Cover
Cover | 9 Months Ended |
Sep. 30, 2022 | |
Entity Addresses [Line Items] | |
Document Type | S-1 |
Amendment Flag | false |
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 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
CURRENT ASSETS | |||||
Cash | $ 45,549,273 | $ 46,163,704 | $ 23,963,861 | ||
Accounts receivable, net | 14,281,922 | 7,991,037 | 11,926,835 | ||
Inventories | 405,183 | 244,381 | 402,050 | ||
Due from related parties | 76,619 | ||||
Prepaid expenses and other current assets | 1,173,249 | 2,445,894 | 228,443 | ||
TOTAL CURRENT ASSETS | 61,409,627 | 56,845,016 | 36,597,808 | ||
Property, plant and equipment, net | 10,593,796 | 11,833,302 | 9,491,195 | ||
Intangible assets, net | 974,696 | ||||
TOTAL ASSETS | 72,003,423 | 68,678,318 | 47,063,699 | ||
CURRENT LIABILITIES | |||||
Accounts payable | 1,409,703 | 800,586 | 891,848 | ||
Due to related parties | 105,890 | 34,669 | 529,060 | ||
Income tax payable | 1,183,001 | 65,463 | 107,137 | ||
Accrued expenses and other current liabilities | 783,913 | 310,407 | 503,455 | ||
Deferred grants | 245,211 | ||||
Convertible promissory notes payable | 1,935,010 | 2,030,550 | |||
TOTAL CURRENT LIABILITIES | 5,417,517 | 3,241,675 | 2,276,711 | ||
Deferred grants-non current | 433,206 | ||||
Common stock purchase warrants liability | 1,093,093 | 1,128,635 | |||
TOTAL LIABILITIES | 6,510,610 | 4,370,310 | 2,709,917 | ||
COMMITMENTS AND CONTINGENCIES (Note 13) | |||||
STOCKHOLDERS’ EQUITY | |||||
Common stock, $0.001 par value, 300,000,000 shares authorized, 31,811,523 and, 31,500,693 issued and outstanding as of December 31, 2021 and 2020, respectively* | 33,346 | 31,812 | [1] | 31,501 | [1] |
Additional paid in capital | 2,332,087 | 2,333,621 | 1,072,932 | ||
Statutory reserve | 5,067,243 | 5,067,243 | 3,062,159 | ||
Retained earnings | 63,392,906 | 54,610,164 | 39,229,282 | ||
Accumulated other comprehensive income | (5,332,769) | 2,265,168 | 957,908 | ||
TOTAL STOCKHOLDERS’ EQUITY | 65,492,813 | 64,308,008 | 44,353,782 | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 72,003,423 | $ 68,678,318 | $ 47,063,699 | ||
[1]Retrospectively restated for effect of recapitalization, see Note 1 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
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 | 33,345,541 | 31,811,523 | 31,500,693 |
Common stock, shares outstanding | 33,345,541 | 31,811,523 | 31,500,693 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
REVENUES | ||||||
Revenue from customers | $ 11,623,018 | $ 11,165,980 | $ 35,370,499 | $ 37,016,616 | $ 40,687,624 | $ 31,345,951 |
Revenues from related parties | 97,554 | 97,850 | ||||
Total Revenues | 11,623,018 | 11,165,980 | 35,370,499 | 37,114,170 | 40,785,474 | 31,345,951 |
COST OF REVENUES | ||||||
Cost of revenues from customers | (6,561,166) | (6,370,278) | (20,946,893) | (19,179,253) | (22,256,642) | (15,736,080) |
Cost of revenues related parties | (97,554) | (97,850) | ||||
Total Cost of revenues | (6,561,166) | (6,370,278) | (20,946,893) | (19,276,807) | (22,354,492) | (15,736,080) |
GROSS PROFIT | 5,061,852 | 4,795,702 | 14,423,606 | 17,837,363 | 18,430,982 | 15,609,871 |
OPERATING EXPENSES | ||||||
Selling expenses | (214,719) | (136,164) | (1,231,967) | (349,561) | (630,503) | (264,553) |
General and administrative expenses | (88,063) | (298,047) | (903,547) | (1,618,753) | (1,937,374) | (2,322,055) |
Research and development expenses | (20,737) | (22,267) | (65,307) | (67,035) | (89,477) | (77,997) |
Share-based compensation | (3,149,106) | (3,149,106) | (1,064,358) | |||
Total operating expenses | (323,519) | (456,478) | (2,200,821) | (5,184,455) | (5,806,460) | (3,728,963) |
INCOME FROM OPERATIONS | 4,738,333 | 4,339,224 | 12,222,785 | 12,652,908 | 12,624,522 | 11,880,908 |
Interest income | 29,621 | 28,798 | 89,257 | 64,184 | 95,534 | 81,537 |
Interest expense | (58,692) | (172,255) | (27,450) | (1,728,961) | ||
Government grant | 692,952 | 695,055 | 246,227 | |||
Gain on asset disposal | 7,625,279 | 7,648,423 | ||||
Gain on changes in fair value of common stock purchase warrants liability | (187,109) | 35,542 | 759,471 | |||
