign currencies to satisfy our foreign currency demands, we may not be able to pay dividends in foreign
currencies to our shareholders, including holders of our Common Stock.

 The
Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or
influence our operations at any time, which could result in a material change in our operations and/or the value of our common stock.

 The
Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through
regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those
relating to taxation, environmental regulations, land use rights, property and other matters. The central or respective local governments
may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts
on our part to ensure our compliance with such regulations or interpretations. The Chinese government may intervene or influence our
operations at any time, which could result in a material change in our operations and/or the value of our common stock.

 If
we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable
tax consequences to us and our non-PRC shareholders and the common stockholders.

 Under
the PRC Enterprise Income Tax Law and its implementation rules, an enterprise established outside of the PRC with its " de facto
 management body" within the PRC is considered a "resident enterprise" and will be subject to the enterprise income
tax on its global income at the rate of 25%. The implementation rules define the term " de facto management body" as
the body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties
of an enterprise. In 2009, the State Administration of Taxation, or SAT, issued a circular, known as SAT Circular 82, which provides
certain specific criteria for determining whether the " de facto management body" of a PRC-controlled enterprise that
is incorporated offshore is located in China. Although this circular applies only to offshore enterprises controlled by PRC enterprises
or PRC enterprise groups, not those controlled by PRC individuals or foreigners, the criteria set forth in the circular may reflect the
SAT's general position on how the " de facto management body" text should be applied in determining the tax resident
status of all offshore enterprises. According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise
or a PRC enterprise group will be regarded as a PRC tax resident by virtue of having its " de facto management body"
in China, and will be subject to PRC enterprise income tax on its global income only if all of the following conditions are met: (i)
the primary location of the day-to-day operational management is in the PRC; (ii) decisions relating to the enterprise's financial
and human resource matters are made or are subject to approval by organizations or personnel in the PRC; (iii) the enterprise's
primary assets, accounting books and records, company seals, and board and shareholder resolutions are located or maintained in the PRC;
and (iv) at least 50% of voting board members or senior executives habitually reside in the PRC.

 We
believe our Company, excluding our PRC subsidiary, is not a PRC resident enterprise for PRC tax purposes. However, the tax resident status
of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of
the term "de facto management body." If the PRC tax authorities determine that our company is a PRC resident enterprise for
enterprise income tax purposes, we would be subject to PRC enterprise income on our worldwide income at the rate of 25%. Furthermore,
we would be required to withhold a 10% tax from dividends we pay to our shareholders that are non-resident enterprises. In addition,
non-resident enterprise shareholders (including the common stockholders) may be subject to PRC tax on gains realized on the sale or other
disposition of the common stock, if such income is treated as sourced from within the PRC. Furthermore, if we are deemed a PRC resident
enterprise, dividends paid to our non-PRC individual shareholders (including the common stock holders) and any gain realized on the transfer
of the common stock or ordinary shares by such shareholders may be subject to PRC tax at a rate of 20% (which, in the case of dividends,
may be withheld at source by us). These rates may be reduced by an applicable tax treaty, but it is unclear whether non-PRC shareholders
of our company would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event
that we are treated as a PRC resident enterprise. Any such tax may reduce the returns on your investment in our common stock.

 Risks
Related to Our Common Stock

 The
price of our common stock may be volatile or may decline regardless of our operating performance and you may not be able to resell your
shares at or above the purchase price.

 An
active trading market for our common stock may not be sustained. The lack of an active market may impair your ability to sell your shares
at the time you wish to sell them or at a price that you consider reasonable. An inactive market may also impair our ability to raise
capital by selling shares of common stock and may impair our ability to acquire other businesses or technologies using our shares of
common stock as consideration, which, in turn, could materially adversely affect our business. The market price of our common stock may
fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

 overall
 performance of the equity markets;

 our
 operating performance and the performance of other similar companies;

 the
 published opinions and third-party valuations by banking and market analysts;

 changes
 in our projected operating results that we provide to the public, our failure to meet these projections or changes in recommendations
 by securities analysts that elect to follow our common stock;

 regulatory
 or legal developments;

 the
 level of expenses related to operations;

 our
 failure to achieve its goals in the timeframe it announces;

 announcements
 of acquisitions, strategic alliances or significant agreements by us;

 recruitment
 or departure of key personnel;

 the
 economy as a whole and market conditions in our industry;

 trading
 activity by a number of stockholders;

 the
 size of our market float;

 political
 uncertainty and/or instability

 the
 ongoing and future impact of the COVID-19 pandemic and actions taken to slow its spread; and

 any
 other factors discussed in this Annual Report.

 In
the past, shareholders of public companies have often brought securities class action suits against those companies following periods
of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount
of our management's attention and other resources from our business and operations and require us to incur significant expenses
to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our
reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be
required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

 Since
our By-laws provide that the courts in the State of Nevada are the sole and exclusive forum for substantially all disputes between us
and our shareholders, this could limit our shareholders' ability to obtain a favorable judicial forum for disputes with us or our
directors or officers, or employees.

 Our
Amended and Restated By-laws provide that, unless we consent in writing to the selection of an alternative forum, the appropriate state
and federal courts in the State of Nevada shall be the sole and exclusive forum for any derivative action or proceeding brought on behalf
of the Company, any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company
to the Company or the Company's shareholders, any action asserting a claim arising pursuant to any provision of the Nevada Revised
Statutes, or any action asserting a claim governed by the internal affairs doctrine. This exclusive forum provision would not apply to
suits brought to enforce any liability or duty created by the Securities Act or the Exchange Act or any other claim for which the federal
courts have exclusive jurisdiction. To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange
Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the
rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over
all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. Any person
or entity purchasing or otherwise acquiring any interest in our Company shall be deemed to have notice of and consented to these provisions.

 These
exclusive-forum provisions may limit a shareholder's ability to bring a claim in a judicial forum of its choosing for disputes
with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other
employees.

 Moreover,
if a court were to find the choice of forum provision contained in our Amended and Restated By-laws to be inapplicable or unenforceable
in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business,
results of operations, and financial condition. Even if we are successful in defending against these claims, litigation could result
in substantial costs and be a distraction to management and other employees.

 Short
sellers of our stock may be manipulative and may drive down the market price of our common stock.

 Short
selling is the practice of selling securities that the seller does not own but rather has borrowed or intends to borrow from a third
party with the intention of buying identical securities at a later date to return to the lender. A short seller hopes to profit from
a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the
short seller expects to pay less in that purchase than it received in the sale. As it is therefore in the short seller's interest
for the price of the stock to decline, some short sellers publish, or arrange for the publication of, opinions or characterizations regarding
the relevant issuer, its business prospects and similar matters calculated to or which may create negative market momentum, which may
permit them to obtain profits for themselves as a result of selling the stock short. Issuers whose securities have historically had limited
trading volumes and/or have been susceptible to relatively high volatility levels can be particularly vulnerable to such short seller
attacks.

 The
publication of any such commentary regarding us by a short seller may bring about a temporary, or possibly long term, decline in the
market price of our common stock. No assurances can be made that we will not become a target of such commentary and declines in the market
price of our common stock will not occur in the future, in connection with such commentary by short sellers or otherwise.

 If
we become directly subject to the scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to
expend significant resources to investigate and resolve the matter which could harm our business, operations and reputations, which could
result in a loss of your investment in our common stock.

 U.S.
public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism and negative
publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative
publicity has centered around financial and accounting irregularities, a lack of effective internal controls over financial accounting,
inadequate corporate governance policies or a lack of adherence thereto and, in some cases, allegations of fraud. As a result of the
scrutiny, criticism and negative publicity, the publicly traded stock of many U.S. listed Chinese companies has sharply decreased in
value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement
actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny,
criticism and negative publicity will have on our business. If we become the subject of any unfavorable allegations, whether such allegations
are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend the Company.
This situation may be a major distraction to our management. If such allegations are not proven to be groundless, our company and business
operations will be severely hampered and your investment in our shares could be rendered worthless.

 The
sale or availability for sale of substantial amounts of our common stock could adversely affect their market price.

 Sales
of substantial amounts of our common stock in the public market, or the perception that these sales could occur, could adversely affect
the market price of our common stock and could materially impair our ability to raise capital through equity offerings in the future.
Shares held by our existing shareholders may be sold in the public market in the future subject to the restrictions in Rule 144 and Rule
701 under the Securities Act. We cannot predict what effect, if any, market sales of securities held by our significant shareholders
or any other shareholder or the availability of these securities for future sale will have on the market price of our common stock.

 Because
we do not expect to pay dividends in the foreseeable future, you must rely on a price appreciation of our common stock for return on
your investment.

 We
currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growth of our
business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment
in our common stock as a source for any future dividend income.

 Our
board of directors has complete discretion as to whether to distribute dividends., Even if our board of directors decides to declare
and pay dividends, the timing, amount and form of future dividends, if any, will depend on our future results of operations and cash
flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial
condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment
in our common stock will likely depend entirely upon any future price appreciation of our common stock. There is no guarantee that our
common stock will appreciate in value, or even maintain the price at which you purchased the common stock. You may not realize a return
on your investment in our common stock and you may even lose your entire investment in our common stock.

 If
relations between the United States and China worsen, our stock price may decrease and could lead to our loss of access or increased difficulty in accessing U.S. capital markets.

 At
various times during recent years, the United States and China have had disagreements over political and economic issues. Controversies
may arise in the future between these two countries. Any political or trade conflicts between the United States and China could adversely
affect the market price of our common stock and could potentially impede our access to, or increase the difficulty of accessing, U.S. capital markets.

 ITEM
 1B.

 Unresolved
 Staff Comments

 None.

 ITEM
 1C.

 Cybersecurity

 Risk

 We
face significant and persistent cybersecurity risks due to the need to protect our business, our confidential information and information
concerning our personnel and others with whom we conduct business. As with other technology companies, we occasionally face threats from
actors who seek to disrupt our business as well as others who are engaging in malicious activities for profit, to make a political point
or for no particular reason other than creating disruption. Disclosure of certain information as a result of a cybersecurity breach may
result is a breach of privacy laws. The substantial level of harm that could occur to us and our suppliers and customers were we to suffer
impacts of a material cybersecurity incident; and our use of third-party products, services and components requires us to maintain robust
governance and oversight of these risks and to implement mechanisms, technologies and processes designed to help us assess, identify,
and eliminate these risks.

 While
we have not, as of the date of this Annual Report, experienced a cybersecurity threat or incident that resulted in a material adverse
impact to our business or operations, we cannot assure you that we will not experience such an incident in the future. Any cybersecurity
incidents, whether or not successful, could result in our incurring additional costs related to, for example, rebuilding our internal
systems, implementing additional threat protection measures, responding to regulatory inquiries or actions, paying damages or making
payments to obtain access to our computer systems, or taking other remedial steps with respect to third parties, as well as incurring
significant reputational harm. We have seen an increase in cyberattack volume, frequency, and sophistication. We seek to detect and investigate
unauthorized attempts and attacks against our network, products, and services, and to prevent their occurrence and recurrence where practicable
through changes or updates to our internal processes and tools and changes or updates to our products and services; however, we remain
potentially vulnerable to known or unknown threats. In some instances, we, our suppliers, our customers, and the users of our products
and services can be unaware of a threat or incident or its magnitude and effects. Further, there are increasing regulation requirements
regarding responses to cybersecurity incidents, including reporting to regulators, which could subject us to additional liability and
reputational harm.

 Governance

 Following
these risk assessments, we evaluate whether and how to re-design, implement, and maintain reasonable safeguards to mitigate identified
risks and reasonably address any identified gaps in existing safeguards. Our IT leadership reports to our Chief Executive Officer (CEO)
periodically and on an as-needed basis to manage our risk assessment and mitigation process. We monitor and test our safeguards and regularly
conduct training for our employees on these safeguards, in collaboration with human resources, IT, and management. We are committed to
promoting a company-wide culture of cybersecurity risk management.

 We
have not encountered cybersecurity risks, threats or incidents that have materially affected or are reasonably likely to materially
affect the Company, our business strategy, results of operations, or financial condition during the financial year ended December 31,
2023.

 ITEM
 2.

 Properties
 and Facilities

 We
operate our business in approximately nine separate buildings covering a total area of approximately 735,745 square feet at No. 29, Third
Main Avenue, Shigao Town, Renshou County, Meishan City, Sichuan, China (previously known as 22 Xingan Ave., Section 2, Shigao Town, Sichuan,
China) where we maintain our executive offices, research and development facilities, factories and other facilities.

 Leaseback
Agreement

to local PRC government guidelines on local environmental issues and the national overall plan, Sichuan Wetouch is under the government-directed
relocation order to relocate no later than December 31, 2021 and received compensation accordingly.

 On
March 16, 2021, Sichuan Wetouch entered into an Agreement of Compensation on Demolition (the "Compensation Agreement") with
Meishan Huantian Industrial Co., Ltd, formerly named Sichuan Renshou Shigao Tianfu Investment Co., Ltd, a limited company owned by the
local government ("Sichuan Renshou"), for the withdrawal of our right to use of a parcel of state-owned land and the demolition
of all buildings, facilities and equipment on such land where we maintain our executive offices, research and development facilities
and factories at No.29, Third Main Avenue, Shigao Town, Renshou County, Meishan City, Sichuan, China (the "Property"). The
Property, all buildings, facilities, equipment and all other appurtenances on the Property are collectively referred to as "Properties".
The Compensation Agreement was executed and delivered as a result of the guidelines (the "Guidelines") published by the local
government with respect to local environmental issues and a national plan on Tianfu New District, Meishan City, Sichuan, PRC. In accordance
with the Guidelines, a project named "Chaisang River Ecological Wetland Park" is under construction in the areas where our
manufacturing facilities and properties are located. In consideration for such relocation, as an owner of the buildings on the state-owned
land, we will be compensated. On March 18, 2021, Sichuan Wetouch received a total amount of RMB115.2 million (approximately $17.7 million)
as the total amount of compensation from Sichuan Renshou, including RMB100.2 million ($15.4 million) based upon the appraised value of
the Properties plus an extra 15% relocation bonus of RMB15.0 million ($2.3 million).

 In
order to minimize the interruption to our business, Sichuan Vtouch entered into a Leaseback Agreement with Sichuan Renshou on March 16,
2021. The Leaseback Agreement entitles us to lease back the Properties commencing from April 1, 2021 until December 31, 2021, at a monthly
rent of RMB300,000 (approximately $46,154), which period was extended to October 31, 2022. On October 16, 2022, Sichuan Vtouch entered
an extension to the Leaseback Agreement with Sichuan Renshou to extend the period it granted Sichuan Vtouch to lease back the Properties
until October 31, 2024, at a monthly rent of RMB 400,000 ($56,339).

 New Facilities

 On July 23, 2021, Sichuan Vtouch
entered into a contract with the Chengdu Wenjiang District Planning and Natural Resources Bureau for the purchase of a land use right
for a parcel of land spanning 131,010 square feet, for a consideration of RMB3,925,233 (equivalent to $537,998) for the Company's
new facility. The Company paid the consideration in full on November 18, 2021. The Company estimates receiving the certificate of land
use right from the local government in the fourth quarter of 2024.

 On
July 27, 2021, Sichuan Vtouch and Sichuan Chunqiu Development and Construction Group Co., Ltd. entered into a construction contract
for a project to build the capacitive touch screen and touch machine research and development production base. The contract was
estimated to start on August 15, 2021, and to be completed by August 15, 2022, at a provisional price of RMB76,000,000
(approximately $11.9 million). This price is subject to adjustment based on actual completion settlement. However, the construction
project has been put on hold due to the outbreak of Covid-19 and government-ordered shutdowns in China. The parties have agreed to
extend the term of the contract to December 31, 2024. As of the date of
this Annual Report, we estimate that our capital needs for this acquisition and construction will be approximately RMB170.0 million
(approximately $26.2 million), but there is no assurance that the estimated amount is sufficient to achieve our goals. We may need
additional financing for our new facilities. In addition, we expect that this the construction of buildings and affixtures will be
completed by end of 2023 and our production at the new facilities will commence in the third quarter of 2025, but there is no assurance and we may need extended time to achieve our business
plan.

 ITEM
 3.

 Legal
 Proceedings

 We
know of no material, active, pending or threatened proceeding against us or our subsidiaries, nor are we, or any subsidiary, involved
as a plaintiff or defendant in any material proceeding or pending litigation.

 From
time to time, we are parties to various legal actions arising in the ordinary course of business. For more information, see Note 13 to the Financial Statements in Item
8.

 i)

 An
 equity dispute case with Yunqing Su with a disputed amount of RMB1,318,604 (equivalent to $185,721)

 On
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 RMB1 million (equivalent to $140,847) to purchase 370,370.37 original listed shares of the target company,
Sichuan Wetouch, and provided for the exit mechanism in the agreement. However, the target company failed to be listed prior to December
31, 2017 as agreed. On June 22, 2017, Guangde Cai and Yunqing Su entered into a supplementary agreement, pursuant to which Guangde Cai
shall repurchase all of Yunqing Su's equity interest and pay the interest. Sichuan Wetouch repaid Yunqing Su the interest of RMB220,000
(equivalent to $30,986) and the principal of RMB128,000 (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. Yunqing
Su sued Sichuan Wetouch and Guangde Cai in the Renshou County People's Court of Sichuan Province, and the case was filed on February
9, 2022.

 On
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.

 ii)

 Legal
 case with Chengdu SME Credit Guarantee Co., Ltd. on a court acceptance fee of RMB338,418 (equivalent to $47,665)

 On
July 5, 2013, Sichuan Wetouch obtained a one-year loan of RMB60.0 million (equivalent to $8.5 million) from Bank of Chengdu, at an annual
interest rate of 8.61%. Chengdu SME Credit Guarantee Co., Ltd ("Chengdu SME"), a third party, provided a 70% guarantee and
Bank of Chengdu retained 30% of the risk, while Chengdu Wetouch, a related party company, owned by Mr. Guangde Cai and Mr. Guangde Cai
provided joint and several liability guarantee for 100% of the loan.

 On
July 31, 2014, Sichuan Wetouch repaid RMB5.0 million (equivalent to $0.7 million). The remaining loan of RMB55.0 million (equivalent
to $7.7 million) was twice extended to be due on August 22, 2018. Upon the loan becoming due, but unpaid by the Company, Chengdu SME
paid the outstanding balance of RMB55 million (equivalent to $7.7 million) to Bank of Chengdu. The Company subsequently repaid RMB55
million (equivalent to $7.7 million) to Chengdu SME; however, Chengdu SME filed two separate lawsuits against the Company to recover
loan default penalties from the Company. The loan default penalties were (a) RMB5.8 million (equivalent to $0.8 million) related to the
30% of the remaining loan balance repaid by Chengdu SME and (b) RMB6.0 million (equivalent to $0.8 million) related to the 70% of the
remaining loan balance repaid by Chengdu SME. During the year ended December 31, 2017, the Company recorded loan default penalties, and
related liabilities, of $1.7 million.

 Chengdu
SME applied to the Chengdu High-tech Court for enforcement of the above-mentioned loan default penalties of RMB5.8 million (equivalent
to $0.8 million) and RMB6.0 million (equivalent to $0.8 million) on December 30, 2018. On March 12, 2020, the Enforcement Settlement
Agreement issued by the Chengdu High-tech Court confirmed that Sichuan Wetouch still owed RMB5.8 million (equivalent to $0.8 million)
and RMB6.0 million (equivalent to $0.8 million) of loan default penalties. The agreement did not specify which party shall pay the court
fee.

 On
September 16, 2020, Sichuan Wetouch made a full repayment of RMB11.8 million (equivalent to $1.7 million) of the above loan default penalties
to Chengdu SME.

