10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the Quarterly Period Ended June 30, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 000-56215

WETOUCH 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) 028-37390666

(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
None	N/A	N/A

Indicate 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 periods 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 ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File to be submitted posted 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 ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “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 ☐

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

Yes ☐ No ☒

As of August 10, 2021, the registrant had 31,811,523 shares of common stock issued and outstanding.

WETOUCH TECHNOLOGY INC.

QUARTERLY REPORT ON FORM 10-Q

June 30, 2021

TABLE OF CONTENTS

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosure	16
Item 5.	Other Information	16
Item 6.	Exhibits	16
SIGNATURES		17

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements include, among others, those statements including the words “believes”, “anticipates”, “expects”, “intends”, “estimates”, “plans” and words of similar import. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Forward-looking statements are based on our current expectations and assumptions regarding our business, potential target businesses, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include changes in local, regional, national or global political, economic, business, competitive, market (supply and demand) and regulatory conditions.

A description of these and other risks and uncertainties that could affect our business appears in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 which we filed with the Securities and Exchange Commission (“SEC”) on March 24, 2021 (the “Annual Report”). The risks and uncertainties described under “Risk Factors” are not exhaustive.

Given these uncertainties, readers of this Quarterly Report on Form 10-Q (“Quarterly Report”) are cautioned not to place undue reliance on such forward-looking statements. We disclaim any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

3

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the SEC, and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report, as updated in subsequent filings we have made with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2021 (UNAUDITED)

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets at June 30, 2021 (Unaudited) and December 31, 2020 (unaudited)	F-1
Condensed Consolidated Statements of Income and Comprehensive Income for the three and six months ended June 30, 2021 and 2020 (unaudited)	F-2
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three and six months ended June 30, 2021 and 2020 (Unaudited)	F-3
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (Unaudited)	F-5
Notes to Condensed Consolidated Financial Statements (unaudited)	F-6 - F-12

4

WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	As of June 30,		As of December 31,
	2021		2020
ASSETS
CURRENT ASSETS
Cash	$	52,594,357	$	23,963,861
Accounts receivable, net		11,590,670		11,926,835
Inventories		341,549		402,050
Due from related parties		-		76,619
Prepaid expenses and other current assets		28,265		228,443
TOTAL CURRENT ASSETS		64,554,841		36,597,808
Property, plant and equipment, net		45,350		9,491,195
Intangible assets, net		-		974,696
TOTAL ASSETS	$	64,600,191	$	47,063,699
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	770,649	$	891,848
Amount due to related parties		-		529,060
Income tax payable		1,822,258		107,137
Accrued expenses and other current liabilities		543,467		503,455
Deferred grants		-		245,211
TOTAL CURRENT LIABILITIES		3,136,374		2,276,711
Deferred grants-non current		-		433,206
TOTAL LIABILITIES	$	3,136,374	$	2,709,917
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value, 300,000,000 shares authorized, 31,811,523 and 31,500,693 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	$	31,812	$	31,501
Additional paid in capital		4,221,727		1,072,932
Statutory reserve		3,062,159		3,062,159
Retained earnings		52,552,950		39,229,282
Accumulated other comprehensive income		1,595,169		957,908
TOTAL STOCKHOLDERS’ EQUITY		61,463,817		44,353,782
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	64,600,191	$	47,063,699

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

F-1

WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

	Three-Month Period Ended						Six-Month Period Ended
	June 30,						June 30,
	2021			2020			2021			2020
REVENUES
Revenue from customers	$	15,234,885		$	5,256,060		$	25,850,636		$	8,765,152
Revenues from related parties		-			-			97,553			-
Total Revenues		15,234,885			5,256,060			25,948,189			8,765,152
COST OF REVENUES		(7,334,722	)		(2,591,100	)		(12,906,528	)		(4,463,883	)
GROSS PROFIT		7,900,163			2,664,960			13,041,661			4,301,269
OPERATING EXPENSES
Selling expenses		(125,574	)		(26,227	)		(213,397	)		(44,932	)
General and administrative expenses		(812,166	)		(351,660	)		(1,320,582	)		(559,937	)
Research and development expenses		(22,588	)		(17,957	)		(44,768	)		(33,299	)
Share-based compensation		-			-			(3,149,106	)		-
OPERATING EXPENSES		(960,328	)		(395,844	)		(4,727,853	)		(638,168	)
INCOME FROM OPERATIONS		6,939,835			2,269,116			8,313,808			3,663,101
Interest income		13,375			19,992			35,386			39,609
Interest expense		-			(2,924	)		-			(5,893	)
Government grant		1,229			56,335			692,942			127,983
Gain on asset disposal		-			-			7,625,165			-
TOTAL OTHER INCOME		14,604			73,403			8,353,493			161,699
INCOME BEFORE INCOME TAX EXPENSE		6,954,439			2,342,519			16,667,301			3,824,800
INCOME TAX EXPENSE		(1,887,339	)		(349,043	)		(3,238,952	)		(571,830	)
NET INCOME	$	5,067,100		$	1,993,476		$	13,428,349		$	3,252,970
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment		809,779			72,252			532,580			(478,166	)
COMPREHENSIVE INCOME	$	5,876,879		$	2,065,728		$	13,960,929		$	2,774,804
EARNINGS PER COMMON SHARE
Basic	$	0.2		$	0.1		$	0.42		$	0.12
Diluted	$	0.2		$	0.1		$	0.42		$	0.12
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic*		31,811,523			28,000,000			31,811,523			28,000,000
Diluted*		32,653,163			28,000,000			32,653,163			28,000,000

* Retrospectively restated for effect of recapitalization, see Note 1

F-2

WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Common stock at Par value $0.001				Additional paid-in		Statutory		Retained		Accumulated other comprehensive			Total stockholders’
	Shares		Amount		capital		reserve		Earnings		loss			equity
Balance at April 1, 2020*	$	28,000,000	$	28,000	$	14,034	$	2,003,569	$	32,616,988	$	(2,285,406	)	$	32,377,185
Net income										1,993,476					1,993,476
Foreign currency translation adjustment		-		-		-		-		-		72,252			72,252
Balance at June 30, 2020	$	28,000,000	$	28,000	$	14,034	$	2,003,569	$	34,610,464	$	(2,213,154	)	$	34,442,913

* Retrospectively restated for effect of recapitalization, see Note 1

	Common stock at Par value $0.001				Additional paid-in		Statutory		Retained		Accumulated other comprehensive		Total stockholders’
	Shares		Amount		capital		reserve		Earnings		loss		equity
Balance at April 1, 2021		31,811,523	$	31,812	$	4,221,727	$	3,062,159	$	47,590,531	$	680,709	$	55,586,938
Net income										5,067,100				5,067,100
Foreign currency translation adjustment		-		-		-		-		-		809,779		809,779
Balance at June 30, 2021		31,811,523	$	31,812	$	4,221,727	$	3,062,159	$	52,657,631	$	1,490,488	$	61,463,817

F-3

WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

	Common stock at Par value $0.001				Additional paid-in		Statutory		Retained		Accumulated other comprehensive			Total stockholders’
	Shares		Amount		capital		reserve		Earnings		loss			equity
Balance at January 1, 2020*		28,000,000	$	28,000	$	14,034	$	2,003,569	$	31,357,494	$	(1,734,988	)	$	31,668,109
Net income										3,252,970					3,252,970
Foreign currency translation adjustment		-		-		-		-		-		(478,166	)		(478,166	)
Balance at June 30, 2020		28,000,000	$	28,000	$	14,034	$	2,003,569	$	34,610,464	$	(2,213,154	)	$	34,442,913

* Retrospectively restated for effect of recapitalization, see Note 1

	Common stock at Par value $0.001				Additional paid-in		Statutory		Retained		Accumulated other comprehensive		Total stockholders’
	Shares		Amount		capital		reserve		Earnings		(income) loss		equity
Balance at January 1, 2021		31,500,693	$	31,501	$	1,072,932	$	3,062,159	$	39,229,282	$	957,908	$	44,353,782
Share-based compensation		310,830		311		3,148,795		-				-		3,149,106
Net income										13,428,349				13,428,349
Foreign currency translation adjustment		-		-		-		-		-		532,580		532,580
Balance at June 30, 2021		31,811,523	$	31,812	$	4,221,727	$	3,062,159	$	52,657,631	$	1,490,488	$	61,463,817

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

F-4

WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the six-months ended June 30,
	2021			2020
Cash flows from operating activities
Net income	$	13,428,349		$	3,252,970
Adjustments to reconcile net income to cash provided by operating activities
Bad debts reversal		(76,260	)		-
Depreciation and amortization		374,505			509,934
Share-based compensation		3,149,106			-
Loss of input VAT credits		354,991			-
Gain on asset disposal		(7,625,165	)		-
Changes in operating assets and liabilities:
Accounts receivable		1,286,124			2,840,257
Amounts due from related parties		83,531			(43,747	)
Inventories		89,850			(14,763	)
Prepaid expenses and other current assets		216,506			(199,125	)
Accounts payable		(186,330	)		(10,788	)
Amounts due to related parties		(566,737	)		(230,879	)
Income Tax payable		1,703,667			(289,117	)
Accrued expenses and other current liabilities		(351,972	)		(111,683	)
Deferred grants		(726,730	)		(113,762	)
Net cash provided by operating activities		11,153,435			5,589,297
Cash flows from investing activities
Purchase of property, plant and equipment		(45,255	)		-
Proceeds from assets disposal		17,804,769			-
Net cash provided by investing activities		17,759,514			-
Cash flows from financing activities
Repayment of bank borrowings		-			(426,609	)
Net cash used in financing activities		-			(426,609	)
Effect of changes of foreign exchange rates on cash		(282,453	)		(233,061	)
Net increase in cash		28,630,496			4,929,627
Cash, beginning of period		23,963,861			14,279,797
Cash, end of period	$	52,594,357		$	19,209,424
Supplemental disclosure of cash flow information
Cash paid for interest expense	$	-		$	42,661
Cash paid for income tax	$	1,521,333		$	860,947

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

F-5

WETOUCH TECHNOLOGY INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 — BUSINESS DESCRIPTION

Business

Wetouch Technology Inc. (“Wetouch”, or the “Company”, or “we”), is a holding company that is incorporated in Nevada, United States. Through a reverse merger and a series of transactions, Wetouch acquired 100% equity interest of Sichuan Wetouch Technology Co., Ltd. (“Sichuan Wetouch”).

For accounting purpose, the acquisition was accounted for as a reverse acquisition with Wetouch (the legal acquirer) identified as the accounting acquiree and Sichuan Wetouch (the legal acquiree) identified as the accounting acquirer. Sichuan Wetouch is a limited liability company established under the laws of the People’s Republic of China (“PRC”).

Wetouch, through its subsidiaries, is primarily engaged in the business of research, development, manufacture, and distribution of touchscreen displays to customers both in PRC and overseas through its subsidiaries. The touchscreen products, which are manufactured by the Company, are primarily for use in the computer components.

