Wetouch Technology Inc.

Location (City, Country) · Segment(s) Using Property · General Character of Property (e.g., Office, Manufacturing, Warehouse) · Ownership/Lease Status · Approx. Size (sq. ft./sq. m.) · Lease Expiration (if leased) · Encumbrances (if any)

Shigao Town, Renshou County, Meishan City, Sichuan Province, China · Touchscreen business · Offices building · Leased · 8,085.0. sq. m · 31-Oct-26 · None

same as above · Touchscreen business · Experimental building( testing and experimenting of samples and products · Leased · 1,069.6 sq. m · 31-Oct-26 · None

same as above · Touchscreen business · Manufacturing/warehouse building No. · Leased · 30,879.3 sq. m · 31-Oct-26 · None

same as above · Touchscreen business · Security gate · Leased · 92.98 sq.m · 31-Oct-26 · None

As of the date of this Annual Report, we lease approximately 8,085.0 sq.m of office space for R&D, sales and other corporate functions in Shigao Town, Renshou County, Meishan City, Sichuan Province, China, which serves as our corporate headquarter. The lease expires on October 31, 2026 and we believe it can be renewed on commercially reasonable terms.

We also lease 30,879.3 sq.m facility with three manufacturing wards for principal manufacturing operations in Shigao Town, Renshou, County, Meishan City, Sichuan Province, China, at which production of, assembly, packaging, warehousing of our touchscreen products. We believe these facilities are adequate to meet our current production requirements and provide room for moderate expansion.

In addition, space of 1069.6 sq. m in Shigao Town, Renshou County, Meishan City, Sichuan Province, China was used for testing and experimenting of samples and products by our engineering teams.

None of our properties are subject to material encumbrances that would adversely affect their use.

As of the date of this Annual Report, we do not own any real property. However, we are in the process of obtaining a certificate of land use right for a new parcel located at Tianfu Avenue, Youjiadu Community in Chengdu, Sichuan province, China, and expect to receive the certificate from the local government in the first quarter of 2027.

We believe the above properties are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative space will be available to accommodate any such expansion of our operations.

Leaseback Agreement

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 March 16, 2021, Sichuan Wetouch entered into an Agreement of Compensation on Demolition (the “Compensation Agreement”) with Meishan Huantian Industrial Co., Ltd, formerly named Sichuan Renshou Shigao Tianfu Investment Co., Ltd, a limited company owned by the local government (“Sichuan Renshou”), for the withdrawal of our right to use of a parcel of state-owned land and the demolition of all buildings, facilities and equipment on such land where we maintain our executive offices, research and development facilities and factories at No.29, Third Main Avenue, Shigao Town, Renshou County, Meishan City, Sichuan, China (the “Property”). The Property, all buildings, facilities, equipment and all other appurtenances on the Property are collectively referred to as “Properties”. The Compensation Agreement was executed and delivered as a result of the guidelines (the “Guidelines”) published by the local government with respect to local environmental issues and a national plan on Tianfu New District, Meishan City, Sichuan, PRC. In accordance with the Guidelines, a project named “Chaisang River Ecological Wetland Park” is under construction in the areas where our manufacturing facilities and properties are located. In consideration for such relocation, as an owner of the buildings on the state-owned land, we will be compensated. On March 18, 2021, Sichuan Wetouch received a total amount of RMB115.2 million (approximately $16.5 million) as the total amount of compensation from Sichuan Renshou, including RMB100.2 million ($14.3 million) based upon the appraised value of the Properties plus an extra 15% relocation bonus of RMB15.0 million ($2.1 million).

In order to minimize the interruption to our business, Sichuan Vtouch entered into a Leaseback Agreement with Sichuan Renshou on March 16, 2021. The Leaseback Agreement entitles us to lease back the Properties commencing from April 1, 2021 until December 31, 2021, at a monthly rent of RMB300,000 (approximately $42,899), which period was extended to October 31, 2022. On October 16, 2022, October 30, 2023, August 9, 2024, and September 29, 2025, Sichuan Vtouch entered an extension to the Leaseback Agreement with Sichuan Renshou four times to extend the period to lease back the Properties until October 31, 2026 at a monthly rent of RMB 400,000 ($57,199) in order to incorporate the new facility construction schedule