 On
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 RMB338,418 (equivalent to $47,665). On March 17, 2023, Chengdu Wetouch made a full
payment of the above court fee to Chengdu SME.

 iii)

 Legal
 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 RMB250,470 (equivalent to $35,278)

 On
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 RMB20 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
Mr. Guangde Cai and Xinjiang Wetouch Electronic Technology Co., Ltd. ("Xinjiang Wetouch") provided Lifan Financial
with joint and several liability guarantee.

 On
August 9, 2021, Lifan Financial filed a lawsuit against Chengdu Wetouch, Guangde Cai, Sichuan Wetouch, Meishan Wetouch and Xinjiang Wetouch
in the Chengdu Intermediate People's Court. The court ruled that: 1) the Financial Lease Contract (Sale and Leaseback) was terminated;
2) the leased property was owned by Lifan Financial; 3) Chengdu Wetouch shall pay Lifan Financial all outstanding rent and interest thereon
in the total amount of RMB 22,905,807 (equivalent to $3.2 million) as well as the difference between the liquidated damages and the value
of the leased property recovered; etc.

 The
parties executed a settlement agreement on March 7, 2023, in which the parties confirmed that the outstanding payment of RMB 22,905,807
(equivalent to $3.2 million) has been fully paid up on December 23, 2021 and the above cases have been settled. As for the court acceptance
fees that were not previously agreed upon by the parties, Chengdu Wetouch agreed to pay the court acceptance fee of RMB 250,470
(equivalent to $ 35,278). Chengdu Wetouch paid the aforesaid fees to Lifan Financial on March 10, 2023.

 iv)

 Legal
 case with Sichuan Renshou Shigao Tianfu Investment Co., Ltd and Renshou Tengyi Landscaping Co., Ltd. on a court acceptance fee of
 RMB103,232 (equivalent to $14,540)

 On
March 19, 2014, Chengdu Wetouch, a related party, obtained a two and half-year loan of RMB15.0 million (equivalent to $2.1 million) from
Chengdu Bank Co., Ltd. Gaoxin Branch ("Chengdu Bank Gaoxin Branch"), with Chengdu Hi-tech Investment Group Co., Ltd. ("CDHT
Investment") acting as guarantor to pay off the loan principal and related interests, while Sichuan Wetouch and Hong Kong Wetouch
as guarantors, were jointly and severally liable for such debts.

 Upon
the loan due in January 2017, Chengdu Wetouch defaulted the loan, thus, CDHT Investment filed a lawsuit against Chengdu Wetouch, Sichuan
Wetouch, and Hong Kong Wetouch demanding a full repayment of such debts.

 To
support the local economic development as well as Chengdu Wetouch, two government-backed companies, Sichuan Renshou Shigao Tianfu Investment
Co., Ltd. ("Sichuan Renshou") and Renshou Tengyi Landscaping Co., Ltd. ("Renshou Tengyi") provided their bank
deposits of RMB 12.0 million (equivalent to $1.7 million) as pledge, while Mr. Guangde Cai and Sichuan Wetouch also provided counter-guarantee.

 Upon
the expiration of the guarantee, Chengdu Wetouch still defaulted on repayment of the above pledge. As a result, CDHT Investment levied
this collateral of RMB12.0 million. On November 21, 2019. Subsequently, Sichuan Renshou and Renshou Tengyi filed with Chengdu Intermediate
People's Court a lawsuit demanding an asset recovery of RMB12.0 million (equivalent to $1.7 million) pursuant to the counter guarantee
agreement.

 On
December 2, 2019, pursuant to the reconciling agreement issued by Chengdu Intermediate People's Court, the parties agreed to cancel
the demand to seize property of Sichuan Wetouch rather than the property of Chengdu Wetouch, and to waive freezing Guangde Cai's
60% shareholding equity in Xinjiang Wetouch Electronic Technology Co., Ltd.

 On
October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch, Hong Kong Wetouch and Guangde Cai are fully discharged
and released from any and all obligations under the outstanding debts, and from all liabilities under guarantee with Chengdu Wetouch
being responsible for the outstanding debts by December 31, 2020.

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

 The
settlement and release agreement did not specify which party shall pay the court acceptance fee. On March 10, 2023, pursuant to an enforcement
settlement agreement entered among Sichuan Renshou, Renshou Tengyi, Sichuan Wetouch, Chengdu Wetouch, and other relevant parties, Sichuan
Wetouch agreed to pay the court acceptance fee of RMB103,232 (equivalent to $14,540). On March 17, 2023, Chengdu Wetouch made a full
payment of the above court fee to Sichuan Renshou.

 v)

 Legal
 case with Chengdu High Investment Financing Guarantee Co. on a court acceptance fee of RMB250,000 (equivalent to $35,211)

 On
March 22, 2019, Chengdu High Investment Financing Guarantee Co., Ltd, ("Chengdu High Investment") filed a lawsuit against
Hong Kong Wetouch in the Chengdu Intermediate People's Court, claiming that Hong Kong Wetouch should assume the guarantee liability
for the debt payable by Chengdu Wetouch. On May 21, 2020, the court rendered a judgment ordering Hong Kong Wetouch to pay compensation
of RMB17,467,042 (equivalent to $2,460,181), interest, liquidated damages, liquidated damages for late performance, etc.

 On
March 16, 2023, Chengdu Wetouch, Sichuan Wetouch and Chengdu High Investment entered into a settlement enforcement agreement, confirming
that Chengdu High Investment had received RMB17,547,197 (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.

 vi)

 Legal
 case with Hubei Lai'en Optoelectronics Technology Co., Ltd. on a product payment of RMB157,714 (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 RMB137,142.7 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 RMB137,143 and liquidated damages of RMB 20,571. Sichuan Wetouch paid the
above amount to Hubei Lai'en on March 15, 2023.

 vi)
 Legal case with
Chengdu Hongxin Shunda Trading Co., Ltd. on settlement of accounts payable and related fund interests totalling RMB3,021,294 ($425,540)

 In
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 RMB3,021,294 ($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 Report date of this 10K, the management assessed that possibility and
amount of contingency cannot be estimated given the current status.

 vii)
 Legal case with
Mr. Guangchuang Liu on a refund of equity transfer price and related interests totalling RMB324,501 ($45,705)

 In
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 RMB315,245 ($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
RMB324,501 ($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 RMB324,501 ($45,705) and subsequently, the Company has made the payment
in full in January, 2024.

 viii)
 Legal case with
Sichuan Yali Cement Manufacturing Co., Ltd. and Sichuan Chunqiu Development & Construction Group Co. Ltd. on a debt payable of RMB
RMB1,656,480 (equivalent to $233,310) and related interest, legal fees and penalties.

 On
August 10, 2022, Sichuan Yali Cement Manufacturing Co., Ltd. ("Yali Co.") and Sichuan Chunqiu Development & Construction
Group Co. Ltd. (" Chunqiu Co.") entered into construction materials contract for Sichuan Vtouch's new facility. Under
this contract, Sichuan Vtouch was listed as the joint responsibility party for the payment settlement between Yali Company and Chunqiu
Company.

 On
February 15, 2023, Yali Co. filed a lawsuit against Chunqiu Co. to the Chengdu Wenjiang District People's Court, claiming that
Chunqiu Co. should pay the remaining debt of RMB RMB1,656,480 (equivalent to $233,310) and related interest, legal fees and penalties,
and that Sichuan Vtouch should assume the guaranteed 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
repayment.

 On
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 RMB10,627 ($1,497)
with Chunqiu liability. As of December 31, 2023, Sichuan Vtouch accrued this court fee of RMB10,627 ($1,497).

 ITEM
 4.

 Mine
 and Safety Disclosure

 Not
applicable.

 Part
II

 ITEM
 5.

 Market
 for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Trading
Market

 Our
common stock is currently traded on the Nasdaq under the symbol "WETH."

 Holders
of Record

 On
April 15, 2024, the closing price per share of our common stock was $2.01. We had approximately 417 stockholders of record as of April
15, 2024. On April 15, 2024 there were 11,931,534 shares of our common stock issued and outstanding.

 Dividend
Policy

 We
do not anticipate declaring or paying, in the foreseeable future, any cash dividends on our capital stock. We intend to retain all available
funds and future earnings, if any, to fund the development and expansion of our business. Any future determination regarding the declaration
and payment of dividends, if any, will be at the discretion of our board of directors and will depend on then-existing conditions, including
our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our
board of directors may deem relevant.

 Securities
Authorized for Issuance Under Equity Compensation Plan

 The
Company does not have any equity compensation plans.

 Recent
Sales of Unregistered Securities

 None.

 Purchases
of Equity Securities by the Company and Affiliated Purchasers

 None.

 ITEM
 6.

 [Reserved]

 ITEM
 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operations

 The
following discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in Part
II, Item 8 of this Annual Report. The following discussion contains forward-looking statements that involve risks and uncertainties about
our business and operations. Our actual results and the timing of selected events may differ materially from those anticipated in these
forward-looking statements as a result of various factors, including those we describe under Item 1A. Risk Factors" and
elsewhere in this Annual Report. See "Special Note Regarding Forward-Looking Statements."

 Overview

 We
were originally incorporated under the laws of the state of Nevada in August 1992. On October 9, 2020, we entered into the Share Exchange
Agreement with BVI Wetouch and all the shareholders of BVI Wetouch, to acquire all the issued and outstanding capital stock of BVI Wetouch
in exchange for the issuance to such shareholders an aggregate of 28 million shares of our common stock. The Reverse Merger closed on
October 9, 2020. As a result of the Reverse Merger, BVI Wetouch became our wholly-owned subsidiary.

 Through
our wholly-owned subsidiaries, BVI Wetouch, HK Wetouch, and Sichuan Vtouch, we are engaged in the research, development, manufacturing,
sales and servicing of medium to large sized projected capacitive touchscreens. We are specialized in large-format touchscreens, which
are developed and designed for a wide variety of markets and used in by the financial terminals, automotive, POS, gaming, lottery, medical,
HMI, and other specialized industries. Our product portfolio comprises medium to large sized projected capacitive touchscreens ranging
from 7.0 inch to 42 inch screens.

 On
July 16, 2023, the Company's board of directors approved a reverse stock split of the Company's common stock at a ratio of
1-for-20. On July 16, 2023, the Company filed a certificate of change (with an effective date of July 16, 2023) with the Nevada Secretary
of State pursuant to Nevada Revised Statutes 78.209 to effectuate a 1-for-20 reverse stock split of its outstanding common stock. On
September 11, 2023, the Company received notice from FINRA/OTC Corporate Actions the reverse split would take effect at the open of business
on September 12, 2023, and the reverse stock that split took effect on that date. All share information included in this Form 10-K has
been reflected as if the reverse stock split occurred as of the earliest period presented.

 Effects
of COVID-19

 There
has been a global pandemic of a novel strain of coronavirus (COVID-19) that first emerged in China in December 2019 and has spread globally.
In March 2020, the World Health Organization declared COVID-19 as a global pandemic. The COVID-19 pandemic has resulted in quarantines,
travel restrictions, and the temporary closures of stores and business facilities in China for the first half year of 2020, along with
various government-initiated COVID-19 containment measures implemented intermittently. Since the end of 2022, the Chinese government
has eased the COVID-19 restrictions. Although we are currently fully functional, potential impact on our results of operations will also
depend on future developments and information that may emerge regarding the duration and severity of COVID-19 and the actions taken by
governmental authorities and other entities to contain COVID-19 or to mitigate its impacts, almost all of which are beyond our control.

 The
Company has several shutdowns during the first quarter of 2023.

 To
serve our customers while also providing for the safety of our employees and service providers, we have modified numerous aspects of
our logistics, transportation, supply chain, purchasing, and after-sale processes. The Company has taken proactive measures to promote
products to new customers and entering more regions during the year ended December 31, 2022.

 The
World Health Organization (WHO) announced on May 5, 2023 that COVID-19 is no longer a public health emergency of international concern.
In the long term, the aftermath of the COVID-19 pandemic is likely to adversely affect the economies and financial markets of many countries
and may result in a global economic downturn or a recession. This would likely adversely affect demand on some of our products or services,
which may, in turn negatively impact our results of operations.

 Highlights
for the Year Ended December 31, 2023

 were $39.7 million, an increase of 4.7% from $37.9 million for the year ended December 31, 2022

 Gross
 profit was $17.2 million, an increase of 22.8% from $14.0 million for the year ended December 31, 2022

 Gross
 profit margin was 43.3%, as compared to 37.0% for the year ended December 31, 2022

 Net
 income was $8.3 million, a decrease of 4.6% from $8.7 million for the year ended December 31, 2022

 Total
 volume shipped was 1,967,316 units, an increase of 2.6% from 1,916,976 units for the year ended December 31, 2022

 Results
of Operations

 The
following table sets forth, for the periods indicated, statements of income data:

 (in US Dollar millions,
except percentage)

 For the Years Ended December 31,

 2023

 2022

 %

 $
 39.7

 $
 37.9

 4.7
 %

 Cost of revenues

 (22.5
)

 (23.9
)

 (5.9
)%

 Gross profit

 17.2

 14.0

 22.8
 %

 Total operating expenses

 (4.5
)

 (2.6
)

 73.1
 %

 Operating income

 12.7

 11.4

 11.4
 %

 Total other income (expense), net

 (0.3
)

 0.7

 142.9
 %

 Income before income taxes

 12.4

 12.1

 2.5
 %

 Income tax expense

 (4.1
)

 (3.4
)

 20.6
 %

 Net income

 $
 8.3

 $
 8.7

 (4.6
)%

 For
the Years Ended December 31, 2023 and 2022

were $39.7 million in the year ended December 31, 2023, an increase of $1.8 million, or 4.7%, compared with $37.9 million in the same
period of last year. This was mainly due to the increase of 2.6% in sales volume, and an increase of 7.1% in the average selling price
of our products in RMB, and 5.2% negative impact from exchange rate due to depreciation of RMB against US dollars, as compared with those
of the same period of last year.

 For the Years Ended December 31,

 2023

 2022

 %

 %

 %

 (in US Dollar except percentage)

 Revenue from sales to customers in the PRC

 $
 27,646,722

 69.6
 %

 $
 26,440,376

 69.7
 %

 $
 1,206,346

 4.6
 %

 Revenue from sales to customers overseas

 12,059,217

 30.4
 %

 11,482,736

 30.3
 %

 576,481

 5.0
 %

 Total Revenues

 $
 39,705,939

 %

 $
 37,923,112

 %

 $
 1,782,827

 4.7
 %

 For the Years Ended December 31,

 2023

 2022

 Unit

 %

 Unit

 %

 Unit

 %

 (in Unit, except percentage)

 Units sold to customers in the PRC

 1,330,013

 67.6
 %

 1,295,097

 67.6
 %

 34,916

 2.7
 %

 Units sold to customers overseas

 637,303

 32.4
 %

 621,879

 32.4
 %

 15,424

 2.5
 %

 Total Units Sold

 1,967,316

 %

 1,916,976

 %

 50,340

 2.6
 %

 PRC
 Dom estic Market

 For
the year ended December 31, 2023, revenue from the PRC domestic market increased by $1.2 million or 4.6%, as a combined result of (i)
the increase of 2.7% in sales volume, and an increase of 6.8% in the average sales price of our products in RMB, and (ii) 5.2%
negative impact from exchange rate due to depreciation of RMB against US dollars, as compared with those of the same period of
last year.

 The
increase of 6.8% in sales price in RMB was mainly due to the marketing initiatives to enhance sales of new models of higher-end
products such as multi-functional printer touchscreens, industrial control computer touchscreens, medical touchscreens, and POS
touchscreens in - Southwest and East China during the year ended December 31, 2023.

 Due
to our proactive efforts to market new models and efforts to obtain new customers and penetrate into new regions, our sales increased
by 23.3% in Southwest China, and 13.4% in East China, partially offset by a decrease of 23.4% in South China during the year ended
December 31, 2023.

 Overseas
Market

 For
the year ended December 31, 2023, revenue from overseas market was $12.1 million as compared to $11.5 million of the same period of 2022,
an increase of $0.6 million, or 5.0%, mainly due to an increase of 2.5% in sales volume and an increase of 7.8% in average selling price
in RMB for gaming touchscreens and industrial control computer touchscreens. The Company had more pricing control capability due to the
higher demand during the year ended December 31, 2023.

 The
following table summarizes the breakdown of revenues by categories in US dollars:

 For the Years Ended December 31,

 2023

 2022

 %

 %

 Margin%

 (in US Dollars, except percentage)

 Product categories by end applications

 Automotive Touchscreens

 $
 9,780,713

 24.6
 %

 $
 9,293,357

 24.5
 %

 $
 487,356

 5.2
 %

 Industrial Control Computer Touchscreens

 7,884,224

 19.9
 %

 7,991,356

 21.1
 %

 (107,132
)

 (1.3
)%

 POS Touchscreens

 6,613,501

 16.7
 %

 6,556,348

 17.3
 %

 57,153

 0.9
 %

 Gaming Touchscreens

 5,619,228

 14.2
 %

 5,199,118

 13.7
 %

 420,110

 8.1
 %

 Medical Touchscreens

 5,799,489

 14.6
 %

 5,050,067

 13.3
 %

 749,422

 14.8
 %

 Multi-Functional Printer Touchscreens

 4,008,784

 10.1
 %

 3,822,054

 10.1
 %

 186,730

 4.9
 %

 Others*

 -

 0.0
 %

 10,812

 0.0
 %

 (10,812
)

 (100.0
)%

 Total Revenues

 $
 39,705,939

 100.0
 %

 $
 37,923,112

 100.0
 %

 $
 1,782,827

 4.7
 %

 *Others
include applications in self-service kiosks, ticket vending machines and financial terminals.

 The
Company continued to shift production mix from traditional lower-end products to high-end touchscreens used in industrial control computers,
gaming machines, and automobiles, primarily due to (i) greater growth potential of computer screen models in China, and (ii) stronger
demand and better quality demand from consumers' recognition of higher-end touchscreens made with better materials.

 Gross
Profit and Gross Profit Margin

 2023

 2022

 %

 Gross Profit

 $
 17.2

 $
 14.0

 $
 3.2

 22.8
 %

 Gross Profit Margin

 43.3
 %

 37.0
 %

 6.3
 %

 Gross
profit was $17.2 million during the year ended December 31, 2023, compared to $14.0 million in the same period of 2022. Our gross profit
margin increased to 43.3% during the year ended December 31, 2023 as compared to 37.0% for the same period of 2022, primarily due to
the increase in sales of 4.7%, particularly high-end products such as industrial control computer touchscreens, automotive touchscreens,
and gaming touchscreens for the year ended December 31, 2023, the decrease of 1.4% in material costs, partially offset by the increase
in labor cost of 9.0% for the year ended December 31, 2023.

 Selling
Expenses

 2023

 2022

 %

 Selling Expenses

 $
 0.6

 $
 1.3

 $
 (0.7
)

 (53.8
)%

 1.5
 %

 3.5
 %

 (2.0
)%

 Selling
expenses were $0.6 million for the years ended December 31, 2023, compared to $1.3 million in the same period in 2022, representing a
decrease of $0.7 million, or 53.8%. During the year ended December 31, 2022, the Company incurred more marketing expenses to reduce the
negative impact of tighter COVID-19 control in China during the second half of 2022.