The Company’s operations are primarily conducted through its subsidiaries in the PRC. The Company’s other subsidiaries in the British Virgin Islands (“BVI”) and Hong Kong do not have significant operations.

Restructuring

Wetouch Holding Group Limited (“BVI Wetouch”) is the sole stockholder of Hong Kong Wetouch Electronics Technology Limited (“Hong Kong Wetouch”) and Hong Kong Wetouch Technology Limited (“HK Wetouch”).

Pursuant 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 December 30, 2020, Sichuan Vtouch Technology Co., Ltd. (“Sichuan Vtouch”) was incorporated in Chengdu, Sichuan, under the laws of the People’s Republic of China in order to take over the operating business of Sichuan Wetouch, with HK Wetouch as its sole shareholder.

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.

On June 18, 2021, Hong Kong Wetouch started its dissolution process pursuant to the minutes of its special shareholder meeting.

F-6

Note 2 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the United States Securities and Exchange Commission (“SEC”). The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited consolidated financial statements of Wetouch. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended.

In the opinion of the management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of June 30, 2021, the results of operations and cash flows for the six-month periods ended June 30, 2021 and 2020 have been made. However, the results of operations included in such financial statements may not necessary be indicative of annual results.

Use of Estimates

The preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

On an ongoing basis, management evaluates the Company’s estimates, including those related to the bad debt allowance, fair values of financial instruments, intangible assets and property and equipment, income taxes, and contingent liabilities, among others. The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Significant Accounting Policies

For a detailed discussion about Wetouch’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in Wetouch’s consolidated financial statements included in the Company’s 2020 audited consolidated financial statements. During the three-month and six-month periods ended June 30, 2021, there were no significant changes made to Wetouch significant accounting policies.

F-7

NOTE-3- ACCOUNTS RECEIVABLE

Accounts receivable consists of the following:

	June 30, 2021		December 31 2020
Accounts receivable	$	11,590,670	$	12,002,454
Allowance for doubtful accounts		-		(75,619	)
Accounts receivable, net	$	11,590,670	$	11,926,835

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

NOTE 4 — PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net, consists of the following:

	June 30, 2021		December 31, 2020
Buildings	$	-	$	10,330,767
Machinery, equipment and furniture		45,350		5,830,470
Subtotal		45,350		16,161,237
Less: accumulated depreciation		-		(6,670,042	)
Property, plant and equipment, net	$	45,350	$	9,491,195

Depreciation expense was nil and $238,710 for the three-month period ended June 30, 2021 and 2020, respectively, and $260,943 and $481,116 six-month period ended June 30, 2021 and 2020, respectively.

Pursuant to local PRC government guidelines on local environment 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 18, 2021, pursuant to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received compensation of RMB115.2 million ($17.8 million) (“Compensation Funds”) for the withdrawal of the right to use of state-owned land and the demolition of all buildings, facilities, equipment and all other appurtenances on the land. During the six-month period ended June 30, 2021, the Company recorded a gain of $7,625,165 for the asset disposal including intangible assets.

On March 16, 2021, in order to minimize interruption of our business, Sichuan Vtouch entered into a leasing agreement with Sichuan Renshou Shigao Tianfu Investment Co., Ltd., a limited company owned by the local government, to lease the property and all buildings, facilities and equipment thereon (“Demised Properties) of Sichuan Wetouch, commencing from April 1, 2021 until December 31, 2021, at a monthly rent of RMB300,000 ($46,366) for the use of the Demised Properties.

NOTE 5 – INTANGIBLE ASSETS, NET

Intangible assets, net mainly consist of the following:

	June 30, 2021		December 31, 2020
Land use rights	$	-	$	1,016,215
Patents		-		417,919
Subtotal		-		1,434,134
Less: accumulated amortization for patents		-		(310,393	)
Accumulated amortization for land use right		-		(149,045	)
Subtotal		-		(459,438	)
Intangible assets, net	$	-	$	974,696

Amortization expense was nil and $14,295 for the three-month period ended June 30, 2021 and 2020, respectively, and $113,562 and $28,818 for the six-month period ended June 30, 2021 and 2020, respectively. The Company accelerated the amortization expense for the three-month period ended March 31, 2021 due to the relocation pursuit to the Compensation Fund agreement with the local government. See Note 4. As the Company plans to deregister Sichuan Wetouch and the newly set up Sichuan Vtouch will use new techniques with new equipment, the Company estimates no remaining useful life for the existing patents.

F-8

NOTE 6 – RELATED PARTY TRANSACTIONS

The related party transactions are summarized as follows:

	Three-Month Period Ended June 30,				Six-Month Period Ended June 30,
	2021		2020		2021		2020
	US$		US$		US$		US$
Revenues resulting from related parties:
Sales to Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”)	$	-	$	-	$	10,451	$	-
Sales to Meishan Vtouch Electronics Technology Co., Ltd. (Meishan Wetouch)		-		-		87,102		-
Total Revenue	$	-	$	-	$	97,553	$	-

The Company sells capacitive touchscreens to Chengdu Wetouch and Meishan Wetouch from time to time. There are no written agreements between the Company and Meishan Wetouch. Mr. Guangde Cai, Chairman and director of the Company and our indirect majority shareholder, owns 94% and 95% of Chengdu Wetouch and Meishan Wetouch, respectively.

Amounts due from related parties are as follows:

Amounts due from related parties	Relationship	June 30, 2021		December 31, 2020		Note
Vision Touch Technology AG	100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch	$	-	$	76,619	Operating expense paid on behalf of the related party/Company

Amounts due to related parties are as follows:

	Relationship	June 30, 2021		December 31, 2020		Note
Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”)	94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li	$	-	$	134,616	Operating expense paid on behalf of the Company
Meishan Vtouch Electronics Technology Co., Ltd.	95% owned by Mr. Guangde Cai and 5% by Chengdu Wetouch		-		68,402	Operating expense paid on behalf of the Company
Chengdu Vtouch Intelligence Science & Technology Co., Ltd.	100% owned by HK Vtouch Holding Group Co., Ltd.		-		-	Operating expenses paid on behalf of the Company
Mr. Guangde Cai	Chairman and CEO of the Company		-		326,042	Payable to employee
Total		$	-	$	529,060

NOTE 7 - INCOME TAXES

Wetouch

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

BVI Wetouch

Under the current laws of the British Virgin Islands, BVI Wetouch, 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 incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a progressive rate of 16.5%.

F-9

PRC

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, which 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 preferential tax treatment High and New Technology Enterprises (“HNTEs”), which entitled it to a reduced income tax rate of 15% beginning October 21, 2020 until October 20, 2023.

Sichuan Vtouch is entitled to 25% of income tax rate.

The effective income tax rates for the six-month periods ended June 30, 2021 and 2020 were 19.4% and 15.0%, respectively. The effective income tax rate for the six-month period ended June 30, 2021 differs from the PRC statutory income tax rate of 25% primarily due to Sichuan Wetouch’s preferential income tax rate.

The estimated effective income tax rate for the year ended December 31, 2021 would be similar to actual effective tax rate of the six-month periods ended June 30, 2021.

NOTE 8- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	June 30, 2021		December 31, 2020
Advance from customers	$	169,040	$	9,493
Accrued payroll and employee benefits		97,036		105,801
Other tax payable (i)		277,098		325,719
Others (ii)		293		62,442
Accrued expenses and other current liabilities	$	543,467	$	503,455

(i) Other tax payables are mainly value added tax payable.

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

NOTE 9- DEFERRED GRANTS

On January 14, 2013 and January 27, 2014, Sichuan Wetouch received RMB11.2 million (equivalent to US$1.8 million) and RMB4.8 million (equivalent to US$0.8 million) government subsidies, respectively, from Sichuan Provincial Government in supporting the initial set-up and construction of its production facility. The Company completed the construction of the plant in June 2013 and there were no other unfulfilled conditions and/or other contingencies attaching to government assistance which has been recognized as income.

Since the funding is related to the construction of long-term assets, the amounts were recognized as government grant, which is included in deferred grants on the consolidated balance sheets, and to be recognized as other income in the consolidated statements of comprehensive income (loss) over the periods and in the proportions in which depreciation expense on the long-term assets is recognized.

During the six-month period ended June 30, 2021, the Company recognized the remaining balance of deferred grant as income due to the government directed relocation order disclosed in Note 4.

F-10

NOTE 10- SHARE BASED COMPENSATION

As of June 30, 2021, the Company had 841,440 warrants outstanding with i) weighted average exercise price of $0.01; ii) weighted average remaining contractual life of 4.45 years; and iii) aggregate intrinsic value of $3.4 million.

On January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 310,830 shares and 631,080 warrants to a third party service provider for consulting services that had been rendered. The five-year warrants are exercisable at one cent per share.

The Company awards common stock and stock options to employees, consultants, and directors as compensation for their services, and accounts for its stock option awards to employees, consultants, and directors pursuant to the provisions of ASC 718, Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.

The 310,830 shares of common stock and 631,080 warrants were vested on January 1, 2021 and no warrants were exercised. The fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses. The fair value of the Black-Scholes model includes the following assumptions: expected life of 2.5 years, expected dividend rate of 0%, volatility of 51.3% and an average interest rate of 0.12%.

For the three-month periods and six-month periods ended June 30, 2021, the Company recognized relevant share-based compensation expense of nil and $1,041,281 for the vested shares, and nil and $2,107,825 for the warrants, respectively.

NOTE 11- 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 RMB500,000.

Interest Rate Risk – The Company is exposed to the risk arising from changing interest rates, which may affect the ability of repayment of existing debts and viability of securing future debt instruments within the PRC.

Currency Risk - A majority of the Company’s revenue and expense transactions are denominated in RMB and a significant portion of the Company’s assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

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

	June 30, 2021	December 31, 2020
Year-end spot rate	US$1=RMB 6.4566	US$1=RMB 6.5250
Average rate	US$1=RMB 6.4702	US$1=RMB 6.9042

And average rate for June 30, 2021 is US$1=RMB6.4702

F-11

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 (Refer to Note 12). Sales to customers individually exceeded 10% of the Company’s revenues for the three and six month periods ended March 31, 2021 and 2020, are as follows:

For the three-month periods ended June 30, 2021 and 2020, five customers accounted for 18.6%, 18.3%, 15.6%, 15.1% and 11.6%, and five customers accounted for 17.9%, 15.6%, 15.4%, 12.6% and 11.2%, respectively, of the Company’s revenue.

For the six-month periods ended June 30, 2021 and 2020, five customers accounted for 18.4%, 17.9%, 14.9%, 13.6% and 11.5%, and five customers accounted for 17.4%, 16.7%, 16.0%, 11.5% and 11.0%, respectively, of the Company’s revenue.

And the Company’s top ten customers aggregately accounted for 98.2 and 98.5 % of the total revenue for the three-month periods ended June 30, 2021 and 2020, and 97.0% and 64.7% for the six-month periods ended June 30, 2021 and 2020.