TOTAL OTHER (EXPENSES), NET | (216,180) | 28,798 | (47,456) | 8,382,415 | 9,171,033 | (1,401,197) |
INCOME BEFORE INCOME TAX EXPENSE | 4,522,153 | 4,368,022 | 12,175,329 | 21,035,323 | 21,795,555 | 10,479,711 |
INCOME TAX EXPENSE | (1,232,629) | (1,092,547) | (3,392,587) | (4,331,499) | (4,409,589) | (1,549,333) |
NET INCOME | 3,289,524 | 3,275,475 | 8,782,742 | 16,703,824 | 17,385,966 | 8,930,378 |
OTHER COMPREHENSIVE INCOME (LOSS) | ||||||
Foreign currency translation adjustment | (4,195,353) | 139,206 | (7,597,937) | 671,786 | 1,307,260 | 2,692,896 |
COMPREHENSIVE INCOME | $ (905,829) | $ 3,414,681 | $ 1,184,805 | $ 17,375,610 | $ 18,693,226 | $ 11,623,274 |
EARNINGS PER COMMON SHARE | ||||||
Basic | $ 0.10 | $ 0.1 | $ 0.27 | $ 0.53 | $ 0.55 | $ 0.31 |
Diluted | $ 0.10 | $ 0.1 | $ 0.27 | $ 0.53 | $ 0.55 | $ 0.31 |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | ||||||
Basic | 32,464,182 | 31,811,523 | 31,727,262 | 31,811,523 | 31,811,523 | 28,774,886 |
Diluted | 34,384,816 | 32,653,163 | 33,647,896 | 32,653,163 | 32,653,163 | 28,985,246 |
Consolidated Statements of Chan
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, value at Dec. 31, 2019 | [1] | $ 28,000 | $ 14,034 | $ 2,003,569 | $ 31,357,494 | $ (1,734,988) | $ 31,668,109 |
Beginning balance, shares at Dec. 31, 2019 | [1] | 28,000,000 | |||||
Net income | 8,930,378 | 8,930,378 | |||||
Foreign currency translation adjustment | 2,692,896 | 2,692,896 | |||||
Share-based compensation | $ 104 | 1,064,254 | 1,064,358 | ||||
Share-based compensation, shares | 103,610 | ||||||
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 | ||||||
Appropriation to statutory reserve | 1,058,590 | (1,058,590) | |||||
Ending balance, value at Dec. 31, 2020 | $ 31,501 | 1,072,932 | 3,062,159 | 39,229,282 | 957,908 | 44,353,782 | |
Ending balance, shares at Dec. 31, 2020 | 31,500,693 | ||||||
Net income | 16,703,824 | 16,703,824 | |||||
Foreign currency translation adjustment | 671,786 | 671,786 | |||||
Share-based compensation | $ 311 | 3,148,795 | 3,149,106 | ||||
Share-based compensation, shares | 310,830 | ||||||
Ending balance, value at Sep. 30, 2021 | $ 31,812 | 4,221,727 | 3,062,159 | 55,933,106 | 1,629,694 | 64,878,498 | |
Ending balance, shares at Sep. 30, 2021 | 31,811,523 | ||||||
Beginning balance, value at Dec. 31, 2020 | $ 31,501 | 1,072,932 | 3,062,159 | 39,229,282 | 957,908 | 44,353,782 | |
Beginning balance, shares at Dec. 31, 2020 | 31,500,693 | ||||||
Net income | 17,385,966 | 17,385,966 | |||||
Foreign currency translation adjustment | 1,307,260 | 1,307,260 | |||||
Share-based compensation | $ 311 | 3,148,795 | 3,149,106 | ||||
Share-based compensation, shares | 310,830 | ||||||
Appropriation to statutory reserve | 2,005,084 | (2,005,084) | |||||
Warrants issued to third parties in conjunction with debt issuance | (1,888,106) | (1,888,106) | |||||
Ending balance, value at Dec. 31, 2021 | $ 31,812 | 2,333,621 | 5,067,243 | 54,610,164 | 2,265,168 | 64,308,008 | |
Ending balance, shares at Dec. 31, 2021 | 31,811,523 | ||||||
Beginning balance, value at Jun. 30, 2021 | $ 31,812 | 4,221,727 | 3,062,159 | 52,657,631 | 1,490,488 | 61,463,817 | |
Beginning 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 | |
Ending balance, shares at Sep. 30, 2021 | 31,811,523 | ||||||
Beginning balance, value at Dec. 31, 2021 | $ 31,812 | 2,333,621 | 5,067,243 | 54,610,164 | 2,265,168 | 64,308,008 | |
Beginning balance, shares at Dec. 31, 2021 | 31,811,523 | ||||||
Shares issued cashless for warrants | $ 1,534 | (1,534) | |||||
Shares issued cashless for warrants, shares | 1,534,018 | ||||||
Net income | 8,782,742 | 8,782,742 | |||||
Foreign currency translation adjustment | (7,597,937) | (7,597,937) | |||||
Ending balance, value at Sep. 30, 2022 | $ 33,346 | 2,332,087 | 5,067,243 | 63,392,906 | (5,332,769) | 65,492,813 | |
Ending balance, shares at Sep. 30, 2022 | 33,345.541 | ||||||
Beginning balance, value at Jun. 30, 2022 | $ 32,040 | 2,333,393 | 5,067,243 | 60,103,382 | (1,137,416) | 66,398,642 | |
Beginning balance, shares at Jun. 30, 2022 | 32,039,035 | ||||||
Shares issued cashless for warrants | $ 1,306 | (1,306) | |||||
Shares issued cashless for warrants, shares | 1,306,506 | ||||||