 General
and Administrative Expenses

 2023

 2022

 %

 General and Administrative Expenses

 $
 3.8

 $
 1.3

 $
 2.5

 192.3
 %

 9.6
 %

 3.4
 %

 6.2
 %

 General
and administrative expenses were $3.8 million for the year ended December 31, 2023, compared to $1.3 million in the same period in 2022,
representing an increase of $2.5 million, or 192.3%. The increase was primarily due to the increase in accrued underwriting fees of $2.5
million in connection with a private placement. On March 18, 2023, the Company entered into a private placement consent agreement with
Representatives of the private placement taken place on January 19, 2023 on the agent fees of US$1.2 million, payable
only on the completion of the underwriting offering. The Company made the full payment in February, 2024 (see Note 8).

 And
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 the underwriting offering. The Company made the full payment in February, 2024 (see Note 8).

 Research
and Development Expenses

 (in US dollars, except percentage)

 2023

 2022

 %

 Research and Development Expenses

 $
 84,551

 $
 85,251

 $
 (700
)

 (0.8
)%

 0.0
 %

 0.0
 %

 0.0
 %

 Research
and development expenses were $84,551 for the year ended December 31, 2023 compared to $85,251 in the same period in 2022.

 Operating
Income

 Total
operating income was $12.7 million for the year ended December 31, 2023 as compared to $11.4 million of the same period of last year
due to higher gross profit and lower selling expenses, partially offset by higher general and administrative expenses.

 Other
Expenses

 (in US dollars, except percentage)

 2023

 2022

 %

 Other expenses

 $
 47,328

 $
 0.0

 $

 N/A

 0.0
 %

 0.0
 %

 0.0
 %

the year ended December 31, 2023, the Company accrued litigation compensation of RMB324,501 ($45,828) and court fee of RMB10,627 ($1,500).

 Loss
on Conversion of Notes Payable

 (in millions, except percentage

 2023

 2022

 %

 Loss on conversion of notes payable

 $
 0.0

 $
 0.1

 $
 (0.1
)

 (100.0
)%

 0.0
 %

 0.3
 %

 (0.3
)%

 Loss
on conversion of notes payable were $0.1 million for the years ended December 31, 2022, as lenders of convertible promissory notes converted
certain principal, accrued and unpaid interest and default charges totaling $1,038,426 into 69,228 shares of common stock of the Company,
including two notes fully converted. As a result, the Company recorded a loss on the conversion of notes payable of $0.1 million accordingly.

 Gain
(loss) on Changes in Fair Value of Common Stock Purchase Warrants

 2023

 2022

 %

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

 $
 (0.1
)

 $
 0.9

 $
 (1.0
)

 111.1
 %

 (0.3
)%

 2.4
 %

 (2.7
)%

 Loss
on changes in fair value of common stock purchase warrants was $0.1 million for the year ended December 31, 2023, as compared to a gain
of $0.9 million in the same period of 2022.

 Income
Taxes

 2023

 2022

 %

 Income before Income Taxes

 $
 12.3

 $
 12.1

 $
 0.2

 1.7
 %

 Income Tax (Expense)

 (4.1
)

 (3.4
)

 (0.7
)

 20.6
 %

 Effective income tax rate

 25.4
 %

 27.7
 %

 (2.3
)%

 The
effective income tax rate for the year ended December 31, 2023 and 2022 was 25.4% and 27.7%, respectively.

 Our
PRC subsidiary had $98.0 million of cash and cash equivalents of December 31, 2023, which are planned to be indefinitely reinvested in
the PRC. The distributions from our PRC subsidiary are subject to the U.S. federal income tax at 21%, less any applicable foreign
tax credits. Due to our policy of indefinitely reinvesting our earnings in our PRC business, we have not provided for deferred income
tax liabilities related to PRC withholding income tax on undistributed earnings of our PRC subsidiaries.

 Net
Income

 As
a result of the above factors, we had a net income of $8.3 million in the year ended December 31, 2023 compared to a net income of $8.7
million in the same period of 2022.

 Liquidity
and Capital Resources

 Historically,
our primary uses of cash have been to finance working capital needs. We expect that we will be able to meet our needs to fund operations,
capital expenditures and other commitments in the next 12 months primarily with our cash and cash equivalents, operating cash flows and
bank borrowings.

 We
may, however, require additional cash resources due to changes in business conditions or other future developments. If these sources
are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility.
The sale of additional equity or equity-linked securities could result in additional dilution to stockholders. The incurrence of indebtedness
would result in increased debt service obligations and could result in operating and financial covenants that would restrict operations.
Financing may not be available in amounts or on terms acceptable to us, or at all.

 As
of December 31, 2023, we had current assets of $106.8 million, consisting of $98.0 million in cash, $7.4 million in accounts receivable,
$0.2 million in inventories, and $1.1 million in prepaid expenses other current assets. Our current liabilities as of December 31, 2023,
were $6.3 million, which is comprised of $0.6 million in accounts payable, $0.5 million in loans from a third party, $4.0 million in
accrued expenses and other current liabilities and $1.2 million in convertible promissory notes payable.

 The
following is a summary of our cash flows provided by (used in) operating, investing, and financing activities for the years ended December
31, 2023 and 2022:

 (in US Dollar millions)

 2023

 2022

 Net cash provided by operating activities

 $
 12.7

 $
 8.6

 Net cash used in investing activities

 (2.3
)

 -

 Net cash provided by (used in) financing activities

 40.0

 (0.7
)

 Effect of foreign currency exchange rate changes on cash and cash equivalents

 (3.6
)

 (2.8
)

 Net increase in cash and cash equivalents

 46.8

 5.1

 Cash and cash equivalents at the beginning of period

 51.2

 46.2

 Cash and cash equivalents at the end of period

 $
 98.0

 $
 51.3

 Operating
Activities

 Net
cash provided by operating activities was $12.7 million for the year ended December 31, 2023, as compared to $8.6 million used in operating
activities for the same period of the last year, a change of $4.1 million, primarily due to (i) an increase of $2.4 million in accrued
expenses and other current liabilities, a decrease of $2.8 million in accounts receivable and $0.4 million in inventories, and a decrease
of $0.1 million in amortization of discounts and issuance cost of the Notes, partially offset by (ii) a decrease of $0.5 million in net
income for the year ended December 31, 2023, (iii) a decrease of $1.3 million in accounts payable, an increase of $0.5 million in prepaid
expenses and other current assets, and an increase of $1.0 million in loss on changes in fair value of common stock purchase warrant
liability.

 Investing
Activities

 Net
cash used in investing activities for the year ended December 31, 2023 was $2.3 million for the purchase of property, plant and equipment.

 There
were nil investing activities for the year ended December 31, 2022.

 Financing
Activities

 Net
cash provided by financing activities was $40.0 million for the year ended December 31, 2023, consisting of $40.0 million proceeds from
a private placement, partially offset by the repayment of $55,000 in convertible promissory note payable.

 Net
cash used in the financing activities was $0.7 million for the year ended December 31, 2022, including $1.4 million of repayment of convertible
promissory note payable, partially offset by proceeds of a third party loan of $0.4 million.

 Our
Days Sales Outstanding ("DSO") decreased to 75 days for the year ended December 31, 2023 from 81 days for the year ended
December 31, 2022.

 The
following table provides an analysis of the aging of accounts receivable as of December 31, 2023 and 2022:

 2023

 2022

 Current

 $
 3,740,488

 $
 1,252,152

 1-3 months past due

 2,635,045

 4,998,596

 4-6 months past due

 1,079,719

 2,806,973

 7-12 months past due

 -

 greater than 1 year past due

 -

 -

 Total accounts receivable

 $
 7,455,252

 $
 9,057,741

 The
majority of the Company's revenues and expenses were denominated primarily in RMB, the currency of the People's Republic
of China. There is no assurance that exchange rates between the RMB and the U.S. Dollar will remain stable. Inflation has not had a material
impact on the Company's business.

 Holding
Company Structure

is a holding company and a company incorporated in Nevada with no material operations of its own. We conduct substantially all of our
operations through our subsidiary established in mainland China. Our equity structure is a direct holding structure, that is, Wetouch,
a Nevada corporation listed in the U.S., controls Sichuan Vtouch though BVI Wetouch. See "Item 1. Business – Corporate
History and Structure " for more details.

 We
face various risks and uncertainties relating to doing business in China. Our business operations are primarily conducted in China, and
we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore
offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, which may impact our ability to conduct
certain businesses, accept foreign investments, or list and conduct offerings on a United States or other foreign exchange. These risks
could result in a material adverse change in our operations and the value of our common stock, significantly limit or completely hinder
our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline. For a detailed
description of risks relating to doing business in China, see " Item 1.A. Risk Factors—Risks Related to Doing Business
in China."

 The
PRC government's significant discretion and authority in regulating our operations and its oversight and control over offerings
conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer
or continue to offer securities to investors. Implementation of industry-wide regulations in this nature may cause the value of our securities
to significantly decline or become worthless. For more details, see " Item 1.A. Risk Factors—Risks Relating to Doing Business
in China— Changes in China's economic, political or social conditions or government policies could have a material adverse
effect on our business and operations. The PRC government has recently indicated an intent to exert more oversight and control over overseas
securities offerings and other capital markets activities and foreign investment in China-based companies like us. Any such action, once
taken by the PRC government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors
and cause the value of such securities to significantly decline or in extreme cases, become worthless."

 Risks
and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly
evolving rules and regulations in China, could result in a material adverse change in our operations and cause our Common Stock to decrease
in value or become worthless. For more details, see " Item 1.A. Risk Factors—Risks Relating to Doing Business in China—
Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws and sudden and unexpected
changes in laws and regulations in China, could adversely affect us and limit the legal protections available to you and us."

 Cash
and Other Assets Transfers between the Holding Company and Its Subsidiaries

 As
of March 31, 2024, Wetouch had made cumulative capital contributions of RMB346.0 million
(US$ 51.9 million) to its PRC subsidiary through intermediate holding companies, and were
accounted as long-term investments of Wetouch. These funds have been used by the Company's PRC subsidiary for its operations.

 To
date, there have not been any dividends or other distributions from our PRC subsidiary to Wetouch, both of which are located outside
of mainland China. Wetouch, as a holding company, may rely on dividends and other distributions on equity paid by its PRC subsidiary
for its cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to its stockholders,
subject to Wetouch's charter and M&A and Nevada law or to service any expenses and other obligations it may incur.

 Within
our direct holding structure, the cross-border transfer of funds from Wetouch to its PRC subsidiary is permitted under laws and regulations
of the PRC currently in effect. Specifically, Wetouch is permitted to provide funding to its PRC subsidiary in the form of shareholder
loans or capital contributions, subject to satisfaction of applicable government registration, approval and filing requirements in China.
There are no quantity limits on Wetouch's ability to make capital contributions to its PRC subsidiary under the PRC law and regulations.
However, the PRC subsidiary may only procure stockholder loans from HK Wetouch in an amount equal to the difference between its registered
capital and total investment amount as recorded in the Chinese Foreign Investment Comprehensive Management Information System or 2.5
times of its net assets, at the discretion of such PRC subsidiary.

 For
additional information, see " Item 1.A. Risk Factors—Risks Related to Doing Business in China PRC regulation of loans to
and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent
us from using the proceeds of any offerings or financings to make loans or additional capital contributions to our Chinese subsidiaries,
which could materially and adversely affect our liquidity and our ability to fund and expand our business."

 The
PRC Enterprise Income Tax Law (the "EIT Law") and its implementation rules provide that a withholding tax at a rate of 10%
will be applicable to dividends payable by PRC companies to non-PRC-resident enterprises unless reduced under treaties or arrangements
between the PRC central government and the governments of other countries or regions where the non-PRC resident enterprises are tax resident.
Pursuant to the tax agreement between mainland China and the Hong Kong Special Administrative Region, the withholding tax rate in respect
to the payment of dividends by a PRC enterprise to a Hong Kong enterprise may be reduced to 5% from a standard rate of 10%. However,
if the relevant tax authorities determine that our transactions or arrangements are for the primary purpose of enjoying a favorable tax
treatment, the relevant tax authorities may adjust the favorable withholding tax in the future. Accordingly, there is no assurance that
the reduced 5% withholding rate will apply to dividends received by our Hong Kong subsidiary from our PRC subsidiaries. This withholding
tax will reduce the amount of dividends we may receive from our PRC subsidiaries.

 There
is no assurance that the PRC government will not intervene or impose restrictions on the ability of us or our subsidiary to transfer
cash. Most of our cash is in Renminbi, and the PRC government could prevent the cash maintained in our bank accounts in mainland China
from leaving mainland China, could restrict deployment of the cash into the business of our subsidiaries and restrict the ability to
pay dividends. For details regarding the restrictions on our ability to transfer cash between us, and our subsidiaries, see " Item
1A. Risk Factors—Risks Related to Doing Business in China — "Governmental control of currency conversion may limit
our ability to utilize our revenues effectively and affect the value of your investment." We currently do not have cash management
policies that dictate how funds are transferred between our holding company and our subsidiaries.

 Restrictions
on Our Ability to Transfer Cash Out of China and to U.S. Investors

 Our
PRC subsidiary's ability to distribute dividends is based upon its distributable earnings. Current PRC regulations permit our PRC
subsidiary to pay dividends to its shareholders only out of its accumulated profits, if any, as determined in accordance with PRC accounting
standards and regulations. In addition, under PRC law, our PRC subsidiary is required to set aside at least 10% of its after-tax profits
each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. These reserves
are not distributable as cash dividends. If our PRC subsidiary incurs debt on its own behalf in the future, the instruments governing
such debt may restrict its ability to pay dividends to Wetouch.

 To
address persistent capital outflows and the RMB's depreciation against the U.S. dollar in the fourth quarter of 2016, the People's
Bank of China and the State Administration of Foreign Exchange, or SAFE, implemented a series of capital control measures in the subsequent
months, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend
payments and shareholder loan repayments. The PRC government may continue to strengthen its capital controls and our PRC subsidiary's
dividends and other distributions may be subject to tightened scrutiny in the future. The PRC government also imposes controls on the
conversion of RMB into foreign currencies and the remittance of currencies out of mainland China. Therefore, we may experience difficulties
in completing the administrative procedures necessary to obtain and remit foreign currency for the payment of dividends from our profits,
if any.

 COMMITMENTS
AND CONTINGENCIES

 Legal
Proceedings

 From
time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated
with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss
contingencies are expensed as incurred.

 For
a discussion of the Company's legal proceedings, see Note 14 to the Financial Statements in Item 8.

 Capital
Expenditure Commitment

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

 Off-Balance
Sheet Arrangements

 We
had no off-balance sheet arrangements as of December 31, 2023.

 Critical
Accounting Policies

 An
accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are
highly uncertain at the time such estimate is made, and if different accounting estimates that reasonably could have been used, or changes
in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements.

 We
prepare our financial statements in conformity with U.S. GAAP, which requires us to make judgments, estimates and assumptions. We continually
evaluate these estimates and assumptions based on the most recently available information, our own historical experiences and various
other assumptions that we believe to be reasonable under the circumstances. Since the use of estimates is an integral component of the
financial reporting process, actual results could differ from our expectations as a result of changes in our estimates. Some of our accounting
policies require a higher degree of judgment than others in their application and require us to make significant accounting estimates.

 The
following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial
statements and accompanying notes and other disclosures included in this registration statement. When reviewing our financial statements,
you should consider (i) our selection of critical accounting policies, (ii) the judgments and other uncertainties affecting the application
of such policies and (iii) the sensitivity of reported results to changes in conditions and assumptions.

 Revenue
recognition

 The
Company adopted Accounting Standards Codification ("ASC") 606 using the modified retrospective approach. The adoption of
this standard did not have a material impact on the Company's consolidated financial statements. Therefore, no adjustments to opening
retained earnings were necessary.

 ASC
606, Revenue from Contracts with customers, establishes principles for reporting information about the nature, amount, timing and uncertainty
of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires
an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration
that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

 ASC
606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company
(i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction
price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate
the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies
the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result
in significant changes in the way the Company records its revenue. The Company has assessed the impact of the guidance by reviewing its
existing customer contracts and current accounting policies and practices to identify differences that would result from applying the
new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control
and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and
pattern of revenue recognition for its current revenue streams.

 In
accordance to ASC 606, the Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects
the consideration to which the Company expects to be entitled in such exchange. The Company accounts for the revenue generated from sales
of its products primarily to its customers in PRC and overseas, as the Company is acting as a principal in these transactions, is subject
to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified
goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits.
All of the Company's contracts have one single performance obligation as the promise is to transfer the individual goods to customers,
and there is no separately identifiable other promises in the contracts. The Company's revenue streams are recognized at a point
in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The Company's
products are sold with no right of return and the Company does not provide other credits or sales incentive to customers. The Company's
sales are net of value added tax ("VAT") and business tax and surcharges collected on behalf of tax authorities in respect
of product sales.

 Contract
Assets and Liabilities

 Payment
terms are established on the Company's pre-established credit requirements based upon an evaluation of customers' credit
quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment
has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing when an order
is placed and when shipment or delivery occurs. As of December 31, 2022 and 2021, other than accounts receivable and advances from customers,
the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance
sheet. Costs of fulfilling customers' purchase orders, such as shipping, handling and delivery, which occur prior to the transfer
of control, are recognized in selling, general and administrative expense when incurred.

 The
Company generally warrants that its products will substantially conform to the agreed-upon specifications for three years from the date
of shipment. The Company's liability is limited to either a credit equal to the purchase price or replacement of the defective
part. Returns, after sales services and technical support under warranty have historically been immaterial. As such, the Company does
not record a specific warranty reserve or consider activities related to such warranty, if any, to be a separate performance obligation.

 Disaggregation
of Revenues

 The
Company disaggregates its revenue from contracts by geography, as the Company believes it best depicts how the nature, amount, timing
and uncertainty of the revenue and cash flows are affected by economic factors. The Company's disaggregation of revenues for the
years ended December 31, 2022 and 2021 are disclosed in Note 14 to the financial statements.

 Use
of estimates

 In
preparing the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America
("US GAAP"), management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates
required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, 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.

 Inventories

 Inventory
consists of raw materials, work-in-process and finished goods and is stated at the lower of cost or net realizable value. Cost is determined
using a weighted average. For work-in-process and manufactured inventories, cost consists of raw materials, direct labor and an allocated
portion of the Company's production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable
value based upon assumptions about future demand and market conditions. For finished goods and work-in-process, if the estimated net
realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable
costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable
value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write-downs are included in the
cost of revenues in the consolidated statements of operations. Inventories are carried at this lower cost basis until sold or scrapped.
Nil and $74,100 inventory write-off was recorded for the year ended December 31, 2023 and 2022, respectively.

 Convertible
Promissory Notes

 The
Company accounts for its convertible promissory notes according to guidance of ASU 2020-06, "Debt—Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity's Own Equity (Subtopic 815-40): Accounting
for Convertible Instruments and Contracts in an Entity's Own Equity", which simplifies the accounting for convertible instruments
by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required
to be accounted for as derivatives under Topic 815.

 The
Company analyzes the convertible notes for the existence of a beneficial conversion feature. The Company considered the three characteristics
of a derivative instrument listed in ASC 815-10-15-83: (i) having one or more underlyings and one or more notional amounts or payment
provisions or both; (ii) requiring no initial net investment; and (iii) permitting net settlement.

 Since
the Company's notes have fixed interest rate, specified notional principal and settlement date, which no other events would affect
specified settlement, and the Company received net proceeds after issuance costs and discount, which the Company recorded as the net
proceeds or net settled investment, the management assessed that the Notes did not do not meet the definition of a derivative instruments
and an embedded feature would not be bifurcated. The discounts on the convertible notes, are amortized to interest expense, using the
effective interest method, over the terms of the related convertible notes.