As of June 30, 2021 and December 31, 2020, seven customers accounted for 99.8%, and four customers accounted for 96.4% 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 26.4% (two suppliers) and 25.7% (two supplier) for the three-month periods, respectively, 26.4% (two suppliers) and 35.0% (three suppliers) for the six-month periods ended June 30, 2020 and 2021, respectively.

NOTE 12 — 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. As of June 30, 2021, there were no legal proceedings.

Capital expenditure commitment

The Company does not have any capital commitments as of June 30, 2021.

NOTE 13 — REVENUES

	Three-Month Period Ended June 30,				Six-Month Period Ended June 30,
	2021		2020		2021		2020
	US$		US$		US$		US$
Sales in PRC	$	9,799,657	$	3,216,025	$	16,955,534	$	5,533,317
Sales in Overseas
—Republic of China (ROC, or Taiwan)		2,901,512		1,133,766		4,878,550		1,697,194
-South Korea		2,326,885		865,135		3,901,200		1,493,507
-Others		206,831		41,134		212,905		41,134
Sub-total		5,435,228		2,040,035		8,992,655		3,231,835
Total Revenue	$	15,234,885	$	5,256,060	$	25,948,189	$	8,765,152

Due to the COVID-19 pandemic, the Company’s subsidiary Sichuan Wetouch was temporarily shut down from early February 2020 to early March 2020 in accordance with the requirement of the local governments. The Company’s business was negatively impacted and generated lower revenue and net income during the period from February to April 2020. Our business gradually recovered to its normal level during the three-months and six-months periods ended June 30, 2021, due to our proactive efforts in marketing new models such as POS touchscreens and penetrating into new customers and into new regions.

F-12

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

The following management’s discussion and analysis should be read in conjunction with our historical financial statements and the related notes thereto. The management’s discussion and analysis contain forward-looking statements, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect” and the like, and/or future tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including those under “Risk Factors” in our Annual Report filed with the SEC on March 24, 2021, as updated in subsequent filings we have made with the SEC that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Quarterly Report.

Basis of Presentation

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our unaudited financial statements contained in this Quarterly Report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Recent Developments

Hong Kong Wetouch Technology Limited, a limited company organized under the laws of Hong Kong (“HK Wetouch”), an affiliate of Guangde Cai, our Chairman and Director, 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 (“Sichuan Vtouch”) in Chengdu, Sichuan, under the laws of The People’s Republic of China (“PRC”).

On March 12, 2021, Wetouch Holding Group Limited (“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, in consideration of the payment of HK$10,000 pursuant to instruments of transfer in accordance with Hong Kong law. As a result of the acquisition, HK Wetouch became a wholly-owned subsidiary of BVI Wetouch. BVI Wetouch owns (i) all the outstanding shares of Hong Kong Wetouch, which, in turn, owns all the outstanding shares of Sichuan Wetouch and (ii) all of the outstanding shares of HK Wetouch, which owns all the shares of Sichaun Vtouch Technology Co., Ltd., a company incorporated under the laws of PRC.

On March 16, 2021, an indirectly wholly-owned operating subsidiary of the Company, Sichuan Wetouch entered into an Agreement of Compensation on Demolition (“Compensation Agreement”) with 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 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 guidelines (the “Guidelines”) published by the local government of with respect to local environmental issues and a national overall 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 the manufacturing facilities and properties of the Company are located. As a result, Sichuan Wetouch must relocate. In consideration for such relocation, the owner of the buildings on the state-owned land will be compensated.

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).

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).

5

We are actively searching for an appropriate parcel in Chengdu Medicine City (Technology Park), Wenjiang District, Chengdu for the construction of our new production facilities and office buildings. As of the date of this Form 10-Q, 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 business development. In addition, we expect that this acquisition and construction will be completed prior to December 31, 2021, but there is no assurance and we may need extended time to achieve our business plan. Pursuant 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 was compensated for RMB115.2 million ($17.8 million) from the local government for the withdrawal of the right to use of state-owned land and the demolition of all buildings, facilities, equipment and all other appurtenances on the land. On March 2, 2021, HK Wetouch acquired all shares of Hong Kong Wetouch. On June 18, 2021, Hong Kong Wetouch started its dissolution process. In addition, the Company is in the process of dissolving Sichuan Wetouch, and its business and operations are being assumed by Sichuan Vtouch.

Overview

We were originally incorporated under the laws of the state of Nevada in August 1992. On October 9, 2020, we entered into a share exchange agreement (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”). 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.

We are engaged in the research, development, manufacturing, sales and servicing of medium to large sized projected capacitive touchscreens, which constitutes our source of revenues through BVI Wetouch, which owns Hong Kong Wetouch, HK Wetouch, Sichuan Wetouch and Sichuan Vtouch. 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, point of sale (POS), 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, lottery and gaming industry; (iii) Plastic-Glass (“PG”), typically adopted by touchscreens in GPS/entertainment panels motor vehicle GPS, smart home, robots and charging stations; and (iv) Glass-Film (“GF”), mostly used in industrial HMI. The following discussion and analysis pertain financial condition and results of operations of our subsidiaries Hong Kong Wetouch, HK Wetouch, Sichuan Wetouch and Sichuan Vtouch for the quarter ended June 30, 2021.

Effects of COVID-19

The COVID-19 pandemic and resulting global disruptions have affected our businesses, as well as those of our customers and suppliers. 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. Beginning in Q1 2020, we made numerous process updates across our operations worldwide, and adapted our fulfillment network, to implement employee and customer safety measures, such as enhanced cleaning and physical distancing, personal protective gear, disinfectant spraying, and temperature checks. We will continue to prioritize employee and customer safety and comply with evolving state and local standards as well as to implement standards or processes that we determine to be in the best interests of our employees, customers, and communities.

Due to the COVID-19 pandemic, our subsidiary Sichuan Wetouch was temporarily shut down from early February 2020 to early March 2020 in accordance with the requirement of the local governments. Our business was negatively impacted and generated lower revenue and net income in 2020. The Company has taken proactive measures to promote products to new customers and entering more regions during the six-month period ended June 30, 2021. The extent of the impact of COVID-19 on the Company’s results of operations and financial condition will depend on the virus’ future developments, including the duration and spread of the outbreak and the impact on the Company’s customers, which are still uncertain and cannot be reasonably estimated at this point of time.

6

Highlights for the three-month period ended June 30, 2021 include:

 ● Revenues were $15.2 million, an increase of 186.8% from $5.3 million in the second quarter of 2020

 ● Gross profit was $7.9 million, an increase of 192.6% from $2.7 million in the second quarter of 2020

 ● Gross profit margin was 51.9%, compared to 50.7% in the second quarter of 2020

 ● Net income was $5.1 million, compared to $2.0 million in the second quarter of 2020

 ● Total volume shipped was 711,548 units, an increase of 145.6% from 289,668 units in the second quarter of 2020

Results of Operations

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

(in US Dollar millions, except percentage)	Three-Month Period Ended June 30,						Change			Six-Month Period Ended June 30,						Change
	2021			2020			%			2021			2020			%
Revenues	$	15.2		$	5.3			186.8	%	$	25.9		$	8.8			194.3	%
Cost of revenues		(7.3	)		(2.6	)		180.8	%		(12.9	)		(4.5	)		186.7	%
Gross profit		7.9			2.7			192.6	%		13.0			4.3			202.3	%
Total operating expenses		(1.0	)		(0.4	)		150.0	%		(4.7	)		(0.6	)		683.3	%
Operating income		6.9			2.3			200.0	%		8.3			3.7			124.3	%
Income before income taxes		7.0			2.3			204.3	%		16.6			3.8			336.8	%
Income tax expense		(1.9	)		(0.3	)		533.3	%		(3.2	)		(0.6	)		433.3	%
Net income	$	5.1		$	2.0			155.0	%	$	13.4		$	3.2			318.8	%

Results of Operations - Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020

Revenues

We generated revenue of $15.2 million for the three months ended June 30, 2021, an increase of $9.9 million, or 186.8%, compared to $5.3 million in the same period of last year. This was due to an increase of 145.6% in sales volume and of 18.0% in the average selling price of our products, and 9.7% positive impact from exchange rate due to appreciation of RMB against US dollars, compared with those of the same period of last year.

	For the Three-Month Period Ended June 30,
	2021					2020					Change		Change
	Amount		%			Amount		%			Amount		%
	(in US Dollar millions except percentage)
Revenue from sales to customers in PRC	$	9.8		64.5	%	$	3.2		60.4	%	$	6.6		206.3	%
Revenue from sales to customers overseas		5.4		35.5	%		2.1		39.6	%		3.3		157.1	%
Total Revenues	$	15.2		100	%	$	5.3		100	%	$	9.9		186.8	%

7

	For the Three-Month Period Ended June 30,
	2021					2020					Change		Change
	Unit		%			Unit		%			Unit		%
	(in UNIT, except percentage)
Units sold to customers in PRC		435,972		61.3	%		181,227		62.6	%		254,745		140.6	%
Units sold to customers overseas		275,576		38.7	%		108,441		37.4	%		167,135		154.1	%
Total Units Sold		711,548		100	%		289,668		100	%		421,880		145.6	%

(i) Domestic market

For the three months ended June 30, 2021, revenue from domestic market increased by $6.6 million or 206.3% as a combined result of: (i) an increase of 140.5% in sales volume, (ii) an increase of 21.3% in the average RMB selling price of our products, and (iii) a 9.7% positive impact from exchange rate due to appreciation of RMB against US dollars, compared with those of the same period of last year.

As for the RMB selling price, the increase of 21.3% was mainly due to the increased sales of new models of higher-end products such as touch screens used in gaming machines with higher selling prices in the domestic market during the three-month period ended June 30, 2021.

The weakening in macroeconomic conditions since the outbreak of COVID-19 pandemic in January 2020 continued to exacerbate the touch screen business environment. For the three months period ended June 30, 2020, the Company’s business was negatively impacted and has continued to generate lower revenues. Due to our proactive efforts to market new models such as POS touchscreens and penetrate into new customers and into new regions, our sales increased by 239.2% in East China, 168.6% in South China, and 129.8% in Southwest China for the second quarter ended June 30, 2021 as compared to that of last year.

(ii) Overseas market

For the three-month period ended June 30, 2021, revenue from overseas market was $5.4 million as compared to $2.1 million of the same period of 2020, increased by $3.3 million or 157.1% mainly due to an increase of 154.1% in sales volume and an increase of 4.8% in average selling price.

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

	Revenues For the Three-Month Period Ended June 30,
	2021					2020					Change		Change
	Amount		%			Amount		%			Amount		Margin%
	(in US Dollars, except percentage)
Product categories by end applications
Automotive Touchscreens	$	4,235,360		27.8	%	$	1,602,903		30.5	%	$	2,632,457		164.2	%
Industrial Control Computer Touchscreens		2,588,412		17.0	%		1,312,501		25.0	%		1,275,911		97.2	%
POS Touchscreens		2,484,880		16.3	%		58,124		1.1	%		2,426,756		4,175.1	%
Gaming Touchscreens		2,318,256		15.2	%		865,135		16.5	%		1,453,121		168.0	%
Medical Touchscreens		2,187,307		14.4	%		630,263		12.0	%		1,557,044		247.0	%
Multi-Functional Printer Touchscreens		1,416,425		9.3	%		785,693		14.9	%		630,732		80.3	%
Others*		4,245		0.0	%		1,441		0.0	%		2,804		194.6	%
Total Revenues	$	15,234,885		100.0	%	$	5,256,060		100.0	%	$	9,978,825		186.8	%

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

8

The Company continued to shift production mix from traditional lower-end products such as touchscreens used in automotive and industrial control computer industries to high-end products such as touchscreens used in self-service kiosks, medical touchscreens, ticket vending machine and financial terminals, primarily due to (i) greater growth potential of computer screen models in China and (ii) the stronger demand and better quality demand from consumers’ recognition of higher-end touch screens made with better raw materials.