Net income | 3,289,524 | 3,289,524 | |||||
Foreign currency translation adjustment | (4,195,353) | (4,195,353) | |||||
Ending balance, value at Sep. 30, 2022 | $ 33,346 | $ 2,332,087 | $ 5,067,243 | $ 63,392,906 | $ (5,332,769) | $ 65,492,813 | |
Ending balance, shares at Sep. 30, 2022 | 33,345.541 | ||||||
[1]Retrospectively restated for effect of recapitalization, see Note 1 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | ||||
Net income | $ 8,782,742 | $ 16,703,824 | $ 17,385,966 | $ 8,930,378 |
Adjustments to reconcile net income to cash provided by operating activities | ||||
Bad debts reversal | (76,260) | (76,492) | ||
Depreciation and amortization | 12,494 | 377,435 | 381,167 | 1,056,139 |
Inventory write-off | 66,944 | |||
Share-based compensation | 3,149,106 | 3,149,106 | 1,064,358 | |
Loss of input VAT credits | 354,991 | 356,073 | ||
Asset disposal gain | (7,625,165) | (7,648,423) | ||
Amortization of discounts and issuance cost of the notes | 39,774 | 8,550 | ||
Gain on changes in fair value of common stock purchase warrants liability | (35,542) | (759,471) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (7,451,004) | 1,556,300 | 4,994,861 | 4,911,580 |
Amounts due from related parties | 83,535 | 83,849 | 1,242 | |
Inventories | (194,529) | (93,265) | 190,490 | (241,435) |
Prepaid expenses and other current assets | 1,168,383 | (757,832) | (2,258,602) | 69,448 |
Accounts payable | 723,723 | (124,858) | (167,186) | 40,749 |
Amounts due to related parties | 7,366 | (566,737) | (575,329) | (273,250) |
Income tax payable | 1,208,810 | 977,435 | (50,424) | (547,080) |
Accrued expenses and other current liabilities | 506,706 | (216,336) | (233,882) | (1,884,578) |
Deferred grants | (726,730) | (728,818) | (231,742) | |
Net cash provided by operating activities | 4,768,923 | 13,015,443 | 14,051,434 | 12,962,753 |
Cash flows from investing activities | ||||
Purchase of property and equipment | (191,882) | (11,695,448) | ||
Proceeds from assets disposal | 17,804,769 | 17,859,076 | ||
Net cash provided by investing activities | 17,612,887 | 6,163,628 | ||
Cash flows from financing activities | ||||
Proceeds from issuance of convertible promissory notes payable | 2,025,000 | |||
Payments of issue costs of convertible promissory note | (162,000) | |||
Repayment of bank borrowings | (434,519) | |||
Repayment of advances from related parties | (4,269,277) | |||
Net cash provided by (used in) financing activities | 1,863,000 | (4,703,796) | ||
Effect of changes of foreign exchange rates on cash | (5,383,354) | (524,833) | 121,781 | 1,425,107 |
Net increase in cash | (614,431) | 30,103,497 | 22,199,843 | 9,684,064 |
Cash, beginning of year | 46,163,704 | 23,963,861 | 23,963,861 | 14,297,797 |
Cash, end of year | 45,549,273 | 54,067,358 | 46,163,704 | 23,963,861 |
Supplemental disclosures of cash flow information | ||||
Interest paid | 1,766,399 | |||
Income taxes paid | $ 2,181,273 | $ 3,339,767 | 3,774,917 | 2,999,802 |
Non-cash investing activities | ||||
Net liabilities acquired due to recapitalization | 1,959 | |||
Warrants issued to third parties in conjunction with debt issuance | $ 1,888,106 |
BUSINESS DESCRIPTION
BUSINESS DESCRIPTION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
BUSINESS DESCRIPTION | 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, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Wetouch Holding Group Limited (“BVI Wetouch”) and all the shareholders of BVI Wetouch (each, a “BVI Shareholder” and collectively the “BVI Shareholders”), to acquire all the issued and outstanding capital stock of BVI Wetouch in exchange for the issuance to the BVI Shareholders an aggregate of 28,000,000 2,800 31,396,394 Wetouch Holding Group Limited (“BVI Wetouch”), is a holding company whose only asset, held through a subsidiary, is 100% of the registered capital of Sichuan Wetouch Technology Co. Ltd. (“Sichuan Wetouch”), a limited liability company organized under the laws of the People’s Republic of China (“China” or “PRC”). Sichuan Wetouch is primarily engaged in the business of research development, manufacture, and distribution of touchscreen displays to customers both in PRC and overseas. The touchscreen products, which are manufactured by the Company, are primarily for use in computer components. 