 Common
stock purchase warrants

 The
Company also analyzed the Warrants in accordance with ASC 815, to determine whether the Warrants meet the definition of a derivative
and, if so, whether the Warrants meet the scope exception of ASC 815-40, which is that contracts issued or held by the reporting entity
that are both (1) indexed to its own stock and (2) classified in stockholders' equity shall not be considered to be derivative
instruments for purposes of ASC 815-40.

 The
Company concluded that the Warrants issued in 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. According
to ASC 815-40, the "Down-round protection" provision is not considered to be an input to the fair value of a fixed-for-fixed
option on equity shares which leads the Warrants to fail to be qualified as indexed to the Company's own stock and then to fail
to meet the scope exceptions of ASC 815. Therefore, the Company accounted for the Warrants as derivative liabilities under ASC 815. Pursuant
to ASC 815, derivatives are measured at fair value and re-measured at fair value with changes in fair value recorded in earnings at each
reporting period.

 The
Company used a Black-Scholes-pricing model to estimate the fair values of common stock purchase warrants at the balance sheet dates.
As of December 31, 2023 and 2022, the Company recorded $378,371 and $256,957 common stock purchase warrant liability, respectively, and
loss of $121,413 and gain of $871,677 on change of fair value of common stock purchase warrant liability for the year ended December
31, 2023 and 2022, respectively.

 Income
taxes

 The
Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized
when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial
statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period including the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.

 An
uncertain tax position is recognized only if it is "more likely than not" that the tax position would be sustained in a tax
examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination.
For tax positions not meeting the "more likely than not" test, no tax benefit is recorded. Penalties and interest incurred
related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties or interest
relating to income taxes have been incurred during the years ended December 31, 2023 and 2022. The Company does not believe there was
any uncertain tax provision at December 31, 2023 and 2022.

 The
Company's operating subsidiaries in China are subject to the income tax laws of the PRC. No significant income was generated outside
the PRC for the fiscal years ended December 31, 2023 and 2022. As of December 31, 2023, all of the Company's tax returns of its
PRC Subsidiaries remain open for statutory examination by PRC tax authorities.

 Property,
plant and equipment, net

 Property,
plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and
equipment is provided using the straight-line method over their expected useful lives, as follows:

 Useful
 life

 Buildings

 years

 Machinery
 and equipment

 years

 Office
 and electric equipment

 years

 Vehicles

 years

 Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated
depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated
statements of income and other comprehensive income in other income or expenses.

 Impairment
of long-lived Assets

 Long-lived
assets, such as property, plant and equipment, land use rights, are reviewed for impairment when events or changes in circumstances indicate
that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used
is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected
to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future
cash flows, an impairment charge is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or
asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values
and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or
fair value less costs to sell, and are no longer depreciated. No impairment of long-lived assets was recognized for any of the years
presented.

 Comprehensive
income

 Comprehensive
income (loss) consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain or
loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss)
in the consolidated statements of income and comprehensive income.

 Recently
issued accounting guidance

 The
Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews
new accounting standards that are issued.

 The
Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews
new accounting standards that are issued.

 In
August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06") "Debt—Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible
Instruments and Contracts in an Entity's Own Equity." ASU 2020-06 will simplify the accounting for convertible instruments
by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting
models results in fewer embedded conversion features being separately recognized from the host contract as compared with current U.S.
GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are
not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception
from derivative accounting, and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded
as additional paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity's
own equity to reduce form-over-substance-based accounting conclusions. For public business entities, the amendments in ASU 2020-06 are
effective for public entities which meet the definition of a smaller reporting company are effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2023, including interim periods within those fiscal years. Early application
of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. The Company adopted ASU 2020-06 effective January 1, 2021.

 In
June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the
accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate
credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities
and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The
pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including
interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning
after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-13 utilizing the modified
retrospective transition method on January 1, 2022. The adoption of ASU 2016-13 did not have a material impact on the Company's
consolidated financial statements.

 In
December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The
amendment simplifies the accounting for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes.
It also clarifies certain aspects of the existing guidance to promote more consistent application, among other things. The guidance is
effective for interim and annual reporting periods beginning within 2021 with early adoption permitted.

 In
October 2021, the FASB issued ASU No. 2021-08, which will require companies to apply the definition of a performance obligation under
ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers
that are acquired in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities
assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers,
at fair value on the acquisition date. ASU No. 2021-08 will result in the acquirer recording acquired contract assets and liabilities
on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. ASU No. 2021-08 is effective
for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU No. 2021-08 on January 1,
2023. The adoption of ASU No. 2021-08 did not have a material impact on the Company's consolidated financial statements.

 In
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
model. 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. The
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
position.

 From
time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated
through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be
adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption.

 Recently
issued accounting pronouncements not yet adopted

 In
March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate
Reform on Financial Reporting", which provides optional expedients and exceptions for applying U.S. GAAP on contract modifications
and hedge accounting to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected
to be discontinued because of reference rate reform, if certain criteria are met. These optional expedients and exceptions provided in
ASU No. 2020-04 are effective for the Company as of March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU 2022-06,
Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ("ASU 2022-06"), which deferred the application
dates of Topic 848 to December 31, 2024. The 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.

 In
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
31, 2024.

 In
December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information
about a reporting entity's effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is
effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial
statements that have not yet been issued or made available for issuance. The Group has evaluated this ASU and expects to add additional
disclosures to our combined and consolidated financial statements, once adopted.

 ITEM
 7A.

 Quantitative
 and Qualitative Disclosure About Market Risk

 As
a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are not required to provide information required
by this Item.

 ITEM
 8.

 Financial
 Statements and Supplementary Data

 Please
see the financial statements beginning on page F-1 following the signature pages in this Annual Report on Form 10-K and incorporated
herein by reference.

 ITEM
 9.

 in and Disagreements with Accountants on Accounting and Financial Disclosure

 Not
Applicable.

 ITEM
 9A.

 Controls
 and Procedures

 Evaluation
of Disclosure Controls and Procedures

 Our
management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness
of the design and operation of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of
December 31, 2022, pursuant to Exchange Act Rule 13a-15(b). We concluded that our disclosure controls and procedures were not effective
as of such date to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange
Act were recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms and that
our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer
and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required
disclosure.

Report on Internal Control over Financial Reporting

 Our
management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over
financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed under the supervision
of our principal executive and principal financial officers and effected by the Company's Board of Directors, management and other
personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its consolidated financial
statements for external reporting purposes in accordance with GAAP.

 Material
Weaknesses in Internal Control over Financial Reporting

assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2022 based on the framework
established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this assessment, management has determined that the Company's internal control over financial reporting as
of December 31, 2022 was not effective.

 A
material weakness, as defined in the standards established by the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"),
is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of our annual or interim consolidated financial statements will not be prevented or detected on a timely
basis.

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

 Inadequate
 segregation of duties consistent with control objectives;

 Lack
 of formal policies and procedures;

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

believes that the material weaknesses that were identified did not have an effect on our financial results. However, management believes
that these weaknesses, if not properly remediated, could result in a material misstatement in our financial statements in future periods.

 Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed,
have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect
to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent
limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to
reduce, though not eliminate, this risk.

 Management's
Plan to Remediate the Material Weakness

has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness
are remediated, such that these controls are designed, implemented, and operating effectively. The remediation actions planned include:

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

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

 We
have engaged with a third-party financial consulting firm during the year to assist with the preparation of SEC reporting. We are committed
to maintaining a strong internal control environment, and believe that these remediation efforts will deliver improvements in our control
environment. Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our
internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing
additional enhancements or improvements, as necessary and as funds allow.

 This
Annual Report does not include an attestation report of our registered public accounting firm regarding our internal control over financial
reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to rules of the
SEC that exempt smaller reporting companies from this requirement.

in Internal Control over Financial Reporting

 There
have been no changes in our internal control over financial reporting that occurred during our fourth quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over financial reporting.

 Item
 9B.

 OTHER
 INFORMATION.

 We
have adopted an insider trading policy and a clawback policy. Our insider trading policy clawback policy are available on our website
and are filed as exhibits to this Annual Report.

 Item
 9C.

 DISCLOSURE
 REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

 Not
applicable.

 PART
III

 ITEM
 10.

 Directors,
 Executive Officers and Corporate Governance

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

 Name

 Age

 Position(s)
 Held

 Fei
 Bai

 Chairman,

 Lian

 President
 and Chief Executive Officer

 Yuhua
 Huang

 Chief
 Financial Officer

 Jiaying
 Cai

 Secretary,

 Jin
 Chen

 Xiaojin
 Tang

 Congjin
 Wang

 Fei
Bai - Chairman and Director

 Mr.
Bai has been our company's Chairman and Director since August 31, 2022. Additionally, he serves as an independent director on the
board of directors of Xinxu Copper Industry Technology Limited (Nasdaq: XXC), a metal material manufacturer, since March 2024. From July
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. Mr.
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

 Mr.
Lian was appointed Chief Executive Officer and President on October 12, 2020. He has served as Chief Executive Officer of Sichuan Wetouch
since November 21, 2017. In 2006, he co-founded Chongqing Damai Touchscreen Computer Co., Ltd ("Damai") (later renamed Chengdu
Wetouch) and served as Vice Technique General Manager, where he was responsible for overseeing the product technology department. In 2011, he co-founded Sichuan Wetouch and served
as Vice Technique General Manager. Mr. Lian holds a Master's degree in Automatic Control from National Chiao Tung University.

 Yuhua
Huang - Chief Financial Officer

 Mr.
Huang was appointed our Chief Financial Officer on October 12, 2020. He concurrently serves as Chief Financial Officer of Sichuan
Wetouch, a position he has held since March 2018. From 2010 to 2013, he worked as an accountant at Liugong Group, where he was
responsible for overseeing the finance department. From 2014 to 2017, he served as Financial Manager at Shanghai Oriental Pearl
Group Co., Ltd., an import and export company, where he was responsible for the financing activities. Mr. 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.

 Jiaying
Cai - Secretary and Director

 Ms.
Cai has been our Company's Secretary and Director since June 2020. She concurrently serves as the Chief Executive Officer and director
of BVI Wetouch, our wholly-owned subsidiary, since its inception on August 14, 2020. From February 2017 to May 2019, Ms. Cai worked at
Chengdu Wetouch Technology Co., Ltd, an affiliate of Guangde Cai, which specializes in the research, development, manufacturing and sales
of capacitive touchscreens widely used in HMI and military industries, where she served as staff within the financial department, human
resources department and purchasing department. In April 2020, she joined Chengdu Haobot Technology Co., Ltd, a software and hardware development company, where she
has been serving as its Legal Representative and General Manager until present. Ms. Cai holds a Bachelor's degree in Music from
The Sichuan Conservatory of Music and an EMBA degree from Sichuan University.

 Jing
Chen - Director

 Ms.
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. (Nasdaq: RAYA) since November
2021, of Jin Medical International Limited. (Nasdaq: ZJYL) from August 2021 to December 2023, of Bon Natural Lift Limited. (Nasdaq: BON)
since October 2023, and of Xinxu Copper Industry Technology Limited. (Nasdaq: XXC) since March 2024.She has served as the Group Vice
President of Future Fintech Group Inc. (Nasdaq: FTFT), a FinTech company, where she was responsible for the company's internal control and merger and acquisition. From May 2019 to November 2020, Ms. Chen served as the CFO of Future Fintech Group Inc. She served as the CFO of AnZhiXinCheng
(Beijing) Technology Co., Ltd. from August 2018 to May 2019. Ms. Chen 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. Chen served as Group Chief Financial Officer of Beijing AnWuYou Food Co., Ltd. Ms. Chen served as Chief Financial
Officer of Beijing DKI Investment Management Co., Ltd. from August 2012 to May 2016. Ms. Chen received a Doctorate of Business Administration
from Victoria University, Neuchatel, Switzerland and an MBA degree from City University of Seattle in Washington, U.S. Ms. Chen holds
Fellow Membership of CPA Australia (FCPA) and is a Member
of the Chartered Institute of Management Accountants (CIMA). She is also a Senior Member of the International Financial Management (SIFM)
accredited by the Ministry of Human Resources and Social Security of the PRC.

 Xiaojin
Tang - Director

 Mr.
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. Mr. 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.

 Congjin
Wang - Director

 Mr.
Wang was elected to our Company's Board of Directors, effective February 17, 2023. Mr. Wang has served as an attorney at Gaopeng
(Nanjing) Law Firm since June 2022. From June 2021 through May 2022, Mr. Wang worked for Guohao Law Firm. He worked at Beijing Gaopeng
(Nanjing) Law Firm from December 2014 through May 2021. He is currently a member of Nanjing Securities and Futures Fund Professional
Committee, a public interest lawyer of China Securities Small and Medium Investors Service Center, a member of Jiangsu foreign lawyers
Talent Pool, and a member of the Nanjing Foreign Lawyers Talent Pool. Mr. Wang received a bachelor's degree from Anqing Normal
University in July 2014, and he is currently studying at University of Chinese Academy of Social Sciences for his master's degree.

 Family
Relationships

 There
are no other family relationships between any of our directors or executive officers. There are no arrangements or understandings between
our directors and directors and any other person pursuant to which they were appointed as an officer and director of the Company.

 Board
Committees

 We
have established three committees under the board of directors: an audit committee, a compensation committee and a nominating and corporate
governance committee. We have adopted a charter for each of the three committees. Each committee's members and functions are described
below.

 Audit
Committee. Our audit committee consists of Jing Chen, Xiaojin Tang and Congjin Wang. Ms. Chen is the chairperson of the audit
committee. We have determined that Ms. Chen, Mr. Tang and Mr. Wang each satisfy the "independence" requirements of Nasdaq
Listing Rule 5605(a)(2) and meets the independence standards under Rule 10A-3 under the Exchange Act. We have determined that Ms. Chen
qualifies as an "audit committee financial expert."

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

 To assist board
 oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) our
 independent auditor's qualifications and independence, and (iv) the performance of our internal audit function and independent
 auditors; the appointment, compensation, retention, replacement, and oversight of the work of the independent auditors and any other
 independent registered public accounting firm engaged by us;

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

 At least annually, to evaluate
 the qualifications, performance and independence of the Company's independent auditors, including an evaluation of the lead
 audit partner; and to assure the regular rotation of the lead audit partner at the Company's independent auditors and consider
 regular rotation of the accounting firm serving as the Company's independent auditors.

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

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

 To review with management
 and the Company's independent auditors: (i) any major issues regarding accounting principles and financial statement presentation,
 including any significant changes in the Company's selection or application of accounting principles; (ii) any significant
 financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including
 the effects of alternative GAAP methods; and (iii) the effect of regulatory and accounting initiatives and off-balance sheet structures
 on the Company's financial statements.

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

 The audit committee oversees our accounting and financial reporting processes
and the audits of the financial statements of our company. The audit committee is responsible for, among other things: (a) representing
and assisting the Board in its oversight responsibilities regarding the Company's accounting and financial reporting processes,
the audits of the Company's financial statements, including the integrity of the financial statements, and the independent auditors'
qualifications and independence; (b) overseeing the preparation of the report required by SEC rules for inclusion in the Company's
annual proxy statement; (c) retaining and terminating the Company's independent auditors; (d) approving in advance all audit and
permissible non-audit services to be performed by the independent auditors; and (e) approving related person transactions.

 Compensation
Committee. Our compensation committee consists of Jing Chen, Xiaojin Tang and Congjin Wang. Mr. Tang is the chairperson of our
compensation committee. We have determined that Ms. Chen, Mr. Tang and Mr. Wang each are "independent," as such term is defined
for directors and compensation committee members in the listing standards of the NASDAQ Stock Market LLC. Additionally, each qualify
as "non-employee directors" for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 and as "outside directors"
for purposes of Section 162(m) of the Internal Revenue Code.

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

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

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

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

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

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

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

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

 The
charter also provides that the compensation committee may select, retain and terminate independent legal counsel and other experts or
consultants, as it deems appropriate, without seeking approval of the Board or management, including the authority to approve the fees
payable to such counsel, experts or consultants and any other term of retention. However, before engaging or receiving advice from a
compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each
such adviser, including the factors required by Nasdaq and the SEC.

 Nominating
and Corporate Governance Committee. Our nominating and corporate governance committee consists of Jing Chen, Xiaojin Tang and
Congjin Wang. Mr. Wang is the chairperson of our nominating and corporate governance committee. We have determined that each of Ms. Chen,
Mr. Tang and Mr. Wang qualify as "independent" as that term is defined by Nasdaq Listing Rule 5605(a)(2).

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

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

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

 Coordinating
 and overseeing Board, committee, and director evaluations.

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

 The
charter also provides that the nominating and corporate governance committee may, in its sole discretion, retain or obtain the advice
of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search
firm's fees and other retention terms.

 Code
of Ethics

 We
have adopted a written code of ethics and business conduct that applies to our directors, officers and employees, including our principal
executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
A copy of the code of ethics and business conduct will be provided to any person, without charge, upon written request sent to Wetouch
Technology Inc., No. 29, Third Main Avenue, Shigao Town, Renshou County, Meishan, Sichuan, China; Attention: Corporate Secretary. Any
amendments to or waivers of the code of ethics and business conduct will be promptly reported in a Current Report on Form 8-K, as required
by applicable laws.

 Trading
Policies

 On
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").

 The
foregoing description of the Insider Trading Policy does not purport to be complete and is qualified in its entirety by the terms and
conditions of the Insider Trading Policy, a copy of which is attached hereto as Exhibit 19 and is incorporated herein by reference.

 Involvement
in Certain Legal Proceedings

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

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

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

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

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

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

 Delinquent
Section 16(a) Reports

 Section
16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than
10% percent of our equity securities ("Reporting Persons") to file reports of ownership and changes in ownership with the
SEC. Based solely on our review of copies of such reports and representations from the Reporting Persons, we believe that during the
fiscal year ended December 31, 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
owned by Mr. Bai, Mr. Tang, or Mr. Wang.

 ITEM
 11.

 Executive
 Compensation

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

 Name and principal position

 Year

 Salary ($)

 Bonus

 ($)

 Stock awards

 ($)

 Option awards

 ($)

 All other compensation

 ($)

 Total

 ($)

 Zongyi Lian, President, Chief Executive Officer

 2023

 $
 20,336

 -

 -

 -

 -

 $
 20,336

 2022

 $
 21,393

 -

 -

 -

 -

 $
 21,393

 Yuhua Huang, Chief Financial Officer

 2023

 $
 18,642

 -

 -

 -

 -

 $
 18,642

 2022

 $
 19,610

 -

 -

 -

 -

 $
 19,610

 Employment
Agreements

Lian

 On
November 21, 2017, Sichuan Wetouch entered into an employment agreement with its Chief Executive Officer, Zongyi Lian, pursuant to which
he receives an annual base salary of approximately $23,890 (equivalent to RMB168,000) plus other annual remuneration, including but not
limited to position salary of approximately $17,070 (equivalent to RMB120,000), confidentiality fee of approximately $6,828 (equivalent
to RMB48,000) and subsidies of approximately $9,104 (equivalent to RMB64,000). Mr. Lian's employment is for an initial term of
three (3) years and may be renewed by the parties within 30 days prior to the expiration of the employment agreement. On November 13,
2020, the employment agreement with Mr. Lian was renewed for another three (3) years until November 20, 2023, with the similar terms
and conditions. Amount reflects salary paid to Mr. Lian for services rendered to our former operating subsidiary, Sichuan Wetouch. Such
employment agreement has been assigned to our PRC subsidiary, Sichuan Vtouch. On April 16, 2024, our board of directors ratified and approved the extension of the term of employment of Mr. Lian
as our CEO for another three years from November 21, 2023 under same terms and conditions. We expect to enter into a new agreement with
Mr. Lian to memorize the terms and conditions and expect to file with the SEC upon execution of such agreement.

