Cover
Cover | 9 Months Ended |
Sep. 30, 2021 | |
Entity Addresses [Line Items] | |
Document Type | S-1/A |
Amendment Flag | true |
Amendment Description | AMENDMENT NO. 4 |
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, Postal Zip Code | 620500 |
City Area Code | 86 |
Local Phone Number | 028-37390666 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | false |
Business Contact [Member] | |
Entity Addresses [Line Items] | |
Entity Address, Address Line One | VCorp Services, LLC |
Entity Address, Address Line Two | 701 S. Carson Street |
Entity Address, City or Town | Carson City |
Entity Address, State or Province | NV |
Entity Address, Postal Zip Code | 89701 |
City Area Code | 888 |
Local Phone Number | 528-2677 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
CURRENT ASSETS | ||||
Cash | $ 54,067,358 | $ 23,963,861 | $ 14,279,797 | |
Accounts receivable, net | 11,343,114 | 11,926,835 | 16,049,453 | |
Inventories | 526,125 | 402,050 | 203,778 | |
Due from related parties | 76,619 | 71,884 | ||
Prepaid expenses and other current assets | 1,006,710 | 228,443 | 283,269 | |
TOTAL CURRENT ASSETS | 66,943,307 | 36,597,808 | 30,888,181 | |
Property, plant and equipment, net | 190,202 | 9,491,195 | 9,867,584 | |
Intangible assets, net | 974,696 | 989,052 | ||
TOTAL ASSETS | 67,133,509 | 47,063,699 | 41,744,817 | |
CURRENT LIABILITIES | ||||
Short-term bank loans | 430,923 | |||
Accounts payable | 833,955 | 891,848 | 795,480 | |
Due to related parties | 529,060 | 5,000,803 | ||
Income tax payable | 1,096,741 | 107,137 | 642,967 | |
Accrued expenses and other current liabilities | 324,315 | 503,455 | 2,340,858 | |
Deferred grants | 245,211 | 229,826 | ||
TOTAL CURRENT LIABILITIES | 2,255,011 | 2,276,711 | 9,440,857 | |
Deferred grants-non current | 433,206 | 635,851 | ||
TOTAL LIABILITIES | 2,255,011 | 2,709,917 | 10,076,708 | |
COMMITMENTS AND CONTINGENCIES (Note 13) | ||||
STOCKHOLDERS’ EQUITY | ||||
Common stock, $0.001 par value, 300,000,000 shares authorized, 31,500,693 and 28,000,000 issued and outstanding as of December 31, 2020 and 2019, respectively* | 31,812 | 31,501 | 28,000 | |
Additional paid in capital | 4,221,727 | 1,072,932 | 14,034 | |
Statutory reserve | 3,062,159 | 3,062,159 | 2,003,569 | |
Retained earnings | 55,933,106 | 39,229,282 | 31,357,494 | |
Accumulated other comprehensive income (loss) | 1,629,694 | 957,908 | (1,734,988) | |
TOTAL STOCKHOLDERS’ EQUITY | 64,878,498 | 44,353,782 | 31,668,109 | [1] |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 67,133,509 | $ 47,063,699 | $ 41,744,817 | |
[1] | Retrospectively restated for effect of recapitalization, see Note 1 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 | Oct. 09, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |
Common stock, shares authorized | 300,000,000 | 300,000,000 | 300,000,000 | |
Common stock, shares issued | 31,811,523 | 31,500,693 | 31,396,394 | 28,000,000 |
Common stock, shares outstanding | 31,811,523 | 31,500,693 | 31,396,394 | 28,000,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |||||||
REVENUES | ||||||||||||
Revenue from customers | $ 11,165,980 | $ 11,904,120 | $ 37,016,616 | $ 20,669,272 | ||||||||
Revenues from related parties | 97,554 | |||||||||||
REVENUES | 11,165,980 | 11,904,120 | 37,114,170 | 20,669,272 | $ 31,345,951 | $ 40,004,103 | ||||||
COST OF REVENUES | ||||||||||||
Cost of revenues from customers | (6,370,278) | (5,716,594) | (19,179,253) | (10,180,477) | ||||||||
Cost of revenues related parties | (97,554) | |||||||||||
Total Cost of revenues | (6,370,278) | (5,716,594) | (19,276,807) | (10,180,477) | (15,736,080) | (20,265,509) | ||||||
GROSS PROFIT | 4,795,702 | 6,187,526 | 17,837,363 | 10,488,795 | 15,609,871 | 19,738,594 | ||||||
OPERATING EXPENSES | ||||||||||||
Selling expenses | (136,164) | (29,028) | (349,561) | (73,960) | (264,553) | (270,752) | ||||||
General and administrative expenses | (298,047) | (952,824) | (1,618,753) | (1,512,761) | (2,322,055) | (2,330,322) | ||||||
Research and development expenses | (22,267) | (21,532) | (67,035) | (54,831) | (77,997) | (136,433) | ||||||
Share-based compensation | (3,149,106) | (1,064,358) | ||||||||||
Total operating expenses | (456,478) | (1,003,384) | (5,184,455) | (1,641,552) | (3,728,963) | (2,737,507) | ||||||
INCOME FROM OPERATIONS | 4,339,224 | 5,184,142 | 12,652,908 | 8,847,243 | 11,880,908 | 17,001,087 | ||||||
OTHER INCOME (EXPENSES) | ||||||||||||
Interest income | 28,798 | 21,450 | 64,184 | 55,166 | 81,537 | 76,201 | ||||||
Interest expense | (1,728,961) | (16,884) | ||||||||||
Government grant | 57,922 | 692,952 | 185,905 | 246,227 | 249,417 | |||||||
Late penalty on debt | (868,546) | |||||||||||
Gain on asset disposal | 7,625,279 | |||||||||||
TOTAL OTHER (EXPENSES), NET | 28,798 | 79,372 | 8,382,415 | 241,071 | (1,401,197) | (559,812) | ||||||
INCOME BEFORE INCOME TAX EXPENSE | 4,368,022 | 5,263,514 | 21,035,323 | 9,088,314 | 10,479,711 | 16,441,275 | ||||||
INCOME TAX EXPENSE | (1,092,547) | (537,019) | (4,331,499) | (1,108,849) | (1,549,333) | (2,724,662) | ||||||
NET INCOME | 3,275,475 | 4,726,495 | 16,703,824 | 7,979,465 | 8,930,378 | 13,716,613 | ||||||
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||||||
Foreign currency translation adjustment | 139,206 | 1,530,474 | 671,786 | 1,052,308 | 2,692,896 | (844,192) | ||||||
COMPREHENSIVE INCOME | $ 3,414,681 | $ 6,256,969 | $ 17,375,610 | $ 9,031,773 | $ 11,623,274 | $ 12,872,421 | ||||||
EARNINGS PER COMMON SHARE | ||||||||||||
Basic | $ 0.1 | $ 0.17 | $ 0.53 | $ 0.28 | $ 0.31 | $ 0.49 | ||||||
Diluted | $ 0.1 | $ 0.17 | $ 0.53 | $ 0.28 | $ 0.31 | $ 0.49 | ||||||
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING* | ||||||||||||
Basic* | 31,811,523 | [1] | 28,000,000 | [1] | 31,811,523 | [1] | 28,000,000 | [1] | 28,774,886 | [2] | 28,000,000 | [2] |
Diluted* | 32,653,163 | [1] | 28,000,000 | [1] | 32,653,163 | [1] | 28,000,000 | [1] | 28,985,246 | [2] | 28,000,000 | [2] |
[1] | Retrospectively restated for effect of recapitalization for the three and nine month ended September 30, 2020, see Note 1 | |||||||||||
[2] | Retrospectively restated for effect of recapitalization, see Note 1 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Statutory Reserve [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Total | |
Beginning Balance at Dec. 31, 2018 | $ 28,000 | $ 14,034 | $ 288,045 | $ 19,356,405 | $ (890,796) | $ 18,795,688 | |
Balance, shares at Dec. 31, 2018 | [1] | 28,000,000 | |||||
Appropriation to statutory reserve | 1,715,524 | (1,715,524) | |||||
Net income | 13,716,613 | 13,716,613 | |||||
Foreign currency translation adjustment | (844,192) | (844,192) | |||||
Ending balance, value at Dec. 31, 2019 | [2] | $ 28,000 | 14,034 | 2,003,569 | 31,357,494 | (1,734,988) | 31,668,109 |
Balance, shares at Dec. 31, 2019 | [2] | 28,000,000 | |||||
Net income | 7,979,465 | 7,979,465 | |||||
Foreign currency translation adjustment | 1,052,308 | 1,052,308 | |||||
Ending balance, value at Sep. 30, 2020 | $ 28,000 | 14,034 | 2,003,569 | 39,336,959 | (682,680) | 40,699,882 | |
Balance, shares at Sep. 30, 2020 | 28,000,000 | ||||||
Beginning Balance at Dec. 31, 2019 | [2] | $ 28,000 | 14,034 | 2,003,569 | 31,357,494 | (1,734,988) | 31,668,109 |
Balance, shares at Dec. 31, 2019 | [2] | 28,000,000 | |||||
Share-based compensation | $ 104 | 1,064,254 | 1,064,358 | ||||
Share-based compensation, shares | 103,610 | ||||||
Appropriation to statutory reserve | 1,058,590 | (1,058,590) | |||||
Recapitalization -10/9/2020 | $ 3,396 | $ (5,355) | $ (1,959) | ||||
Recapitalization -10/9/2020, shares | 3,396,394 | ||||||
Fraction shares issued due to stock split | 1 | (1) | |||||
Fraction shares issued due to stock split, shares | 689 | ||||||
Net income | $ 8,930,378 | $ 8,930,378 | |||||
Foreign currency translation adjustment | $ 2,692,896 | 2,692,896 | |||||
Ending balance, value at Dec. 31, 2020 | $ 31,501 | 1,072,932 | 3,062,159 | 39,229,282 | 957,908 | 44,353,782 | |
Balance, shares at Dec. 31, 2020 | 31,500,693 | ||||||
Beginning Balance at Jun. 30, 2020 | [3] | $ 28,000 | 14,034 | 2,003,569 | 34,610,464 | (2,213,154) | 34,442,913 |
Balance, shares at Jun. 30, 2020 | [3] | 28,000,000 | |||||
Net income | 4,726,495 | 4,726,495 | |||||
Foreign currency translation adjustment | 1,530,474 | 1,530,474 | |||||
Ending balance, value at Sep. 30, 2020 | $ 28,000 | 14,034 | 2,003,569 | 39,336,959 | (682,680) | 40,699,882 | |
Balance, shares at Sep. 30, 2020 | 28,000,000 | ||||||
Beginning Balance at Dec. 31, 2020 | $ 31,501 | 1,072,932 | 3,062,159 | 39,229,282 | 957,908 | 44,353,782 | |
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 | 16,703,824 | 16,703,824 | |||||
Foreign currency translation adjustment | 671,786 | 671,786 | |||||
Ending balance, value at Sep. 30, 2021 | $ 31,812 | 4,221,727 | 3,062,159 | 55,933,106 | 1,629,694 | 64,878,498 | |
Balance, shares at Sep. 30, 2021 | 31,811,523 | ||||||
Beginning Balance at Jun. 30, 2021 | $ 31,812 | 4,221,727 | 3,062,159 | 52,657,631 | 1,490,488 | 61,463,817 | |
Balance, shares at Jun. 30, 2021 | 31,811,523 | ||||||
Net income | 3,275,475 | 3,275,475 | |||||
Foreign currency translation adjustment | 139,206 | 139,206 | |||||
Ending balance, value at Sep. 30, 2021 | $ 31,812 | $ 4,221,727 | $ 3,062,159 | $ 55,933,106 | $ 1,629,694 | $ 64,878,498 | |
Balance, shares at Sep. 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 | ||||||
[3] | Retrospectively restated for effect of recapitalization, see Note 1 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Cash flows from operating activities | ||||
Net income | $ 16,703,824 | $ 7,979,465 | $ 8,930,378 | $ 13,716,613 |
Adjustments to reconcile net income to cash provided by operating activities | ||||
Inventory write-off | 66,944 | |||
Bad debts reversal | (76,260) | |||
Depreciation and amortization | 377,435 | 769,179 | 1,056,139 | 1,037,941 |
Share-based compensation | 3,149,106 | 1,064,358 | ||
Loss of input VAT credits | 354,991 | |||
Gain on asset disposal | (7,625,165) | |||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 1,556,300 | (1,293,696) | 4,911,580 | (2,334,513) |
Amounts due from related parties | 83,535 | 282 | 1,242 | 34,603 |
Inventories | (93,265) | (58,465) | (241,435) | 10,581 |
Prepaid expenses and other current assets | (757,832) | (96,350) | 69,448 | 78,393 |
Accounts payable | (124,858) | 190,281 | 40,749 | (2,036,549) |
Amounts due to related parties | (566,737) | (351,048) | (273,250) | 94,714 |
Income tax payable | 977,435 | (535,330) | (547,080) | 51,838 |
Accrued expenses and other current liabilities | (216,336) | (1,530,154) | (1,884,578) | (258,357) |
Deferred grants | (726,730) | (171,603) | (231,742) | (231,611) |
Net cash provided by operating activities | 13,015,443 | 4,902,561 | 12,962,753 | 10,163,653 |
Cash flows from investing activities | ||||
Purchase of property and equipment | (191,882) | (5,006) | ||
Proceeds from assets disposal | 17,804,769 | |||
Net cash used in investing activities | 17,612,887 | (5,006) | ||
Cash flows from financing activities | ||||
Repayment of bank borrowings | (429,011) | (434,519) | ||
Repayment of advances from related parties | (4,269,277) | (13,529,422) | ||
Net cash used in financing activities | (429,011) | (4,703,796) | (13,529,422) | |
Effect of changes of foreign exchange rates on cash | (524,833) | 514,933 | 1,425,107 | (642,208) |
Net increase (decrease) in cash | 30,103,497 | 4,988,483 | 9,684,064 | (4,012,983) |
Cash, beginning of year | 23,963,861 | 14,279,797 | 14,279,797 | 18,292,780 |
Cash, end of year | 54,067,358 | 19,268,280 | 23,963,861 | 14,279,797 |
Supplemental disclosures of cash flow information | ||||
Interest paid | 42,901 | 1,766,399 | ||
Income taxes paid | $ 3,339,767 | $ 1,644,175 | 2,999,802 | 4,176,694 |
Non-cash investing activities | ||||
Net liabilities acquired due to recapitalization | $ 1,959 |
BUSINESS DESCRIPTION
BUSINESS DESCRIPTION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
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 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 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. | NOTE 1 — BUSINESS DESCRIPTION Business Wetouch Technology Inc. (“Wetouch”, or the “Company”), formerly known as Gulf West Investment Properties, Inc., was originally incorporated in August 1992, under the laws of the state of Nevada. On October 9, 2020, we entered into a share exchange agreement (the “Share Exchange Agreement”) with Wetouch Holding Group Limited (“BVI Wetouch”) and all the shareholders of BVI Wetouch (each, a “BVI Shareholder” and collectively the “BVI Shareholders”), to acquire all the issued and outstanding capital stock of BVI Wetouch in exchange for the issuance to the BVI Shareholders an aggregate of 28,000,000 2,800 31,396,394 Wetouch Holding Group Limited (“BVI Wetouch”), is a holding company whose only asset, held through a subsidiary, is 100 The Reverse Merger was accounted for as a recapitalization effected by a share exchange, wherein BVI Wetouch is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of BVI Wetouch have been brought forward at their book value and no goodwill has been recognized. The number of shares, par value amount, and additional paid-in capital in the prior years are retrospectively adjusted according. See Note 9. Corporate History of BVI Wetouch Wetouch Holding Group Limited (“BVI Wetouch”) was incorporated under the laws of British Virgin Islands on August 14, 2020. It became the holding company of Hong Kong Wetouch Electronics Technology Limited (“HK Wetouch”) on September 11, 2020. HK Wetouch, formerly known as Hong Kong Vtouch Electronics Technology Limited, is a holding company that is incorporated under the laws of Hong Kong Special Administrative Region (“SAR”). HK Wetouch has initiated no business activity and is currently not engaging in any active business operations. Sichuan Wetouch Technology Co. Ltd. (“Sichuan Wetouch”) was formed on May 6, 2011 in the People’s Republic of China (“PRC”) and became Wholly Foreign-Owned Enterprise in PRC on February 23, 2017. On July 19, 2016, Sichuan Wetouch was 100 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | Note 2 — BASIS OF PRESENTATION 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 September 30, 2021, the results of operations and cash flows for the nine-month periods ended September 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 nine-month periods ended September 30, 2021, there were no significant changes made to Wetouch significant accounting policies. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the financial statements of the Wetouch and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation. (b) Uses of estimates In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, inventory valuations, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition and realization of deferred tax assets. Actual results could differ from those estimates. (c) Cash and cash equivalents Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. (d) Accounts receivables, net Accounts receivables are presented net of allowance for doubtful accounts. The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the collection is not probable. (e) Inventory Inventory consists of raw materials, work-in-process and finished goods and is stated at the lower of cost or net realizable value. Cost is determined using a weighted average. For work-in-process and manufactured inventories, cost consists of raw materials, direct labor and an allocated portion of the Company’s production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable value based upon assumptions about future demand and market conditions. For finished goods and work-in-process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write-downs are included in the cost of revenues in the consolidated statements of operations. Inventories are carried at this lower cost basis until sold or scrapped. US$ 66,944 nil (f) Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and due to related parties, approximate the fair value of the respective assets and liabilities as of December 31, 2020 and 2019 based upon the short-term nature of the assets and liabilities. (g)) Property, plant and equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is provided using the straight-line method over their expected useful lives, as follows: SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Useful life Buildings 20 Machinery and equipment 10 Office and electric equipment 3 Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. (h) Intangible assets, net The Company’s intangible assets primarily includes land use rights and patent right. A land use right in the PRC represents an exclusive right to occupy, use and develop a piece of land during the contractual term of the land use right. The cost of a land use right is usually paid in one lump sum at the date the right is granted. The prepayment usually covers the entire period of the land use right. The lump sum advance payment is capitalized and recorded as land use right and then charged to expense on a straight-line basis over the period of the right, which is normally 50 Patents are recognized at cost of acquisition. They have a finite life and are carried at cost less any accumulated amortization and any impairment losses. SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS Useful life Land use right 50 Patents 10 i) Impairment of long-lived Assets Long-lived assets, such as property, plant and equipment, land use rights, are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. There were nil (h) Foreign Currency Translation The Company uses US dollars as the reporting currency. The Company’s subsidiary HK Wetouch’s functional currency for HK Wetouch is Hong Kong dollar. The functional currency of Sichuan Wetouch is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into US$. Assets and liabilities accounts are translated using the exchange rate at each reporting period end date. Equity accounts are translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations. The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: SCHEDULE OF CURRENCY EXCHANGE RATES December 31 December 31, Year-end spot rate US$1=RMB 6.5250 US$1=RMB 6.9618 Average rate US$1=RMB 6.9042 US$1=RMB 6.9081 (i) Revenue recognition The Company adopted Accounting Standards Codification (“ASC”) 606 using the modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Therefore, no adjustments to opening retained earnings were necessary. ASC 606, Revenue from Contracts with customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. ASC 606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that would result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams. In accordance with ASC 606, the Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company accounts for the revenue generated from sales of its products primarily to its customers in PRC and overseas, as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual goods to customers, and there is no separately identifiable other promises in the contracts. The Company’s revenue streams are recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The Company’s products are sold with no right of return and the Company does not provide other credits or sales incentive to customers. The Company’s sales are net of value added tax (“VAT”) and business tax and surcharges collected on behalf of tax authorities in respect of product sales. Contract Assets and Liabilities Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing when an order is placed and when shipment or delivery occurs. As of December 31, 2020 and 2019, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred. Disaggregation of Revenues The Company disaggregates its revenue from contracts by geography, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended December 31, 2020 and 2019 are disclosed in Note 14 to the financial statements. (j) Selling, General and Administrative Expenses Selling expenses represents primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses. General and administrative expenses represents primarily payroll and benefits costs for administrative employees, rent and operating costs of office premises, depreciation and amortization of office facilities, professional fees and other administrative expenses. (k) Research and Development Expense Research and development costs are expensed as incurred. (l) Share-Based Compensation The Company awards share options and other equity-based instruments to its employees, directors and third party service providers (collectively “share-based payments”). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date. The Company recognizes the compensation cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect the expected forfeiture prior to vesting. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. (m) Government grant The Company follows other authoritative accounting guidance since there is no clear guidance with regard to government grants. Government grants are recognized at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognized as income over the periods necessary to match the grant to the costs it is compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight-line basis. (n) Income taxes The Company accounts for income taxes in accordance with the asset and liability method. Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established, as needed, to reduce the amount of deferred tax assets if it is considered more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company recognizes the effect of uncertain income tax positions only if those positions are more-likely-than-not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% no On December 22, 2017 the Tax Cut and Jobs Act of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces the U.S. federal corporate income tax rate to 21 34 35 (o) Value added tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price. Since April 1, 2019, VAT rate was lowered from 16 13 For export sales, VAT is not imposed on gross sales price, but the VAT related to purchasing raw materials is refunded after the export is completed. (p) Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of December 31, 2020, warrants were included for the dilutive EPS calculation. (q) Comprehensive income (loss) Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the consolidated statements of income and comprehensive income. (r) Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not anticipate the guidance will have a material impact on its financial statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption. | Note 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the financial statements of the Wetouch and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation. (b) Uses of estimates In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, inventory valuations, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition and realization of deferred tax assets. Actual results could differ from those estimates. (c) Cash and cash equivalents Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. (d) Accounts receivables, net Accounts receivables are presented net of allowance for doubtful accounts. The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the collection is not probable. (e) Inventory Inventory consists of raw materials, work-in-process and finished goods and is stated at the lower of cost or net realizable value. Cost is determined using a weighted average. For work-in-process and manufactured inventories, cost consists of raw materials, direct labor and an allocated portion of the Company’s production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable value based upon assumptions about future demand and market conditions. For finished goods and work-in-process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write-downs are included in the cost of revenues in the consolidated statements of operations. Inventories are carried at this lower cost basis until sold or scrapped. US$ 66,944 nil (f) Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and due to related parties, approximate the fair value of the respective assets and liabilities as of December 31, 2020 and 2019 based upon the short-term nature of the assets and liabilities. (g)) Property, plant and equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is provided using the straight-line method over their expected useful lives, as follows: SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Useful life Buildings 20 Machinery and equipment 10 Office and electric equipment 3 Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. (h) Intangible assets, net The Company’s intangible assets primarily includes land use rights and patent right. A land use right in the PRC represents an exclusive right to occupy, use and develop a piece of land during the contractual term of the land use right. The cost of a land use right is usually paid in one lump sum at the date the right is granted. The prepayment usually covers the entire period of the land use right. The lump sum advance payment is capitalized and recorded as land use right and then charged to expense on a straight-line basis over the period of the right, which is normally 50 Patents are recognized at cost of acquisition. They have a finite life and are carried at cost less any accumulated amortization and any impairment losses. SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS Useful life Land use right 50 Patents 10 (i) Impairment of long-lived Assets Long-lived assets, such as property, plant and equipment, land use rights, are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. There were nil (h) Foreign Currency Translation The Company uses US dollars as the reporting currency. The Company’s subsidiary HK Wetouch’s functional currency for HK Wetouch is Hong Kong dollar. The functional currency of Sichuan Wetouch is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into US$. Assets and liabilities accounts are translated using the exchange rate at each reporting period end date. Equity accounts are translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations. The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: SCHEDULE OF CURRENCY EXCHANGE RATES December 31 December 31, Year-end spot rate US$1=RMB 6.5250 US$1=RMB 6.9618 Average rate US$1=RMB 6.9042 US$1=RMB 6.9081 (i) Revenue recognition The Company adopted Accounting Standards Codification (“ASC”) 606 using the modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Therefore, no adjustments to opening retained earnings were necessary. ASC 606, Revenue from Contracts with customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. ASC 606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that would result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams. In accordance with ASC 606, the Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company accounts for the revenue generated from sales of its products primarily to its customers in PRC and overseas, as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual goods to customers, and there is no separately identifiable other promises in the contracts. The Company’s revenue streams are recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The Company’s products are sold with no right of return and the Company does not provide other credits or sales incentive to customers. The Company’s sales are net of value added tax (“VAT”) and business tax and surcharges collected on behalf of tax authorities in respect of product sales. Contract Assets and Liabilities Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing when an order is placed and when shipment or delivery occurs. As of December 31, 2020 and 2019, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred. Disaggregation of Revenues The Company disaggregates its revenue from contracts by geography, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended December 31, 2020 and 2019 are disclosed in Note 14 to the financial statements. (j) Selling, General and Administrative Expenses Selling expenses represents primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses. General and administrative expenses represents primarily payroll and benefits costs for administrative employees, rent and operating costs of office premises, depreciation and amortization of office facilities, professional fees and other administrative expenses. (k) Research and Development Expense Research and development costs are expensed as incurred. (l) Share-Based Compensation The Company awards share options and other equity-based instruments to its employees, directors and third party service providers (collectively “share-based payments”). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date. The Company recognizes the compensation cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect the expected forfeiture prior to vesting. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. (m) Government grant The Company follows other authoritative accounting guidance since there is no clear guidance with regard to government grants. Government grants are recognized at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognized as income over the periods necessary to match the grant to the costs it is compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight-line basis. (n) Income taxes The Company accounts for income taxes in accordance with the asset and liability method. Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established, as needed, to reduce the amount of deferred tax assets if it is considered more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company recognizes the effect of uncertain income tax positions only if those positions are more-likely-than-not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% no On December 22, 2017 the Tax Cut and Jobs Act of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces the U.S. federal corporate income tax rate to 21 34 35 (o) Value added tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price. Since April 1, 2019, VAT rate was lowered from 16 13 For export sales, VAT is not imposed on gross sales price, but the VAT related to purchasing raw materials is refunded after the export is completed. (p) Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of December 31, 2020, warrants were included for the dilutive EPS calculation. (q) Comprehensive income (loss) Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the consolidated statements of income and comprehensive income. (r) Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not anticipate the guidance will have a material impact on its financial statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Receivables [Abstract] | ||