Gross Profit and Gross Profit Margin

	Three-Month Period Ended June 30,						Change
(in millions, except percentage)	2021			2020			Amount		%
Gross Profit	$	7.9		$	2.7		$	5.2		192.6	%
Gross Profit Margin		51.9	%		50.7	%				1.2	%

Gross profit was $7.9 million in the second quarter ended June 30, 2021, compared to $2.7 million in the same period of 2020. Our gross profit margin increased to 51.9% for the second quarter ended June 30, 2021 as compared to 50.7% for the same period of 2020, primarily due to product mix shift to higher gross profit margin products such as POS touchscreens, gaming touchscreens, industrial control computer touchscreens and medical touchscreens.

General and Administrative Expenses

	Three-Month Period Ended June 30,						Change
(in millions, except percentage)	2021			2020			Amount		%
General and Administrative Expenses	$	0.8		$	0.4		$	0.4		100.0	%
as a percentage of revenues		5.3	%		7.5	%				(2.2	)%

General and administrative (G&A) expenses were $0.8 million for the quarter ended June 30, 2021, compared to $0.4 million in the same period in 2020, representing an increase of 100.0%, or $0.4 million. The increase was primarily due to the increase of $0.4 million loss of VAT input credits due to Sichuan Wetouch ceasing operation and relocation to comply with local PRC government guidelines on local environment issues and the national overall plan. See Note 4 to our Condensed Consolidated Financial Statements (unaudited).

9

Research and Development Expenses

	Three-Month Period Ended June 30,						Change
(in US dollars, except percentage)	2021			2020			Amount		%
Research and Development Expenses	$	22,588		$	17,957		$	4,631		25.8	%
as a percentage of revenues		0.0	%		0.0	%				0.0	%

Research and development (R&D) expenses were $22,588 for the quarter ended June 30, 2021 compared to $17,957 in the same period in 2020, representing an increase of $4,631 of material consumption.

Operating Income

Total operating income was $6.9 million for the second quarter ended quarter ended June 30, 2021 as compared to $2.3 million for the same period of last year, due to higher gross profit, offset by the higher operating expenses.

Income Taxes

	Three-Month Period Ended June 30,						Change
(in millions, except percentage)	2021			2020			Amount			%
Income before Income Taxes	$	7.0		$	2.3		$	4.7			204.3	%
Income Tax (Expense)		(1.9	)		(0.3	)		(1.6	)		533.3	%
Effective income tax rate		27.1	%		14.9	%					12.2	%

The effective income tax rates for the three-month periods ended June 30, 2021 and 2020 were 27.1% and 14.9%, respectively. The increase of the effective income tax rate was partially due to the increase of $0.6 million income tax clearance for Sichuan Wetouch for the year ended 2020.

Net Income

As a result of the above factors, we had a net income of $5.1 million in the second quarter of 2021 compared to a net income of $2.0 million in the same quarter of 2020.

Results of Operations - Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Revenues

We generated revenue of $25.9 million for the six months ended June 30, 2021, an increase of $17.1 million, or 194.3%, compared to $8.8 million in the same period of last year. This was due to an increase of 158.1% in sales volume and of 22.7% in the average selling price of our products, and 8.0% positive impact from exchange rate due to appreciation of RMB against US dollars, compared with those of the same period of last year.

	For the Six-Month Period Ended June 30,
	2021					2020					Change		Change
	Amount		%			Amount		%			Amount		%
	(in US Dollar millions except percentage)
Revenue from sales to customers in PRC	$	16.9		65.3	%	$	5.6		63.6	%	$	11.3		201.8	%
Revenue from sales to customers overseas		9.0		34.7	%		3.2		36.4	%		5.8		181.3	%
Total Revenues	$	25.9		100	%	$	8.8		100	%	$	17.1		194.3	%

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	For the Six-Month Period Ended June 30,
	2021					2020					Change		Change
	Unit		%			Unit		%			Unit		%
	(in UNIT, except percentage)
Units sold to customers in PRC		753,385		62.2	%		298,274		63.6	%		455,111		152.6	%
Units sold to customers overseas		457,959		37.8	%		170,986		36.4	%		286,973		167.8	%
Total Units Sold		1,211344		100	%		469,260		100	%		742,084		158.1	%

(i) Domestic market

For the six months ended June 30, 2021, revenue from domestic market increased by $11.3 million or 201.8% as a combined result of: (i) an increase of 152.6% in sales volume, (ii) an increase of 12.5% in the average RMB selling price of our products, and (iii) an 8.0% positive impact from exchange rate due to appreciation of RMB against US dollars, compared with those of the same period of last year.

As for the RMB selling price, the increase of 12.5% was mainly due to the increased sales of new models of higher-end products such as touch screens used in gaming machines with higher selling prices in the domestic market during the six-month period ended June 30, 2021.

The weakening in macroeconomic conditions since the outbreak of COVID-19 pandemic in January 2020 continued to exacerbate touch screen business environment. The Company’s business was negatively impacted and has continued to generate lower revenues during the six months ended June 30, 2020. The Company has taken proactive efforts to market new models such as POS touchscreens and penetrate into new customers and into new regions. Our sales increased by 209.0% in South China, 187.5% in East China, 164.8% in Southwest China, and 165.3% in North China.

(ii) Overseas market

For the six-month period ended June 30, 2021, revenue from overseas market was $9.0 million as compared to $3.2 million of the same period of 2020, increased by $5.8 million or 181.3% mainly due to an increase of 167.8% in sales volume and an increase of 4.0% in the average selling price of our products.

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

	Revenues For the Six-Month Period Ended June 30,
	2021					2020					Change		Change
	Amount		%			Amount		%			Amount		Margin%
	(in US Dollars, except percentage)
Product categories by end applications
Automotive Touchscreens	$	7,755,001		29.9	%	$	2,586,470		29.6	%	$	5,168,531		199.9	%
Industrial Control Computer Touchscreens		4,823,587		18.6	%		2,115,458		24.1	%		2,708,129		128.0	%
Gaming Touchscreens		3,892,571		15.0	%		1,493,507		17.0	%		2,399,064		160.3	%
POS Touchscreens		3,644,686		14.0	%		647,176		7.4	%		2,997,510		463.2	%
Medical Touchscreens		3,403,889		13.1	%		849,644		9.7	%		2,554,245		300.6	%
Multi-Functional Printer Touchscreens		2,333,457		9.0	%		1,064,347		12.1	%		1,269,110		119.2	%
Others*		94,998		0.4	%		8,550		0.1	%		86,448		1,011.1	%
Total Revenues	$	25,948,189		100.0	%	$	8,765,152		100.0	%	$	17,183,037		194.3	%

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

11

The Company continued to shift production mix from traditional lower-end products such as touchscreens used in automotive and industrial control computer industries to high-end products such as touchscreens used in self-service kiosks, medical touchscreens, ticket vending machine and financial terminals, primarily due to (i) greater growth potential of computer screen models in China and (ii) the stronger demand and better quality demand from consumers’ recognition of higher-end touch screens made with better raw materials.

Gross Profit and Gross Profit Margin

	Six-Month Period Ended June 30,						Change
(in millions, except percentage)	2021			2020			Amount		%
Gross Profit	$	13.0		$	4.3		$	8.7		202.3	%
Gross Profit Margin		50.5	%		49.1	%				1.4	%

Gross profit was $13.0 million during the six-month period ended June 30, 2021, compared to $4.3 million in the same period of 2020. Our gross profit margin increased to 50.5% for the six-month period ended June 30, 2021 as compared to 49.1% for the same period of 2020, primarily due to product mix shift to higher gross profit margin products such as POS touchscreens, gaming touchscreens, and industrial control computer touchscreens.

General and Administrative Expenses

	Six-Month Period Ended June 30,						Change
(in millions, except percentage)	2021			2020			Amount		%
General and Administrative Expenses	$	1.3		$	0.6		$	0.7		116.7	%
as a percentage of revenues		5.0	%		6.8	%				(1.8	)%

General and administrative (G&A) expenses were $1.3 million for the six-month period ended June 30, 2021, compared to $0.6 million in the same period in 2020, representing an increase of 116.7%, or $0.7 million. The increase was primarily due to (i) the increase of $0.4 million loss of VAT input credits due to Sichuan Wetouch ceasing operation and relocation to comply with local PRC government guidelines on local environment issues and the national overall plan (see Note 4 of our Condensed Consolidated Financial Statements (unaudited)), and (ii) the increase of $0.1 million accelerated amortization expense due to Sichuan Wetouch ceasing operation and relocation to comply with local PRC government guidelines on local environment issues and the national overall plan (see Note 4 of our Condensed Consolidated Financial Statements (unaudited)), and (iii) the increase of $0.1 million in miscellaneous expenses.

Research and Development Expenses

	Six-Month Period Ended June 30,						Change
(in US dollars, except percentage)	2021			2020			Amount		%
Research and Development Expenses	$	44,768		$	33,299		$	11,469		34.4	%
as a percentage of revenues		0.0	%		0.0	%				0.0	%

Research and development (R&D) expenses were $44,768 for the six-month period ended June 30, 2021 compared to $33,299 in the same period in 2020, representing an increase of $11,469 mainly due to the increase of salary expenses.

Share-based Compensation

	Six-Month Period Ended June 30,						Change
(in millions, except percentage)	2021			2020			Amount		%
Share-based compensation	$	3.1		$	0.0		$	3.1		0.0	%
as a percentage of revenues		12.0	%		0.0	%				12.0	%

12

Share-based compensation was $3.1 million for the six-month period ended June 30, 2021 compared to nil in the same period in 2020. On January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 310,830 shares and 631,080 warrants to Ascendant Global Advisors, Inc. for advisory services that had been rendered. The Company recognized relevant share-based compensation expense of $1,041,281 for the vested shares and $2,107,825 for the warrants.

Operating Income

Total operating income was $8.3 million for the six-month period ended June 30, 202 as compared to $3.7 million of the same period of last year due to higher gross profit offset by the higher G&A expenses and share-based compensation expenses.