 Yuhua
Huang

 On
November 1, 2017, Sichuan Wetouch entered into an employment agreement with its Chief Financial Officer, Yuhua Huang, pursuant to which
he receives an annual base salary of approximately $11,945 (equivalent to RMB84,000) plus other annual remuneration, including but not
limited to position salary of approximately $8,535 (equivalent to RMB60,000), confidentiality fee of approximately $3,414 (equivalent
to RMB24,000) and subsidies of approximately $4,552 (equivalent to RMB32,000). Mr. Huang's employment is for an initial term of
three (3) years and may be renewed by the parties within 30 days prior to the expiration of the employment agreement. On November 11,
2020, the employment agreement with Mr. Huang was renewed for another three (3) years until October 31, 2023, with the similar terms
and conditions. Amount reflects salary paid to Mr. Huang for services rendered to our former operating subsidiary, Sichuan Wetouch. Such
employment agreement has been assigned to our PRC subsidiary, Sichuan Vtouch. On April 16, 2024, our board of directors ratified and approved the extension
of the term of employment of Mr. Huang as our CFO for another three years from November 1, 2023 under same terms and conditions. We expect
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
agreement.

 Under
these agreements, each of the individuals is employed for a specified time period and is entitled to receive annual salary plus other
remuneration, pension insurance, medical insurance, maternity insurance, unemployment insurance, work-related injury insurance, housing
provident funds and other benefits pursuant to PRC law. We and the individuals may terminate the employment upon mutual agreement. Provided
that the individuals propose earlier termination and the agreement is terminated upon mutual agreement. The persons are not entitled
to compensation. The persons may terminate the employment by giving thirty days advance written notice. We may terminate their employment
for cause, at any time, without notice or remuneration, for certain acts of the person, such as serious violation of Sichuan Vtouch's
rules and regulations, and gross neglect of duty and misconduct resulting in large economic losses to Sichuan Vtouch. We may also terminate
the employment for cause, with thirty days advance written notice and one month's salary, for certain acts of the executive officer,
such as illness or non-work related injury resulting in inability to work in the previous position or newly assigned position after recovery,
inability to perform the assigned work and after training or adjustment of position, still failure to perform the assigned work. The
employment agreements will be terminated upon (1) expiry of the employment, (2) the entitlement of the named executive officers to the
pension insurance, (3) the death of the named executive officers, (4) the bankruptcy of Sichuan Vtouch, and (5) other circumstances regulated
by laws and regulations.

 Each
individual is not permitted to (1) hold any side job during the employment, and (2) operate on their own or on behalf of other individuals
or enterprises any business providing same or similar competitive products or services.

 Confidentiality
and Non-Competition

 We
have entered into confidentiality and non-competition agreements with each of Mr. Lian and Mr. Huang in November 2017, which were renewed
in November 2020. Such agreements have been assigned to our PRC subsidiary, Sichuan Vtouch. Each individual has agreed (1) to keep all
confidential information confidential and return them together with any copy to Sichuan Vtouch upon termination of employment; (2) not
to disclose the confidential information of Sichuan Vtouch to any third party; (3) not to allow any third party to use or acquire the
confidential information of Sichuan Vtouch, except as required in the performance of his or her duties in connection with the employment
or pursuant to the instruction of the Company; (4) not to use the confidential information of Sichuan Vtouch for its own benefits; and
(4) to keep other confidential obligations. As compensation, each individual is entitled to receive a monthly confidentiality fee at
a different rate. Each individual has also agreed to hold, after the termination or expiry of his employment agreement, in strict confidence,
any of our confidential information without any extra compensation.

 Each
officer has agreed to be bound by non-competition restrictions during the term of his employment and for two years following termination
of the employment. The executive officers are not allowed to (1) directly or indirectly invest, establish, or be hired by, any individual
or enterprises engaging in the same or similar business, or competitive business, (2) directly or indirectly persuade, induce, encourage,
or cause any employee of the Company to terminate the employment with Sichuan Vtouch or its subsidiaries; and (3) directly or indirectly
persuade, induce, encourage, or cause any customers of Sichuan Vtouch to terminate the business relationship with Sichuan Vtouch or its
subsidiaries.

 Each
officer is obligated to pay $7,110 to $14,220 (equivalent to RMB50,000 to RMB100,000) as a penalty, together with any earnings generated
from the use or disclose of the confidential information, to Sichuan Vtouch for violation of the confidentiality and non-competition
agreements.

 Clawback
Policy

 Our
board of directors adopted a clawback policy covering our executive officers. An executive officer is our chief executive officer, president,
principal financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president
in charge of a significant principal business unit, division, or function (such as sales, administration, or finance), any other officer
who performs a policy-making function, or any other person who performs similar policy-making functions for us. As of the date of this
Annual Report, our only executive officers are our chief executive officer and our chief financial officer. The clawback policy relates
to incentive-based compensation, which is any compensation that is granted, earned or vested based wholly or in part upon the attainment
of a financial reporting measure. The clawback policy covers the recovery of incentive-based compensation from an executive officer only
in the event that we are required to prepare an accounting restatement due to the material noncompliance of our financial reporting 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.

 The
incentive-based compensation subject to recovery is the incentive-based compensation received during the three completed fiscal years
immediately preceding the date that we are required to prepare an accounting restatement as described above, provided that the person
served as an executive officer at any time during the performance period applicable to the incentive-based compensation in question provided
that the clawback policy shall only apply if the incentive-based compensation is received while we have a class of securities listed
on Nasdaq and on or after October 2, 2023. None of our officers' employment agreements provide incentive-based compensation during
the year ended December 31. 2023.

 Outstanding
Equity Awards at Fiscal Year-End

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

 Long-Term
Incentive Plans

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

Compensation

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

 Name

 Year

 Fees Earned or Paid in Cash

 Stock Awards

 Option Awards

 Non-Equity Incentive Plan Compensation

 Nonqualified Deferred Compensation Earnings

 All other
 Compensation

 Total

 Fei Bai

 2023

 -

 -

 -

 -

 -

 33,894
 *

 $
 33,894

 *

 Xiaojin Tang

 2023

 -

 -

 -

 -

 -

 *

 $

 *

 Congjin Wang

 2023

 -

 -

 -

 -

 -

 *

 $

 *

 Jiaying Cai

 2023

 -

 -

 -

 -

 -

 *

 $
 *

 Jing Chen

 2023

 -

 -

 -

 -

 -

 20,000
 *

 $
 20,000

 *

 Jeffrey Kone(1)

 2023

 $
 2,575

 *

 -

 -

 -

 -

 -

 2,575

 *Accrued and not paid.

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

 ITEM
 12.

 Security
 Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The
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.

 All
information with respect to beneficial ownership has been furnished by the respective 5% or more stockholders, directors or executive
officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is No. 29, Third Main Avenue,
Shigao Town, Renshou County, Meishan, Sichuan, China.

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

 Shares Beneficially Owned

 Name of Beneficial Owner

 Shares

 Percentage

 Executive Officers and Directors:

 Fei Bai

 %

 Jiaying Cai

 41,961

 *

 Zongyi Lian

 Yuhua Huang

 Jing Chen

 Xiaojin Tang

 Congjin Wang

 All officers and directors as a group (7 persons)

 41,961

 *

 5% or Greater Holders:

 N/A

 *

 Less
 than 1%

in Control Agreements

 As
of the date of this Annual Report, we are not aware of any arrangements that may result in "changes in control," as that
term is defined by the provisions of Item 403(c) of Regulation S-K.

 ITEM
 13.

 Certain
Relationships and Related Transactions, and Director Independence

 The
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."

 Amounts
due to Related Parties

 For
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.

 Item
 14.

 PRINCIPAL
 ACCOUNTING FEES AND SERVICES.

 Audit
Fees

 For
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
Expenses

 Audit-related
expenses for 2023 and 2022 were $0 and $0, respectively.

 Tax
Fees

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

 All
Other Fees

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

 ITEM
 15.

 Exhibits
 and Financial Statements Schedules

 1.

 Consolidated
 Financial Statements

 Our
financial statements and the notes thereto, together with the report of our independent registered public accounting firm on those financial
statements, are hereby filed as part of this Annual Report beginning on page F-1.

 2.

 Financial
 Statement Schedules

 All
financial statement schedules have been omitted since the required information is not applicable or is not present in amounts sufficient
to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes
thereto.

 3.

 Exhibits

 The
following is a complete list of exhibits filed as part of this Form 10-K. Exhibit numbers correspond to the numbers in the Exhibit Table
of Item 601 of Regulation S-K.

 Exhibit
 Number

 Description
 of Document

 2.1 (1)

 Share Exchange Agreement dated October 9, 2020 among Wetouch Technology Inc. f/k/a Gulf West Investment Properties, Inc., Wetouch Holding Group Limited, the shareholders of Wetouch Holding Group Limited, Hong Kong Wetouch Electronics Technology Limited and Fengfei Zhang, as administrative agent for the sellers.

 3.1 (1)

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

 3.2 (1)

 Bylaws of the Company.

 3.3 (1)

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

 3.4 (1)

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

 3.5.1 (1)

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

 3.5.2 (1)

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

 3.5.3 (1)

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

 3.6.1 (1)

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

 3.6.2 (1)

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

 3.7 (1)

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

 3.8 (1)

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

 3.9 (1)

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

 3.10 (1)

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

 3.11 (1)

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

 3.12 (1)

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

 3.13 (1)

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

 3.14 (1)

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

 4.1 (1)

 Specimen Common Stock Certificate.

 4.2*

 Description of Registrant's Securities.

 4.3 (1)

 Form of Underwriter's Warrants.

 4.4 (1)

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

 4.6 (1)

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

 4.8 (1)

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

 4.10 (1)

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

 4.12 (1)

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

 4.14 (1)

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

 4.16 (1)

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

 10.1.1 (1)

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

 10.1.2 (1)

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

 10.2.1 (1)

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

 10.2.2 (1)

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

 10.3.1 (1)

 English Translation of Form of Sichuan Vtouch Technology Co., Ltd. Sales Framework Agreement.

 10.4 (1)

 English Translation of Form of Sichuan Vtouch Technology Co., Ltd. Purchase Order with Suppliers.

 10.5 (1)

 English Translation of Form of Loan Agreement between Sichuan Wetouch Technology Co., Ltd and Shareholder of Australia Vtouch Technology Co., Ltd.

 10.6 (1)

 English Translation of Form of Supplemental Agreement to Loan Agreement between Sichuan Wetouch Technology Co., Ltd and Shareholder of Australia Vtouch Technology Co., Ltd.

 10.7 (1)

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

 10.8 (1)

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

 10.9 (1)

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

 10.10 (1)

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

 10.11 (1)

 English Translation of Form of Sichuan Wetouch Technology Co., Ltd. Supplemental Agreement to Sales Framework Agreement.

 10.12 (1)

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

 10.13.1 (1)

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

 10.13.2 *

 English Translation of Leaseback Agreement between Sichuan Vtouch Technology Co., Ltd and Meishan Huantian Industrial Co., Ltd. (formerly known as Sichuan Renshou Shigao Tianfu Investment Co., Ltd) dated October 30, 2023.

 10.14 (1)

 Securities Purchase Agreement, dated as of October 27, 2021, between Wetouch Technology Inc. and Talos Victory Fund, LLC

 10.15 (1)

 Registration Rights Agreement dated as of October 27, 2021, between Wetouch Technology Inc. and Talos Victory Fund, LLC

 10.16 (1)

 Securities Purchase Agreement, dated as of November 5, 2021, between Wetouch Technology Inc. and Mast Hill Fund, L.P.

 10.17 (1)

 Registration Rights Agreement dated as of November 5, 2021, between Wetouch Technology Inc. and Mast Hill Fund, L.P.

 10.18 (1)

 Securities Purchase Agreement, dated as of November 16, 2021, between Wetouch Technology Inc. and FirstFire Global Opportunities Fund, LLC.

 10.19 (1)

 Registration Rights Agreement dated as of November 16, 2021, between Wetouch Technology Inc. and FirstFire Global Opportunities Fund, LLC.

 10.20 (1)

 Securities Purchase Agreement, dated as of November 24, 2021, between Wetouch Technology Inc. and LGH Investments, LLC.

 10.21 (1)

 Registration Rights Agreement dated as of November 24, 2021, between Wetouch Technology Inc. and LGH Investments, LLC.

 10.22 (1)

 Securities Purchase Agreement, dated as of November 29, 2021, between Wetouch Technology Inc. and Fourth Man, LLC.

 10.23 (1)

 Registration Rights Agreement dated as of November 29, 2021, between Wetouch Technology Inc. and Fourth Man, LLC.

 10.24 (1)

 Securities Purchase Agreement, dated as of December 2, 2021, between Wetouch Technology Inc. and Jefferson Street Capital LLC.

 10.25 (1)

 Registration Rights Agreement dated as of December 2, 2021, between Wetouch Technology Inc. and Jefferson Street Capital LLC.

 10.26 (1)

 Securities Purchase Agreement, dated as of December 2, 2021, between Wetouch Technology Inc. and Blue Lake Partners, LLC.

 10.27 (1)

 Registration Rights Agreement dated as of December 2, 2021, between Wetouch Technology Inc. and Blue Lake Partners LLC.

 10.28 (1)

 Form of Securities Purchase Agreement.

 10.29*

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

 10.30*

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

 19*

 Insider Trading Policy.

 21.1 (1)

 List of subsidiaries of the Company.

 31.1*

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

 31.2*

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

 32.1**

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

 32.2**

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

 97*

 Executive Compensation Recovery Policy

 99.1*

 Audit Committee Charter

 99.2*

 Compensation Committee Charter

 99.3*

 Nominating and Corporate Governance Committee Charter

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Cover

 *filed
herewith

 **

 Furnished herewith

 (1)

 Filed as an exhibit to the Company's registration statement on Form
S-1, File No. 333-270726 and incorporated herein by reference.

 ITEM 16.

 FORM 10–K SUMMARY

 None.

 Signatures

to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed
on its behalf by the undersigned, thereunto duly authorized.

 Date:
April 16, 2024

 TECHNOLOGY INC.

 By:

 /s/
 Zongyi Lian

 Lian

 President
 and Chief Executive Officer

 (Principal
 Executive Officer)

 By:

 /s/
 Yuhua Huang

 Yuhua
 Huang

 Chief
 Financial Officer

 (Principal
 Financial and Accounting Officer)

to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.

 /s/
 Zongyi Lian

 President

 April

 Lian

 Chief
 Executive Officer and

 Chairman(Principal
 Executive Officer)

 /s/
 Yuhua Huang

 Chief
 Financial Officer

 April

 Yuhua
 Huang

 (Principal
 Financial and Accounting Officer)

 /s/
 Fei Bai

 Chairman
 and Director

 April

 Fei
 Bai

 /s/
 Jiaying Cai

 April

 Jiaying
 Cai

 /s/
 Jing Chen

 April

 Jing
 Chen

 /s/
 Xiaojin Tang

 April

 Xiaojin
 Tang

 /s/
 Congjin Wang

 April

 Congjin
 Wang

TO CONSOLIDATED FINANCIAL STATEMENTS

 Report of Independent Registered Public Accounting Firm

 Consolidated Balance Sheets as of December 31, 2023 and 2022

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

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

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

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

 - F-30

 F- 1

 Report of Independent Registered
Public Accounting Firm

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

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheets of Wetouch Technology Inc. as of December 31, 2023 and 2022, the related statements
of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred
to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the
financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for the years
then ended, in conformity with accounting principles generally accepted in the United States.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.

 /S/
 BF Borgers CPA PC (PCAOB ID 5041)

 We
have served as the Company's auditor since 2019

 Lakewood,
CO

 April

 F- 2

 CONSOLIDATED
BALANCE SHEETS

 2023

 2022

 As of December 31,

 2023

 2022

 ASSETS

 CURRENT ASSETS

 Cash

 $
 98,040,554

 $
 51,250,505

 Accounts receivable, net

 7,455,252

 9,057,741

 Inventories

 222,102

 423,276

 Prepaid expenses and other current assets

 1,063,627

 1,450,620

 TOTAL CURRENT ASSETS

 106,781,535

 62,182,142

 Property, plant and equipment, net

 12,859,863

 10,923,610

 TOTAL ASSETS

 $
 119,641,398

 $
 73,105,752

 LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES

 Accounts payable

 $
 640,795

 $
 1,383,094

 Loan from a third party

 469,591

 385,791

 Due to a related party

 -

 1,665

 Income tax payable

 -

 22,152

 Accrued expenses and other current liabilities

 3,992,905

 944,624

 Convertible promissory notes payable

 1,239,126

 1,277,282

 TOTAL CURRENT LIABILITIES

 6,342,417

 4,014,608

 Common stock purchase warrants liability

 378,371

 256,957

 TOTAL LIABILITIES

 $
 6,720,788

 $
 4,271,565

 COMMITMENTS AND CONTINGENCIES (Note 13)

 -

 -

 STOCKHOLDERS' EQUITY

 Common stock, $ 0.001
 par value, 15,000,000 shares authorized,
 9,732,948 and 1,680,248
 issued and outstanding as of December 31, 2023 and 2022, respectively *

 $
 9,733

 $
 1,680

 Additional paid in capital *

 43,514,125

 3,402,178

 Statutory reserve

 7,195,092

 6,040,961

 Retained earnings

 69,477,092

 62,366,892

 Accumulated other comprehensive loss

 ( 7,275,432
)

 ( 2,977,524
)

 TOTAL STOCKHOLDERS' EQUITY

 112,920,610

 68,834,187

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 $
 119,641,398

 $
 73,105,752

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

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

 F- 3

 CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 2023

 2022

 The Years Ended December 31,

 2023

 2022

 REVENUES

 $
 39,705,939

 $
 37,923,112

 COST OF REVENUES

 ( 22,515,219
)

 ( 23,872,632
)

 GROSS PROFIT

 17,190,720

 14,050,480

 OPERATING EXPENSES

 Selling expenses

 ( 608,524
)

 ( 1,288,467
)

 General and administrative expenses

 ( 3,847,361
)

 ( 1,262,093
)

 Research and development expenses

 ( 84,551
)

 ( 85,251
)

 OPERATING EXPENSES

 ( 4,540,436
)

 ( 2,635,811
)

 INCOME FROM OPERATIONS

 12,650,284

 11,414,669

 Interest income

 117,719

 118,714

 Interest expense

 ( 252,325
)

 ( 224,885
)

 Other expense

 ( 47,328
)

 -

 Loss on conversion of convertible promissory notes payable

 -

 ( 96,927

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

 ( 121,413
)

 871,677

 TOTAL OTHER INCOME (EXPENSE), NET

 ( 303,347
)

 668,579

 INCOME BEFORE INCOME TAX EXPENSE

 12,346,937

 12,083,248

 INCOME TAX EXPENSE

 ( 4,082,606
)

 ( 3,352,802
)

 NET INCOME

 $
 8,264,331

 $
 8,730,446

 OTHER COMPREHENSIVE INCOME (LOSS)

 Foreign currency translation adjustment

 ( 4,297,908
)

 ( 5,242,692
)

 COMPREHENSIVE INCOME (LOSS)

 $
 3,966,423

 $
 3,487,754

 EARNINGS PER COMMON SHARE *

 Basic *

 $
 0.89

 $
 5.38

 Diluted *

 $
 0.89

 $
 4.73

 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING *

 Basic *

 9,285,815

 1,620,511

 Diluted *

 9,375,105

 1,843,767

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

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

 F- 4

 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

 FOR
THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 Shares

 capital

 reserve

 Earnings

 (income) loss

 equity

 Common stock at
 Par value $0.001

 Additional
 paid-in

 Statutory

 Retained

 Accumulated
 other
 comprehensive

 Total
 stockholders'