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. 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 (“Hong Kong Wetouch”) on September 11, 2020. Hong Kong Wetouch Technology Limited (“HK Wetouch”), was incorporated as a holding company under the laws of Hong Kong Special Administrative Region (“SAR”) on December 3, 2020. On March 2, 2021, HK Wetouch acquired all shares of Hong Kong Vtouch. Due to the fact that Hong Kong Wetouch and HK Wetouch are both under the same sole stockholder, the acquisition is accounted for under common control. In June, 2021, Hong Kong Wetouch completed its dissolution process pursuant to the minutes of its special shareholder meeting. 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 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 March 2021, pursuant to local PRC government guidelines on local environmental issues and the national overall plan, Sichuan Wetouch was under the government directed relocation order, and started its dissolution process which is estimated to be completed by the end of 2022. Sichuan Vtouch took over the operating business of Sichuan Wetouch. As a result of the above restructuring, HK Wetouch became the sole shareholder of Sichuan Vtouch. | 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, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with Wetouch Holding Group Limited (“BVI Wetouch”) and all the shareholders of BVI Wetouch (each, a “BVI Shareholder” and collectively the “BVI Shareholders”), to acquire all the issued and outstanding capital stock of BVI Wetouch in exchange for the issuance to the BVI Shareholders an aggregate of 28,000,000 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. 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 (“Hong Kong Wetouch”) on September 11, 2020. Hong Kong Wetouch Technology Limited (“HK Wetouch”), was incorporated as a holding company under the laws of Hong Kong Special Administrative Region (“SAR”) on December 3, 2020. On March 2, 2021, HK Wetouch acquired all shares of Hong Kong Vtouch. Due to the fact that Hong Kong Wetouch and HK Wetouch are both under the same sole stockholder, the acquisition is accounted for under common control. In June, 2021, Hong Kong Wetouch completed its dissolution process pursuant to the minutes of its special shareholder meeting. 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 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 March 2021, pursuant to local PRC government guidelines on local environmental issues and the national overall plan, Sichuan Wetouch was under the government directed relocation order, and started its dissolution process which is estimated to be completed by the second quarter of 2022. Sichuan Vtouch took over the operating business of Sichuan Wetouch. As a result of the above restructuring, HK Wetouch became the sole shareholder of Sichuan Vtouch. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | Note 2 — BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the United States Securities and Exchange Commission (“SEC”). The condensed consolidated balance sheet as of December 31, 2021 was derived from the audited consolidated financial statements of Wetouch. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated balance sheet of the Company as of December 31, 2021, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended. In the opinion of the management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the financial position as of September 30, 2022, the results of operations and cash flows for the three-month and nine-month periods ended September 30, 2022 and 2021 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 Company’s 2021 audited consolidated financial statements. During the three-month and nine-month periods ended September 30, 2022, there were no significant changes made to Wetouch significant accounting policies. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||