Gain on Asset Disposal

	Six-Month Period Ended June 30,						Change
(in millions, except percentage)	2021			2020			Amount		%
Gain on asset disposal	$	7.6		$	0.0		$	7.6		0.0	%
as a percentage of revenues		29.3	%		0.0	%				29.3	%

Gain on asset disposal was $7.6 million for the six-month period ended June 30, 2021 compared to nil in the same period in 2020. Pursuant to local PRC government guidelines on local environment 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 18, 2021, pursuant to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received compensation of RMB115.2 million ($17.8 million) (“Compensation Funds”) for the withdrawal of the right to use of state-owned land and the demolition of all buildings, facilities, equipment and all other appurtenances on the land. During the six-month period ended June 30, 2021, the Company recorded a gain of $7,625,165 for the asset disposal.

Income Taxes

	Six-Month Period Ended June 30,						Change
(in millions, except percentage)	2021			2020			Amount			%
Income before Income Taxes	$	16.6		$	3.8		$	12.8			336.8	%
Income Tax (Expense)		(3.2	)		(0.6	)		(2.6	)		433.3	%
Effective income tax rate		19.2	%		15.8	%					(1.1	)%

The effective income tax rates for the six-month periods ended June 30, 2021 and 2020 were 19.2% and 15.8%, respectively. The effective income tax rate for the six-month period ended June 30, 2021 differs from the PRC statutory income tax rate of 25% primarily due to Sichuan Wetouch’s preferential income tax rate.

Our PRC subsidiary Sichuan Vtouch had $52.6 million of cash and cash equivalents as of June 30, 2021, 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.

13

Net Income

As a result of the above factors, we had a net income of $13.4 million in the six-month period ended June 30, 2021 compared to a net income of $3.2 million in the same period of 2020.

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 June 30, 2021, we had current assets of $64.6 million, consisting of $52.6 million in cash, $11.6 million in accounts receivable, $0.3 million in inventories, and 28,265 in prepaid expenses other current assets. Our current liabilities as of June 30, 2021, were $3.1 million, which is comprised of $1.8 million in income tax payable, $0.8 in accounts payable, and $0.5 million in accrued expenses and other current liabilities.

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities for the six- month period ended June 30, 2021 and 2020:

	Six-Month Period Ended June 30,
(in US Dollar millions)	2021			2020
Net cash provided by operating activities	$	11.1		$	5.5
Net cash provided by investing activities		17.8			-
Net cash used in financing activities		-			(0.4	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(0.3	)		(0.2	)
Net increase in cash and cash equivalents		28.6			4.9
Cash and cash equivalents at the beginning of period		24.0			14.3
Cash and cash equivalents at the end of period	$	52.6		$	19.2

Operating Activities

Net cash provided by operating activities was $11.1 million for the six-month period ended June 30, 2021, as compared to $5.5 million provided by operating activities for the same period of last year, primarily due to (i) the increase of $10.2 million net income for the six-month period ended June 30, 2021 as compared to the same period of 2020, (ii) the increase of $3.1 million of share-based compensation, (ii) the increase of $2.0 million income tax payable due to income tax clearance for Sichuan Wetouch during the six-month period ended June 30, 2021, partially offset by (iv) the decrease of $7.6 million gain on asset disposal for the six-month period ended June 30, 2021, (v) the decrease of $1.6 million of accounts receivable due to Sichuan Wetouch settling customer receivables for the six-month period ended June 30, 2021 and (vi) the increase of 0.6 million of deferred income due to Sichuan Wetouch write-off government grant in the operating ceasing process for the six-month period ended June 30, 2021, as compared to the same period of 2020.

Investing Activities

There were $17.8 million proceeds from asset disposal for Sichuan Wetouch for the six-month period ended June 30, 2021. See Note 4 of our Condensed Consolidated Financial Statements.

Financing Activities

There was a $0.4 million payment of bank borrowing for the six-month period ended June 30, 2020.

14

As of June 30, 2021, our cash and cash equivalents were $52.6 million, as compared to $24.0 million at December 31, 2020.

Days Sales Outstanding (“DSO”) has decreased to 82 days for the six-month period ended June 30, 2021 from 161 days for the year ended December 31, 2020 as a result of Sichuan Wetouch settling all accounts receivable collection from customers.

The following table provides an analysis of the aging of accounts receivable as of June 30, 2021 and December 31, 2020:

	June 30, 2021		December 31, 2020
-Current	$	1,977,273	$	3,531,963
-1-3 months past due		8,752,438		8,136,340
-4-6 months past due		860,959		123,581
7-12 months past due		-		160,844
-greater than 1 year past due		-		49,726
Total accounts receivable	$	11,590,670	$	12,002,454

The majority of the Company’s revenues and expenses were denominated primarily in Renminbi (“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.

Our industry typical payment term is 180 days. Accounts receivable are written off against the allowances only after exhaustive collection efforts. There was a stalled collection activities during February and March 2020, during which most businesses except essential services were operated.

Based on past performance and current expectations, we believe our cash and cash equivalents provided by operating activities and financing activities will satisfy our working capital needs, capital expenditures and other liquidity requirements associated with our operations for at least the next 12 months.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable because we are a smaller reporting company.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

15

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 of the end of the period covered by this report. Based upon that evaluation and subject to the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective as of June 30, 2021 due to the material weaknesses in internal control over financial reporting described below. Because of our limited operations, we have a limited number of employees which prohibits a segregation of duties. In addition, we lack a formal audit committee with a financial expert. As we grow and expand our operations we will engage additional employees and experts as needed. However, there can be no assurance that our operations will expand.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter ended June 30, 2021 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. 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.

ITEM 1A. RISK FACTORS.

Not required for smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Exhibit No.	Description
31.1	Certification of Principal Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certifications of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certifications of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

16

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	WETOUCH TECHNOLOGY INC.
Date: August 10, 2021	By:	/s/ Zongyi Lian
	Name:	Zongyi Lian
	Title:	President and Chief Executive Officer (Principal Executive Officer)
Date: August 10, 2021	By:	/s/ Yuhua Huang
	Name:	Yuhua Huang
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

17

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

OF REGISTRANT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(RULE 13a-14(a) or 15d-14(a) OF THE EXCHANGE ACT)

I, Zongyi Lian, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Wetouch Technology Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 10, 2021	By:	/s/ Zongyi Lian
	Name:	Zongyi Lian
	Title:	Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

OF REGISTRANT PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

(RULE 13a-14(a) or 15d-14(a) OF THE EXCHANGE ACT)

I, Yuhua Huang, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Wetouch Technology Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly for the period in which this quarterly report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: August 10, 2021	By:	/s/ Yuhua Huang
	Name:	Yuhua Huang
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of Wetouch Technology Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: August 10, 2021	By:	/s/ Zongyi Lian
	Name:	Zongyi Lian
	Title:	Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

In connection with this quarterly report on Form 10-Q of Wetouch Technology Inc. (the “Company”) as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: August 10, 2021	By:	/s/ Yuhua Huang
	Name:	Yuhua Huang
	Title:	Chief Financial Officer
		(Principal Financial and Accounting Officer)

XML

Cover - shares	6 Months Ended
	Jun. 30, 2021	Aug. 10, 2021
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2021
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2021
Current Fiscal Year End Date	--12-31
Entity File Number	000-56215
Entity Registrant Name	WETOUCH TECHNOLOGY INC.
Entity Central Index Key	0001826660
Entity Tax Identification Number	20-4080330
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	No. 29, Third Main Avenue
Entity Address, Address Line Two	Shigao Town, Renshou County
Entity Address, Address Line Three	Meishan
Entity Address, City or Town	Sichuan
Entity Address, Country	CN
Entity Address, Postal Zip Code	620500
City Area Code	86
Local Phone Number	028-37390666
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		31,811,523

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
CURRENT ASSETS
Cash	$ 52,594,357	$ 23,963,861
Accounts receivable, net	11,590,670	11,926,835
Inventories	341,549	402,050
Due from related parties		76,619
Prepaid expenses and other current assets	28,265	228,443
TOTAL CURRENT ASSETS	64,554,841	36,597,808
Property, plant and equipment, net	45,350	9,491,195
Intangible assets, net		974,696
TOTAL ASSETS	64,600,191	47,063,699
CURRENT LIABILITIES
Accounts payable	770,649	891,848
Amount due to related parties		529,060
Income tax payable	1,822,258	107,137
Accrued expenses and other current liabilities	543,467	503,455
Deferred grants		245,211
TOTAL CURRENT LIABILITIES	3,136,374	2,276,711
Deferred grants-non current		433,206
TOTAL LIABILITIES	3,136,374	2,709,917
COMMITMENTS AND CONTINGENCIES STOCKHOLDERS’ EQUITY
Common stock, $0.001 par value, 300,000,000 shares authorized, 31,811,523 and 31,500,693 issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	31,812	31,501
Additional paid in capital	4,221,727	1,072,932
Statutory reserve	3,062,159	3,062,159
Retained earnings	52,552,950	39,229,282
Accumulated other comprehensive income	1,595,169	957,908
TOTAL STOCKHOLDERS’ EQUITY	61,463,817	44,353,782
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 64,600,191	$ 47,063,699

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	31,811,523	31,500,693
Common stock, shares outstanding	31,811,523	31,500,693

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Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($)		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
REVENUES
Revenue from customers		$ 15,234,885	$ 5,256,060	$ 25,850,636	$ 8,765,152
Revenues from related parties				97,553
Total Revenues		15,234,885	5,256,060	25,948,189	8,765,152
COST OF REVENUES		(7,334,722)	(2,591,100)	(12,906,528)	(4,463,883)
GROSS PROFIT		7,900,163	2,664,960	13,041,661	4,301,269
OPERATING EXPENSES
Selling expenses		(125,574)	(26,227)	(213,397)	(44,932)
General and administrative expenses		(812,166)	(351,660)	(1,320,582)	(559,937)
Research and development expenses		(22,588)	(17,957)	(44,768)	(33,299)
Share-based compensation				(3,149,106)
OPERATING EXPENSES		(960,328)	(395,844)	(4,727,853)	(638,168)
INCOME FROM OPERATIONS		6,939,835	2,269,116	8,313,808	3,663,101
Interest income		13,375	19,992	35,386	39,609
Interest expense			(2,924)		(5,893)
Government grant		1,229	56,335	692,942	127,983
Gain on asset disposal				7,625,165
TOTAL OTHER INCOME		14,604	73,403	8,353,493	161,699
INCOME BEFORE INCOME TAX EXPENSE		6,954,439	2,342,519	16,667,301	3,824,800
INCOME TAX EXPENSE		(1,887,339)	(349,043)	(3,238,952)	(571,830)
NET INCOME		5,067,100	1,993,476	13,428,349	3,252,970
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation adjustment		809,779	72,252	532,580	(478,166)
COMPREHENSIVE INCOME		$ 5,876,879	$ 2,065,728	$ 13,960,929	$ 2,774,804
EARNINGS PER COMMON SHARE
Basic		$ 0.2	$ 0.1	$ 0.42	$ 0.12
Diluted		$ 0.2	$ 0.1	$ 0.42	$ 0.12
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Basic*	[1]	31,811,523	28,000,000	31,811,523	28,000,000
Diluted*	[1]	32,653,163	28,000,000	32,653,163	28,000,000