 Shares

 capital

 reserve

 Earnings

 (income) loss

 equity

 Balance at December 31, 2021 *

 1,590,576

 $
 1,591

 $
 2,363,842

 $
 5,067,243

 $
 54,610,164

 $
 2,265,168

 $
 64,308,008

 Appropriation to statutory reserve

 -

 -

 973,718

 ( 973,718
)

 -

 -

 Exercise of warrants issued in conjunction with legal services in 2020

 6,211

 ( 6
)

 -

 -

 -

 -

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

 14,233

 ( 14
)

 -

 -

 -

 -

 Stock issuance for convertible promissory notes payable

 69,228

 1,038,356

 -

 -

 -

 1,038,425

 Net income

 8,730,446

 -

 8,730,446

 Foreign currency translation adjustment

 -

 -

 -

 -

 -

 ( 5,242,692
)

 ( 5,242,692
)

 Balance at December 31 2022 *

 1,680,248

 $
 1,680

 $
 3,402,178

 $
 6,040,961

 $
 62,366,892

 $
 ( 2,977,524
)

 $
 68,834,187

 Common stock at
 Par value $0.001

 Additional
 paid-in

 Statutory

 Retained

 Accumulated
 other
 comprehensive

 Total
 stockholders'

 Shares

 capital

 reserve

 Earnings

 loss

 equity

 Balance at December 31 2022 *

 1,680,248

 $
 1,680

 $
 3,402,178

 $
 6,040,961

 $
 62,366,892

 $
 ( 2,977,524
)

 $
 68,834,187

 Balance

 1,680,248

 $
 1,680

 $
 3,402,178

 $
 6,040,961

 $
 62,366,892

 $
 ( 2,977,524
)

 $
 68,834,187

 Appropriation to statutory reserve

 -

 -

 -

 1,154,131

 ( 1,154,131
)

 -

 -

 Shares issued to private placement

 8,000,000

 8,000

 39,992,000

 -

 -

 -

 40,000,000

 Fraction shares issued due to reverse stock split

 5,362

 ( 6
)

 -

 -

 -

 -

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

 22,338

 ( 22
)

 -

 -

 -

 -

 Stock issuance for convertible promissory notes payable

 25,000

 119,975

 -

 -

 -

 120,000

 Net income

 -

 -

 -

 -

 8,264,331

 -

 8,264,331

 Foreign currency translation adjustment

 -

 -

 -

 -

 -

 ( 4,297,908
)

 ( 4,297,908
)

 Balance at September 30, 2023

 9,732,948

 $
 9,733

 $
 43,514,125

 $
 7,195,092

 $
 69,477,092

 $
 ( 7,275,432
)

 $
 112,920,610

 Balance

 9,732,948

 $
 9,733

 $
 43,514,125

 $
 7,195,092

 $
 69,477,092

 $
 ( 7,275,432
)

 $
 112,920,610

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

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

 F- 5

 CONSOLIDATED
STATEMENTS OF CASH FLOWS

 For the Years Ended

 2023

 2022

 Cash flows from operating activities

 Net income

 $
 8,264,331

 $
 8,730,446

 Adjustments to reconcile net income to cash provided by operating activities

 Inventory write-off

 -

 74,100

 Depreciation and amortization

 9,403

 9,891

 Loss on convertible promissory notes payable

 -

 96,927

 Amortization of discounts and issuance cost of the notes

 33,655

 148,368

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

 121,413

 ( 871,677
)

 Changes in operating assets and liabilities:

 Accounts receivable

 1,347,497

 ( 1,497,237
)

 Inventories

 187,532

 ( 197,453
)

 Due from a related party

 ( 51
)

 -

 Prepaid expenses and other current assets

 333,415

 853,426

 Accounts payable

 ( 704,696
)

 637,372

 Loans from a third party

 84,025

 -

 Amounts due to related parties

 ( 1,665
)

 ( 18,055
)

 Income tax payable

 ( 21,578
)

 ( 41,068
)

 Accrued expenses and other current liabilities

 3,071,108

 661,203

 Net cash provided by operating activities

 12,724,389

 8,586,243

 Cash flows from investing activities

 Purchase of property, plant and equipment

 ( 2,263,549
)

 -

 Net cash used in investing activities

 ( 2,263,549
)

 -

 Cash flows from financing activities

 Proceeds from stock issuance of private placement

 40,000,000

 -

 Repayments of convertible promissory notes payable

 ( 55,000
)

 ( 1,038,426
)

 Proceeds from interest-free advances from a third party

 -

 385,791

 Net cash provided by (used in) financing activities

 39,945,000

 ( 652,635
)

 Effect of changes of foreign exchange rates on cash

 ( 3,615,791
)

 ( 2,846,807
)

 Net increase in cash

 46,790,049

 5,086,801

 Cash, beginning of year

 51,250,505

 46,163,704

 Cash, end of year

 $
 98,040,554

 $
 51,250,505

 Supplemental disclosures of cash flow information

 Interest paid

 $
 -

 $
 10,000

 Income taxes paid

 $
 4,104,184

 $
 3,391,137

 Non-cash financing activities

 Cashless stock issuance for convertible promissory notes payable

 $
 22,338

 $
 284,654

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

 F- 6

 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

 NOTE
1 — BUSINESS DESCRIPTION

Technology Inc. ("Wetouch", or the "Company"), formerly known as Gulf West Investment Properties, Inc., was originally
incorporated in August 1992, under the laws of the state of Nevada.

 On
October 9, 2020, the Company entered into a share exchange agreement (the "Share Exchange Agreement") with Wetouch Holding
Group Limited ("BVI Wetouch") and all the shareholders of BVI Wetouch (each, a "BVI Shareholder" and collectively,
the "BVI Shareholders"), to acquire all the issued and outstanding capital stock of BVI Wetouch in exchange for the issuance
to the BVI Shareholders an aggregate of 28,000,000 shares ( 1,400,000 shares post-Reverse Stock Split) of the Company's common stock
(the "Reverse Merger"). In the Reverse Merger, each ordinary share of BVI Wetouch was exchanged for 2,800 shares ( 140 shares
post-Reverse Stock Split) of common stock of Wetouch. Immediately after the closing of the Reverse Merger on October 9, 2020, the Company
had a total of 31,396,394 ( 1,569,820 shares post-Reverse Stock Split) issued and outstanding shares of common stock. As a result of the
Reverse Merger, BVI Wetouch became a wholly-owned subsidiary of the Company.

 BVI
Wetouch is a holding company whose only asset, held through a subsidiary, is 100 % of the registered capital of Sichuan Wetouch Technology
Co., Ltd. ("Sichuan Wetouch"), a limited liability company organized under the laws of the People's Republic of China
("China" or the "PRC"). Sichuan Wetouch is primarily engaged in the business of research and development, manufacture,
and distribution of touchscreen displays to customers both in the PRC and overseas. The touchscreen products, which are manufactured
by the Company, are primarily for use financial terminals, automotive, Point of Sales, gaming, lottery, medical, Human-Machine Interface
(HMI), and other specialized industries

 The
Reverse Merger was accounted for as a recapitalization effected by a share exchange, wherein BVI Wetouch is considered the acquirer for
accounting and financial reporting purposes. The assets and liabilities of BVI Wetouch have been brought forward at their book value
and no goodwill has been recognized. The number of shares, par value amount, and additional paid-in capital in the prior years are retrospectively
adjusted accordingly.

 Corporate
History of BVI Wetouch

 BVI
Wetouch was incorporated under the laws of British Virgin Islands on August 14, 2020. It became the holding company of Hong Kong Wetouch
Electronics Technology Limited ("Hong Kong Wetouch") on September 11, 2020.

 Hong
Kong Wetouch Technology Limited ("HK Wetouch"), was incorporated as a holding company under the laws of Hong Kong Special
Administrative Region (the "SAR") on December 3, 2020. On March 2, 2021, HK Wetouch acquired all shares of Hong Kong Wetouch.
Due to the fact that Hong Kong Wetouch and HK Wetouch are both under the same sole stockholder, the acquisition is accounted for under
common control.

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

Wetouch was formed on May 6, 2011 in the PRC and became a Wholly Foreign-Owned Enterprise (WFOE") in PRC on February 23, 2017.
On July 19, 2016, Sichuan Wetouch was 100 % held by HK Wetouch.

 On
December 30, 2020, Sichuan Vtouch was incorporated in Chengdu, Sichuan, under the
PRC laws.

 F- 7

 In
March 2021, pursuant to local PRC government guidelines on local environmental issues and the national plan, Sichuan Wetouch was under
the government directed relocation order. Sichuan Vtouch took over the operating business of Sichuan Wetouch.

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

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

 The
following diagram illustrates the Company's current corporate structure:

 Note
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 (a)
 Basis of Presentation and Principles of Consolidation

 The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP") and pursuant to the rules and regulations of the Securities and Exchange Commission
(the "SEC"). The accompanying consolidated financial statements include the financial statements of Wetouch and its wholly
owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation.

 Deconsolidation
of Sichuan Wetouch

 On
March 30, 2023, upon transferring Sichuan Wetouch to a third-party individual for a nominal value, the Company was no longer able to
operate and exert control over this subsidiary whose operation has been taken over by Sichuan Vtouch since the first quarter of 2021.
As a result, Sichuan Wetouch was deconsolidated accordingly since the disposal date.

 F- 8

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

 SCHEDULE OF DISPOSAL GROUPS, INCLUDING DISCONTINUED OPERATIONS

 2023

 March
 30, 2023

 Total assets as of deconsolidated date

 $
 -

 Total liabilities as of deconsolidated date

 -

 Total gain or loss from deconsolidation

 $
 -

 Upon
the deconsolidation, the Company was no longer entitled to the assets and also legally released from the liabilities previously held
by the deconsolidated Sichuan Wetouch, derived nil gain or loss from the deconsolidation in the consolidated statements of operations
and comprehensive income for the year ended December 31, 2023. The disposal of Sichuan Wetouch did not represent a strategic
shift and did not have a major effect on the Company's operation. There was no cash outflow for the disposal for the year ended
December 31, 2023.

 (b)
 Uses of estimates

 In
preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date
of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the
allowance for estimated uncollectible receivables, fair values of financial instruments, inventory valuations, useful lives of property,
plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue
recognition and realization of deferred tax assets. Actual results could differ from those estimates.

 (c)
 Cash and cash equivalents

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

 (d)
 Accounts receivables, net

 Accounts
receivables are presented net of allowance for doubtful accounts. The Company determines the adequacy of reserves for doubtful accounts
based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when
there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management's best
estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received
may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written-off
against the allowance for doubtful accounts after management has determined that the collection is not probable.

 (e)
 Inventory

 Inventory
consists of raw materials, work-in-process and finished goods and is stated at the lower of cost or net realizable value. Cost is determined
using a weighted average. For work-in-process and manufactured inventories, cost consists of raw materials, direct labor and an allocated
portion of the Company's production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable
value based upon assumptions about future demand and market conditions. For finished goods and work-in-process, if the estimated net
realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable
costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable
value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write-downs are included in the
cost of revenues in the consolidated statements of operations. Inventories are carried at this lower cost basis until sold or scrapped.
 Nil and $ 74,100 inventory write-off were recorded for the years ended December 31, 2023 and 2022, respectively.

 F- 9

 (f)
 Convertible Promissory Notes

 The
Company accounts for its convertible promissory notes according to guidance of ASU 2020-06, "Debt—Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity's Own Equity (Subtopic 815-40): Accounting
for Convertible Instruments and Contracts in an Entity's Own Equity", which simplifies the accounting for convertible instruments
by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required
to be accounted for as derivatives under Topic 815.

 We
analyze the convertible notes for the existence of a beneficial conversion feature. the Company considered the three characteristics
of a derivative instrument listed in ASC 815-10-15-83: (i) having one or more underlyings and one or more notional amounts or payment
provisions or both; (ii) requiring no initial net investment; (iii) permitting net settlement;

 Since
the Company's notes have fixed interest rate, specified notional principal and settlement date, which no other events would affect
specified settlement, and the Company received net proceeds after issuance costs and discount, which the Company recorded as the net
proceeds or net settled investment, the management assessed that the Notes did not meet the definition of a derivative instruments
and an embedded feature would not be bifurcated. The discounts on the convertible notes, are amortized to interest expense, using the
effective interest method, over the terms of the related convertible notes.

 (g)
 Common stock purchase warrants

 The
Company also analyzed the Warrants in accordance with ASC 815, to determine whether the Warrants meet the definition of a derivative
and, if so, whether the Warrants meet the scope exception of ASC 815-40, which is that contracts issued or held by the reporting entity
that are both (1) indexed to its own stock and (2) classified in stockholders' equity shall not be considered to be derivative
instruments for purposes of ASC 815-40.

 The
Company concluded that the warrants issued in the financings in November and December 2021 should be treated as a derivative liability
because these warrants are entitled to a price adjustment to allow the exercise price to be increased or reduced in the event the Company
issues or sells any additional shares of common stock at a price per share other than the then-applicable exercise price or without consideration,
which is typically referred to as a "Down-round protection" or "anti-dilution" provision. According to ASC 815-40,
the "Down-round protection" provision is not considered to be an input to the fair value of a fixed-for-fixed option on equity
shares which leads the warrants to fail to be qualified as indexed to the Company's own stock and then to fail to meet the scope
exceptions of ASC 815. Therefore, the Company accounted for the warrants as derivative liabilities under ASC 815. Pursuant to ASC 815,
derivatives are measured at fair value and re-measured at fair value with changes in fair value recorded in earnings at each reporting
period.

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

 F- 10

 (h)
 Fair value of financial instruments

 Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The
hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of
inputs used to measure fair value are as follows:

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

 Level
 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets,
 quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable
 and inputs derived from or corroborated by observable market data.

 Level
 3 — inputs to the valuation methodology are unobservable.

 Unless
otherwise disclosed, the fair value of the Company's financial instruments, including cash, accounts receivable, prepaid expenses
and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and
due to related parties, common stock purchase warrants liability, approximate the fair value of the respective assets and liabilities
as of December 31, 2023 and 2022 based upon the nature of the assets and liabilities.

 (i)
 Property, plant and equipment, net

 Property,
plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and
equipment is provided using the straight-line method over their expected useful lives, as follows:

OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT

 Useful
 life

 Buildings

 years

 Machinery
 and equipment

 years

 Office
 and electric equipment

 years

 Vehicles

 years

 Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated
depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated
statements of income and other comprehensive income in other income or expenses.

 (l)
 Impairment of long-lived Assets

 Long-lived
assets, such as property, plant and equipment, land use rights, are reviewed for impairment when events or changes in circumstances indicate
that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used
is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected
to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future
cash flows, an impairment charge is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or
asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values
and third-party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or
fair value less costs to sell, and are no longer depreciated. There was nil impairment of intangible assets recognized for the years
ended December 31, 2023 and 2022.

 (m)
 Foreign Currency Translation

 The
Company uses US dollars as the reporting currency. The Company's subsidiary HK Wetouch's functional currency for HK Wetouch
is Hong Kong dollar. The functional currency of Sichuan Vtouch is the Chinese Yuan ("RMB"). The Company's consolidated
financial statements have been translated into US$. Assets and liabilities accounts are translated using the exchange rate at each reporting
period end date. Equity accounts are translated at historical rates. Income and expense accounts are translated at the average rate of
exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains
and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations.

 F- 11

 The
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.
No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

 The
following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report:

OF CURRENT EXCHANGE RATES

 December
 31,

 2023

 December
 31,

 2022

 Year-end
 spot rate

 US$1=RMB
 7.0999

 US$1=RMB
 6.8972

 Average
 rate

 US$1=RMB
 7.0809

 US$1=RMB
 6.7312

 (n)
 Revenue Recognition

 The
Company adopted Accounting Standards Codification ("ASC") 606 using the modified retrospective approach. The adoption of
this standard did not have a material impact on the Company's consolidated financial statements. Therefore, no adjustments to opening
retained earnings were necessary.

 ASC
606, Revenue from Contracts with customers, establishes principles for reporting information about the nature, amount, timing and uncertainty
of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires
an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration
that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied.

 ASC
606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company
(i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction
price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate
the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies
the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result
in significant changes in the way the Company records its revenue. The Company has assessed the impact of the guidance by reviewing its
existing customer contracts and current accounting policies and practices to identify differences that would result from applying the
new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control
and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and
pattern of revenue recognition for its current revenue streams.

 In
accordance with ASC 606, the Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects
the consideration to which the Company expects to be entitled in such exchange. The Company accounts for the revenue generated from sales
of its products primarily to its customers in PRC and overseas, as the Company is acting as a principal in these transactions, is subject
to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified
goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits.
All of the Company's contracts have one single performance obligation as the promise is to transfer the individual goods to customers,
and there is no separately identifiable other promises in the contracts. The Company's revenue streams are recognized at a point
in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The Company's
products are sold with no right of return and the Company does not provide other credits or sales incentive to customers. The Company's
sales are net of value added tax ("VAT") and business tax and surcharges collected on behalf of tax authorities in respect
of product sales.

 F- 12

 Contract
Assets and Liabilities

 Payment
terms are established on the Company's pre-established credit requirements based upon an evaluation of customers' credit
quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment
has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing when an order
is placed and when shipment or delivery occurs. As of December 31, 2023 and 2022, other than accounts receivable and advances from customers,
the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance
sheet. Costs of fulfilling customers' purchase orders, such as shipping, handling and delivery, which occur prior to the transfer
of control, are recognized in selling, general and administrative expense when incurred.

 Disaggregation
of Revenues

 The
Company disaggregates its revenue from contracts by geography, as the Company believes it best depicts how the nature, amount, timing
and uncertainty of the revenue and cash flows are affected by economic factors. The Company's disaggregation of revenues for the
years ended December 31, 2023 and 2022 are disclosed in Note 14 to the financial statements.

 (o)
 Selling, General and Administrative Expenses

 Selling
expenses represents primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses. General and
administrative expenses represent primarily payroll and benefits costs for administrative employees, rent and operating costs of office
premises, depreciation and amortization of office facilities, professional fees and other administrative expenses.

 (p)
 Research and Development Expense

 Research
and development costs are expensed as incurred.

 (q)
 Share-Based Compensation

 The
Company awards share options and other equity-based instruments to its employees, directors and third party service providers (collectively
"share-based payments"). Compensation cost related to such awards is measured based on the fair value of the instrument on
the grant date. The Company recognizes the compensation cost over the period the employee is required to provide service in exchange
for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect the expected forfeiture prior
to vesting. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and
if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. The Company recognizes
compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite
service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals
the portion of the grant-date value of such award that is vested at that date.

 (r)
 Government grant

 The
Company follows other authoritative accounting guidance since there is no clear guidance with regard to government grants. Government
grants are recognized at fair value where there is reasonable assurance that the grant will be received and all grant conditions will
be met. Grants relating to expense items are recognized as income over the periods necessary to match the grant to the costs it is compensating.
Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the
asset on a straight-line basis.

 F- 13

 (s)
 Income taxes

 The
Company accounts for income taxes in accordance with the asset and liability method. Deferred taxes are recognized for the future tax
consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes
and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred
taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established,
as needed, to reduce the amount of deferred tax assets if it is considered more-likely-than-not that some portion or all of the deferred
tax assets will not be realized.

 The
Company recognizes the effect of uncertain income tax positions only if those positions are more-likely-than-not of being sustained.
Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition
or measurement are reflected in the period in which the change in judgment occurs. The Company's policy is to record interest and
penalties related to uncertain tax positions as a component of income tax expense. There were no such interest or penalty for the years
ended December 31, 2023 and 2022.