ACCOUNTS RECEIVABLE | NOTE-3- ACCOUNTS RECEIVABLE Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE September 30, 2022 December 31 2021 Accounts receivable $ 14,281,922 $ 7,991,037 Allowance for doubtful accounts - - Accounts receivable, net $ 14,281,922 $ 7,991,037 The Company’s accounts receivable primarily includes balance due from customers when the Company’s products are sold and delivered to customers. | NOTE-3 - ACCOUNTS RECEIVABLE Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE December 31, December 31 Accounts receivable $ 7,991,037 $ 12,002,454 Allowance for doubtful accounts - (75,619 ) Accounts receivable, net $ 7,991,037 $ 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. |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 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 consists of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, 2022 December 31, 2021 Advance to suppliers $ 297,260 $ 244,758 VAT input credits - 307,575 Issue cost related to convertible promissory notes 138,687 159,000 Deferred marketing expenses - 1,000,000 Prepayment for land use right/ (i) (i) 551,800 615,955 Security deposit (ii) (ii) 55,247 61,670 Others receivable (iii) (iii) 130,255 56,936 Prepaid expenses and other current assets $ 1,173,249 $ 2,445,894 (i) On July 23, 2021, Sichuan Vtouch entered into a contract with Chengdu Wenjiang District Planning and Natural Resources Bureau for purchasing a land use right of 131,010 3,925,233 551,800 (ii) On July 28, 2021, Sichuan Vtouch made a security deposit of RMB 393,000 55,247 (iii) Other receivables are mainly employee advances, and prepaid expenses. | NOTE-4 — PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consists of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS December 31, December 31, Advance to suppliers $ 244,758 $ 117,819 VAT input credits 307,575 - Issue cost related to convertible promissory notes 159,000 - Deferred marketing expenses 1,000,000 - Prepayment for land use right/ (i) 615,955 - Security deposit (ii) 61,670 - Others receivable (iii) 56,936 110,624 Prepaid expenses and other current assets $ 2,445,894 $ 228,443 (i) On July 23, 2021, Sichuan Vtouch entered into a contract with Chengdu Wenjiang District Planning and Natural Resources Bureau for purchasing a land use right of 131,010 square feet with a consideration of RMB 3,925,233 (equivalent to $ 615,955 ) for the new facility. The Company made a full prepayment by November 18, 2021 . Upon a certificate of land use right issued by the local government, which is estimated to be obtained by the fourth quarter of 2022, the Company will reclassify this prepayment to intangible assets accordingly. (ii) On July 28, 2021, Sichuan Vtouch made a security deposit of RMB 393,000 (equivalent to $ 61,670 ) to Chengdu Cross-Strait Science and Technology Industry Development Park Management Committee to obtain a construction license for new facility. This deposit will be refunded upon the issuance of the construction license by end of April, 2022. (iii) Other receivables are mainly employee advances, and prepaid expenses. |
PROPERTY, PLANT AND EQUIPMENT,
PROPERTY, PLANT AND EQUIPMENT, NET | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 5— PROPERTY, PLANT AND EQUIPMENT, NET SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT September 30, 2022 December 31, 2021 Buildings $ 12,107 $ 13,514 Vehicles 41,162 45,948 Construction in progress 10,552,131 11,778,957 Subtotal 10,605,400 11,838,419 Less: accumulated depreciation (11,604 ) (5,117 ) Property, plant and equipment, net $ 10,593,796 $ 11,833,302 Depreciation expense was $ 2,340 2,477 12,494 263,873 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 16.2 7,611,646 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 42,173 renewed on December 31, 2022 at a monthly rent of RMB 400,000 ($56,231) from January 1, 2022 till October 31, 2022 for the use of the Demised Properties | NOTE 5 — PROPERTY, PLANT AND EQUIPMENT, NET SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT December 31, December 31, Buildings $ 13,514 $ 10,330,767 Machinery, equipment and furniture 45,948 5,830,470 Construction in progress 11,778,957 - Subtotal 11,838,419 16,161,237 Less: accumulated depreciation (5,117 ) (6,670,042 ) Property, plant and equipment, net $ 11,833,302 $ 9,491,195 Depreciation expense was $ 5,117 979,999 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 18.1 7,648,423 872,045 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 47,076 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | ||