[1] Retrospectively restated for effect of recapitalization, see Note 1

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Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) - USD ($)		Common Stock [Member]	Additional Paid-in Capital [Member]	Statutory Reserve [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Beginning balance, value at Dec. 31, 2019	[1]	$ 28,000	$ 14,034	$ 2,003,569	$ 31,357,494	$ (1,734,988)	$ 31,668,109
Beginning balance, shares at Dec. 31, 2019	[1]	28,000,000
Net income					3,252,970		3,252,970
Foreign currency translation adjustment						(478,166)	(478,166)
Ending balance, value at Jun. 30, 2020		$ 28,000	14,034	2,003,569	34,610,464	(2,213,154)	34,442,913
Ending balance, shares at Jun. 30, 2020		28,000,000
Beginning balance, value at Mar. 31, 2020	[2]	$ 28,000	14,034	2,003,569	32,616,988	(2,285,406)	32,377,185
Beginning balance, shares at Mar. 31, 2020	[2]	28,000,000
Net income					1,993,476		1,993,476
Foreign currency translation adjustment						72,252	72,252
Ending balance, value at Jun. 30, 2020		$ 28,000	14,034	2,003,569	34,610,464	(2,213,154)	34,442,913
Ending balance, shares at Jun. 30, 2020		28,000,000
Beginning balance, value at Dec. 31, 2020		$ 31,501	1,072,932	3,062,159	39,229,282	957,908	44,353,782
Beginning balance, shares at Dec. 31, 2020		31,500,693
Share-based compensation		$ 311	3,148,795				3,149,106
Share-based compensation, shares		310,830
Net income					13,428,349		13,428,349
Foreign currency translation adjustment						532,580	532,580
Ending balance, value at Jun. 30, 2021		$ 31,812	4,221,727	3,062,159	52,657,631	1,490,488	61,463,817
Ending balance, shares at Jun. 30, 2021		31,811,523
Beginning balance, value at Mar. 31, 2021		$ 31,812	4,221,727	3,062,159	47,590,531	680,709	55,586,938
Beginning balance, shares at Mar. 31, 2021		31,811,523
Net income					5,067,100		5,067,100
Foreign currency translation adjustment						809,779	809,779
Ending balance, value at Jun. 30, 2021		$ 31,812	$ 4,221,727	$ 3,062,159	$ 52,657,631	$ 1,490,488	$ 61,463,817
Ending balance, shares at Jun. 30, 2021		31,811,523

[1] Retrospectively restated for effect of recapitalization, see Note 1

[2] Retrospectively restated for effect of recapitalization, see Note 1

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities
Net income	$ 13,428,349	$ 3,252,970
Adjustments to reconcile net income to cash provided by operating activities
Bad debts reversal	(76,260)
Depreciation and amortization	374,505	509,934
Share-based compensation	3,149,106
Loss of input VAT credits	354,991
Gain on asset disposal	(7,625,165)
Changes in operating assets and liabilities:
Accounts receivable	1,286,124	2,840,257
Amounts due from related parties	83,531	(43,747)
Inventories	89,850	(14,763)
Prepaid expenses and other current assets	216,506	(199,125)
Accounts payable	(186,330)	(10,788)
Amounts due to related parties	(566,737)	(230,879)
Income Tax payable	1,703,667	(289,117)
Accrued expenses and other current liabilities	(351,972)	(111,683)
Deferred grants	(726,730)	(113,762)
Net cash provided by operating activities	11,153,435	5,589,297
Cash flows from investing activities
Purchase of property, plant and equipment	(45,255)
Proceeds from assets disposal	17,804,769
Net cash provided by investing activities	17,759,514
Cash flows from financing activities
Repayment of bank borrowings		(426,609)
Net cash used in financing activities		(426,609)
Effect of changes of foreign exchange rates on cash	(282,453)	(233,061)
Net increase in cash	28,630,496	4,929,627
Cash, beginning of period	23,963,861	14,279,797
Cash, end of period	52,594,357	19,209,424
Supplemental disclosure of cash flow information
Cash paid for interest expense		42,661
Cash paid for income tax	$ 1,521,333	$ 860,947

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BUSINESS DESCRIPTION

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS DESCRIPTION

NOTE 1 — BUSINESS DESCRIPTION

Business

Wetouch Technology Inc. (“Wetouch”, or the “Company”, or “we”), is a holding company that is incorporated in Nevada, United States. Through a reverse merger and a series of transactions, Wetouch acquired 100% equity interest of Sichuan Wetouch Technology Co., Ltd. (“Sichuan Wetouch”).

For accounting purpose, the acquisition was accounted for as a reverse acquisition with Wetouch (the legal acquirer) identified as the accounting acquiree and Sichuan Wetouch (the legal acquiree) identified as the accounting acquirer. Sichuan Wetouch is a limited liability company established under the laws of the People’s Republic of China (“PRC”).

Wetouch, through its subsidiaries, is primarily engaged in the business of research, development, manufacture, and distribution of touchscreen displays to customers both in PRC and overseas through its subsidiaries. The touchscreen products, which are manufactured by the Company, are primarily for use in the computer components.

The Company’s operations are primarily conducted through its subsidiaries in the PRC. The Company’s other subsidiaries in the British Virgin Islands (“BVI”) and Hong Kong do not have significant operations.

Restructuring

Wetouch Holding Group Limited (“BVI Wetouch”) is the sole stockholder of Hong Kong Wetouch Electronics Technology Limited (“Hong Kong Wetouch”) and Hong Kong Wetouch Technology Limited (“HK Wetouch”).

Pursuant 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 December 30, 2020, Sichuan Vtouch Technology Co., Ltd. (“Sichuan Vtouch”) was incorporated in Chengdu, Sichuan, under the laws of the People’s Republic of China in order to take over the operating business of Sichuan Wetouch, with HK Wetouch as its sole shareholder.

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.

On June 18, 2021, Hong Kong Wetouch started its dissolution process pursuant to the minutes of its special shareholder meeting.

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

Note 2 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the United States Securities and Exchange Commission (“SEC”). The condensed consolidated balance sheet as of December 31, 2020 was derived from the audited consolidated financial statements of Wetouch. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended.

In the opinion of the management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of June 30, 2021, the results of operations and cash flows for the six-month periods ended June 30, 2021 and 2020 have been made. However, the results of operations included in such financial statements may not necessary be indicative of annual results.

Use of Estimates

The preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

On an ongoing basis, management evaluates the Company’s estimates, including those related to the bad debt allowance, fair values of financial instruments, intangible assets and property and equipment, income taxes, and contingent liabilities, among others. The Company bases its estimates on assumptions, both historical and forward looking, that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Significant Accounting Policies

For a detailed discussion about Wetouch’s significant accounting policies, refer to Note 2 — “Summary of Significant Accounting Policies,” in Wetouch’s consolidated financial statements included in the Company’s 2020 audited consolidated financial statements. During the three-month and six-month periods ended June 30, 2021, there were no significant changes made to Wetouch significant accounting policies.

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ACCOUNTS RECEIVABLE

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

ACCOUNTS RECEIVABLE

NOTE-3- ACCOUNTS RECEIVABLE

Accounts receivable consists of the following:

	June 30, 2021		December 31 2020
Accounts receivable	$	11,590,670	$	12,002,454
Allowance for doubtful accounts		-		(75,619	)
Accounts receivable, net	$	11,590,670	$	11,926,835

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

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PROPERTY, PLANT AND EQUIPMENT, NET

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

PROPERTY, PLANT AND EQUIPMENT, NET

NOTE 4 — PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net, consists of the following:

	June 30, 2021		December 31, 2020
Buildings	$	-	$	10,330,767
Machinery, equipment and furniture		45,350		5,830,470
Subtotal		45,350		16,161,237
Less: accumulated depreciation		-		(6,670,042	)
Property, plant and equipment, net	$	45,350	$	9,491,195

Depreciation expense was nil and $238,710 for the three-month period ended June 30, 2021 and 2020, respectively, and $260,943 and $481,116 six-month period ended June 30, 2021 and 2020, respectively.

Pursuant to local PRC government guidelines on local environment 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 18, 2021, pursuant to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received compensation of RMB115.2 million ($17.8 million) (“Compensation Funds”) for the withdrawal of the right to use of state-owned land and the demolition of all buildings, facilities, equipment and all other appurtenances on the land. During the six-month period ended June 30, 2021, the Company recorded a gain of $7,625,165 for the asset disposal including intangible assets.

On March 16, 2021, in order to minimize interruption of our business, Sichuan Vtouch entered into a leasing agreement with Sichuan Renshou Shigao Tianfu Investment Co., Ltd., a limited company owned by the local government, to lease the property and all buildings, facilities and equipment thereon (“Demised Properties) of Sichuan Wetouch, commencing from April 1, 2021 until December 31, 2021, at a monthly rent of RMB300,000 ($46,366) for the use of the Demised Properties.

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INTANGIBLE ASSETS, NET

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS, NET

NOTE 5 – INTANGIBLE ASSETS, NET

Intangible assets, net mainly consist of the following:

	June 30, 2021		December 31, 2020
Land use rights	$	-	$	1,016,215
Patents		-		417,919
Subtotal		-		1,434,134
Less: accumulated amortization for patents		-		(310,393	)
Accumulated amortization for land use right		-		(149,045	)
Subtotal		-		(459,438	)
Intangible assets, net	$	-	$	974,696

Amortization expense was nil and $14,295 for the three-month period ended June 30, 2021 and 2020, respectively, and $113,562 and $28,818 for the six-month period ended June 30, 2021 and 2020, respectively. The Company accelerated the amortization expense for the three-month period ended March 31, 2021 due to the relocation pursuit to the Compensation Fund agreement with the local government. See Note 4. As the Company plans to deregister Sichuan Wetouch and the newly set up Sichuan Vtouch will use new techniques with new equipment, the Company estimates no remaining useful life for the existing patents.

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 6 – RELATED PARTY TRANSACTIONS

The related party transactions are summarized as follows:

	Three-Month Period Ended June 30,				Six-Month Period Ended June 30,
	2021		2020		2021		2020
	US$		US$		US$		US$
Revenues resulting from related parties:
Sales to Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”)	$	-	$	-	$	10,451	$	-
Sales to Meishan Vtouch Electronics Technology Co., Ltd. (Meishan Wetouch)		-		-		87,102		-
Total Revenue	$	-	$	-	$	97,553	$	-

The Company sells capacitive touchscreens to Chengdu Wetouch and Meishan Wetouch from time to time. There are no written agreements between the Company and Meishan Wetouch. Mr. Guangde Cai, Chairman and director of the Company and our indirect majority shareholder, owns 94% and 95% of Chengdu Wetouch and Meishan Wetouch, respectively.