 On
December 22, 2017, the Tax Cut and Jobs Act of 2017 ("the Tax Act") was signed into law, which among other effects, reduces
the U.S. federal corporate income tax rate to 21% from 34% (or 35% in certain cases) beginning in 2018, and requires companies to pay
a one-time transition tax on certain unrepatriated earnings from non-U.S. subsidiaries that is payable over eight years. No tax was due
under this provision. The Tax Act also makes the receipt of future non-U.S. sourced income of non-U.S. subsidiaries tax-free to U.S.
companies and creates a new minimum tax on the earnings of non-U.S. subsidiaries relating to the parent's deductions for payments
to the subsidiaries.

 (t)
 Value added tax ("VAT")

 Sales
revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price. Since April 1, 2019, VAT rate was
lowered from 16 % to 13 %. The VAT may be offset by VAT paid by the Company on raw materials and other materials included in the cost of
producing or acquiring its finished products. The Company recorded a VAT payable or recoverable net of VAT payments in the accompanying
consolidated financial statements.

 For
export sales, VAT is not imposed on gross sales price, but the VAT related to purchasing raw materials is refunded after the export is
completed.

 (u)
 Earnings per Share

 The
Company computes earnings per share ("EPS") in accordance with ASC 260, "Earnings per Share" ("ASC 260").
ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided
by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential
common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented,
or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or
decrease loss per share) are excluded from the calculation of diluted EPS. As of December 31, 2023 and 2022, warrants were included for
the dilutive EPS calculation, respectively.

 (v)
 Comprehensive income (loss)

 Comprehensive
income (loss) consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain or
loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss)
in the consolidated statements of income and comprehensive income.

 F- 14

 (w)
 Recent Accounting Pronouncements

 The
Company considers the applicability and impact of all accounting standards updates ("ASUs"). Management periodically reviews
new accounting standards that are issued.

 In
August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06") "Debt—Debt with Conversion and Other Options
(Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible
Instruments and Contracts in an Entity's Own Equity." ASU 2020-06 will simplify the accounting for convertible instruments
by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting
models results in fewer embedded conversion features being separately recognized from the host contract as compared with current U.S.
GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are
not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception
from derivative accounting, and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded
as additional paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity's
own equity to reduce form-over-substance-based accounting conclusions. For public business entities, the amendments in ASU 2020-06 are
effective for public entities which meet the definition of a smaller reporting company are effective for fiscal years, and interim periods
within those fiscal years, beginning after December 15, 2023, including interim periods within those fiscal years. Early application
of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2020, including interim periods within
those fiscal years. The Company adopted ASU 2020-06 effective January 1, 2021.

 In
June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the
accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate
credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities
and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The
pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including
interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning
after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-13 utilizing the modified
retrospective transition method on January 1, 2022. The adoption of ASU 2016-13 did not have a material impact on the Company's
consolidated financial statements.

 In
December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes". The
amendment simplifies the accounting for income taxes by eliminating some exceptions to the general approach in ASC 740, Income Taxes.
It also clarifies certain aspects of the existing guidance to promote more consistent application, among other things. The guidance is
effective for interim and annual reporting periods beginning within 2021 with early adoption permitted.

 In
October 2021, the FASB issued ASU No. 2021-08, which will require companies to apply the definition of a performance obligation under
ASC Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers
that are acquired in a business combination. Under current U.S. GAAP, an acquirer generally recognizes assets acquired and liabilities
assumed in a business combination, including contract assets and contract liabilities arising from revenue contracts with customers,
at fair value on the acquisition date. ASU No. 2021-08 will result in the acquirer recording acquired contract assets and liabilities
on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. ASU No. 2021-08 is effective
for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU No. 2021-08 on January 1,
2023. The adoption of ASU No. 2021-08 did not have a material impact on the Company's consolidated financial statements.

 In
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
model. 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. The
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
position.

 From
time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated
through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be
adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption.

 F- 15

 Recently
issued accounting pronouncements not yet adopted

 In
March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate
Reform on Financial Reporting", which provides optional expedients and exceptions for applying U.S. GAAP on contract modifications
and hedge accounting to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected
to be discontinued because of reference rate reform, if certain criteria are met. These optional expedients and exceptions provided in
ASU No. 2020-04 are effective for the Company as of March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU 2022-06,
Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 ("ASU 2022-06"), which deferred the application
dates of Topic 848 to December 31, 2024. The 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.

 In
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
31, 2024.

 In
December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information
about a reporting entity's effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is
effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial
statements that have not yet been issued or made available for issuance. The Group has evaluated this ASU and expects to add additional
disclosures to our combined and consolidated financial statements, once adopted.

 NOTE-3-
 ACCOUNTS RECEIVABLE

 Accounts
receivable consists of the following:

OF ACCOUNTS RECEIVABLE

 2023

 2022

 Accounts receivable

 $
 7,455,252

 $
 9,057,741

 Allowance for doubtful accounts

 -

 -

 Accounts receivable, net

 $
 7,455,252

 $
 9,057,741

 The
Company's accounts receivable primarily includes balance due from customers when the Company's products are sold and delivered
to customers.

 F- 16

 NOTE-4
— PREPAID EXPENSES AND OTHER CURRENT ASSETS

 Prepaid
expenses and other current assets consist of the following:

OF PREPAID EXPENSES AND OTHER CURRENT ASSETS

 2023

 2022

 Advance to suppliers

 $
 334,852

 $
 333,920

 VAT input credits

 -

 355,482

 Issue cost related to convertible promissory notes

 64,802

 81,614

 Prepayment for land use right (i)

 537,998

 569,105

 Security deposit (ii)

 53,865

 56,979

 Others receivable (iv)

 72,110

 53,520

 Prepaid expenses and other current assets

 $
 1,063,627

 $
 1,450,620

 (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 its new facility. This deposit will be refunded upon the issuance
of the construction license by the end of 2024.

 (iv)
 Other receivables
are mainly employee advances, and prepaid expenses.

 NOTE
5— PROPERTY, PLANT AND EQUIPMENT, NET

OF PROPERTY, PLANT AND EQUIPMENT

 September 30,

 2023

 2022

 Buildings

 $
 12,130

 $
 12,487

 Machinery and equipment

 3,944

 -

 Vehicles

 41,241

 42,453

 Construction in progress

 12,825,896

 10,883,051

 Subtotal

 12,883,211

 10,937,991

 Less: accumulated depreciation

 ( 23,348
)

 ( 14,381
)

 Property, plant and equipment, net

 $
 12,859,863

 $
 10,923,610

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

to local PRC government guidelines on local environment issues and the national overall plan, Sichuan Wetouch, was under the government
directed relocation order to relocate no later than December 31, 2021 and received compensation accordingly. On March 18, 2021, pursuant
to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received a compensation
of RMB 115.2 million ($ 16.2 million) (the "Compensation Funds") for the withdrawal of the right to use of state-owned land
(the "property") and the demolition of all buildings, facilities, equipment and all other appurtenances on the land.

 F- 17

 On
March 16, 2021, in order to minimize interruption of the Company's business, Sichuan Vtouch entered into a leasing agreement with
Sichuan Renshou Shigao Tianfu Investment Co., Ltd. (later renamed as Meishan Huantian Industrial Co., Ltd.), a limited liability company
owned by the local government, to lease the property, and all buildings, facilities and equipment thereon (the "Demised Properties)
of Sichuan Wetouch, commencing from April 1, 2021 until December 31, 2021 at a monthly rent of RMB 300,000 ($ 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.

 NOTE
6 – RELATED PARTY TRANSACTIONS

 Amounts
due to a related party are as follows:

OF RELATED PARTY TRANSACTIONS

 Relationship

 2023

 2022

 Note

 Mr. Zongyi Lian

 President and CEO of the Company

 -

 1,665

 Payable to employee

 Total

 $
 -

 $
 1,665

 NOTE
7 — INCOME TAXES

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

 BVI

 Under
the current laws of the British Virgin Islands, BVI Wetouch, a wholly owned subsidiary of Wetouch, is not subject to tax on its income
or capital gains. In addition, no British Virgin Islands withholding tax will be imposed upon the payment of dividends by the Company
to its shareholders.

 Hong
Kong

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

 PRC

Wetouch and Sichuan Vtouch files income tax returns in the PRC. Effective from January 1, 2008, the PRC statutory income tax rate is
 25 % according to the Corporate Income Tax ("CIT") Law which was passed by the National People's Congress on March 16,
2007.

 Under
PRC CIT Law, domestic enterprises and foreign investment enterprises (the "FIEs") are usually subject to a unified 25% enterprise
income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis by local government
as preferential tax treatment to High and New Technology Enterprises (the "HNTEs"). Under this preferential tax treatment,
HNTEs are entitled to an income tax rate of 15 %, subject to a requirement that they re-apply for their HNTE status every three years.
Pursuant to an approval from the local tax authority in October 2017, Sichuan Wetouch became a qualified enterprise located in the western
region of the PRC, entitled it to a preferential income tax rate of 15 % from October 11, 2017 to October 11, 2020.

 On
October 21, 2020, Sichuan Wetouch was granted on a case-by-case basis by Sichuan Provincial government as an HNTE, entitled to a reduced
income tax rate of 15% from October 21, 2020 until October 20, 2023.

Vtouch is subject to a 25 % income tax rate.

 F- 18

 The
CIT Law and its implementation rules impose a withholding income tax at 10%, unless reduced by a tax treaty or arrangement, on the amount
of dividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC that are related to earnings accumulated
beginning on January 1, 2008. Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding
income tax.

 The
components of the income tax provision are as follows:

OF COMPONENTS OF THE INCOME TAX PROVISION

 For the Years Ended

 2023

 2022

 Current tax provision

 PRC

 $
 4,082,606

 $
 3,352,802

 Total current tax provision

 $
 4,082,606

 $
 3,352,802

 Deferred tax provision

 BVI

 -

 -

 Hong Kong

 -

 -

 China

 -

 -

 Total deferred tax provision

 -

 -

 Income tax provision

 $
 4,082,606

 $
 3,352,802

 The
following table reconciles the PRC statutory rates to the Company's effective tax rate for the years ended December 31, 2023 and
2022:

OF INCOME TAX RATE

 For the Years Ended

 2023

 2022

 PRC statutory income tax rate

 25.0
 %

 25.0
 %

 Effect of income tax holiday

 0.0
 %

 0.0
 %

 Tax rate differential on entities not subject to PRC income

 ( 1.1
)%

 ( 0.5
)%

 R&D additional deduction

 ( 0.7
)%

 ( 1.0
)%

 Non-deductible expenses in the PRC

 2.2
 %

 4.2
 %

 Effective tax rate

 25.4
 %

 27.7
 %

 Deferred
tax assets

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

 The
Company follows ASC 740, "Income Taxes", which requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income
taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized.

 The
Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative
rulings. As of December 31, 2023 and 2022, taxes for Sichuan Wetouch and Sichuan Vtouch remained open for statutory examination by PRC
tax authorities.

 F- 19

 NOTE
8— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 Accrued
expenses and other current liabilities consist of the following:

OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 2023

 2022

 Advance from customers (i)

 $
 182,277

 $
 397,886

 Accrued payroll and employee benefits

 84,280

 89,359

 Accrued interest expenses

 240,805

 122,135

 Accrued private placement agent fees (ii)

 1,200,000

 -

 Accrued consulting fees (iii)

 1,370,972

 -

 Accrued litigation charges (iv)

 45,828

 -

 Accrued professional fees

 330,180

 -

 Accrued director fees

 106,824

 -

 Other tax payables (v)

 143,035

 Other payable to a former stockholder (vi)

 -

 191,180

 Others (vii)

 288,704

 153,803

 Accrued expenses and other current liabilities

 $
 3,992,905

 $
 944,624

 (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.

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

 NOTE
9 – CONVERTIBLE PROMISSORY NOTES PAYABLE

 a)
Convertible promissory notes

 In
October, November, and December 2021, the Company, issued seven (7) convertible promissory notes (the "Notes") of an aggregate
principal amount of 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. Net proceeds
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.

 The
details of the Notes are as follows:

 Unless
the Notes are converted, the principal amounts of the Notes, and accrued interest at the rate of 8 % per annum, are payable on the one-year
anniversary of the issuance of the Notes (the "Maturity Date"). If the Company fails to satisfy its loan obligation by the
Maturity Date, the default interest rate will be 16 %.

 F- 20

 The
Lenders have the right to convert any or all of the principal and accrued interest on the Notes into shares of common stock of the Company
on the earlier of (i) 180 calendar days after the issuance date of the Notes or (ii) the closing of a listing for trading of the common
stock of the Company on a national securities exchange offering resulting in gross proceeds to the Company of $ 15,000,000 or more (an
" Uplist Offering "). If the Company closes an Uplist Offering on or before the 180 th calendar date after
the issuance date of the Notes, the conversion price shall be 70 % of the per share offering price in the Uplist Offering; otherwise,
the conversion price is $ 15.0 per share.

 Subject
to customary exceptions, if the Company issues shares or any securities convertible into shares of common stock at an effective price
per share lower than the conversion price of the Notes, the conversion rate of the Notes shall be reduced to such lower price.

 Until
the Notes are either paid or converted in their entirety, the Company agreed with the Lenders not to sell any securities convertible
into shares of common stock of the Company (i) at a conversion price that is based on the trading price of the stock or (ii) with a conversion
price that is subject to being reset at a future date or upon an event directly or indirectly related to the business of the Company
or the market for the common stock. The Company also agreed to not issue securities at a future determined price.

 The
Lenders have the right to require the Company to repay the Notes if the Company receives cash proceeds, including proceeds from customers
and the issuance of equity (including in the Uplist Offering). If the Company prepays the Notes prior to the Maturity Date, the Company
shall pay a 10 % prepayment penalty.

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

 SUMMARY
OF OUTSTANDING PROMISSORY NOTES

 December 31, 2023

 December 31, 2022

 Interest
 rate

 Principal

 Carrying

 Principal

 Carrying

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

 %

 $
 -

 $
 -

 $
 -

 -

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

 %

 740,000

 700,448

 740,000

 635,535

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

 %

 156,250

 151,457

 181,250

 156,594

 Convertible Note - LGH Note 9 (b))

 %

 202,500

 204,929

 207,500

 188,987

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

 %

 152,000

 142,397

 157,000

 128,703

 Convertible Note - Jeffery Street Note 9 (b))

 %

 165,000

 150,641

 170,000

 142,554

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

 %

 -

 -

 -

 -

 Total

 $
 1,400,750

 $
 1,349,872

 $
 1,455,750

 $
 1,252,373

 Amortization of Discounts for the Year Ended December 31, 2023

 ( 110,746
)

 Convertible Promissory Notes payable as of December 31, 2023

 $
 1,239,126

 From
December 28, 2022 to April 6, 2023, the lenders of five outstanding Notes and the Company entered into an amendment to the Notes ("Amendment
to Promissory Note") extending the term of the Notes for an additional 6 months.

 F- 21

 From
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. Two notes were fully converted

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

 *The
 Company prepaid $ 10,000 legal deposit for each Note till the repayment of the Notes.

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

 b)
Warrants

 Accounting
for Warrants

 In
connection with the issuance of the Notes, the Company also issued to the lenders seven (7) three-year warrants (the "Note Warrants")
to purchase an aggregate of 90,000 shares of the Company's common stock (the "Warrant Shares").

 The
Note Warrants issued to the lenders granted the holders the rights to purchase up to 10,000 shares of common stock of the
Company at an exercise price of $ 25 per share. However, if the Company closes an Uplist Offering on or before the 180 th calendar
date after the issuance date of the Note Warrants, then the exercise price shall be 125 % of the offering price of a share in the Uplist
Offering. If the adjusted exercise price as a result of the Uplist Offering is less than $ 25 per share, then the number of shares for
which the Warrants are exercisable shall be increased such that the total exercise price, after taking into account the decrease in the
per share exercise price, shall be equal to the total exercise price prior to such adjustment.

 The
lenders have the right to exercise the Note Warrants on a cashless basis if the highest traded price of a share of common stock of the
Company during the 150 trading days prior to exercise of the Note Warrants exceeds the exercise price, unless there is an effective registration
statement of the Company which covers the resale of the Lenders.

 If
the Company issues shares or any securities convertible into shares at an effective price per share lower than the exercise price of
the Note Warrants, the exercise price of the Note Warrants shall be reduced to such lower price, subject to customary exceptions.

 The
lenders may not convert the Notes or exercise the Note Warrants if such conversion or exercise will result in each of the lenders, together
with any affiliates, beneficially owning in excess of 4.9 % of the Company's outstanding shares of common stock immediately after
giving effect to such exercise unless such lender notifies the Company at least 61 days prior to such exercise.

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

 F- 22

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

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

OF FAIR VALUE OF WARRANTS

 December 31, 2023

 Volatility (%)

 Expected dividends yield (%)

 Weighted average expected life (year)

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

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

 Changes of fair value of common stock purchase warrants liability
(+ (loss)/(- (gain)(US$)

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

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

 545.7
 %

 0.0
 %

 0.8

 5.03
 %

 14,803

 28,310

 43,113

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

 545.7
 %

 0.0
 %

 -

 5.03
 %

 101,293

 ( 101,293
)

 -

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

 545.7
 %

 0.0
 %

 0.9

 5.03
 %

 33,919

 64,456

 98,375

 Convertible Note - LGH Note 9 (a))

 545.7
 %

 0.0
 %

 0.9

 5.03
 %

 34,028

 64,489

 98,517

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

 545.7
 %

 0.0
 %

 0.9

 5.03
 %

 14,398

 27,241

 41,639

 Convertible Note - Jeffery Street Note 9 (a))

 545.7
 %

 0.0
 %

 0.9

 5.03
 %

 34,134

 ( 7,870
)

 26,264

 Convertible Note - Blue Lake Note 9 (a))

 545.7
 %

 0.0
 %

 0.9

 5.03
 %

 24,382

 46,080

 70,463

 Total

 Total

 256,957

 121,413

 378,371

 (c)
Registration Rights Agreements

to the terms of the Registration Rights Agreements between the Company and lenders of the Notes, the Company agreed to file a registration
statement with the Securities and Exchange Commission to register the shares of common stock underlying the Notes and the shares issuable
upon exercise of the Note Warrants within sixty days from the date of each Registration Rights Agreement. The Company also granted the
lenders piggyback registration rights on such securities pursuant to the Purchase Agreements.

 NOTE
10— STOCKHOLDERS' EQUITY

 1)
Common Stock

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

 On
December 22, 2020, the Company issued 5,181 shares of common stock to The Crone Law Group, P.C. or its designees for legal
services (see Note 11).

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

 F- 23

 On
April 14, April 27 and September 1, 2022, the Company issued 5,777, 5,599 and 2,857 shares of common stock upon cashless exercise of
the Note Warrants to three lenders, respectively. (see Note 9 (b)).

the year ended December 31, 2022, the Company issued 6,211 shares of common stock to a third party upon exercise of warrants (see Note
11).

the year ended December 31, 2022, the Company issued 69,228 shares of common upon conversion of convertible promissory note payable (see
note 9 (a)).

 On
January 19, 2023, the Company sold an aggregate of 8,000,000 shares of common stock to purchasers in a private placement for an
aggregate purchase price of $ 40,000,000, or $ 5.00 per share. On January 20, 2023, the Company received net proceeds of
$ 40 million accordingly.

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)).