New Facilities

• Our industry is cyclical, with recurring periods of capacity increases. As a result, price fluctuations in response to supply and demand imbalances could harm our results of operations.
• Failure to maintain the quality and safety of our products could have a material and adverse effect on our reputation, financial condition and results of operations.
• We face intense competition in the touchscreen display industry in general. If we fail to compete effectively, we may lose market share and customers, and our business, financial condition and results of operations may be materially and adversely affected.
• If we do not obtain substantial additional financing, our ability to execute our business plan may be impaired.
• Any adjustment of related party transaction pricing could lead to additional taxes, and therefore substantially reduce our consolidated net income and the value of your investment.
• A significant interruption in the operations of our third-party suppliers could potentially disrupt our operations.
• We face the risk of fluctuations in the cost, availability and quality of our raw materials, which could adversely affect our results of operations.
• We are dependent upon key executives and highly qualified managers and we cannot assure their retention.
• We do not have long-term contracts with our suppliers and they can reduce order quantities or terminate their sales to us at any time.
• If we fail to adopt new technologies to evolving customer needs or emerging industry standards, our business may be materially and adversely affected.
• We may experience significant liability claims or complaints from customers, or adverse publicity involving our products and our services.
• We may experience losses on inventories.
• We have no business liability or disruption insurance, which could expose us to significant costs and business disruption.
• We may incur liabilities that are not covered by insurance.
• Our introduction of new technologies and products may increase the likelihood that third parties will assert claims that our products infringe upon their proprietary rights.
• Adverse regulatory developments in China may subject us to additional regulatory review and expose us to government restrictions, and additional disclosure requirements and regulatory scrutiny to be adopted by the SEC in response to risks related to recent regulatory developments in China may impose additional compliance requirements for companies with significant China-based operations, all of which could increase our compliance costs, subject us to additional disclosure requirements, and/or suspend or terminate our future securities offerings, making capital-raising more difficult.
• Our common stock will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, as amended, if it is later determined that the PCAOB is unable to inspect and investigate completely our auditor. The delisting of and prohibition from trading of our common stock, or the threat of their being delisted and prohibited from trading, may cause the value of our common stock to significantly decline or be worthless.
• We may be subject to substantial fine if the CSRC has determined that we have failed to comply with the post-offering filing obligations imposed by the Trial Administrative Measure.
• Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact our business and operating results.
• PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent us from using the proceeds of any offerings or financings to make loans or additional capital contributions to our Chinese subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
• PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident beneficial owners or our PRC subsidiary to liability or penalties, limit our ability to inject capital into our PRC subsidiary, limit our PRC subsidiary’ ability to increase their registered capital or distribute profits to us, or may otherwise adversely affect us.
• Labor laws in the PRC may adversely affect our results of operations.
• We may be exposed to liabilities under the Foreign Corrupt Practices Act and Chinese anti-corruption law.
• Our business may be materially and adversely affected if our PRC subsidiary declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.
• Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws and sudden and unexpected changes in laws and regulations in China, could adversely affect us and limit the legal protections available to you and us.
• You may experience difficulties in effecting service of legal process, enforcing foreign judgments or bringing actions in China against us or our management based on foreign laws.
• Government control of currency conversion may affect the value of your investment.
• Fluctuations in exchange rates could have a material and adverse effect on our results of operations and the value of your investment.
• Governmental control of currency conversion may limit our ability to utilize our revenues effectively and affect the value of your investment.
• The Chinese government exerts substantial influence over the manner in which we must conduct our business activities and may intervene or influence our operations at any time, which could result in a material change in our operations and/or the value of our common stock.
• If we are classified as a PRC resident enterprise for PRC enterprise income tax purposes, such classification could result in unfavorable tax consequences to us and our non-PRC shareholders and the common stockholders.
• The price of our common stock may be volatile or may decline regardless of our operating performance and you may not be able to resell your shares at or above the purchase price.
• Since our By-laws provide that the courts in the State of Nevada are the sole and exclusive forum for substantially all disputes between us and our shareholders, this could limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors or officers, or employees.
• Short sellers of our stock may be manipulative and may drive down the market price of our common stock.
• If we become directly subject to the scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business, operations and reputations, which could result in a loss of your investment in our common stock.
• The sale or availability for sale of substantial amounts of our common stock could adversely affect their market price.
• Because we do not expect to pay dividends in the foreseeable future, you must rely on a price appreciation of our common stock for return on your investment.
• If relations between the United States and China worsen, our stock price may decrease and could lead to our loss of access or increased difficulty in accessing U.S. capital markets.
• We may be subject to delisting from Nasdaq if we fail to timely file periodic reports with the SEC or to maintain Nasdaq’s minimum bid price, which could materially and adversely affect the liquidity and value of our common stock.