Wetouch Technology Inc.

Previous wording

As of March 31, 2026, the Company has contributed RMB 348.0 million (US$50.4 million) to its PRC subsidiary through intermediate holding companies, which were accounted for as long-term investments. These funds have been used by our PRC subsidiary in its operations. To date, no dividends or other distributions have been made by our PRC subsidiary to the Company. We may rely on future distributions from our PRC subsidiary to fund our holding company obligations, subject to PRC law and restrictions. For more details, see “Item 1A. Risk Factors—Risks Related to Doing Business in China—As a holding company, we conduct our operations primarily through our PRC subsidiary and face risks and uncertainties associated with this structure.”

Current wording

As of June 30, 2026, the Company has contributed RMB 348.0 million (US$51.3 million) to its PRC subsidiary through intermediate holding companies, which were accounted for as long-term investments. These funds have been used by our PRC subsidiary in its operations. To date, no dividends or other distributions have been made by our PRC subsidiary to the Company. We may rely on future distributions from our PRC subsidiary to fund our holding company obligations, subject to PRC law and restrictions. For more details, see “Item 1A. Risk Factors—Risks Related to Doing Business in China—As a holding company, we conduct our operations primarily through our PRC subsidiary and face risks and uncertainties associated with this structure.”

Previous wording

We sell our touchscreen products both domestically in China and internationally, covering major areas in Mainland China, including but not limited to the eastern, southern, northern and southwest regions of Mainland China, Taiwan, South Korea, and Germany. We believe that we have established a strong client base, although our revenues remain concentrated among a limited number of major customers, as described in Note 13 to the condensed consolidated financial statements. For the three months ended March 31, 2026 and 2025, our domestic sales accounted for approximately 67.5% and 67.4%, respectively, of our revenues, and our international sales accounted for approximately 32.5% and 32.6%, respectively, of our revenues.

Current wording

We sell our touchscreen products both domestically in China and internationally, covering major areas in Mainland China, including but not limited to the eastern, southern, northern and southwest regions of Mainland China, Taiwan, South Korea, and Germany. We believe that we have established a strong client base, although our revenues remain concentrated among a limited number of major customers, as described in Note 13 to the condensed consolidated financial statements. For the three months ended June 30, 2026 and 2025, our domestic sales accounted for approximately 68.6% and 67.7%, respectively, of our revenues, and our international sales accounted for approximately 31.4% and 32.3%, respectively, of our revenues. For the six months ended June 30, 2026 and 2025, our domestic sales accounted for approximately 68.0% and 67.5%, respectively, of our revenues, and our international sales accounted for approximately 32.0% and 32.5%, respectively, of our revenues..

Previous wording

As of the date of this Quarterly report, the Company estimated the construction to be completed by the first half of 2027 and commence production by the end of 2027. The total capital requirements for the new facility construction totaled approximately $36.7 million (RMB253 million) and $13.7 million (RMB 94.6 million) have been recorded in the construction in progress as of March 31, 2026. The Company primarily fund the project with our existing cash on hand and cash flows generated from operations, and we may seek additional financing if needed to support the timely completion of the project.

Current wording

As of the date of this Quarterly report, the Company estimated the construction to be completed by the first half of 2027 and commence production by the end of 2027. The total capital requirements for the new facility construction totaled approximately $14.8 million and $9.1 million have been recorded in the construction in progress as of June 30, 2026. The Company primarily fund the project with our existing cash on hand and cash flows generated from operations, and we may seek additional financing if needed to support the timely completion of the project.

Previous wording

For the three months ended March 31, 2026, revenue from the PRC domestic market increased by $0.7 million, or 6.8%, as a combined result of: (i) an increase of 2.7% in the average RMB selling price of our products, and 4.8% positive impact from exchange rate due to appreciation of RMB against US dollars, partially offset by (iii) a decrease of 1.1% in sales volume due to higher pricing offset by the lower demand in broader types of touchscreens exclusive of the medial touchscreens, compared with that of the same period of last year.