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS The related party transactions are summarized as follows: SCHEDULE OF REVENUES FROM RELATED PARTY TRANSACTIONS 2022 2021 2022 2021 Three-Month Period Ended September 30, Nine-Month Period Ended September 30, 2022 2021 2022 2021 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 During the six-month period ended June 30, 2021, the Company sold capacitive touchscreens to Chengdu Wetouch and Meishan Wetouch from time to time. There were 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 to related parties are as follows: SCHEDULE OF RELATED PARTY TRANSACTIONS Relationship September 30, December 31, 2021 Note Mr. Zongyi Lian President and CEO of the Company $ 1,614 $ 1,802 Payable to employee Mr. Guangde Cai Chairman of the Company 104,276 32,867 Payable to employee Total $ 105,890 $ 34,669 | NOTE 7 – RELATED PARTY TRANSACTIONS The related party transactions are summarized as follows: SCHEDULE OF REVENUES FROM RELATED PARTY TRANSACTIONS Years Ended December 31, 2021 2020 US$ US$ Revenues resulting from related parties: Sales to Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”) 10,483 - Sales to Meishan Wetouch Electronics Technology Co., Ltd. (“Meishan Wetouch”) 87,367 - Total revenue $ 97,850 $ - The Company sells capacitive touchscreens to Chengdu Wetouch and Meishan Wetouch from time to time. There are no written agreements between the Company and Meishan Wetouch. Mr. Guangde Cai, Chairman and director of the Company and our indirect majority shareholder, owns 94 % and 95 % of Chengdu Wetouch and Meishan Wetouch, respectively. SCHEDULE OF RELATED PARTY TRANSACTIONS Amounts due from related parties are as follows: Amounts due from related parties Relationship December 31, 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 December 31, 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. Zongyi Lian President and CEO of the Company 1,802 - Payable to employee Mr. Guangde Cai Chairman of the Company 32,867 326,042 Payable to employee Total $ 34,669 $ 529,060 |
INCOME TAXES
INCOME TAXES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
INCOME TAXES | NOTE 7 — 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 PRC Sichuan Wetouch and Sichuan Vtouch files income tax returns in the PRC. Effective from January 1, 2008, the PRC statutory income tax rate is 25% according to the Corporate Income Tax (“CIT”) Law which was passed by the National People’s Congress on March 16, 2007. Under PRC CIT Law, domestic enterprises and Foreign Investment Enterprises (“FIEs”) are usually subject to a unified 25% enterprise income tax rate while preferential tax rates, tax holidays and even tax exemption may be granted on a case-by-case basis by local government as preferential tax treatment to High and New Technology Enterprises (“HNTEs”). Under this preferential tax treatment, HNTEs are entitled to an income tax rate of 15 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, 2022 and 2021 were 27.9 20.6 25 35,542 The estimated effective income tax rate for the year ended December 31, 2022 would be similar to actual effective tax rate of the nine-month periods ended September 30, 2022. | 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, 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, 2021 and 2020, and accordingly no provision for Hong Kong profits tax has been made in these periods. PRC Sichuan Wetouch and Sichuan Vtouch 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 until October 20, 2023 Sichuan Vtouch is entitled to 25 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 (BENEFITS) For the Years Ended December 31, 2021 2020 Current tax provision PRC $ 4,409,589 $ 1,549,333 Total current tax provision $ 4,409,589 $ 1,549,333 Deferred tax provision BVI - - Hong Kong - - China - - Total deferred tax provision - - Income tax provision $ 4,409,589 $ 1,549,333 The