ACCOUNTS RECEIVABLE | NOTE-3- ACCOUNTS RECEIVABLE Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE September 30, 2021 December 31 2020 Accounts receivable $ 11,343,114 $ 12,002,454 Allowance for doubtful accounts - (75,619 ) Accounts receivable, net $ 11,343,114 $ 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. There was no | NOTE-2- ACCOUNTS RECEIVABLE Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE December 31, 2020 December 31 2019 Accounts receivable $ 12,002,454 $ 16,120,327 Allowance for doubtful accounts (75,619 ) (70,874 ) Accounts receivable, net $ 11,926,835 $ 16,049,453 There was no The Company’s accounts receivable primarily includes balance due from customers when the Company’s products are sold and delivered to customers. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended |
Sep. 30, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consist of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, 2021 December 31, 2020 Advance to customers $ 140,846 $ 117,819 VAT input credits 677,038 - Others receivable (i) 188,826 110,624 Prepaid expenses and other current assets $ 1,006,710 $ 228,443 (i) Other receivables are mainly employee advances. |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 5 — PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net, consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT September 30, 2021 December 31, 2020 Buildings $ 13,366 $ 10,330,767 Machinery, equipment and furniture 45,443 5,830,470 Construction in progress 133,870 Subtotal 192,679 16,161,237 Less: accumulated depreciation (2,477 ) (6,670,042 ) Property, plant and equipment, net $ 190,202 $ 9,491,195 Depreciation expense was US$ 2,477 and $ 244,592 for the three-month period September 30, 2021 and 2020, respectively, and $ 263,873 and $ 725,708 for the nine-month period ended September 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 a compensation of RMB 115.2 17.9 7,625,279 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 RMB 300,000 46,367 | NOTE 3— PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net, consists of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT December 31, 2020 December 31 2019 Buildings $ 10,330,767 $ 9,682,590 Machinery, equipment and furniture 5,830,470 5,464,652 Subtotal 16,161,237 15,147,242 Less: accumulated depreciation (6,670,042 ) (5,279,658 ) Property, plant and equipment, net $ 9,491,195 $ 9,867,584 Depreciation expense was $ 979,999 979,270 |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
INTANGIBLE ASSETS, NET | NOTE 6 – INTANGIBLE ASSETS, NET Intangible assets, net mainly consist of the following: SCHEDULE OF INTANGIBLE ASSETS September 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 14,653 113,562 43,471 | NOTE 4 – INTANGIBLE ASSETS, NET Intangible assets, net mainly consist of the following: SCHEDULE OF INTANGIBLE ASSETS December 31, 2020 December 31 2019 Land use rights $ 1,016,215 $ 952,455 Patents 417,919 391,697 Subtotal 1,434,134 1,344,152 Less: accumulated amortization for patents (310,393 ) (234,456 ) Accumulated amortization for land use right (149,045 ) (120,644 ) Subtotal (459,438 ) (355,100 ) Intangible assets, net $ 974,696 $ 989,052 Amortization expense was $ 76,141 58,671 Estimated future amortization expense for intangible assets is as follows: SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE December 31, Total amortization expense 2021 $ 55,198 2022 55,198 2023 55,198 2024 29,043 2025 20,324 Thereafter 759,735 Total expense $ 974,696 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | NOTE 7 – RELATED PARTY TRANSACTIONS The related party transactions are summarized as follows: SCHEDULE OF RELATED PARTY TRANSACTIONS Three-Month Period Ended September 30, Nine-Month Period Ended September 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) - - 87,103 - Total revenue $ - $ - $ 97,554 $ - Three-Month Period Ended September 30, Nine-Month Period Ended September 30, 2021 2020 2021 2020 US$ US$ US$ US$ Cost of goods sold 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) - - 87,103 - Total cost of goods sold $ - $ - $ 97,554 $ - 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 95 Amounts due from related parties are as follows: Amounts due from related parties Relationship September 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 September 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 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 5 – RELATED PARTY TRANSACTIONS The related party transactions are summarized as follows: SCHEDULE OF RELATED PARTY TRANSACTIONS Revenues resulting from transactions with a related party: Year Ended December 31, 2020 Year Ended December 31, 2019 Sales from Sichuan Wetouch to Meishan Vtouch Electronics Technology Co., Ltd. (Meishan Wetouch) $ $ 184,212 Sichuan Wetouch sells capacitive touchscreens to Meishan Wetouch from time to time. There are no written agreements between Sichuan Wetouch and Meishan Wetouch. Mr. Guangde Cai, Chairman and director of the Company and our indirect majority shareholder, owns 95 Amounts due from related parties are as follows: Amounts due from related parties Relationship December 31, 2020 December 31, 2019 Note Mr. Shengyong Li General Manager of Sichuan Wetouch $ - $ 72 Employee advance Vision Touch Technology AG 100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch 76,619 71,812 Operating expense paid on behalf of the related party/Company Total $ 76,619 $ 71,884 Amounts due to related parties are as follows : Relationship December 31, 2020 December 31, 2019 Note Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”) 94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li $ 134,616 $ 121,306 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 68,402 397,947 Operating expense paid on behalf of the Company Australia Vtouch Technology Co., Ltd. (i) 35.36% owned by Mr. Guangde Cai - 4,233,949 Interest- free loan Mr. Guangde Cai Chairman and CEO of the Company 326,042 215,031 Payable to employee Mr. Guangde Cai/Ms. Jiaying Cai/Mr. Shenyong Li(ii) (ii) - - Interest- free advance Mr. Yong Yang Sales Director of Sichuan Wetouch - 32,570 Payable to employee Total $ 529,060 $ 5,000,803 (i) On November 24, 2020, the Company repaid in full RMB 29.5 4.2 11.9 1.8 8 (ii) For the year ended December 31, 2018, Sichuan Wetouch owed Mr. Guangde Cai, daughter of Mr. Guangde Cai, Ms. Jiaying Cai and Mr. Shengyong Li, the related parties of the Company, a total amount of approximately $ 14,000,000 93.5 100 14,000,000 93.5 14,000,000 For other related party guarantees, please refer to Note 9. |
INCOME TAXES
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
INCOME TAXES | NOTE 8 - INCOME TAXES Wetouch Wetouch Technology Inc. is subject to a tax rate of 21 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, entitled it to a preferential income tax rate of 15 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”), entitled to a reduced income tax rate of 15% beginning October 21, 2020 until October 20, 2023. Sichuan Vtouch is entitled to 25 The effective income tax rates for the nine-month periods ended September 30, 2021 and 2020 were 20.6 12.2 25 The estimated effective income tax rate for the year ended December 31, 2021 would be similar to actual effective tax rate of the nine-month periods ended September 30, 2021. The components of the income tax provision are as follows: SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFIT) For the Years Ended December 31, 2020 2019 Current tax provision Hong Kong $ - $ - China 1,549,333 2,724,662 1,549,333 2,724,662 Deferred tax provision Hong Kong - - China - - - - Income tax provision $ 1,549,333 $ 2,724,662 The following table reconciles the China statutory rates to the Company’s effective tax rate for the years ended December 31, 2020 and 2019: SCHEDULE OF INCOME TAX RATE For the Years Ended December 31, 2020 2019 PRC statutory income tax rate 25.0 % 25.0 % Effect of income tax holiday (10.0 )% (10.0 )% Non-deductible expenses in the PRC (0.2 )% 1.6 % Effective tax rate 14.8 % 16.6 % | NOTE 6 — INCOME TAXES Wetouch Wetouch Technology Inc. is subject to a tax rate of 21 BVI Wetouch Under the current laws of the British Virgin Islands, BVI Wetouch, subsidiaries 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 HK Wetouch did not generate any assessable profits derived from Hong Kong sources for the fiscal years ended December 31, 2020 and 2019, and accordingly no provision for Hong Kong profits tax has been made in these periods. PRC Sichuan Wetouch files income tax returns in the PRC. Effective from January 1, 2008, the PRC statutory income tax rate is 25 Under PRC CIT Law, domestic enterprises and Foreign Investment Enterprises (“FIEs”) are usually subject to a unified 25 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”), entitled to a reduced income tax rate of 15% beginning October 21, 2020 till October 20, 2023. The CIT Law and its implementation rules impose a withholding income tax at 10%, unless reduced by a tax treaty or arrangement, on the amount of dividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC that are related to earnings accumulated beginning on January 1, 2008. Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding income tax. The components of the income tax provision are as follows: SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFIT) For the Years Ended December 31, 2020 2019 Current tax provision Hong Kong $ - $ - China 1,549,333 2,724,662 1,549,333 2,724,662 Deferred tax provision Hong Kong - - China - - - - Income tax provision $ 1,549,333 $ 2,724,662 The following table reconciles the China statutory rates to the Company’s effective tax rate for the years ended December 31, 2020 and 2019: SCHEDULE OF INCOME TAX RATE For the Years Ended December 31, 2020 2019 PRC statutory income tax rate 25.0 % 25.0 % Effect of income tax holiday (10.0 )% (10.0 )% Non-deductible expenses in the PRC (0.2 )% 1.6 % Effective tax rate 14.8 % 16.6 % Deferred tax assets The Company’s has no The Company follows ASC 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates, applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company continually evaluates expiring statutes of limitations, audits, proposed settlements, changes in tax law and new authoritative rulings. As of December 31, 2020 and 2019, Sichuan Wetouch remains open for statutory examination by PRC tax authorities. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Payables and Accruals [Abstract] | ||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 9- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES September 30, 2021 December 31, 2020 Advance from customers $ 132,521 $ 9,493 Accrued payroll and employee benefits 99,194 105,801 Advance 0.9 $ - $ - Accrued interest expenses - - Other tax payable (i) - 325,719 Penalty related to a loan default (ii) - - Others (ii) 92,600 62,442 Accrued expenses and other current liabilities $ 324,315 $ 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 7— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES December 31, 2020 December 31, 2019 Advance from customers $ 9,493 $ 11,719 Accrued payroll and employee benefits 105,801 248,745 Accrued interest expenses - 37,140 Other tax payables (i) 325,719 324,670 Penalty related to a loan default (ii) - 1,701,986 Others (iii) 62,442 16,598 Accrued expenses and other current liabilities $ 503,455 $ 2,340,858 (i) Other tax payables are mainly value added tax payable. (ii) Penalty payable of RMB 6.0 0.9 5.8 0.8 11.8 1.7 (iii) Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses. |
DEFERRED GRANTS
DEFERRED GRANTS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Deferred Grants | ||
DEFERRED GRANTS | NOTE 10- DEFERRED GRANTS On January 14, 2013 and January 27, 2014, Sichuan Wetouch received RMB 11.2 1.8 4.8 0.8 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 nine-month period ended September 30, 2021, the Company recognized the remaining balance of deferred grant as income due to the government directed relocation order disclosed in Note 4. As of December 31, 2020, the remaining deferred grants as below: SCHEDULE OF REMAINING DEFERRED GRANTS Years ended December 31 2021 $ 245,211 2022 245,211 2023 187,995 Total deferred grants 678,417 less: current portion (245,211 ) Deferred grants- non-current $ 433,206 | NOTE 8— DEFERRED GRANTS On January 14, 2013 and January 27, 2014, Sichuan Wetouch received RMB 11.2 1.8 4.8 0.8 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. As of December 31, 2020, the remaining deferred grants as below: SCHEDULE OF REMAINING DEFERRED GRANTS Years ended December 31 2021 $ 245,211 2022 245,211 2023 187,995 Total deferred grants 678,417 less: current portion (245,211 ) Deferred grants- non-current $ 433,206 |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | ||
SHARE BASED COMPENSATION | NOTE 11- SHARE BASED COMPENSATION As of September 30, 2021, the Company had 841,440 0.01 4.45 3.4 On January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 310,830 631,080 five one 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 310,830 631,080 2.5 0 51.3 0.12 For the three-month periods and nine-month periods ended September 30, 2021, the Company recognized relevant share-based compensation expense of nil 1,041,281 nil 2,107,825 | NOTE 10- SHARE BASED COMPENSATION On December 22, 2020, the Board of Directors of the Company authorized the issuance of an aggregate of 103,610 210,360 five one The shares of 103,610 no 2.5 0 43.5 0.11 For the year ended December 31, 2020, the Company recognized relevant share-based compensation expense of $ 351,134 713,120 |
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | ||
RISKS AND UNCERTAINTIES | NOTE 12- RISKS AND UNCERTAINTIES Credit Risk The Company has its cash in bank deposits primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy of protecting depositors’ interests. The PRC promulgated a Bankruptcy Law in August 2006, effective June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks. The bank deposits with financial institutions in the PRC are insured by the government authority for up to RMB 500,000 Interest Rate Risk Currency Risk - The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: SCHEDULE OF CURRENCY EXCHANGE RATE September 30, December 31, Year-end spot rate US$1=RMB 6.4434 US$1=RMB 6.5250 Average rate US$1=RMB 6.4701 US$1=RMB 6.9042 And average rate for September 30, 2021 is US$=RMB 6.4701 Concentrations - 10 For the three-month periods ended September 30, 2021 and 2020, five customers accounted for 21.3 15.5 15.4 14.0 11.4 18.5 16.3 15.0 12.5 12.5 For the nine-month periods ended September 30, 2021 and 2020, five customers accounted for 18.9 17.5 14.6 14.1 11.4 18.0 17.3 14.5 13.5 11.4 And the Company’s top ten customers aggregately accounted for 98.1 99.4 96.7 98.5 As of September 30, 2021 and December 31, 2020, seven customers accounted for 97.6 96.4 The Company purchases its raw materials through various suppliers. Raw material purchases from these suppliers which individually exceeded 10 46.3 28.3 25.1 37.6 | NOTE 12- RISKS AND UNCERTAINTIES Credit Risk The Company has its cash in bank deposits primarily at state owned banks located in the PRC. Historically, deposits in PRC banks have been secured due to the state policy of protecting depositors’ interests. The PRC promulgated a Bankruptcy Law in August 2006, effective June 1, 2007, which contains provisions for the implementation of measures for the bankruptcy of PRC banks. The bank deposits with financial institutions in the PRC are insured by the government authority for up to RMB 500,000 Interest Rate Risk Currency Risk - Concentrations - 17.8 15.9 14.6 12.7 12.2 16.7 16.6 13.1 12.6 11.6 And the Company’s top 10 customers aggregately accounted for 98.5% 98.6% As of December 31, 2020 four customers accounted for 18.2 16.0 13.2 18.6 17.4 15.8 14.0 The Company purchases its raw materials through various suppliers. Raw material purchases from these suppliers which individually exceeded 10 37.5 33.7 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