Amounts due from related parties are as follows:

Amounts due from related parties	Relationship	June 30, 2021		December 31, 2020		Note
Vision Touch Technology AG	100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch	$	-	$	76,619	Operating expense paid on behalf of the related party/Company

Amounts due to related parties are as follows:

	Relationship	June 30, 2021		December 31, 2020		Note
Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”)	94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li	$	-	$	134,616	Operating expense paid on behalf of the Company
Meishan Vtouch Electronics Technology Co., Ltd.	95% owned by Mr. Guangde Cai and 5% by Chengdu Wetouch		-		68,402	Operating expense paid on behalf of the Company
Chengdu Vtouch Intelligence Science & Technology Co., Ltd.	100% owned by HK Vtouch Holding Group Co., Ltd.		-		-	Operating expenses paid on behalf of the Company
Mr. Guangde Cai	Chairman and CEO of the Company		-		326,042	Payable to employee
Total		$	-	$	529,060

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INCOME TAXES

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 7 - INCOME TAXES

Wetouch

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

BVI Wetouch

Under the current laws of the British Virgin Islands, BVI Wetouch, 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 incorporated in Hong Kong and is subject to profit taxes in Hong Kong at a progressive rate of 16.5%.

PRC

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, which 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 preferential tax treatment High and New Technology Enterprises (“HNTEs”), which entitled it to a reduced income tax rate of 15% beginning October 21, 2020 until October 20, 2023.

Sichuan Vtouch is entitled to 25% of income tax rate.

The effective income tax rates for the six-month periods ended June 30, 2021 and 2020 were 19.4% and 15.0%, respectively. The effective income tax rate for the six-month period ended June 30, 2021 differs from the PRC statutory income tax rate of 25% primarily due to Sichuan Wetouch’s preferential income tax rate.

The estimated effective income tax rate for the year ended December 31, 2021 would be similar to actual effective tax rate of the six-month periods ended June 30, 2021.

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

6 Months Ended

Jun. 30, 2021

Payables and Accruals [Abstract]

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

NOTE 8- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	June 30, 2021		December 31, 2020
Advance from customers	$	169,040	$	9,493
Accrued payroll and employee benefits		97,036		105,801
Other tax payable (i)		277,098		325,719
Others (ii)		293		62,442
Accrued expenses and other current liabilities	$	543,467	$	503,455

(i) Other tax payables are mainly value added tax payable.

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

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DEFERRED GRANTS

6 Months Ended

Jun. 30, 2021

Deferred Grants

DEFERRED GRANTS

NOTE 9- DEFERRED GRANTS

On January 14, 2013 and January 27, 2014, Sichuan Wetouch received RMB11.2 million (equivalent to US$1.8 million) and RMB4.8 million (equivalent to US$0.8 million) government subsidies, respectively, from Sichuan Provincial Government in supporting the initial set-up and construction of its production facility. The Company completed the construction of the plant in June 2013 and there were no other unfulfilled conditions and/or other contingencies attaching to government assistance which has been recognized as income.

Since the funding is related to the construction of long-term assets, the amounts were recognized as government grant, which is included in deferred grants on the consolidated balance sheets, and to be recognized as other income in the consolidated statements of comprehensive income (loss) over the periods and in the proportions in which depreciation expense on the long-term assets is recognized.

During the six-month period ended June 30, 2021, the Company recognized the remaining balance of deferred grant as income due to the government directed relocation order disclosed in Note 4.

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SHARE BASED COMPENSATION

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

SHARE BASED COMPENSATION

NOTE 10- SHARE BASED COMPENSATION

As of June 30, 2021, the Company had 841,440 warrants outstanding with i) weighted average exercise price of $0.01; ii) weighted average remaining contractual life of 4.45 years; and iii) aggregate intrinsic value of $3.4 million.

On January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 310,830 shares and 631,080 warrants to a third party service provider for consulting services that had been rendered. The five-year warrants are exercisable at one cent per share.

The Company awards common stock and stock options to employees, consultants, and directors as compensation for their services, and accounts for its stock option awards to employees, consultants, and directors pursuant to the provisions of ASC 718, Stock Compensation. The fair value of each option award is estimated on the date of grant using the Black-Scholes Merton valuation model. The Company recognizes the fair value of each option as compensation expense ratably using the straight-line attribution method over the service period, which is generally the vesting period.

The 310,830 shares of common stock and 631,080 warrants were vested on January 1, 2021 and no warrants were exercised. The fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses. The fair value of the Black-Scholes model includes the following assumptions: expected life of 2.5 years, expected dividend rate of 0%, volatility of 51.3% and an average interest rate of 0.12%.

For the three-month periods and six-month periods ended June 30, 2021, the Company recognized relevant share-based compensation expense of nil and $1,041,281 for the vested shares, and nil and $2,107,825 for the warrants, respectively.

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RISKS AND UNCERTAINTIES

6 Months Ended

Jun. 30, 2021

Risks and Uncertainties [Abstract]

RISKS AND UNCERTAINTIES

NOTE 11- 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 RMB500,000.

Interest Rate Risk – The Company is exposed to the risk arising from changing interest rates, which may affect the ability of repayment of existing debts and viability of securing future debt instruments within the PRC.

Currency Risk - A majority of the Company’s revenue and expense transactions are denominated in RMB and a significant portion of the Company’s assets and liabilities are denominated in RMB. RMB is not freely convertible into foreign currencies. In the PRC, certain foreign exchange transactions are required by law to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (“PBOC”). Remittances in currencies other than RMB by the Company in China must be processed through the PBOC or other China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.

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

	June 30, 2021	December 31, 2020
Year-end spot rate	US$1=RMB 6.4566	US$1=RMB 6.5250
Average rate	US$1=RMB 6.4702	US$1=RMB 6.9042

And average rate for June 30, 2021 is US$1=RMB6.4702

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 (Refer to Note 12). Sales to customers individually exceeded 10% of the Company’s revenues for the three and six month periods ended March 31, 2021 and 2020, are as follows:

For the three-month periods ended June 30, 2021 and 2020, five customers accounted for 18.6%, 18.3%, 15.6%, 15.1% and 11.6%, and five customers accounted for 17.9%, 15.6%, 15.4%, 12.6% and 11.2%, respectively, of the Company’s revenue.

For the six-month periods ended June 30, 2021 and 2020, five customers accounted for 18.4%, 17.9%, 14.9%, 13.6% and 11.5%, and five customers accounted for 17.4%, 16.7%, 16.0%, 11.5% and 11.0%, respectively, of the Company’s revenue.

And the Company’s top ten customers aggregately accounted for 98.2 and 98.5 % of the total revenue for the three-month periods ended June 30, 2021 and 2020, and 97.0% and 64.7% for the six-month periods ended June 30, 2021 and 2020.

As of June 30, 2021 and December 31, 2020, seven customers accounted for 99.8%, and four customers accounted for 96.4% 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 26.4% (two suppliers) and 25.7% (two supplier) for the three-month periods, respectively, 26.4% (two suppliers) and 35.0% (three suppliers) for the six-month periods ended June 30, 2020 and 2021, respectively.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 12 — 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. As of June 30, 2021, there were no legal proceedings.

Capital expenditure commitment

The Company does not have any capital commitments as of June 30, 2021.

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REVENUES

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

REVENUES

NOTE 13 — REVENUES

	Three-Month Period Ended June 30,				Six-Month Period Ended June 30,
	2021		2020		2021		2020
	US$		US$		US$		US$
Sales in PRC	$	9,799,657	$	3,216,025	$	16,955,534	$	5,533,317
Sales in Overseas
—Republic of China (ROC, or Taiwan)		2,901,512		1,133,766		4,878,550		1,697,194
-South Korea		2,326,885		865,135		3,901,200		1,493,507
-Others		206,831		41,134		212,905		41,134
Sub-total		5,435,228		2,040,035		8,992,655		3,231,835
Total Revenue	$	15,234,885	$	5,256,060	$	25,948,189	$	8,765,152

Due to the COVID-19 pandemic, the Company’s subsidiary Sichuan Wetouch was temporarily shut down from early February 2020 to early March 2020 in accordance with the requirement of the local governments. The Company’s business was negatively impacted and generated lower revenue and net income during the period from February to April 2020. Our business gradually recovered to its normal level during the three-months and six-months periods ended June 30, 2021, due to our proactive efforts in marketing new models such as POS touchscreens and penetrating into new customers and into new regions.

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ACCOUNTS RECEIVABLE (Tables)

6 Months Ended

Jun. 30, 2021

Receivables [Abstract]

SCHEDULE OF ACCOUNT RECEIVABLE

Accounts receivable consists of the following:

	June 30, 2021		December 31 2020
Accounts receivable	$	11,590,670	$	12,002,454
Allowance for doubtful accounts		-		(75,619	)
Accounts receivable, net	$	11,590,670	$	11,926,835

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PROPERTY, PLANT AND EQUIPMENT, NET (Tables)

6 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

SCHEDULE OF PROPERTY PLANT AND EQUIPMENT

Property, plant and equipment, net, consists of the following:

	June 30, 2021		December 31, 2020
Buildings	$	-	$	10,330,767
Machinery, equipment and furniture		45,350		5,830,470
Subtotal		45,350		16,161,237
Less: accumulated depreciation		-		(6,670,042	)
Property, plant and equipment, net	$	45,350	$	9,491,195

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INTANGIBLE ASSETS, NET (Tables)

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

SCHEDULE OF INTANGIBLE ASSETS

Intangible assets, net mainly consist of the following:

	June 30, 2021		December 31, 2020
Land use rights	$	-	$	1,016,215
Patents		-		417,919
Subtotal		-		1,434,134
Less: accumulated amortization for patents		-		(310,393	)
Accumulated amortization for land use right		-		(149,045	)
Subtotal		-		(459,438	)
Intangible assets, net	$	-	$	974,696

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RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2021

Related Party Transactions [Abstract]

SCHEDULE OF RELATED PARTY TRANSACTIONS

The related party transactions are summarized as follows:

	Three-Month Period Ended June 30,				Six-Month Period Ended June 30,
	2021		2020		2021		2020
	US$		US$		US$		US$
Revenues resulting from related parties:
Sales to Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”)	$	-	$	-	$	10,451	$	-
Sales to Meishan Vtouch Electronics Technology Co., Ltd. (Meishan Wetouch)		-		-		87,102		-
Total Revenue	$	-	$	-	$	97,553	$	-

Amounts due from related parties are as follows:

Amounts due from related parties	Relationship	June 30, 2021		December 31, 2020		Note
Vision Touch Technology AG	100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch	$	-	$	76,619	Operating expense paid on behalf of the related party/Company

Amounts due to related parties are as follows:

	Relationship	June 30, 2021		December 31, 2020		Note
Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”)	94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li	$	-	$	134,616	Operating expense paid on behalf of the Company
Meishan Vtouch Electronics Technology Co., Ltd.	95% owned by Mr. Guangde Cai and 5% by Chengdu Wetouch		-		68,402	Operating expense paid on behalf of the Company
Chengdu Vtouch Intelligence Science & Technology Co., Ltd.	100% owned by HK Vtouch Holding Group Co., Ltd.		-		-	Operating expenses paid on behalf of the Company
Mr. Guangde Cai	Chairman and CEO of the Company		-		326,042	Payable to employee
Total		$	-	$	529,060

 

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2021

Payables and Accruals [Abstract]

SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following:

	June 30, 2021		December 31, 2020
Advance from customers	$	169,040	$	9,493
Accrued payroll and employee benefits		97,036		105,801
Other tax payable (i)		277,098		325,719
Others (ii)		293		62,442
Accrued expenses and other current liabilities	$	543,467	$	503,455

(i) Other tax payables are mainly value added tax payable.