following table reconciles the China statutory rates to the Company’s effective tax rate for the years ended December 31, 2021 and 2020: SCHEDULE OF INCOME TAX RATE For the Years Ended 2021 2020 PRC statutory income tax rate 25.0 % 25.0 % Effect of income tax holiday (1.0 )% (10.0 )% Tax rate differential on entities not subject to PRC income (0.6 )% 0.0 % R&D additional deduction (0.5 )% 0.0 % Non-deductible expenses in the PRC (2.7 )% (0.2 )% Effective tax rate 20.2 % 14.8 % 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, 2021 and 2020, Sichuan Wetouch and Sichuan Vtouch 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, 2022 | Dec. 31, 2021 | |
Payables and Accruals [Abstract] | ||
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 8— ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consist of the following: SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES September 30, December 31, Advance from customers $ 199,491 $ 59,111 Accrued payroll and employee benefits 86,686 99,342 Accrued interest expenses 153,275 20,795 Other tax payables (i) (i) 253 - Others (ii) (ii) 344,208 131,159 Accrued expenses and other current liabilities $ 783,913 $ 310,407 (i) Other tax payables are mainly value added tax payable. (ii) Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses. | NOTE 9— 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, 2021 December 31, 2020 Advance from customers $ 59,111 $ 9,493 Accrued payroll and employee benefits 99,342 105,801 Accrued interest expenses 20,795 - Other tax payables (i) - 325,719 Others (ii) 131,159 62,442 Accrued expenses and other current liabilities $ 310,407 $ 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. |
CONVERTIBLE PROMISSORY NOTES PA
CONVERTIBLE PROMISSORY NOTES PAYABLE | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
CONVERTIBLE PROMISSORY NOTES PAYABLE | NOTE 9 – CONVERTIBLE PROMISSORY NOTES PAYABLE a) Convertible promissory notes In October, November, and December 2021, the Company, issued seven (7) convertible promissory notes of US$ 2,250,000 90.0 8.0 1,793,000 162,000 The details of convertible notes are as follows: Unless the Notes are converted, the principal amounts of the Notes, and accrued interest at the rate of 8 16 The Lenders have the right to convert any or all of the principal and accrued interest on the Notes into shares of common stock of the Company on the earlier of (i) 180 calendar days after the issuance date of the Notes or (ii) the closing of a listing for trading of the common stock of the Company on a national securities exchange offering resulting in gross proceeds to the Company of $ 15,000,000 Uplist Offering th 70 0.75 Subject to customary exceptions, if the Company issues shares or any securities convertible into shares of common stock at an effective price per share lower than the conversion price of the Notes, the conversion rate of the Notes shall be reduced to such lower price. Until the Notes are either paid or converted in their entirety, the Company agreed with the Lenders not to sell any securities convertible into shares of common stock of the Company (i) at a conversion price that is based on the trading price of the stock or (ii) with a conversion price that is subject to being reset at a future date or upon an event directly or indirectly related to the business of the Company or the market for the common stock. The Company also agreed to not issue securities at a future determined price. The Lenders have the right to require the Company to repay the Notes if the Company receives cash proceeds, including proceeds from customers and the issuance of equity (including in the Uplist Offering). If the Company prepays the Notes prior to the Maturity Date, the Company shall pay a 10 On April 27, 2022, the Company entered into an amendment to the Note (“Amendment to Promissory Note”) issued to a Lender and, on May 3, 2022, an amendment to the Registration Rights Agreement by and between the Company and the Lender dated as of October 27, 2021 (“Amendment to Registration Rights Agreement”), extending the number of days the Company shall have in order to cause the registration statement covering