COMMITMENTS AND CONTINGENCIES | NOTE 13 — 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 September 30, 2021. | NOTE 13 — COMMITMENTS AND CONTINGENCIES Legal Proceedings From time to time, the Company is a party to various legal actions arising in the ordinary course of business. The Company accrues costs associated with these matters when they become probable and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. For the year ended December 31, 2020, the Company had several legal claims or litigation that, individually or in aggregate, could have a material adverse impact on the Company’s consolidated financial position, results of operations and cash flows. i) Legal case with Chengdu SME Credit Guarantee Co., Ltd. on a loan default penalty of RMB 11.8 1.7 On July 5, 2013, Sichuan Wetouch obtained a one-year loan of RMB 60.0 9.8 8.61% Chengdu SME Credit Guarantee Co., Ltd (“Chengdu SME”), a third party, provided a 70% guarantee and Bank of Chengdu retained 30% of the risk, while Chengdu Wetouch and Mr. Guangde Cai (related parties, see Note 4) provided joint and several liability guarantee for 100% of the loan. On July 31, 2014, Sichuan Wetouch repaid RMB 5.0 0.8 55.0 8.9 55 8.0 55 8.0 5.8 0.8 6.0 0.9 1.7 Chengdu SME applied to the Chengdu High-tech Court for enforcement for the above mentioned loan default penalties of RMB 5.8 0.8 6.0 0.9 5.8 0.8 6.0 0.9 On September 16, 2020, Sichuan Wetouch made a full repayment of RMB 11.8 1.7 ii) Legal case with Sichuan Renshou Shigao Tianfu Investment Co., Ltd and Renshou Tengyi Landscaping Co., Ltd. on an asset recovery of RMB 12.0 1.7 On March 19, 2014, Chengdu Wetouch, a related party, obtained a two and half-year loan of RMB 15.0 2.2 Upon the loan due in January 2017, Chengdu Wetouch defaulted the loan, thus, CDHT Investment filed a lawsuit against Chengdu Wetouch, Sichuan Wetouch, and Hong Kong Wetouch demanding a full repayment of such debts. To support the local economic development as well as Chengdu Wetouch, two government-backed companies, Sichuan Renshou Shigao Tianfu Investment Co., Ltd. (“Shigaotianfu Investment”) and Renshou Tengyi Landscaping Co., Ltd. (“Renshou Tenyi”) provided their bank deposits of RMB 12.0 1.7 Upon the expiration of the guarantee, Chengdu Wetouch still defaulted repayment of above pledge. As a result, CDHT Investment levied this collateral of RMB12.0 million On November 21, 2019. Subsequently, Shigaotianfu Investment and Renshou Tengyi filed with Chengdu Intermediate People’s Court a lawsuit demanding an asset recovery of RMB 12.0 1.7 On December 2, 2019, pursuant to the reconciling agreement issued by Chengdu Intermediate People’s Court, the parties agreed to cancel the demand to seize property of Sichuan Wetouch rather than the property of Chengdu Wetouch, and to waive freezing Guangde Cai’s 60% shareholding equity in Xinjiang Wetouch. On October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch, Hong Kong Wetouch and Guangde Cai are fully discharged and released from any and all obligations under the outstanding debts, and from all liabilities under guarantee with Chengdu Wetouch being responsible for the outstanding debts by December 31, 2020. On October 27, 2020, Chengdu Wetouch made a full payment of the above debts. Guarantees i) Guarantee to Chengdu Wetouch for a loan of RMB 17.0 2.6 In July 2014, Chengdu Wetouch, a related party, obtained a loan of RMB 17.0 2.6 Sichuan Wetouch, Mr. Guangde Cai and his 60% controlled Xinjiang Wetouch and his 95% controlled Meishan Wetouch, as well as two unrelated individuals acting as counter guarantors for this loan. On July 2, 2018, as Chengdu Wetouch defaulted the loan, Chengdu SME filed a lawsuit demanding the full repayment. As of December 31, 2019, there was a lawsuit in progress on this loan repayment. Above mentioned counter guarantors were obliged for the joint responsibilities. On May 13, 2020, with Xinjiang Wetouch partially repaying RMB 5.9 On October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch and Mr. Guangde Cai are unconditionally and fully released and discharged from all and only obligations under the outstanding debts, with Chengdu Wetouch being responsible for the outstanding debts by December 31, 2020. On December 30, 2020, Chengdu Wetouch made a full payment of the above debts. ii) Guarantee to Chengdu Wetouch for a loan of RMB 9.0 1.3 On April 21, 2014, Sichuan Wetouch, Mr. Guangde Cai provided counter guarantee to Chengdu Wetouch obtaining a loan of RMB 9.0 1.3 Upon the loan due, Chengdu Wetouch failed to pay the debts on schedule. On May 3, 2017, Tianhong Asset brought a lawsuit to the local court. As of December 31, 2019, this lawsuit was in progress on the loan repayment. Sichuan Wetouch and Mr. Guangde Cai were under joint and several guarantee liability for the agreed principal and interest and corresponding fees. On October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch and Guangde Cai are unconditionally and fully released and discharged from all and only obligations under the outstanding debts, with Chengdu Wetouch being responsible for the outstanding balance by December 31, 2020. On November 10, 2020, Chengdu Wetouch made a full payment of the above debts. iii) Guarantee to Chengdu Wetouch for a loan of RMB 15.0 2.2 On May 26, 2015, Sichuan Wetouch, Mr. Guangde Cai provided guarantee to Chengdu Wetouch obtaining a loan of RMB 15.0 2.2 Upon the loan due, Chengdu Wetouch failed to pay the debts on schedule. On May 3, 2017, Tianhong Asset brought a lawsuit to the local court. As of December 31, 2019, this lawsuit was in progress on the loan repayment. Sichuan Wetouch and Mr. Guangde Cai were under joint and several guarantee liability for the agreed principal and interest and corresponding fees. On October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch and Guangde Cai are unconditionally and fully released and discharged from all and only obligations under the outstanding debts, with Chengdu Wetouch being responsible for the outstanding debts by December 31, 2020. On November 10, 2020, Chengdu Wetouch made a full payment of the above debts. iv) Guarantee to Chengdu Wetouch for a loan of RMB 14.9 2.3 On July 4, 2014, Sichuan Wetouch, Mr. Guangde Cai and another unrelated individual provided joint guarantee to Chengdu Wetouch obtaining a loan of RMB 14.9 2.3 Upon the loan due, Chengdu Wetouch failed to pay the debts on schedule. On December 16, 2015, the bank thus brought a lawsuit to the local court. As of December 31, 2019, there was a lawsuit in progress on the loan repayment. Sichuan Wetouch, Mr. Guangde Cai and another unrelated individual for the joint guarantee responsibility. On October 9, 2020, pursuant to a settlement and release agreement, Wetouch and Mr. Guangde Cai are unconditionally and fully released and discharged from all and only obligations under the outstanding debts, with Chengdu Wetouch being responsible for the outstanding debts by December 31, 2020. On December 24, 2020, Chengdu Wetouch made a full payment of the above debts. v) Guarantee to Chengdu Wetouch for a loan of RMB 17.3 2.7 On May 23, 2014, Sichuan Wetouch and Mr. Guangde Cai provided guarantee to Chengdu Wetouch obtaining a loan of RMB 17.3 2.7 On February 3, 2017, Agricultural Bank Wenjiang Branch filed a lawsuit demanding the full repayments of the above mentioned loan and its interests. As of December 31, 2019, there was a lawsuit in progress on the loan repayment. Sichuan Wetouch and Mr. Guangde Cai and two other unrelated parties were obliged to take joint guarantee responsibility. On October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch, and Mr. Guangde Cai are unconditionally and fully released and discharged from all and only obligations under the outstanding debts, with Chengdu Wetouch being responsible for the outstanding debts by December 31, 2020. On October 14, 2020, Chengdu Wetouch made a full payment of the above debts. vi) Guarantee to Chengdu Wetouch for a loan of RMB 15.0 2.2 On March 19, 2014, Sichuan Wetouch, Mr. Guangde Cai and HK Wetouch provided counter guarantee to Chengdu Wetouch obtaining a loan of RMB 15.0 2.2 Upon the loan defaulted, CDHT paid off the above loan principal and interests to the bank on behalf of Chengdu Wetouch on January 10, 2017. On August 16, 2018, CDHT Investment brought a lawsuit to Chengdu Railway Transport Court. (See above Legal Case #2- Note 9) As of December 31, 2019, there was a lawsuit in progress on the loan repayment. Sichuan Wetouch, Mr. Guangde Cai and Hong Kong Wetouch were obliged to take joint guarantee responsibility for the above loan and its interests. On October 9, 2020, pursuant to a settlement and release, Sichuan Wetouch, Mr. Guangde Cai and HK Wetouch are unconditionally and fully released and discharged from all and only obligations under the outstanding debts, with Chengdu Wetouch being responsible for the outstanding debts by December 31, 2020. On December 10, 2020, Chengdu Wetouch made a full payment of the above debts. vii) Guarantee to Meishan Wetouch for a loan of RMB 26.0 3.5 On October 21, 2014, Sichuan Wetouch, Chengdu Wetouch, Mr. Guangde Cai and his 60% owned Xinjiang Wetouch, together with one unrelated guarantee company Sichuan Yitong Financing Guarantee Co., Ltd. (“Yitong Guarantee”) provided joint guarantee to Meishan Wetouch obtaining a two-year loan of RMB 26.0 3.5 On September 11, 2019, Meishan Wetouch made a partial repayment of RMB 10.5 1.5 As of December 31, 2019, there was a lawsuit in progress on the loan remaining balance repayment. Sichuan Wetouch, Chengdu Wetouch and Mr. Guangde Cai, and Xinjiang Wetouch as well as Yitong Guarantee were under guarantee responsibility. On October 9, 2020, pursuant to a settlement and release agreement, Sichuan Wetouch and Mr. Guangde Cai are unconditionally and fully released and discharged from all and only obligations under the outstanding debts, with Chengdu Wetouch being responsible for the outstanding debts by December 31, 2020. On November 3, 2020, Chengdu Wetouch made a full payment of the above debts. Capital expenditure commitment The Company does not have any capital commitments as of December 31, 2020 and 2019. |
REVENUES
REVENUES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
REVENUES | NOTE 14 — REVENUES SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION Three-Month Period Ended September 30, Nine-Month Period Ended September 30, 2021 2020 2021 2020 US$ US$ US$ US$ Sales in PRC $ 7,696,992 $ 8,407,154 $ 24,652,526 $ 13,940,471 Sales in Overseas —Republic of China (ROC, or Taiwan) 1,785,128 1,955,577 6,663,678 3,652,771 -South Korea 1,618,284 1,500,392 5,519,484 2,993,899 -Others 65,576 40,997 278,482 82,131 Sub-total 3,468,988 3,496,966 12,461,644 6,728,801 Total Revenue $ 11,165,980 $ 11,904,120 $ 37,114,170 $ 20,669,272 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 was gradually recovered to its normal level during the three -months and nine months period ended September 30, 2021, due to our proactive efforts to in marketing new models such as POS touchscreens and penetrate into new customers into new regions. | NOTE 14 — REVENUES The Company’s geographical revenue information is set forth below: SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION 2020 2019 For the Years Ended December 31, 2020 2019 Sales in PRC $ 21,430,226 $ 26,496,302 Sales in Overseas —Republic of China (ROC, or Taiwan) 5,178,407 6,725,155 -South Korea 4,654,133 6,697,864 -Others 83,185 84,782 Sub-total 9,915,725 13,507,801 Total revenues $ 31,345,951 $ 40,004,103 |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Subsequent Events [Abstract] | ||
SUBSEQUENT EVENT | NOTE 15 — SUBSEQUENT EVENT Convertible Note and Warrant On November 3, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Talos Victory Fund, LLC, a Delaware limited liability company (the “Lender”), dated as of October 27, 2021, pursuant to which the Company issued the Lender a convertible promissory note in the principal amount of $ 250,000 8% 200,000 1.25 225,000 Registration Statement On September 13, 2021, the Company filed a registration statement (No. 333-259499) with the SEC to offer and sell shares of common stock in an underwritten offering through Craft Capital Management LLC and R.F. Lafferty & Co., Inc. The Company also filed an application to have its shares of common stock listed on the Nasdaq Capital Market. | NOTE 15 — SUBSEQUENT EVENT (i) On December 30, 2020, Sichuan Vouch Technology Co., Ltd. (“Sichuan Vtouch”) was incorporated in Chengdu, Sichuan, under the laws of PRC in order to take over the operating business of Sichuan Wetouch, with HK Wetouch as sole shareholder. HK Wetouch, an affiliate of Guangde Cai, our Chairman and Director, was incorporated on December 3, 2020 under the laws of Hong Kong. On March 12, 2021, BVI Wetouch acquired all the outstanding shares of HK Wetouch from the sole shareholder of HK Wetouch, Guangde Cai, in consideration of the payment of HK$ 10,000 (ii) Pursuant to local PRC government guidelines on local environment issues and the national overall plan, Sichuan Wetouch is under the government directed relocation order no later than December 31, 2021 and get compensated accordingly. On March 18, 2021, pursuant to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received a compensation of RMB 115.2 17.7 (iii) On March 16, 2020, 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 RMB 300,000 46,154 (iv) On December 31, 2020, the Company released a preliminary prospectus for selling an aggregate of 15,889,371 0.001 3.38 As of the date of filing, the proposed sales was not completed yet. |
SHAREHOLDERS_ EQUITY
SHAREHOLDERS’ EQUITY | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
SHAREHOLDERS’ EQUITY | NOTE 9— SHAREHOLDERS’ EQUITY Common Stock The Company’s authorized number of shares of common stock was 300,000,000 shares with par value of $ 0.001 . On December 22,2020, the Company issued 103,610 Statutory reserve and restricted net assets Under PRC rules and regulations, Sichuan Wetouch is required to appropriate 10% of their net income to a statutory surplus reserve until the reserve balance reaches 50% of their registered capital. The appropriation to this statutory surplus reserve must be made before distribution of dividends can be made. The statutory reserve is non-distributable, other than during liquidation, and can be used to fund previous years losses, if any, and may be converted into share capital by issuing new shares to existing shareholders in proportion to their shareholders or by increasing the par value of the shares currently outstanding, provided that the remaining balance of the statutory reserve after such issue is not less than 25% of the registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the board of directors. The statutory reserve may be applied against prior year losses, if any, and may be used for general business expansion and production or increase in registered capital, but are not distributable as cash dividends. For the years ended December 31, 2020 and 2019, Sichuan Wetouch made appropriations to the reserve fund of RMB 6,907,298 1,058,590 nil |