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

 2)
Reverse Stock Split

 On
February 17, 2023, the Company's board of directors authorized a reverse stock split of common stock with a ratio of not less than
one to five (1:5) and not more than one to eighty (1:80), with the exact amount and the timing of the reverse stock split to be determined
by the Chairman of the Board. Upon effectiveness of such reverse stock split, the number of authorized shares of the common stock of
the Company will also be decreased in the same ratio. Pursuant to Section 78.209 of the Nevada Revised Statutes, the reverse stock split
does not have to be approved by the stockholders of the Company.

 On
July 16, 2023, the Company's board of directors approved the reverse stock split of the Company's common stock at a ratio
of 1-for-20. On July 16, 2023, the Company filed a certificate of change (with an effective date of July 16, 2023) with the Nevada Secretary
of State pursuant to Section 78.209 of the Nevada Revised Statutes to effectuate a 1-for-20 reverse stock split of its common stock.
On September 11, 2023, the reverse stock split was approved by the Financial Industry Regulatory Authority and took effect on September
12, 2023. All share information included in this annual report has been adjusted as if the reverse stock split occurred as of the earliest
period presented.

 3)
Statutory Reserve and Restricted Net Assets

 Under
PRC rules and regulations, all companies in the PRC are required to appropriate 10% of their net income to a statutory surplus reserve
until the reserve balance reaches 50% of their registered capital. The appropriation to this statutory surplus reserve must be made before
distribution of dividends can be made. The statutory reserve is non-distributable, other than during liquidation, and can be used to
fund previous years losses, if any, and may be converted into share capital by issuing new shares to existing shareholders in proportion
to their shareholders or by increasing the par value of the shares currently outstanding, provided that the remaining balance of the
statutory reserve after such issue is not less than 25% of the registered capital.

 Appropriations
to the discretionary surplus reserve are made at the discretion of the board of directors. The statutory reserve may be applied against
prior year losses, if any, and may be used for general business expansion and production or increase in registered capital, but are not
distributable as cash dividends.

 For
the years ended December 31, 2023 and 2022, the Company made appropriations to the reserve fund of RMB 8,172,303 (equivalent to US$ 1,154,131)
and RMB 6,554,271 (equivalent to US$ 973,718), respectively.

 F- 24

 NOTE
11- SHARE BASED COMPENSATION

 The
Company applied ASC 718 and related interpretations in accounting for measuring the cost of share-based compensation over the period
during which the consultants are required to provide services in exchange for the issued shares. The fair value of above award was estimated
at the grant date using the Black-Scholes model for pricing the share compensation expenses.

 On
December 22, 2020, the Board of Directors of the Company authorized the issuance of an aggregate of 5,181 shares and warrants to purchase
 10,518 shares of common stock to The Crone Law Group, P.C. or its designees for legal services that had been rendered. The five-year
warrants are exercisable at one cent per share.

 5,181
shares of common stock underlying such warrants were vested on December 22, 2020 and 6,211 shares were issued upon exercise of these
warrants on September 21, 2022 and warrant to purchase 4,307 shares remained outstanding for The Crone law Group, P.C. or its designees
for legal services. The fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation
expenses. The fair value of the Black-Scholes model includes the following assumptions: expected life of 2.5 years, expected dividend
rate of 0 %, volatility of 43.5 % and an average interest rate of 0.11 %.

 On
January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 15,541 shares and warrants to purchase
 31,554 shares of common stock to a third party service provider for consulting services that had been rendered. These warrants have a
five-year term and are exercisable at one cent per share.

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

 vested
on January 1, 2021.

 The
fair value of the above warrants was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses.
The fair value of the Black-Scholes model includes the following assumptions: expected life of 2.5 years, expected dividend rate of 0 %,
volatility of 51.3 % and an average interest rate of 0.12 %.

 As
of December 31, 2023, the Company had warrants outstanding to purchase 35,861 shares of common stock related to above mentioned services
with i) weighted average exercise price of $ 0.2; ii) weighted average remaining contractual life of 0.2 years; and iii) aggregate intrinsic
value of $ 0.3 million.

 NOTE
12. WEIGHTED AVERAGE NUMBER OF SHARES

 In
October 2020, the Company entered into a reverse merger transaction. The Company computes the weighted-average number of shares of common
stock outstanding in accordance with ASC 260 states that in calculating the weighted average shares when a reverse merger takes place
in the middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be
computed on the basis of the weighted-average number of shares of common stock of the legal acquiree (accounting acquirer) outstanding
during the period multiplied by the exchange ratio established in the merger agreement. The number of shares of common stock outstanding
from the acquisition date to the end of that period shall be the actual number of shares of common stock of the legal acquirer (the accounting
acquiree) outstanding during that period.

 NOTE
13 - RISKS AND UNCERTAINTIES

 Credit
Risk – The carrying amount of accounts receivable included in the balance sheet represents the Company's exposure
to credit risk in relation to its financial assets. No other financial asset carries a significant exposure to credit risk. The Company
performs ongoing credit evaluations of each customer's financial condition. The Company maintains allowances for doubtful accounts
and such allowances in the aggregate have not exceeded management's estimates.

 The
Company has its cash in bank deposits primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been
secured due to the state policy of protecting depositors' interests. The PRC promulgated a Bankruptcy Law in August 2006, effective
June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks. The bank deposits with financial
institutions in the PRC are insured by the government authority for up to RMB 500,000.

 F- 25

 Interest
Rate Risk – The Company is exposed to the risk arising from changing interest rates, which may affect the ability of repayment
of existing debts and viability of securing future debt instruments within the PRC.

 Currency
Risk - A majority of the Company's revenue and expense transactions are denominated in RMB and a significant portion of
the Company's assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC,
certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates
set by the People's Bank of China ("PBOC"). Remittances in currencies other than RMB by the Company in China must be
processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order
to affect the remittance.

 Concentrations
- The Company sells its products primarily through direct customers in the PRC and to some extent, the overseas customers in
European countries and East Asia such as South Korea and Taiwan. For the year ended December 31, 2023, six customers accounted for 22.5 %,
 16.5 %, 15.6 %, 14.1 %, 11.3 % and 10.1 %, respectively, of the Company's revenue. For the year ended December 31, 2022, six customers
accounted for 21.2 %, 16.1 %, 14.8 %, 13.7 %, 11.9 % and 10.1 %, respectively, of the Company's revenue.

 And
the Company's top 10 customers aggregately accounted for 99.7 % and 98.7 % of the total revenue for the years ended December 31,
2023 and 2022, respectively.

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

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

 The
Company purchases its raw materials through various suppliers. Raw material purchases from these suppliers which individually exceeded
10% of the Company's total raw material purchases, accounted for approximately 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.

 NOTE
14 — COMMITMENTS AND CONTINGENCIES

 Legal
Proceedings

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

 i)

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

 On
June 22, 2017, Yunqing Su, a former shareholder, entered an Equity Investment Agreement with Sichuan Wetouch and Guangde Cai, agreed
that Yunqing Su would invest RMB 1 million (equivalent to $ 140,847) to purchase 370,370.37 original listed shares of the target company,
Sichuan Wetouch, and provided for the exit mechanism in the agreement. However, the target company failed to be listed prior to December
31, 2017 as agreed. On June 22, 2017, Guangde Cai and Yunqing Su entered into a supplementary agreement, pursuant to which Guangde Cai
shall repurchase all of Yunqing Su's equity interest and pay the interest. Sichuan Wetouch repaid Yunqing Su the interest of RMB 220,000
(equivalent to $ 30,986) and the principal of RMB 128,000 (equivalent to $ 18,028) in November 2018. The repayment period set forth in the
supplementary agreement expired, but Sichuan Wetouch and Guangde Cai failed to pay the principal and interest owed to Yunqing Su. Yunqing
Su sued Sichuan Wetouch and Guangde Cai in the Renshou County People's Court of Sichuan Province, and the case was filed on February
9, 2022.

 On
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.

 F- 26

 ii)

 Legal
 case with Chengdu SME Credit Guarantee Co., Ltd. on a court acceptance fee of RMB 338,418 (equivalent to $ 47,665)

 On
July 5, 2013, Sichuan Wetouch obtained a one-year loan of RMB 60.0 million (equivalent to $ 8.5 million) from Bank of Chengdu, at an annual
interest rate of 8.61 %. Chengdu SME Credit Guarantee Co., Ltd ("Chengdu SME"), a third party, provided a 70% guarantee and
Bank of Chengdu retained 30% of the risk, while Chengdu Wetouch, a related party company, owned by Mr. Guangde Cai and Mr.
Guangde Cai provided joint and several liability guarantee for 100% of the loan.

 On
July 31, 2014, Sichuan Wetouch repaid RMB 5.0 million (equivalent to $ 0.7 million). The remaining loan of RMB 55.0 million (equivalent
to $ 7.7 million) was twice extended to be due on August 22, 2018. Upon the loan becoming due, but unpaid by the Company, Chengdu SME
paid the outstanding balance of RMB 55 million (equivalent to $ 7.7 million) to Bank of Chengdu. The Company subsequently repaid RMB 55
million (equivalent to $ 7.7 million) to Chengdu SME; however, Chengdu SME filed two separate lawsuits against the Company to recover
loan default penalties from the Company. The loan default penalties were (a) RMB 5.8 million (equivalent to $ 0.8 million) related to the
30% of the remaining loan balance repaid by Chengdu SME and (b) RMB 6.0 million (equivalent to $ 0.8 million) related to the 70% of the
remaining loan balance repaid by Chengdu SME. During the year ended December 31, 2017, the Company recorded loan default penalties, and
related liabilities, of $ 1.7 million.

 Chengdu
SME applied to the Chengdu High-tech Court for enforcement of the above-mentioned loan default penalties of RMB 5.8 million (equivalent
to $ 0.8 million) and RMB 6.0 million (equivalent to $ 0.8 million) on December 30, 2018. On March 12, 2020, the Enforcement Settlement
Agreement issued by the Chengdu High-tech Court confirmed that Sichuan Wetouch still owed RMB 5.8 million (equivalent to $ 0.8 million)
and RMB 6.0 million (equivalent to $ 0.8 million) of loan default penalties. The agreement did not specify which party shall pay the court
fee.

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

 On
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.

 iii)

 Legal
 case with Lifan Financial Leasing (Shanghai) Co., Ltd. and Sichuan Wetouch, Chengdu Wetouch, Meishan Wetouch and Xinjiang Wetouch
 Electronic Technology Co., Ltd. on a court acceptance fee of RMB 250,470 (equivalent to $ 35,278)

 On
November 20, 2014, Lifan Financial Lease (Shanghai) Co., Ltd. ("Lifan Financial") and Chengdu Wetouch entered into a Financial
Lease Contract (Sale and Leaseback), which stipulated that Lifan Financial shall lease the equipment to Chengdu Wetouch after the purchase
of the production equipment owned by Chengdu Wetouch at a purchase price, the purchase price/lease principal shall be RMB 20 million,
the rental interest rate of the leased equipment shall be 8 % per year, and the lease term shall be 24 months. Upon the expiration of
the lease term, Lifan Financial shall transfer the leased property to Chengdu Wetouch or a third party designated by Chengdu Wetouch
at the price of RMB0 after Chengdu Wetouch has fully fulfilled its obligations, including, without limitation, the payment of the rent,
liquidated damages (if any) and other contractual obligations. Guangde Cai, Sichuan Wetouch, Meishan Wetouch, an affiliated company to
Mr. Guangde Cai and Xinjiang Wetouch Electronic Technology Co., Ltd. ("Xinjiang Wetouch") provided Lifan Financial
with joint and several liability guarantee.

 F- 27

 On
August 9, 2021, Lifan Financial filed a lawsuit against Chengdu Wetouch, Guangde Cai, Sichuan Wetouch, Meishan Wetouch and Xinjiang Wetouch
in the Chengdu Intermediate People's Court. The court ruled that: 1) the Financial Lease Contract (Sale and Leaseback) was terminated;
2) the leased property was owned by Lifan Financial; 3) Chengdu Wetouch shall pay Lifan Financial all outstanding rent and interest thereon
in the total amount of RMB 22,905,807 (equivalent to $ 3.2 million) as well as the difference between the liquidated damages and the value
of the leased property recovered; etc.

 The
parties executed a settlement agreement on March 7, 2023, in which the parties confirmed that the outstanding payment of RMB 22,905,807
(equivalent to $ 3.2 million) has been fully paid up on December 23, 2021 and the above cases have been settled. As for the court acceptance
fees that were not previously agreed upon by the parties, Chengdu Wetouch agreed to pay the court acceptance fee of RMB 250,470
(equivalent to $ 35,278). Chengdu Wetouch paid the aforesaid fees to Lifan Financial on March 10, 2023.

 iv)

 Legal
 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)

 On
March 19, 2014, Chengdu Wetouch, a related party, obtained a two and half-year loan of RMB 15.0 million (equivalent to $ 2.1 million) from
Chengdu Bank Co., Ltd. Gaoxin Branch ("Chengdu Bank Gaoxin Branch"), with Chengdu Hi-tech Investment Group Co., Ltd. ("CDHT
Investment") acting as guarantor to pay off the loan principal and related interests, while Sichuan Wetouch and Hong Kong Wetouch
as guarantors, were jointly and severally liable for such debts.

 Upon
the loan due in January 2017, Chengdu Wetouch defaulted the loan, thus, CDHT Investment filed a lawsuit against Chengdu Wetouch, Sichuan
Wetouch, and Hong Kong Wetouch demanding a full repayment of such debts.

 To
support the local economic development as well as Chengdu Wetouch, two government-backed companies, Sichuan Renshou Shigao Tianfu Investment
Co., Ltd. ("Sichuan Renshou") and Renshou Tengyi Landscaping Co., Ltd. ("Renshou Tengyi") provided their bank
deposits of RMB 12.0 million (equivalent to $ 1.7 million) as pledge, while Mr. Guangde Cai and Sichuan Wetouch also provided counter-guarantee.

 Upon
the expiration of the guarantee, Chengdu Wetouch still defaulted on repayment of the above pledge. As a result, CDHT Investment levied
this collateral of RMB 12.0 million. On November 21, 2019. Subsequently, Sichuan Renshou and Renshou Tengyi filed with Chengdu Intermediate
People's Court a lawsuit demanding an asset recovery of RMB 12.0 million (equivalent to $ 1.7 million) pursuant to the counter guarantee
agreement.

 On
December 2, 2019, pursuant to the reconciling agreement issued by Chengdu Intermediate People's Court, the parties agreed to cancel
the demand to seize property of Sichuan Wetouch rather than the property of Chengdu Wetouch, and to waive freezing Guangde Cai's
60% shareholding equity in Xinjiang Wetouch Electronic Technology Co., Ltd.

 On
October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch, Hong Kong Wetouch and Guangde Cai are fully discharged
and released from any and all obligations under the outstanding debts, and from all liabilities under guarantee with Chengdu Wetouch
being responsible for the outstanding debts by December 31, 2020.

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

 The
settlement and release agreement did not specify which party shall pay the court acceptance fee. On March 10, 2023, pursuant to an enforcement
settlement agreement entered among Sichuan Renshou, Renshou Tengyi, Sichuan Wetouch, Chengdu Wetouch, and other relevant parties, Sichuan
Wetouch agreed to pay the court acceptance fee of RMB 103,232 (equivalent to $ 14,540). On March 17, 2023, Chengdu Wetouch made a full
payment of the above court fee to Sichuan Renshou.

 F- 28

 v)

 Legal
 case with Chengdu High Investment Financing Guarantee Co. on a court acceptance fee of RMB 250,000 (equivalent to $ 35,211)

 On
March 22, 2019, Chengdu High Investment Financing Guarantee Co., Ltd, ("Chengdu High Investment") filed a lawsuit against
Hong Kong Wetouch in the Chengdu Intermediate People's Court, claiming that Hong Kong Wetouch should assume the guarantee liability
for the debt payable by Chengdu Wetouch. On May 21, 2020, the court rendered a judgment ordering Hong Kong Wetouch to pay compensation
of RMB 17,467,042 (equivalent to $ 2,460,181), interest, liquidated damages, liquidated damages for late performance, etc.

 On
March 16, 2023, Chengdu Wetouch, Sichuan Wetouch and Chengdu High Investment entered into a settlement enforcement agreement, confirming
that Chengdu High Investment had received RMB 17,547,197 (equivalent to $ 2,471,471) on October 27, 2020 paid by Chengdu Wetouch,
and the above case has been settled. As for the court acceptance fees that were not previously agreed upon by the parties, Chengdu Wetouch
agreed to pay the court acceptance fee of RMB 250,000 (equivalent to $ 35,211). Chengdu Wetouch paid the aforesaid fees to Chengdu High
Investment on March 20, 2023.

 vi)

 Legal
 case with Hubei Lai'en Optoelectronics Technology Co., Ltd. on a product payment of RMB 157,714 (equivalent to $ 22,213)

Wetouch purchased products from Hubei Lai'en Optoelectronics Technology Co., Ltd. ("Hubei Lai'en) multiple times from
March to June 2019, but failed to pay the corresponding amount of RMB 137,142.7 for the purchased products. On April 6, 2022, Hubei Lai'en
filed a lawsuit against Sichuan Wetouch in the Renshou County People's Court of Sichuan Province, requesting payment of overdue
payment for the products and liquidated damages. On May 31, 2022, the Renshou County People's Court rendered a judgment that Sichuan
Wetouch shall pay Hubei Lai'en the price of goods of RMB 137,143 and liquidated damages of RMB 20,571. Sichuan Wetouch paid the
above amount to Hubei Lai'en on March 15, 2023.

 vi)
 Legal case with Chengdu Hongxin Shunda Trading Co., Ltd. on settlement of accounts payable and related fund interests totalling RMB 3,021,294
($ 425,540)

 In
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.

 vii)
 Legal case with Mr. Guangchuang Liu on a refund of equity transfer price and related interests totalling RMB 324,501 ($ 45,705)

 In
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.

 F- 29

 viii)
Legal case with Sichuan Yali Cement Manufacturing Co., Ltd. and Sichuan Chunqiu Development & Construction Group Co. Ltd. on a debt
payable of RMB RMB 1,656,480 (equivalent to $ 233,310) and related interest, legal fees and penalties.

 On
August 10, 2022, Sichuan Yali Cement Manufacturing Co., Ltd. ("Yali Co.") and Sichuan Chunqiu Development & Construction
Group Co. Ltd. (" Chunqiu Co.") entered into construction materials contract for Sichuan Vtouch's new facility. Under
this contract, Sichuan Vtouch was listed as the joint responsibility party for the payment settlement between Yali Company and Chunqiu
Company.

 On
February 15, 2023, Yali Co. filed a lawsuit against Chunqiu Co. to the Chengdu Wenjiang District People's Court, claiming that
Chunqiu Co. 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
repayment.

 On
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).

 Capital
Expenditure Commitment

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

 NOTE
15 — REVENUES

 The
Company's geographical revenue information is set forth below:

OF GEOGRAPHICAL REVENUE INFORMATION

 For the Years Ended

 2023

 2022

 Sales in PRC

 $
 27,668,985

 $
 26,438,509

 Sales in Overseas

 -Republic of China (ROC, or Taiwan)

 6,255,602

 6,146,043

 -South Korea

 5,619,228

 5,221,209

 -Others

 162,124

 126,351

 Sub-total

 12,036,954

 11,484,603

 Total revenues

 $
 39,705,939

 $
 37,923,112

 NOTE
16 — SUBSEQUENT EVENTS

 On
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
21, 2024.

 The
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"). The
Offering was closed on February 23, 2024.

 The
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.

 On
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. In addition,
the Representatives' Warrants will not be exercisable for more than five years from the commencement of sales of the Offering.

 F- 30