Current wording

For the three months ended June 30, 2026, revenue from the PRC domestic market increased by $1.2 million, or 14.3%, as a combined result of (i) an increase of 7.3% in sales volume in all types of touchscreen products in the PRC market, (ii) an increase of 0.3% in the average selling price of our products in RMB, and (iii) 6.0% positive impact from exchange rate due to appreciation of RMB against US dollars, compared with that of the same period of last year

Previous wording

Due to our proactive efforts to market new models and efforts to obtain new customers and penetrate into new regions, our sales increased by 9.1% in Southwest China, partially offset by a decrease of 1.8% in South China and 1.8% in East China during the three months ended March 31, 2026.

Current wording

Due to our proactive efforts to market new models and efforts to obtain new customers and penetrate into new regions, our sales increased by 8.6% in East China, 7.1% in South China and 6.3% in Southwest China, during the three months ended June 30, 2026, as compared to the same period of last year.

Previous wording

For the three-month period ended March 31, 2026, revenues from the overseas market were $5.3 million as compared to $5.0 million of the same period of 2025, representing an increase by $0.3 million, or 6.0%, primarily due to (i) 2.4% increase in sales volume because of higher demand on automotive computer touchscreens and gaming touchscreens, (ii) 4.8% positive impact from exchange rate due to appreciation of RMB against US dollars, partially offset by (iii) a decrease of 1.0% in average selling price in RMB (mainly in medical touchscreens and gaming touchscreens), compared to the same period of last year.

Current wording

For the three-month period ended June 30, 2026, revenues from the overseas market were $4.4 million as compared to $4.0 million of the same period of 2025, representing an increase by $0.4 million, or 10.0%, primarily due to (i) 8.8% increase in sales volume because of higher demand on automotive touchscreens and gaming touchscreens, and (ii) 6.0% positive impact from exchange rate due to appreciation of RMB against US dollars, partially offset by a decrease of 5.8% in the average selling price of our products in RMB compared with that of the same period of last year. compared to the same period of last year.

Previous wording

The Company continued to shift production mix from traditional lower-end products to high-end products such as medical touchscreens, automotive touchscreens, POS touchscreens, industrial control computer touchscreens, and multi-functional printer touchscreens, primarily due to (i) greater growth potential of computer screen models in China and overseas market, and (ii) the stronger demand on higher-end touch screens made with better materials and better quality.

Current wording

The Company continued to shift production mix from traditional lower-end products to high-end products such as medical touchscreens, gaming touchscreen, automotive touchscreens, POS touchscreens, and multi-functional printer touchscreens, primarily due to (i) greater growth potential of computer screen models in China and overseas market, and (ii) the stronger demand on higher-end touch screens made with better materials and better quality.

Previous wording

Gross profit was $5.8 million in the first quarter ended March 31, 2026, compared to $5.7 million in the same period of 2025. Our gross profit margin decreased to 35.7% for the first quarter ended March 31, 2026, as compared to 36.9% for the same period of 2025, primarily due to an increase of 8.7% in cost of goods sold, consisting of an increase of 10.5% in labor costs due to additional hiring of technicians, and an increase of 2.7% in costs of materials, and partially offset by the increase of revenue by 6.5%, particularly high-end products as stated above during the three months ended March 31, 2026.

Current wording

Gross profit was $4.9 million in the second quarter ended June 30, 2026, compared to $4.1 million in the same period of 2025. Our gross profit margin increased to 34.9% for the second quarter of 2026, as compared to 33.1% for the same period of 2025, primarily due to the increase of sales of 12.9%, particularly high-end products such as the profit margin increased by 3.33% in industrial computer control touchscreens sold in PRC market, and partially offset by an increase of 3.4% in labor costs due to additional hiring of technicians, and an increase of 2.2% in costs of materials (mainly in the price of chip costs) during the three months ended June 30, 2026.

Previous wording

Selling expenses were $0.2 million for the three-month period ended March 31, 2026, compared to $0.1 million in the same period in 2025, representing an increase of $0.1 million. The increase was primarily due to the traveling expenses visiting clients during the three months ended March 31, 2026.

Current wording

Selling expenses were $0.2 million for the three-month period ended June 30, 2026, compared to $0.1 million in the same period in 2025, representing an increase of $0.1 million. The increase was primarily due to the increase of traveling expenses visiting clients during the three months ended June 30, 2026.