WEIGHTED AVERAGE NUMBER OF SHAR
WEIGHTED AVERAGE NUMBER OF SHARES | 12 Months Ended |
Dec. 31, 2020 | |
EARNINGS PER COMMON SHARE | |
WEIGHTED AVERAGE NUMBER OF SHARES | NOTE 11. WEIGHTED AVERAGE NUMBER OF SHARES In October 2020, the Company entered into a reverse merger transaction. The Company computes the weighted-average number of common shares outstanding in accordance with ASC 260 states that in calculating the weighted average shares when a reverse merger takes place in the middle of the year, the number of common shares outstanding from the beginning of that period to the acquisition date shall be computed on the basis of the weighted-average number of common shares of the legal acquiree (accounting acquirer) outstanding during the period multiplied by the exchange ratio established in the merger agreement. The number of common shares outstanding from the acquisition date to the end of that period shall be the actual number of common shares of the legal acquirer (the accounting acquiree) outstanding during that period. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
Basis of Presentation and Principles of Consolidation | (a) Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the financial statements of the Wetouch and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation. | (a) Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying consolidated financial statements include the financial statements of the Wetouch and its wholly owned subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation. |
Uses of estimates | (b) Uses of estimates In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, inventory valuations, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition and realization of deferred tax assets. Actual results could differ from those estimates. | (b) Uses of estimates In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, inventory valuations, useful lives of property, plant and equipment, intangible assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition and realization of deferred tax assets. Actual results could differ from those estimates. |
Cash and cash equivalents | (c) Cash and cash equivalents Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. | (c) Cash and cash equivalents Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. |
Accounts receivables, net | (d) Accounts receivables, net Accounts receivables are presented net of allowance for doubtful accounts. The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the collection is not probable. | (d) Accounts receivables, net Accounts receivables are presented net of allowance for doubtful accounts. The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the collection is not probable. |
Inventory | (e) Inventory Inventory consists of raw materials, work-in-process and finished goods and is stated at the lower of cost or net realizable value. Cost is determined using a weighted average. For work-in-process and manufactured inventories, cost consists of raw materials, direct labor and an allocated portion of the Company’s production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable value based upon assumptions about future demand and market conditions. For finished goods and work-in-process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write-downs are included in the cost of revenues in the consolidated statements of operations. Inventories are carried at this lower cost basis until sold or scrapped. US$ 66,944 nil | (e) Inventory Inventory consists of raw materials, work-in-process and finished goods and is stated at the lower of cost or net realizable value. Cost is determined using a weighted average. For work-in-process and manufactured inventories, cost consists of raw materials, direct labor and an allocated portion of the Company’s production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable value based upon assumptions about future demand and market conditions. For finished goods and work-in-process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write-downs are included in the cost of revenues in the consolidated statements of operations. Inventories are carried at this lower cost basis until sold or scrapped. US$ 66,944 nil |
Fair value of financial instruments | (f) Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and due to related parties, approximate the fair value of the respective assets and liabilities as of December 31, 2020 and 2019 based upon the short-term nature of the assets and liabilities. | (f) Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and due to related parties, approximate the fair value of the respective assets and liabilities as of December 31, 2020 and 2019 based upon the short-term nature of the assets and liabilities. |
Property, plant and equipment, net | (g)) Property, plant and equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is provided using the straight-line method over their expected useful lives, as follows: SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Useful life Buildings 20 Machinery and equipment 10 Office and electric equipment 3 Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. | (g)) Property, plant and equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is provided using the straight-line method over their expected useful lives, as follows: SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Useful life Buildings 20 Machinery and equipment 10 Office and electric equipment 3 Expenditures for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other comprehensive income in other income or expenses. |
Intangible assets, net | (h) Intangible assets, net The Company’s intangible assets primarily includes land use rights and patent right. A land use right in the PRC represents an exclusive right to occupy, use and develop a piece of land during the contractual term of the land use right. The cost of a land use right is usually paid in one lump sum at the date the right is granted. The prepayment usually covers the entire period of the land use right. The lump sum advance payment is capitalized and recorded as land use right and then charged to expense on a straight-line basis over the period of the right, which is normally 50 Patents are recognized at cost of acquisition. They have a finite life and are carried at cost less any accumulated amortization and any impairment losses. SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS Useful life Land use right 50 Patents 10 | (h) Intangible assets, net The Company’s intangible assets primarily includes land use rights and patent right. A land use right in the PRC represents an exclusive right to occupy, use and develop a piece of land during the contractual term of the land use right. The cost of a land use right is usually paid in one lump sum at the date the right is granted. The prepayment usually covers the entire period of the land use right. The lump sum advance payment is capitalized and recorded as land use right and then charged to expense on a straight-line basis over the period of the right, which is normally 50 Patents are recognized at cost of acquisition. They have a finite life and are carried at cost less any accumulated amortization and any impairment losses. SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS Useful life Land use right 50 Patents 10 |
Impairment of long-lived Assets | i) Impairment of long-lived Assets Long-lived assets, such as property, plant and equipment, land use rights, are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. There were nil | (i) Impairment of long-lived Assets Long-lived assets, such as property, plant and equipment, land use rights, are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. There were nil |
Foreign Currency Translation | (h) Foreign Currency Translation The Company uses US dollars as the reporting currency. The Company’s subsidiary HK Wetouch’s functional currency for HK Wetouch is Hong Kong dollar. The functional currency of Sichuan Wetouch is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into US$. Assets and liabilities accounts are translated using the exchange rate at each reporting period end date. Equity accounts are translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations. The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: SCHEDULE OF CURRENCY EXCHANGE RATES December 31 December 31, Year-end spot rate US$1=RMB 6.5250 US$1=RMB 6.9618 Average rate US$1=RMB 6.9042 US$1=RMB 6.9081 | (h) Foreign Currency Translation The Company uses US dollars as the reporting currency. The Company’s subsidiary HK Wetouch’s functional currency for HK Wetouch is Hong Kong dollar. The functional currency of Sichuan Wetouch is the Chinese Yuan (“RMB”). The Company’s consolidated financial statements have been translated into US$. Assets and liabilities accounts are translated using the exchange rate at each reporting period end date. Equity accounts are translated at historical rates. Income and expense accounts are translated at the average rate of exchange during the reporting period. The resulting translation adjustments are reported under other comprehensive income (loss). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the results of operations. The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation. The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: SCHEDULE OF CURRENCY EXCHANGE RATES December 31 December 31, Year-end spot rate US$1=RMB 6.5250 US$1=RMB 6.9618 Average rate US$1=RMB 6.9042 US$1=RMB 6.9081 |
Revenue recognition | (i) Revenue recognition The Company adopted Accounting Standards Codification (“ASC”) 606 using the modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Therefore, no adjustments to opening retained earnings were necessary. ASC 606, Revenue from Contracts with customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. ASC 606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that would result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams. In accordance with ASC 606, the Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company accounts for the revenue generated from sales of its products primarily to its customers in PRC and overseas, as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual goods to customers, and there is no separately identifiable other promises in the contracts. The Company’s revenue streams are recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The Company’s products are sold with no right of return and the Company does not provide other credits or sales incentive to customers. The Company’s sales are net of value added tax (“VAT”) and business tax and surcharges collected on behalf of tax authorities in respect of product sales. Contract Assets and Liabilities Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing when an order is placed and when shipment or delivery occurs. As of December 31, 2020 and 2019, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred. Disaggregation of Revenues The Company disaggregates its revenue from contracts by geography, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended December 31, 2020 and 2019 are disclosed in Note 14 to the financial statements. | (i) Revenue recognition The Company adopted Accounting Standards Codification (“ASC”) 606 using the modified retrospective approach. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. Therefore, no adjustments to opening retained earnings were necessary. ASC 606, Revenue from Contracts with customers, establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity’s contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. ASC 606 requires the use of a five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. The Company has assessed the impact of the guidance by reviewing its existing customer contracts and current accounting policies and practices to identify differences that would result from applying the new requirements, including the evaluation of its performance obligations, transaction price, customer payments, transfer of control and principal versus agent considerations. Based on the assessment, the Company concluded that there was no change to the timing and pattern of revenue recognition for its current revenue streams. In accordance with ASC 606, the Company recognizes revenue when it transfers its goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company accounts for the revenue generated from sales of its products primarily to its customers in PRC and overseas, as the Company is acting as a principal in these transactions, is subject to inventory risk, has latitude in establishing prices, and is responsible for fulfilling the promise to provide customers the specified goods, which the Company has control of the goods and has the ability to direct the use of goods to obtain substantially all the benefits. All of the Company’s contracts have one single performance obligation as the promise is to transfer the individual goods to customers, and there is no separately identifiable other promises in the contracts. The Company’s revenue streams are recognized at a point in time when title and risk of loss passes and the customer accepts the goods, which generally occurs at delivery. The Company’s products are sold with no right of return and the Company does not provide other credits or sales incentive to customers. The Company’s sales are net of value added tax (“VAT”) and business tax and surcharges collected on behalf of tax authorities in respect of product sales. Contract Assets and Liabilities Payment terms are established on the Company’s pre-established credit requirements based upon an evaluation of customers’ credit quality. Contract assets are recognized for in related accounts receivable. Contract liabilities are recognized for contracts where payment has been received in advance of delivery. The contract liability balance can vary significantly depending on the timing when an order is placed and when shipment or delivery occurs. As of December 31, 2020 and 2019, other than accounts receivable and advances from customers, the Company had no other material contract assets, contract liabilities or deferred contract costs recorded on its consolidated balance sheet. Costs of fulfilling customers’ purchase orders, such as shipping, handling and delivery, which occur prior to the transfer of control, are recognized in selling, general and administrative expense when incurred. Disaggregation of Revenues The Company disaggregates its revenue from contracts by geography, as the Company believes it best depicts how the nature, amount, timing and uncertainty of the revenue and cash flows are affected by economic factors. The Company’s disaggregation of revenues for the years ended December 31, 2020 and 2019 are disclosed in Note 14 to the financial statements. |
Selling, General and Administrative Expenses | (j) Selling, General and Administrative Expenses Selling expenses represents primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses. General and administrative expenses represents primarily payroll and benefits costs for administrative employees, rent and operating costs of office premises, depreciation and amortization of office facilities, professional fees and other administrative expenses. | (j) Selling, General and Administrative Expenses Selling expenses represents primarily costs of payroll, benefits, commissions for sales representatives and advertising expenses. General and administrative expenses represents primarily payroll and benefits costs for administrative employees, rent and operating costs of office premises, depreciation and amortization of office facilities, professional fees and other administrative expenses. |