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

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RISKS AND UNCERTAINTIES (Tables)

6 Months Ended

Jun. 30, 2021

Risks and Uncertainties [Abstract]

SCHEDULE OF CURRENCY EXCHANGE RATE

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

	June 30, 2021	December 31, 2020
Year-end spot rate	US$1=RMB 6.4566	US$1=RMB 6.5250
Average rate	US$1=RMB 6.4702	US$1=RMB 6.9042

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REVENUES (Tables)

6 Months Ended

Jun. 30, 2021

Revenue from Contract with Customer [Abstract]

SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION

	Three-Month Period Ended June 30,				Six-Month Period Ended June 30,
	2021		2020		2021		2020
	US$		US$		US$		US$
Sales in PRC	$	9,799,657	$	3,216,025	$	16,955,534	$	5,533,317
Sales in Overseas
—Republic of China (ROC, or Taiwan)		2,901,512		1,133,766		4,878,550		1,697,194
-South Korea		2,326,885		865,135		3,901,200		1,493,507
-Others		206,831		41,134		212,905		41,134
Sub-total		5,435,228		2,040,035		8,992,655		3,231,835
Total Revenue	$	15,234,885	$	5,256,060	$	25,948,189	$	8,765,152

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BUSINESS DESCRIPTION (Details Narrative)	Oct. 09, 2020
Sichuan Wetouch Technology Co. Ltd. [Member]
Entity Listings [Line Items]
Ownership percentage	100.00%

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SCHEDULE OF ACCOUNT RECEIVABLE (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Receivables [Abstract]
Accounts receivable	$ 11,590,670	$ 12,002,454
Allowance for doubtful accounts		(75,619)
Accounts receivable, net	$ 11,590,670	$ 11,926,835

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SCHEDULE OF PROPERTY PLANT AND EQUIPMENT (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Subtotal	$ 45,350	$ 16,161,237
Less: accumulated depreciation		(6,670,042)
Property, plant and equipment, net	45,350	9,491,195
Building [Member]
Property, Plant and Equipment [Line Items]
Subtotal		10,330,767
Machinery, Equipment and Furniture [Member]
Property, Plant and Equipment [Line Items]
Subtotal	$ 45,350	$ 5,830,470

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PROPERTY, PLANT AND EQUIPMENT, NET (Details Narrative)			3 Months Ended		6 Months Ended		9 Months Ended
	Mar. 18, 2021 USD ($)	Mar. 18, 2021 CNY (¥)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2021 CNY (¥)
Entity Listings [Line Items]
Depreciation expense			$ 238,710	$ 238,710	$ 260,943	$ 481,116
Compensation expenses	$ 17,800,000	¥ 115,200,000
Gain (loss) on disposition of intangible assets					$ 7,625,165
Sichuan Wetouch [Member]
Entity Listings [Line Items]
Rent expenses							$ 46,366	¥ 300,000

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SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Subtotal		$ 1,434,134
Less: accumulated amortization for patents		(459,438)
Intangible assets, net		974,696
Land Use Right [Member]
Finite-Lived Intangible Assets [Line Items]
Subtotal		1,016,215
Less: accumulated amortization for patents		(149,045)
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Subtotal		417,919
Less: accumulated amortization for patents		$ (310,393)

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INTANGIBLE ASSETS, NET (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 14,295	$ 14,295	$ 113,562	$ 28,818

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SCHEDULE OF RELATED PARTY TRANSACTIONS (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Related Party Transaction [Line Items]
Revenues resulting from transactions with a related party			$ 97,553
Amounts due from related parties					$ 76,619
Amounts due to related parties					$ 529,060
Chengdu Wetouch Technology Co., Ltd [Member]
Related Party Transaction [Line Items]
Revenues resulting from transactions with a related party			10,451
Meishan Vtouch Electronics Technology Co., Ltd. [Member]
Related Party Transaction [Line Items]
Revenues resulting from transactions with a related party			$ 87,102
Related party transaction relationship			95% owned by Mr. Guangde Cai and 5% by Chengdu Wetouch		95% owned by Mr. Guangde Cai and 5% by Chengdu Wetouch
Amounts due to related parties					$ 68,402
Vision Touch Technology AG [Member]
Related Party Transaction [Line Items]
Related party transaction relationship			100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch		100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch
Amounts due from related parties					$ 76,619
Chengdu Wetouch Technology Co., Ltd ("Chengdu Wetouch") [Member]
Related Party Transaction [Line Items]
Related party transaction relationship			94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li		94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li
Amounts due to related parties					$ 134,616
Chengdu Vtouch Intelligence Science and Technology Co., Ltd. [Member]
Related Party Transaction [Line Items]
Related party transaction relationship			100% owned by HK Vtouch Holding Group Co., Ltd.		100% owned by HK Vtouch Holding Group Co., Ltd.
Amounts due to related parties
Mr. Guangde Cai [Member]
Related Party Transaction [Line Items]
Related party transaction relationship			Chairman and CEO of the Company		Chairman and CEO of the Company
Amounts due to related parties					$ 326,042

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RELATED PARTY TRANSACTIONS (Details Narrative)	Jun. 30, 2021
Chengdu Wetouch [Member]
Related Party Transaction [Line Items]
Ownership percentage	94.00%
Meishan Wetouch [Member]
Related Party Transaction [Line Items]
Ownership percentage	95.00%

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INCOME TAXES (Details Narrative)	6 Months Ended		12 Months Ended	36 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2018	Oct. 11, 2020
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Income tax rate			21.00%
Sichuan Wetouch Technology Co. Ltd. [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Income tax description	On October 21, 2020, Sichuan Wetouch was granted on a case-by-case basis by Sichuan Provincial government as preferential tax treatment High and New Technology Enterprises (“HNTEs”), which entitled it to a reduced income tax rate of 15% beginning October 21, 2020 until October 20, 2023
Sichuan Vtouch [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Statutory income tax	25.00%
HONG KONG
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Income tax rate	16.50%
PRC [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Income tax rate				15.00%
Statutory income tax	19.40%	15.00%
PRC [Member] | Sichuan Vtouch [Member]
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items]
Statutory income tax	25.00%

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SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($)		Jun. 30, 2021	Dec. 31, 2020
Payables and Accruals [Abstract]
Advance from customers		$ 169,040	$ 9,493
Accrued payroll and employee benefits		97,036	105,801
Other tax payable (i)	[1]	277,098	325,719
Others (ii)	[2]	293	62,442
Accrued expenses and other current liabilities		$ 543,467	$ 503,455

[1] Other tax payables are mainly value added tax payable.

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

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DEFERRED GRANTS (Details Narrative) ¥ in Millions, $ in Millions	Jan. 27, 2014 USD ($)	Jan. 27, 2014 CNY (¥)	Jan. 14, 2013 USD ($)	Jan. 14, 2013 CNY (¥)
Sichuan Wetouch Technology Co. Ltd. [Member]
Entity Listings [Line Items]
Deferred grants	$ 0.8	¥ 4.8	$ 1.8	¥ 11.2

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SHARE BASED COMPENSATION (Details Narrative) - USD ($) $ / shares in Units, $ in Millions			3 Months Ended	6 Months Ended
	Jan. 02, 2021	Jan. 02, 2021	Jun. 30, 2021	Jun. 30, 2021
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Warrants outstanding			841,440	841,440
Weighted average exercise price				$ 0.01
Weighted average remaining contractual term				4 years 5 months 12 days
Aggregate intrinsic value			$ 3.4	$ 3.4
Number of shares vested	310,830		0	1,041,281
Share based compensation, expected term of fair value				2 years 6 months
Share-based compensation, expected dividend rate				0.00%
Share-based compensation, volatility				51.30%
Share-based compensation, average interest rate				0.12%
Warrant [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Number of shares vested	631,080		0	2,107,825
Board Of Directors [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Number of shares authorized	310,830	310,830
Board Of Directors [Member] | Warrant [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Number of shares authorized	631,080	631,080
Share-based compensation, expected term	5 years
Warrants exercise price per share		1

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SCHEDULE OF CURRENCY EXCHANGE RATE (Details)	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Year-end Spot Rate [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Foreign currency exchange rate, translation	1	1
Year-end Spot Rate [Member] | RMB [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Foreign currency exchange rate, translation	6.4566	6.5250
Average Rate [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Foreign currency exchange rate, translation	1	1
Average Rate [Member] | RMB [Member]
Trading Activity, Gains and Losses, Net [Line Items]
Foreign currency exchange rate, translation	6.4702	6.9042	6.4702

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RISKS AND UNCERTAINTIES (Details Narrative)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2021 CNY (¥)	Jun. 30, 2020	Jun. 30, 2021 CNY (¥)	Jun. 30, 2020	Dec. 31, 2020
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%		10.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	18.60%	17.90%	18.40%	17.40%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Two [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	18.30%	15.60%	17.90%	16.70%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Three [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	15.60%	15.40%	14.90%	16.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Four [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	15.10%	12.60%	13.60%	11.50%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Five [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.60%	11.20%	11.50%	11.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Top Ten Customers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	98.20%	98.50%	97.00%	64.70%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Seven Customers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			99.80%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Four Customers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage					96.40%
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Suppliers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			10.00%
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Two Suppliers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	25.70%	26.40%		26.40%
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Three Suppliers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage			35.00%
Year-end Spot Rate [Member]
Concentration Risk [Line Items]
Foreign currency exchange rate, translation	1		1		1
Year-end Spot Rate [Member] | RMB [Member]
Concentration Risk [Line Items]
Foreign currency exchange rate, translation	6.4566		6.4566		6.5250
Average Rate [Member]
Concentration Risk [Line Items]
Foreign currency exchange rate, translation	1		1		1
Average Rate [Member] | RMB [Member]
Concentration Risk [Line Items]
Foreign currency exchange rate, translation	6.4702	6.4702	6.4702	6.4702	6.9042
Maximum [Member]
Concentration Risk [Line Items]
Bank deposits	¥ 500,000		¥ 500,000

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SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Disaggregation of Revenue [Line Items]
Sales in PRC	$ 9,799,657	$ 3,216,025	$ 16,955,534	$ 5,533,317
Sub-total	5,435,228	2,040,035	8,992,655	3,231,835
Total revenues	15,234,885	5,256,060	25,948,189	8,765,152
Republic of China (ROC, or Taiwan) [Member]
Disaggregation of Revenue [Line Items]
Sub-total	2,901,512	1,133,766	4,878,550	1,697,194
KOREA, REPUBLIC OF
Disaggregation of Revenue [Line Items]
Sub-total	2,326,885	865,135	3,901,200	1,493,507
Others [Member]
Disaggregation of Revenue [Line Items]
Sub-total	$ 206,831	$ 41,134	$ 212,905	$ 41,134