Previous wording

General and administrative expenses were $0.6 million for the three-month period ended March 31, 2026, compared to $1.6 million in the same period in 2025, representing a decrease of $1.0 million, or 62.5%. The decrease was primarily due to the absence in the first quarter of 2026 of approximately $0.5 million of amortization expense related to prepaid three-year consulting service fees that was recorded during the first quarter of 2025, partially offset by an increase of approximately $0.4 million in professional fees during the first quarter of 2026.

Current wording

General and administrative expenses were $0.5 million for the three-month period ended June 30, 2026, compared to $0.9 million in the same period in 2025, representing a decrease of $0.4 million, or 44.4%. The decrease was primarily due to the absence in the second quarter of 2026 of approximately $0.4 million of amortization expense related to prepaid three-year consulting service fees that was expired on May 31, 2025, partially offset by an increase of approximately $0.1 million in professional fees during the second quarter of 2026.

Previous wording

Total operating income was $5.1 million for the three-month period ended March 31, 2026 as compared to $4.1 million of the same period of last year, primarily due to higher revenues and gross profit, and lower general and administrative expenses, partially offset by the higher selling expenses for the three-month period ended March 31, 2026.

Current wording

Total operating income was $3.2 million for the three-month period ended June 30, 2026 as compared to $3.1 million of the same period of last year, primarily due to higher revenues and gross profit, and lower general and administrative expenses, partially offset by the higher selling expenses and share-based compensation expenses for the three-month period ended June 30, 2026.

Previous wording

The effective income tax rates for the three-month period ended March 31, 2026 and 2025 were 24.3% and 36.5%, respectively.

Current wording

The effective income tax rates for the three-month period ended June 30, 2026 and 2025 were 32.1% and 28.1%, respectively.

Previous wording

We generated revenue of $16.3 million for the three months ended March 31, 2026, an increase of $1.0 million, or 6.5%, compared to $15.3 million in the same period of last year. This was due to an increase of 0.1% in sales volume, an increase of 1.5% in the average selling price of our products , and 4.8% positive impact from exchange rate due to appreciation of RMB against US dollars, compared with that of the same period of last year.

Current wording

We generated revenue of $30.3 million for the six months ended June 30, 2026, an increase of $2.6 million, or 9.4%, compared to $27.7 million in the same period of last year. This was mainly due to an increase of 3.5% in sales volume, an increase of 3.5% in the average RMB selling price of our products, and 5.4% positive impact from exchange rate due to appreciation of RMB against US dollars, compared with those of the same period of last year.

Previous wording

As for the RMB selling price, the increase of 2.7% was mainly due to the higher demand of higher selling priced products of touchscreen machines in the PRC domestic market, average RMB selling price of 10.8% in medical touchscreens and 1.0% in automotive computer touchscreens during the three-month period ended March 31, 2026.

Current wording

As for the RMB selling price, the increase of 1.6% was mainly due to the higher demand of higher selling priced products of touchscreen machines in the PRC domestic market, including the increase in average RMB selling price of 5.6% in medical touchscreens, 0.9% in automotive touchscreens, and partially offset by the decrease in average RMB selling price of 0.1% in POS touchscreens and multi-functional printer touchscreens during the six-month period ended June 30, 2026.

Previous wording

As a result of the above factors, we had a net income of $3.9 million in the first quarter of 2026 compared to a net income of $2.6 million in the same quarter of 2025.

Current wording

As a result of the above factors, we had a net income of $6.0 million in the six months ended June 30, 2026 as compared to $4.8 million of the same period of last year

Previous wording

As of March 31, 2026, we had current assets of $132.7 million, consisting of $120.5 million in cash and cash equivalent, $11.1 million in accounts receivable, $29,060 in inventories, and $1.1 million in prepaid expenses and other current assets. Our current liabilities as of March 31, 2026 were $4.1 million, which is comprised of $0.9 million in accounts payable, $0.3 million in amounts due to a related party, $1.2 million income tax payable, $1.3 million in accrued expenses and other current liabilities. and $0.4 million in operating lease liabilities, current portion.