Research and Development Expense | (k) Research and Development Expense Research and development costs are expensed as incurred. | (k) Research and Development Expense Research and development costs are expensed as incurred. |
Share-Based Compensation | (l) Share-Based Compensation The Company awards share options and other equity-based instruments to its employees, directors and third party service providers (collectively “share-based payments”). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date. The Company recognizes the compensation cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect the expected forfeiture prior to vesting. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. | (l) Share-Based Compensation The Company awards share options and other equity-based instruments to its employees, directors and third party service providers (collectively “share-based payments”). Compensation cost related to such awards is measured based on the fair value of the instrument on the grant date. The Company recognizes the compensation cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The amount of cost recognized is adjusted to reflect the expected forfeiture prior to vesting. When no future services are required to be performed by the employee in exchange for an award of equity instruments, and if such award does not contain a performance or market condition, the cost of the award is expensed on the grant date. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. |
Government grant | (m) Government grant The Company follows other authoritative accounting guidance since there is no clear guidance with regard to government grants. Government grants are recognized at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognized as income over the periods necessary to match the grant to the costs it is compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight-line basis. | (m) Government grant The Company follows other authoritative accounting guidance since there is no clear guidance with regard to government grants. Government grants are recognized at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met. Grants relating to expense items are recognized as income over the periods necessary to match the grant to the costs it is compensating. Grants relating to assets are credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a straight-line basis. |
Income taxes | (n) Income taxes The Company accounts for income taxes in accordance with the asset and liability method. Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established, as needed, to reduce the amount of deferred tax assets if it is considered more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company recognizes the effect of uncertain income tax positions only if those positions are more-likely-than-not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% no On December 22, 2017 the Tax Cut and Jobs Act of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces the U.S. federal corporate income tax rate to 21 34 35 | (n) Income taxes The Company accounts for income taxes in accordance with the asset and liability method. Deferred taxes are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and income tax purposes using enacted rates expected to be in effect when such amounts are realized or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established, as needed, to reduce the amount of deferred tax assets if it is considered more-likely-than-not that some portion or all of the deferred tax assets will not be realized. The Company recognizes the effect of uncertain income tax positions only if those positions are more-likely-than-not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% no On December 22, 2017 the Tax Cut and Jobs Act of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces the U.S. federal corporate income tax rate to 21 34 35 |
Value added tax (“VAT”) | (o) Value added tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price. Since April 1, 2019, VAT rate was lowered from 16 13 For export sales, VAT is not imposed on gross sales price, but the VAT related to purchasing raw materials is refunded after the export is completed. | (o) Value added tax (“VAT”) Sales revenue represents the invoiced value of goods, net of VAT. The VAT is based on gross sales price. Since April 1, 2019, VAT rate was lowered from 16 13 For export sales, VAT is not imposed on gross sales price, but the VAT related to purchasing raw materials is refunded after the export is completed. |
Earnings per Share | (p) Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of December 31, 2020, warrants were included for the dilutive EPS calculation. | (p) Earnings per Share The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding for the period. Diluted presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. As of December 31, 2020, warrants were included for the dilutive EPS calculation. |
Comprehensive income (loss) | (q) Comprehensive income (loss) Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the consolidated statements of income and comprehensive income. | (q) Comprehensive income (loss) Comprehensive income (loss) consists of two components, net income and other comprehensive income (loss). The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported in other comprehensive income (loss) in the consolidated statements of income and comprehensive income. |
Recent Accounting Pronouncements | (r) Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not anticipate the guidance will have a material impact on its financial statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption. | (r) Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company does not anticipate the guidance will have a material impact on its financial statements. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”. From time to time, the FASB or other standards setting bodies issue new accounting pronouncements. Updates to the FASB ASCs are communicated through issuance of ASUs. Unless otherwise discussed, the Company believes that the recently issued guidance, whether adopted or to be adopted in the future, is not expected to have a material impact on its consolidated financial statements upon adoption. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Accounting Policies [Abstract] | ||
SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT | SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Useful life Buildings 20 Machinery and equipment 10 Office and electric equipment 3 | SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT Useful life Buildings 20 Machinery and equipment 10 Office and electric equipment 3 |
SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS | SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS Useful life Land use right 50 Patents 10 | SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS Useful life Land use right 50 Patents 10 |
SCHEDULE OF CURRENCY EXCHANGE RATES | The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: SCHEDULE OF CURRENCY EXCHANGE RATES December 31 December 31, Year-end spot rate US$1=RMB 6.5250 US$1=RMB 6.9618 Average rate US$1=RMB 6.9042 US$1=RMB 6.9081 | The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: SCHEDULE OF CURRENCY EXCHANGE RATES December 31 December 31, Year-end spot rate US$1=RMB 6.5250 US$1=RMB 6.9618 Average rate US$1=RMB 6.9042 US$1=RMB 6.9081 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Receivables [Abstract] | ||
SCHEDULE OF ACCOUNTS RECEIVABLE | Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE September 30, 2021 December 31 2020 Accounts receivable $ 11,343,114 $ 12,002,454 Allowance for doubtful accounts - (75,619 ) Accounts receivable, net $ 11,343,114 $ 11,926,835 | Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE December 31, 2020 December 31 2019 Accounts receivable $ 12,002,454 $ 16,120,327 Allowance for doubtful accounts (75,619 ) (70,874 ) Accounts receivable, net $ 11,926,835 $ 16,049,453 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets consist of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, 2021 December 31, 2020 Advance to customers $ 140,846 $ 117,819 VAT input credits 677,038 - Others receivable (i) 188,826 110,624 Prepaid expenses and other current assets $ 1,006,710 $ 228,443 (i) Other receivables are mainly employee advances. |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT | Property, plant and equipment, net, consist of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT September 30, 2021 December 31, 2020 Buildings $ 13,366 $ 10,330,767 Machinery, equipment and furniture 45,443 5,830,470 Construction in progress 133,870 Subtotal 192,679 16,161,237 Less: accumulated depreciation (2,477 ) (6,670,042 ) Property, plant and equipment, net $ 190,202 $ 9,491,195 | Property, plant and equipment, net, consists of the following: SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT December 31, 2020 December 31 2019 Buildings $ 10,330,767 $ 9,682,590 Machinery, equipment and furniture 5,830,470 5,464,652 Subtotal 16,161,237 15,147,242 Less: accumulated depreciation (6,670,042 ) (5,279,658 ) Property, plant and equipment, net $ 9,491,195 $ 9,867,584 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
SCHEDULE OF INTANGIBLE ASSETS | Intangible assets, net mainly consist of the following: SCHEDULE OF INTANGIBLE ASSETS September 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 | Intangible assets, net mainly consist of the following: SCHEDULE OF INTANGIBLE ASSETS December 31, 2020 December 31 2019 Land use rights $ 1,016,215 $ 952,455 Patents 417,919 391,697 Subtotal 1,434,134 1,344,152 Less: accumulated amortization for patents (310,393 ) (234,456 ) Accumulated amortization for land use right (149,045 ) (120,644 ) Subtotal (459,438 ) (355,100 ) Intangible assets, net $ 974,696 $ 989,052 |
SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE | Estimated future amortization expense for intangible assets is as follows: SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE December 31, Total amortization expense 2021 $ 55,198 2022 55,198 2023 55,198 2024 29,043 2025 20,324 Thereafter 759,735 Total expense $ 974,696 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Related Party Transactions [Abstract] | ||
SCHEDULE OF RELATED PARTY TRANSACTIONS | The related party transactions are summarized as follows: SCHEDULE OF RELATED PARTY TRANSACTIONS Three-Month Period Ended September 30, Nine-Month Period Ended September 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) - - 87,103 - Total revenue $ - $ - $ 97,554 $ - Three-Month Period Ended September 30, Nine-Month Period Ended September 30, 2021 2020 2021 2020 US$ US$ US$ US$ Cost of goods sold 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) - - 87,103 - Total cost of goods sold $ - $ - $ 97,554 $ - Amounts due from related parties are as follows: Amounts due from related parties Relationship September 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 September 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 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 | The related party transactions are summarized as follows: SCHEDULE OF RELATED PARTY TRANSACTIONS Revenues resulting from transactions with a related party: Year Ended December 31, 2020 Year Ended December 31, 2019 Sales from Sichuan Wetouch to Meishan Vtouch Electronics Technology Co., Ltd. (Meishan Wetouch) $ $ 184,212 Sichuan Wetouch sells capacitive touchscreens to Meishan Wetouch from time to time. There are no written agreements between Sichuan Wetouch and Meishan Wetouch. Mr. Guangde Cai, Chairman and director of the Company and our indirect majority shareholder, owns 95 Amounts due from related parties are as follows: Amounts due from related parties Relationship December 31, 2020 December 31, 2019 Note Mr. Shengyong Li General Manager of Sichuan Wetouch $ - $ 72 Employee advance Vision Touch Technology AG 100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch 76,619 71,812 Operating expense paid on behalf of the related party/Company Total $ 76,619 $ 71,884 Amounts due to related parties are as follows : Relationship December 31, 2020 December 31, 2019 Note Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”) 94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li $ 134,616 $ 121,306 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 68,402 397,947 Operating expense paid on behalf of the Company Australia Vtouch Technology Co., Ltd. (i) 35.36% owned by Mr. Guangde Cai - 4,233,949 Interest- free loan Mr. Guangde Cai Chairman and CEO of the Company 326,042 215,031 Payable to employee Mr. Guangde Cai/Ms. Jiaying Cai/Mr. Shenyong Li(ii) (ii) - - Interest- free advance Mr. Yong Yang Sales Director of Sichuan Wetouch - 32,570 Payable to employee Total $ 529,060 $ 5,000,803 (i) On November 24, 2020, the Company repaid in full RMB 29.5 4.2 11.9 1.8 8 (ii) For the year ended December 31, 2018, Sichuan Wetouch owed Mr. Guangde Cai, daughter of Mr. Guangde Cai, Ms. Jiaying Cai and Mr. Shengyong Li, the related parties of the Company, a total amount of approximately $ 14,000,000 93.5 100 14,000,000 93.5 14,000,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFIT) | The components of the income tax provision are as follows: SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFIT) For the Years Ended December 31, 2020 2019 Current tax provision Hong Kong $ - $ - China 1,549,333 2,724,662 1,549,333 2,724,662 Deferred tax provision Hong Kong - - China - - - - Income tax provision $ 1,549,333 $ 2,724,662 | The components of the income tax provision are as follows: SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFIT) For the Years Ended December 31, 2020 2019 Current tax provision Hong Kong $ - $ - China 1,549,333 2,724,662 1,549,333 2,724,662 Deferred tax provision Hong Kong - - China - - - - Income tax provision $ 1,549,333 $ 2,724,662 |
SCHEDULE OF INCOME TAX RATE | The following table reconciles the China statutory rates to the Company’s effective tax rate for the years ended December 31, 2020 and 2019: SCHEDULE OF INCOME TAX RATE For the Years Ended December 31, 2020 2019 PRC statutory income tax rate 25.0 % 25.0 % Effect of income tax holiday (10.0 )% (10.0 )% Non-deductible expenses in the PRC (0.2 )% 1.6 % Effective tax rate 14.8 % 16.6 % | The following table reconciles the China statutory rates to the Company’s effective tax rate for the years ended December 31, 2020 and 2019: SCHEDULE OF INCOME TAX RATE For the Years Ended December 31, 2020 2019 PRC statutory income tax rate 25.0 % 25.0 % Effect of income tax holiday (10.0 )% (10.0 )% Non-deductible expenses in the PRC (0.2 )% 1.6 % Effective tax rate 14.8 % 16.6 % |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Payables and Accruals [Abstract] | ||
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | Accrued expenses and other current liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES September 30, 2021 December 31, 2020 Advance from customers $ 132,521 $ 9,493 Accrued payroll and employee benefits 99,194 105,801 Advance 0.9 $ - $ - Accrued interest expenses - - Other tax payable (i) - 325,719 Penalty related to a loan default (ii) - - Others (ii) 92,600 62,442 Accrued expenses and other current liabilities $ 324,315 $ 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. | Accrued expenses and other current liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES December 31, 2020 December 31, 2019 Advance from customers $ 9,493 $ 11,719 Accrued payroll and employee benefits 105,801 248,745 Accrued interest expenses - 37,140 Other tax payables (i) 325,719 324,670 Penalty related to a loan default (ii) - 1,701,986 Others (iii) 62,442 16,598 Accrued expenses and other current liabilities $ 503,455 $ 2,340,858 (i) Other tax payables are mainly value added tax payable. (ii) Penalty payable of RMB 6.0 0.9 5.8 0.8 11.8 1.7 (iii) Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses. |
DEFERRED GRANTS (Tables)
DEFERRED GRANTS (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Deferred Grants | ||
SCHEDULE OF REMAINING DEFERRED GRANTS | As of December 31, 2020, the remaining deferred grants as below: SCHEDULE OF REMAINING DEFERRED GRANTS Years ended December 31 2021 $ 245,211 2022 245,211 2023 187,995 Total deferred grants 678,417 less: current portion (245,211 ) Deferred grants- non-current $ 433,206 | As of December 31, 2020, the remaining deferred grants as below: SCHEDULE OF REMAINING DEFERRED GRANTS Years ended December 31 2021 $ 245,211 2022 245,211 2023 187,995 Total deferred grants 678,417 less: current portion (245,211 ) Deferred grants- non-current $ 433,206 |
RISKS AND UNCERTAINTIES (Tables
RISKS AND UNCERTAINTIES (Tables) | 9 Months Ended |
Sep. 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: SCHEDULE OF CURRENCY EXCHANGE RATE September 30, December 31, Year-end spot rate US$1=RMB 6.4434 US$1=RMB 6.5250 Average rate US$1=RMB 6.4701 US$1=RMB 6.9042 |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | ||
SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION | SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION Three-Month Period Ended September 30, Nine-Month Period Ended September 30, 2021 2020 2021 2020 US$ US$ US$ US$ Sales in PRC $ 7,696,992 $ 8,407,154 $ 24,652,526 $ 13,940,471 Sales in Overseas —Republic of China (ROC, or Taiwan) 1,785,128 1,955,577 6,663,678 3,652,771 -South Korea 1,618,284 1,500,392 5,519,484 2,993,899 -Others 65,576 40,997 278,482 82,131 Sub-total 3,468,988 3,496,966 12,461,644 6,728,801 Total Revenue $ 11,165,980 $ 11,904,120 $ 37,114,170 $ 20,669,272 | The Company’s geographical revenue information is set forth below: SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION 2020 2019 For the Years Ended December 31, 2020 2019 Sales in PRC $ 21,430,226 $ 26,496,302 Sales in Overseas —Republic of China (ROC, or Taiwan) 5,178,407 6,725,155 -South Korea 4,654,133 6,697,864 -Others 83,185 84,782 Sub-total 9,915,725 13,507,801 Total revenues $ 31,345,951 $ 40,004,103 |
BUSINESS DESCRIPTION (Details N
BUSINESS DESCRIPTION (Details Narrative) - shares | Oct. 09, 2020 | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | Jul. 19, 2016 |
Common stock, shares issued | 31,396,394 | 31,811,523 | 31,500,693 | 28,000,000 | |
Common stock, shares outstanding | 31,396,394 | 31,811,523 | 31,500,693 | 28,000,000 | |
BVI Shareholders [Member] | |||||
Stock issued during period, shares, acquisitions | 28,000,000 | ||||
Number of reverse merger stock | 2,800 | ||||
Sichuan Wetouch Technology Co. Ltd. [Member] | |||||
Ownership percentage | 100.00% | 100.00% |
SCHEDULE OF ESTIMATED USEFUL LI
SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Building [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 20 years |
Machinery and Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 10 years |
Office and Electric Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Property, plant and equipment, estimated useful lives | 3 years |
SCHEDULE OF FINITE LIVED INTANG
SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Land Use Right [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible asset useful lives | 50 years |
Patents [Member] | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible asset useful lives | 10 years |
SCHEDULE OF CURRENCY EXCHANGE R
SCHEDULE OF CURRENCY EXCHANGE RATES (Details) | Dec. 31, 2020 | Dec. 31, 2019 |
Year-End Spot Rate US$1=RMB [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Foreign exchange rate | 0.065250 | 0.069618 |
Average Rate US$1=RMB [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Foreign exchange rate | 0.069042 | 0.069081 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | Apr. 01, 2019 | Mar. 31, 2019 | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||||||
Inventory write-off | $ 66,944 | |||||
Impairment of intangible asset | ||||||
Income tax percentage description | greater than 50% | |||||
Penalties or interest | $ 0 | $ 0 | ||||
Federal corporate income tax rate | 21.00% | 35.00% | ||||
Income tax rate | 0.34 | |||||
Value added tax rate | 13.00% | 16.00% | ||||
Land Use Right [Member] | ||||||
Finite-Lived Intangible Assets [Line Items] | ||||||
Intangible asset useful lives | 50 years |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Receivables [Abstract] | |||
Accounts receivable | $ 11,343,114 | $ 12,002,454 | $ 16,120,327 |
Allowance for doubtful accounts | (75,619) | (70,874) | |
Accounts receivable, net | $ 11,343,114 | $ 11,926,835 | $ 16,049,453 |
ACCOUNTS RECEIVABLE (Details Na
ACCOUNTS RECEIVABLE (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Receivables [Abstract] | ||
Provision or write-off of accounts receivable | $ 0 | $ 0 |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Advance to customers | $ 140,846 | $ 117,819 | ||
VAT input credits | 677,038 | |||
Others receivable (i) | [1] | 188,826 | 110,624 | |
Prepaid expenses and other current assets | $ 1,006,710 | $ 228,443 | $ 283,269 | |
[1] | Other receivables are mainly employee advances. |
SCHEDULE OF PROPERTY, PLANT AND
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 192,679 | $ 16,161,237 | $ 15,147,242 |
Less: accumulated depreciation | (2,477) | (6,670,042) | (5,279,658) |
Property, plant and equipment, net | 190,202 | 9,491,195 | 9,867,584 |
Building [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 13,366 | 10,330,767 | 9,682,590 |
Machinery, Equipment and Furniture [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 45,443 | $ 5,830,470 | $ 5,464,652 |
Construction in Progress [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 133,870 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details Narrative) | Mar. 18, 2021USD ($) | Mar. 18, 2021CNY (¥) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2021CNY (¥) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Depreciation expense | $ 2,477 | $ 244,592 | $ 263,873 | $ 725,708 | $ 979,999 | $ 979,270 | ||||
Compensation expenses | $ 17,900,000 | ¥ 115,200,000 | ||||||||
Gain (loss) on disposition of intangible assets | $ 7,625,279 | |||||||||
Sichuan Wetouch [Member] | Forecast [Member] | ||||||||||
Rent expenses | $ 46,367 | ¥ 300,000 |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Finite-Lived Intangible Assets [Line Items] | |||
Subtotal | $ 1,434,134 | $ 1,344,152 | |
Less: accumulated amortization Subtotal | (459,438) | (355,100) | |
Intangible assets, net | 974,696 | 989,052 | |
Land Use Right [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Subtotal | 1,016,215 | 952,455 | |
Less: accumulated amortization Subtotal | (149,045) | (120,644) | |
Patents [Member] | |||
Finite-Lived Intangible Assets [Line Items] | |||
Subtotal | 417,919 | 391,697 | |
Less: accumulated amortization Subtotal | $ (310,393) | $ (234,456) |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||
Amortization expense | $ 14,653 | $ 113,562 | $ 43,471 | $ 76,141 | $ 58,671 |
SCHEDULE OF RELATED PARTY TRANS
SCHEDULE OF RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | ||
Related Party Transaction [Line Items] | |||||||
Revenues resulting from transactions with a related party | $ 97,554 | ||||||
Cost of goods sold resulting from related parties | 97,554 | ||||||
Amounts due from related parties | $ 76,619 | $ 71,884 | |||||
Amounts due to related parties | $ 529,060 | 5,000,803 | |||||
Chengdu Wetouch Technology Co Ltd [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenues resulting from transactions with a related party | 10,451 | ||||||
Cost of goods sold resulting from related parties | 10,451 | ||||||
Meishan Vtouch Electronics Technology Co., Ltd. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenues resulting from transactions with a related party | 87,103 | ||||||
Cost of goods sold resulting from related parties | $ 87,103 | ||||||
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 | 397,947 | |||||
Meishan Vtouch Electronics Technology Co., Ltd. [Member] | Sichuan Wetouch [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Revenues resulting from transactions with a related party | 184,212 | ||||||
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 | 71,812 | |||||
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 | 121,306 | |||||
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 | 215,031 | |||||
Mr. Shengyong Li [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Related party transaction relationship | General Manager of Sichuan Wetouch | ||||||
Amounts due from related parties | 72 | ||||||
Australia Vtouch Technology Co., Ltd. [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Related party transaction relationship | [1] | 35.36% owned by Mr. Guangde Cai | |||||
Amounts due to related parties | [1] | 4,233,949 | |||||
Mr. Guangde Cai/Ms. Jiaying Cai/Mr. Shenyong Li [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Amounts due to related parties | [2] | ||||||
Mr. Yong Yang [Member] | |||||||
Related Party Transaction [Line Items] | |||||||
Related party transaction relationship | Sales Director of Sichuan Wetouch | ||||||
Amounts due to related parties | $ 32,570 | ||||||
[1] | On November 24, 2020, the Company repaid in full RMB 29.5 4.2 11.9 1.8 8 | ||||||
[2] | For the year ended December 31, 2018, Sichuan Wetouch owed Mr. Guangde Cai, daughter of Mr. Guangde Cai, Ms. Jiaying Cai and Mr. Shengyong Li, the related parties of the Company, a total amount of approximately $ 14,000,000 93.5 100 14,000,000 93.5 14,000,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) | Sep. 30, 2021 | Dec. 31, 2020 |
Chengdu Wetouch [Member] | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 94.00% | |
Meishan Wetouch [Member] | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 95.00% | |
Mr. Guangde Cai [Member] | ||
Related Party Transaction [Line Items] | ||
Ownership percentage | 95.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | Jan. 01, 2008 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Oct. 11, 2020 |
IncomeTaxDisclosureLineItems [Line Items] | ||||||||
Statutory income tax | 21.00% | 35.00% | ||||||
Income tax rate | 14.80% | 16.60% | 21.00% | |||||
Statutory income tax | 25.00% | 25.00% | ||||||
Deferred tax assets | $ 0 | $ 0 | ||||||
Sichuan Wetouch Technology Co. Ltd. [Member] | ||||||||
IncomeTaxDisclosureLineItems [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”), entitled to a reduced income tax rate of 15% beginning October 21, 2020 until October 20, 2023. | 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”), entitled to a reduced income tax rate of 15% beginning October 21, 2020 till October 20, 2023. | ||||||
Sichuan Vtouch [Member] | ||||||||
IncomeTaxDisclosureLineItems [Line Items] | ||||||||
Statutory income tax | 25.00% | |||||||
HONG KONG | ||||||||
IncomeTaxDisclosureLineItems [Line Items] | ||||||||
Income tax rate | 16.50% | 16.50% | ||||||
PRC [Member] | ||||||||
IncomeTaxDisclosureLineItems [Line Items] | ||||||||
Statutory income tax | 25.00% | 20.60% | 12.20% | |||||
Income tax rate | 15.00% | |||||||
PRC [Member] | Sichuan Vtouch [Member] | ||||||||
IncomeTaxDisclosureLineItems [Line Items] | ||||||||
Statutory income tax | 25.00% |
SCHEDULE OF COMPONENTS OF THE I
SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFIT) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
IncomeTaxDisclosureLineItems [Line Items] | ||||||
Current tax provision | $ 1,549,333 | $ 2,724,662 | ||||
Deferred tax provision | ||||||
Income tax provision | $ 1,092,547 | $ 537,019 | $ 4,331,499 | $ 1,108,849 | 1,549,333 | 2,724,662 |
HONG KONG | ||||||
IncomeTaxDisclosureLineItems [Line Items] | ||||||
Current tax provision | ||||||
Deferred tax provision | ||||||
CHINA | ||||||
IncomeTaxDisclosureLineItems [Line Items] | ||||||
Current tax provision | 1,549,333 | 2,724,662 | ||||
Deferred tax provision |
SCHEDULE OF INCOME TAX RATE (De
SCHEDULE OF INCOME TAX RATE (Details) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
PRC statutory income tax rate | 25.00% | 25.00% | |
Effect of income tax holiday | (10.00%) | (10.00%) | |
Non-deductible expenses in the PRC | (0.20%) | 1.60% | |
Effective tax rate | 14.80% | 16.60% | 21.00% |
SCHEDULE OF ACCRUED EXPENSES AN
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |||
Payables and Accruals [Abstract] | ||||||
Advance from customers | $ 132,521 | $ 9,493 | $ 11,719 | |||
Accrued payroll and employee benefits | 99,194 | 105,801 | 248,745 | |||
Accrued interest expenses | 37,140 | |||||
Other tax payables (i) | [1] | 325,719 | [1] | 324,670 | [2] | |
Penalty related to a loan default (ii) | [3] | 1,701,986 | [3] | |||
Others (iii) | 92,600 | [4] | 62,442 | [4] | 16,598 | [5] |
Accrued expenses and other current liabilities | $ 324,315 | $ 503,455 | $ 2,340,858 | |||
[1] | Other tax payables are mainly value added tax payable. | |||||
[2] | Other tax payables are mainly value added tax payable. | |||||
[3] | Penalty payable of RMB 6.0 0.9 5.8 0.8 11.8 1.7 | |||||
[4] | Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses. | |||||
[5] | Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses. |
SCHEDULE OF ACCRUED EXPENSES _2
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) (Parenthetical) ¥ in Millions, $ in Millions | Sep. 16, 2020USD ($) | Sep. 16, 2020CNY (¥) | Dec. 31, 2019USD ($) | Dec. 31, 2019CNY (¥) |
Payables and Accruals [Abstract] | ||||
Penalty payable | $ 0.9 | ¥ 6 | ||
Accrued loan | $ 0.8 | ¥ 5.8 | ||
Repayment of loan default penalties | $ 1.7 | ¥ 11.8 |
SCHEDULE OF REMAINING DEFERRED
SCHEDULE OF REMAINING DEFERRED GRANTS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred Grants | |||
2021 | $ 245,211 | ||
2022 | 245,211 | ||
2023 | 187,995 | ||
Total deferred grants | 678,417 | ||
less: current portion | (245,211) | $ (229,826) | |
Deferred grants- non-current | $ 433,206 | $ 635,851 |
DEFERRED GRANTS (Details Narrat
DEFERRED GRANTS (Details Narrative) | Dec. 31, 2020USD ($) | Jan. 27, 2014USD ($) | Jan. 27, 2014CNY (¥) | Jan. 14, 2013USD ($) | Jan. 14, 2013CNY (¥) |
DeferredGrantsLineItems [Line Items] | |||||
Deferred grants | $ 678,417 | ||||
Sichuan Wetouch Technology Co. Ltd. [Member] | |||||
DeferredGrantsLineItems [Line Items] | |||||
Deferred grants | $ 800,000 | ¥ 4,800,000 | $ 1,800,000 | ¥ 11,200,000 |
SHARE BASED COMPENSATION (Detai
SHARE BASED COMPENSATION (Details Narrative) - USD ($) | Jan. 02, 2021 | Jan. 01, 2021 | Dec. 22, 2020 | Sep. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
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 | $ 3,400,000 | $ 3,400,000 | ||||
Number of shares vested | 310,830 | |||||
Share-based compensation, expected term | 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% | |||||
Share-based compensation expense | $ 1,041,281 | $ 351,134 | ||||
Warrant [Member] | ||||||
Number of shares vested | 631,080 | |||||
Share-based compensation expense | $ 2,107,825 | $ 713,120 | ||||