Current wording

As of June 30, 2026, we had current assets of $138.0 million, consisting of $127.5 million in cash and cash equivalent, $9.3 million in accounts receivable, $9,185 in inventories, and $1.1 million in prepaid expenses and other current assets. Our current liabilities as of June 30, 2026 were $3.8 million, which is comprised of $0.9 million in accounts payable, $0.4 million in amounts due to a related party, $0.9 million income tax payable, $1.4 million in accrued expenses and other current liabilities. and $0.2 million in operating lease liabilities, current portion.

Previous wording

The following is a summary of our cash flows provided by operating, investing, and financing activities for the three-month periods ended March 31, 2026 and 2025:

Current wording

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities for the three-month periods ended June 30, 2026 and 2025:

Previous wording

Net cash provided by operating activities was $0.5 million for the three months ended March 31, 2026 as compared to net cash provided by operating activities of $2.0 million for the same period of the last year.

Current wording

Net cash provided by operating activities was $5.5 million for the six months ended June 30, 2026 as compared to net cash provided by operating activities of $4.7 million for the same period of the last year.

Previous wording

The positive cash flow for the three months ended March 31, 2026 was primarily due to i) $3.9 million net income, ii) the increase of $1.2 million in income tax payable, andpartially offset by iii) the increase of $4.4 million in accounts receivable and iv) the decrease of $0.1 million in accounts payable.

Current wording

The positive cash flow for the six months ended June 30, 2026 was primarily due to i) $6.0 million net income, adjusted by an increase of $1.0 million share-based compensation expenses and $0.3 million of amortization of operating right-of-use assets, ii) the increase of $0.9 million in income tax payable and $0.1 million due to a related party, andpartially offset by iii) the increase of $2.6 million in accounts receivable and iv) the decrease of $0.2 million in accounts payable.

Previous wording

The positive cash flow for the three months ended March 31, 2025 was primarily due to i) $2.5 million net income, ii) the decrease of $0.6 million in prepaid expenses and current assets, iii) the increase of in $0.3 million accounts payable, $0.3 million due to a related party, $1.3 million in tax payable and $0.6 million in accrued expenses and current liabilities, partially offset by iv) the increase of $3.5 million in accounts receivable.

Current wording

The positive cash flow for the six months ended June 30, 2025 was primarily due to i) $4.8 million net income, ii) $0.3 million of amortization of operating right-of-use assets, iii) the decrease of $0.9 million in prepaid expenses and current assets, iii) the increase of in $0.2 million accounts payable, $0.5 million due to related parties, $0.9 million in tax payable and $0.4 million in accrued expenses and current liabilities, partially offset by iv) the increase of $3.1 million in accounts receivable and v) the decrease of $0.3 million in operating lease liabilities.

Previous wording

There were no cash flows from investing activities for the three-month period ended March 31, 2026 and 2025.

Current wording

There were no cash flows from investing activities for the six-month period ended June 30, 2026 and 2025.

Previous wording

There were no cash flows from financing activities for the three-month period ended March 31, 2026 and 2025.

Current wording

There were no cash flows from financing activities for the six-month period ended June 30, 2026, and 2025.

Previous wording

As of March 31, 2026, our cash and cash equivalents were $120.5 million, as compared to $118.4 million on December 31, 2025.

Current wording

As of June 30, 2026, our cash and cash equivalents were $127.5 million, as compared to $118.4 million at December 31, 2025.

Previous wording

Days Sales Outstanding (“DSO”) has decreased to 48 days for the three-month period ended March 31, 2026 from 56 days for the year ended December 31, 2025.

Current wording

Days Sales Outstanding (“DSO”) has decreased to 47 days for the six months ended June 30, 2026 from 56 days for the year ended December 31, 2025.

Previous wording

There have been no changes to the Company’s holding company structure during the three months ended March 31, 2026. For more details, refer to the Company’s holding company structure disclosures set forth in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Holding Company Structure” of the 2025 Form 10-K.

Current wording

There have been no changes to the Company’s holding company structure during the six months ended June 30, 2026. For more details, refer to the Company’s holding company structure disclosures set forth in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations- Holding Company Structure” of the 2025 Form 10-K.

Previous wording

As of March 31, 2026, the Company had commitment of RMB7.3 million (equivalent to $1.06 million) for construction in progress.

Current wording

As of June 30, 2026, the Company had commitment of RMB7.3 million (equivalent to $1.08 million) for construction in progress.