Board of Directors [Member] | ||||||
Number of shares authorized | 310,830 | |||||
Board of Directors [Member] | Warrant [Member] | ||||||
Number of shares authorized | 631,080 | |||||
Share-based compensation, expected term | 5 years | |||||
Warrants exercise price per share | one | |||||
Director [Member] | The Crone Law Group [Member] | ||||||
Number of shares authorized | 103,610 | |||||
Share-based compensation, expected term | 2 years 6 months | |||||
Share-based compensation, expected dividend rate | 0.00% | |||||
Share-based compensation, volatility | 43.50% | |||||
Share-based compensation, average interest rate | 0.11% | |||||
Number of shares vested | 103,610 | |||||
Director [Member] | Warrant [Member] | The Crone Law Group [Member] | ||||||
Number of shares authorized | 210,360 | |||||
Warrant exercisable, period | 5 years | |||||
Warrants exercise price per share | $ 1 | |||||
Number of shares vested | 0 |
SCHEDULE OF CURRENCY EXCHANGE_2
SCHEDULE OF CURRENCY EXCHANGE RATE (Details) | Sep. 30, 2021 | Dec. 31, 2020 |
Year End Spot Rate [Member] | ||
Trading Activity, Gains and Losses, Net [Line Items] | ||
Foreign currency exchange rate, translation | 6.4434 | 6.5250 |
Average Rate [Member] | ||
Trading Activity, Gains and Losses, Net [Line Items] | ||
Foreign currency exchange rate, translation | 6.4701 | 6.9042 |
RISKS AND UNCERTAINTIES (Detail
RISKS AND UNCERTAINTIES (Details Narrative) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021CNY (¥) | Sep. 30, 2020 | Sep. 30, 2021CNY (¥) | Sep. 30, 2020 | Dec. 31, 2020CNY (¥) | Dec. 31, 2019 | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | 10.00% | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 21.30% | 18.50% | 18.90% | 18.00% | 17.80% | 16.70% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 15.50% | 16.30% | 17.50% | 17.30% | 15.90% | 16.60% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 15.40% | 15.00% | 14.60% | 14.50% | 14.60% | 13.10% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 14.00% | 12.50% | 14.10% | 13.50% | 12.70% | 12.60% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Five [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 11.40% | 12.50% | 11.40% | 11.40% | 12.20% | 11.60% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Top Ten Customers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 98.10% | 99.40% | 96.70% | 98.50% | 98.50% | 98.60% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Seven Customers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 97.60% | |||||
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% | 10.00% | ||||
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Four Suppliers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 46.30% | |||||
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Two Suppliers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 28.30% | 25.10% | ||||
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Three Suppliers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 37.60% | 37.50% | 33.70% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 18.20% | 18.60% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 16.00% | 17.40% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 13.20% | 15.80% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 14.00% | |||||
Average Rate [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Foreign currency exchange rate, translation | 6.4701 | 6.4701 | 6.9042 | |||
Average Rate [Member] | Chinese Yuan [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Foreign currency exchange rate, translation | 6.4701 | 6.4701 | ||||
Maximum [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Bank deposits | ¥ 500,000 | ¥ 500,000 | ¥ 500,000 |
SCHEDULE OF GEOGRAPHICAL REVENU
SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Dec. 31, 2019 | |
Disaggregation of Revenue [Line Items] | ||||||
Sales in PRC | $ 7,696,992 | $ 8,407,154 | $ 24,652,526 | $ 13,940,471 | $ 21,430,226 | $ 26,496,302 |
Sub-total | 3,468,988 | 3,496,966 | 12,461,644 | 6,728,801 | 9,915,725 | 13,507,801 |
Total revenues | 11,165,980 | 11,904,120 | 37,114,170 | 20,669,272 | 31,345,951 | 40,004,103 |
Republic of China [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Sub-total | 1,785,128 | 1,955,577 | 6,663,678 | 3,652,771 | 5,178,407 | 6,725,155 |
KOREA, REPUBLIC OF | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Sub-total | 1,618,284 | 1,500,392 | 5,519,484 | 2,993,899 | 4,654,133 | 6,697,864 |
Others [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Sub-total | $ 65,576 | $ 40,997 | $ 278,482 | $ 82,131 | $ 83,185 | $ 84,782 |
SCHEDULE OF INTANGIBLE ASSETS A
SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Subsequent Events [Abstract] | |||
2021 | $ 55,198 | ||
2022 | 55,198 | ||
2023 | 55,198 | ||
2024 | 29,043 | ||
2025 | 20,324 | ||
Thereafter | 759,735 | ||
Total expense | $ 974,696 | $ 989,052 |
SCHEDULE OF RELATED PARTY TRA_2
SCHEDULE OF RELATED PARTY TRANSACTIONS (Details) (Parenthetical) ¥ in Millions | Nov. 24, 2020USD ($) | Nov. 24, 2020CNY (¥) | Sep. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Jul. 19, 2016USD ($) | Jul. 19, 2016CNY (¥) |
Australia Vtouch Technolody Co., Ltd. [Member] | |||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||||
Repayment of debt | $ 4,200,000 | ||||||
Debt interest | $ 1,800,000 | ||||||
Rate of interest expenses | 8.00% | 8.00% | |||||
Sichuan Wetouch [Member] | |||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||||
Repayment of debt | $ 14,000,000 | ||||||
Amounts due to related parties | $ 14,000,000 | ¥ 93.5 | |||||
HK Wetouch [Member] | Share Transfer Agreement [Member] | |||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||||
Amounts due to related parties | $ 14,000,000 | ¥ 93.5 | |||||
Ownership percentage | 100.00% | 100.00% | |||||
Mr. Guangde Cai, Ms. Guanying Cai and Mr. Shengyong Li [Member] | |||||||
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |||||||
Repayment of debt | ¥ | ¥ 29.5 | ||||||
Debt interest | ¥ | ¥ 11.9 |
SUBSEQUENT EVENT (Details Narra
SUBSEQUENT EVENT (Details Narrative) | Nov. 03, 2021USD ($)$ / sharesshares | Mar. 18, 2021USD ($) | Mar. 18, 2021CNY (¥) | Mar. 12, 2021HKD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2021CNY (¥) | Sep. 30, 2021USD ($)$ / shares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2019$ / shares |
Subsequent Event [Line Items] | |||||||||
Compensation received | $ | $ 3,149,106 | $ 1,064,358 | |||||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Preliminary Prospectus [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Number of common stock issued | shares | 15,889,371 | ||||||||
Common stock, par value | $ / shares | $ 0.001 | ||||||||
Share issued price per shares | $ / shares | $ 3.38 | ||||||||
Sichuan Wetouch Technology Co. Ltd. [Member] | Forecast [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Monthly rent | $ 46,154 | ¥ 300,000 | |||||||
Subsequent Event [Member] | BVI Wetouch [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Consideration amount | $ | $ 10,000 | ||||||||
Subsequent Event [Member] | Sichuan Wetouch Technology Co. Ltd. [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Compensation received | $ 17,700,000 | ¥ 115,200,000 | |||||||
Subsequent Event [Member] | Purchase Agreement [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Warrant to purchase shares of common stock | shares | 200,000 | ||||||||
Exercise of warrant price per share | $ / shares | $ 1.25 | ||||||||
Proceeds from issuance of warrants | $ | $ 225,000 | ||||||||
Subsequent Event [Member] | Purchase Agreement [Member] | Lender [Member] | |||||||||
Subsequent Event [Line Items] | |||||||||
Convertible promissory note, principal amount | $ | $ 250,000 | ||||||||
Debt instrument, interest rate, stated percentage | 8.00% |
SHAREHOLDERS_ EQUITY (Details N
SHAREHOLDERS’ EQUITY (Details Narrative) | Sep. 30, 2021$ / sharesshares | Dec. 31, 2020USD ($)$ / sharesshares | Dec. 31, 2020CNY (¥)shares | Dec. 22, 2020shares | Oct. 09, 2020shares | Dec. 31, 2019USD ($)$ / sharesshares | Dec. 31, 2019CNY (¥)shares |
Common Stock, Shares Authorized | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 | ||
Common Stock, Par or Stated Value Per Share | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||
Ordinary Shares, shares issued | 31,811,523 | 31,500,693 | 31,500,693 | 31,396,394 | 28,000,000 | 28,000,000 | |
The Crone Law Group [Member] | |||||||
Ordinary Shares, shares issued | 103,610 | ||||||
Sichuan Wetouch Technology Co. Ltd. [Member] | |||||||
Reserve fund | $ 1,058,590 | ¥ 6,907,298 |
WEIGHTED AVERAGE NUMBER OF SH_2
WEIGHTED AVERAGE NUMBER OF SHARES (Details Narrative) $ in Millions | Sep. 16, 2020USD ($) | Sep. 16, 2020CNY (¥) | May 13, 2020USD ($) | Nov. 21, 2019USD ($) | Nov. 21, 2019CNY (¥) | Sep. 11, 2019USD ($) | Sep. 11, 2019CNY (¥) | Aug. 22, 2018USD ($) | Aug. 22, 2018CNY (¥) | Oct. 21, 2014USD ($) | Jul. 31, 2014USD ($) | Jul. 31, 2014CNY (¥) | Jul. 31, 2014USD ($) | Mar. 19, 2014USD ($) | Jul. 05, 2013USD ($) | Dec. 31, 2020USD ($) | Dec. 31, 2020CNY (¥) | Dec. 31, 2020CNY (¥) | Mar. 12, 2020USD ($) | Mar. 12, 2020CNY (¥) | Dec. 31, 2018USD ($) | Dec. 31, 2018CNY (¥) | Dec. 31, 2017USD ($) | May 26, 2015USD ($) | May 26, 2015CNY (¥) | Oct. 21, 2014CNY (¥) | Jul. 31, 2014CNY (¥) | Jul. 04, 2014USD ($) | Jul. 04, 2014CNY (¥) | May 23, 2014USD ($) | May 23, 2014CNY (¥) | Apr. 21, 2014USD ($) | Apr. 21, 2014CNY (¥) | Mar. 19, 2014CNY (¥) | Jul. 05, 2013CNY (¥) |
Repayment of loan default penalties | $ 1.7 | ¥ 11,800,000 | |||||||||||||||||||||||||||||||||
Xinjiang Wetouch [Member] | Guarantee to Debt Instrument Loan One [Member] | |||||||||||||||||||||||||||||||||||
Repayment of loan during period | $ 5.9 | ||||||||||||||||||||||||||||||||||
Bank of Chengdu [Member] | Chengdu Wetouch Technology Co., Ltd ("Chengdu Wetouch") [Member] | Guarantee to Debt Instrument Loan One [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 2.6 | $ 2.6 | ¥ 17,000,000 | ||||||||||||||||||||||||||||||||
Debt instrument, description | Sichuan Wetouch, Mr. Guangde Cai and his 60% controlled Xinjiang Wetouch and his 95% controlled Meishan Wetouch, as well as two unrelated individuals acting as counter guarantors for this loan. | ||||||||||||||||||||||||||||||||||
Deyang Bank Co., Ltd [Member] | Sichuan Wetouch Mr. Guangde Cai [Member] | Guarantee to Debt Instrument Loan Two [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 1.3 | ¥ 9,000,000 | |||||||||||||||||||||||||||||||||
Deyang Bank Co., Ltd [Member] | Sichuan Wetouch Mr. Guangde Cai [Member] | Guarantee to Debt Instrument Loan Three [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 2.2 | ¥ 15,000,000 | |||||||||||||||||||||||||||||||||
Sichuan Tianfu Bank Co.,Ltd [Member] | Sichuan Wetouch Mr. Guangde Cai [Member] | Guarantee to Debt Instrument Loan Four [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 2.3 | ¥ 14,900,000 | |||||||||||||||||||||||||||||||||
Agricultural Bank of China Co.,Ltd [Member] | Sichuan Wetouch Mr. Guangde Cai [Member] | Guarantee to Debt Instrument Loan Five [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 2.7 | ¥ 17,300,000 | |||||||||||||||||||||||||||||||||
Chengdu Bank Co, Ltd Gaoxin Branch [Member] | Sichuan Wetouch Mr. Guangde Cai [Member] | Guarantee to Debt Instrument Loan Six [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 2.2 | ¥ 15,000,000 | |||||||||||||||||||||||||||||||||
Sichuan Yitong Financing Guarantee Co.,Ltd [Member] | Sichuan Wetouch Mr. Guangde Cai [Member] | Guarantee to Debt Instrument Loan Seven [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 3.5 | ¥ 26,000,000 | |||||||||||||||||||||||||||||||||
Debt instrument, description | Sichuan Wetouch, Chengdu Wetouch, Mr. Guangde Cai and his 60% owned Xinjiang Wetouch, together with one unrelated guarantee company Sichuan Yitong Financing Guarantee Co., Ltd. (“Yitong Guarantee”) provided joint guarantee to Meishan Wetouch obtaining a two-year loan of RMB26.0 million (equivalent to $3.5 million) from Meishan Rural Commercial Bank Co., Ltd. | ||||||||||||||||||||||||||||||||||
Repayment of loan during period | $ 1.5 | ¥ 10,500,000 | |||||||||||||||||||||||||||||||||
Legal case with Chengdu SME Credit Guarantee Co., Ltd. [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | 8.9 | $ 8.9 | 55,000,000 | ||||||||||||||||||||||||||||||||
Repayment of loan during period | 0.8 | ¥ 5,000,000 | |||||||||||||||||||||||||||||||||
Legal case with Chengdu SME Credit Guarantee Co., Ltd. [Member] | Related to 30% of Remaining Loan Repaid By Chengdu SME [Member] | |||||||||||||||||||||||||||||||||||
Loan, default penalty | 0.8 | 0.8 | $ 0.8 | ¥ 5,800,000 | $ 0.8 | ¥ 5,800,000 | 5,800,000 | ||||||||||||||||||||||||||||
Legal case with Chengdu SME Credit Guarantee Co., Ltd. [Member] | Related to 70% of Remaining Loan Repaid By Chengdu SME [Member] | |||||||||||||||||||||||||||||||||||
Loan, default penalty | $ 0.9 | $ 0.9 | $ 0.9 | ¥ 6,000,000 | $ 0.9 | ¥ 6,000,000 | ¥ 6,000,000 | ||||||||||||||||||||||||||||
Legal case with Chengdu SME Credit Guarantee Co., Ltd. [Member] | Bank of Chengdu [Member] | |||||||||||||||||||||||||||||||||||
Debt instrument, interest rate | 8.61% | 8.61% | |||||||||||||||||||||||||||||||||
Legal case with Chengdu SME Credit Guarantee Co., Ltd. [Member] | Chengdu SME Credit Guarantee Co., Ltd. [Member] | |||||||||||||||||||||||||||||||||||
Loan, default penalty | $ 1.7 | ¥ 11,800,000 | $ 1.7 | ||||||||||||||||||||||||||||||||
Repayment of loan during period | $ 8 | ¥ 55,000,000 | |||||||||||||||||||||||||||||||||
Repayment of loan default penalties | $ 1.7 | ¥ 11,800,000 | |||||||||||||||||||||||||||||||||
Legal case with Chengdu SME Credit Guarantee Co., Ltd. [Member] | Chengdu SME Credit Guarantee Co., Ltd. [Member] | Bank of Chengdu [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 9.8 | ¥ 60,000,000 | |||||||||||||||||||||||||||||||||
Debt instrument, description | Chengdu SME Credit Guarantee Co., Ltd (“Chengdu SME”), a third party, provided a 70% guarantee and Bank of Chengdu retained 30% of the risk, while Chengdu Wetouch and Mr. Guangde Cai (related parties, see Note 4) provided joint and several liability guarantee for 100% of the loan. | ||||||||||||||||||||||||||||||||||
Legal case with Sichuan Renshou Shigao Tianfu Investment Co., Ltd and Renshou Tengyi Landscaping Co., Ltd. [Member] | |||||||||||||||||||||||||||||||||||
Asset recovery, value | $ 1.7 | ¥ 12,000,000 | |||||||||||||||||||||||||||||||||
Legal case with Sichuan Renshou Shigao Tianfu Investment Co., Ltd and Renshou Tengyi Landscaping Co., Ltd. [Member] | Chengdu Bank Co, Ltd [Member] | |||||||||||||||||||||||||||||||||||
Loan obtained during period | $ 2.2 | ¥ 15,000,000 | |||||||||||||||||||||||||||||||||
Legal case with Sichuan Renshou Shigao Tianfu Investment Co., Ltd and Renshou Tengyi Landscaping Co., Ltd. [Member] | Shigaotianfu Investment and Renshou Tenvi [Member] | Chengdu Bank Co, Ltd [Member] | |||||||||||||||||||||||||||||||||||
Debt instrument, description | To support the local economic development as well as Chengdu Wetouch, two government-backed companies, Sichuan Renshou Shigao Tianfu Investment Co., Ltd. (“Shigaotianfu Investment”) and Renshou Tengyi Landscaping Co., Ltd. (“Renshou Tenyi”) provided their bank deposits of RMB 12.0 million (equivalent to US$1.7 million) as pledge, while Mr. Guangde Cai and Sichuan Wetouch also provided counter-guarantee. | ||||||||||||||||||||||||||||||||||
Pledged bank deposits for debt, value | $ 1.7 | ¥ 12,000,000 |