the resale of the Common Stock to become effective. For each 30-day extension, the Company agreed to repay the Lender $25,000 of the principal amount of the Note, without prepayment penalty. The Company has repaid $ 25,000 On August 9 and September 20, 2022, the Company repaid $ 50,000 65,000 For the nine-month period ended September 30, 2022, the Company recognized interest expenses of the Notes in the amount of US$ 172,255 The following is the summary of outstanding promissory notes as of September 30, 2022: SUMMARY OF OUTSTANDING PROMISSORY NOTES Interest rate Principal Amount Net Proceeds Warrants Shares Maturity Date Convertible Note- Talos Victory (Note 9 (b)) 8 % $ 250,000 $ 197,000 200,000 October 27, 2022 Convertible Note-Mast Hill (Note 9 (b)) 8 % 750,000 601,000 600,000 November 5, 2022 Convertible Note-First Fire (Note 9 (b)) 8 % 250,000 197,000 200,000 November 16, 2022 Convertible Note-LGH Note 9 (b)) 8 % 250,000 207,000 200,000 November 24, 2022 Convertible Note -Fourth Man (Note 9 (b)) 8 % 250,000 197,000 200,000 November 29, 2022 Convertible Note-Jeffery Street Note 9 (b)) 8 % 250,000 197,000 200,000 December 2, 2022 Convertible Note -Blue Lake Note 9 (b)) 8 % 250,000 197,000 200,000 December 2, 2022 Total 2,250,000 1,793,000 1,800,000 Debt Discounts (225,000 ) Amortization of discounts for the year ended December 31, 2021 5,550 Convertible promissory notes payable as of December 31, 2021 2,030,550 Repayment of principals for the nine-month period ended September 30, 2022 (115,000 ) Amortization of discounts for the nine-month period ended September 30, 202 19,461 Convertible promissory notes payable as of September 30,2022 $ 1,935,010 *The Company prepaid $ 10,000 b) Warrants Accounting for Warrants In connection with the issuance of a convertible promissory notes (see Note 11 (a) in October, November and December, 2021, the Company also issued seven (7) three-year warrants (the “ Warrants”) to purchase an aggregate of 1,800,000 The Warrants issued to the Lenders granted each of the Lenders the right to purchase up to 200,000 1.25 th 125 1.25 The Lenders have the right to exercise the Warrants on a cashless basis if the highest traded price of a share of common stock of the Company during the 150 trading days prior to exercise of the Warrants exceeds the exercise price, unless there is an effective registration statement of the Company which covers the resale of the Lenders. If the Company issues shares or any securities convertible into shares at an effective price per share lower than the exercise price of the Warrants, the exercise price of the Warrants shall be reduced to such lower price, subject to customary exceptions. The Lenders may not convert the Notes or exercise the Warrants if such conversion or exercise will result in each of the Lenders, together with any affiliates, beneficially owning in excess of 4.9 On April 14 and April 27, 2022, two Lenders exercised cashless for 115,540 111,972 From August 24 to September 27, 2022, seven Lenders exercised cashless for 1,306,506 The fair values of these warrants as of September 30, 2022 were calculated using the Black-Scholes option-pricing model with the following assumptions: SCHEDULE OF FAIR VALUE OF WARRANTS September 30, 2022 Volatility (%) Expected dividends yield (%) Weighted average expected life (year) Risk-free interest rate (%) (per annum) Common stock purchase warrants liability as of December 31, 2021(US$) Changes of fair value of common stock purchase warrants liability Common stock purchase warrants liability as of September 30, 2022 (US$) Convertible Note- Talos Victory (Note 9 (a)) 256.7 % $ 0.0 % $ 2.1 4.22 % 124,756 (3,895 ) 120,861 Convertible Note-Mast Hill (Note 9 (a)) 256.7 % 0.0 % 2.1 4.22 % 375,156 (11,749 ) 363,407 Convertible Note-First Fire (Note 9 (a)) 256.7 % 0.0 % 2.1 4.22 % 125,408 (3,946 ) 121,462 Convertible Note-LGH Note 9 (a)) 256.7 % 0.0 % 2.1 4.22 % 125,664 (3,971 ) 121,693 Convertible Note -Fourth Man (Note 9 (ab)) 256.7 % 0.0 % 2.2 4.22 % 125,821 (3,987 ) 121,834 Convertible Note-Jeffery Street Note 9 (a))3,054 256.7 % 0.0 % 2.2 4.22 % 125,915 (3,997 ) 121,918 Convertible Note -Blue Lake Note 9 (a)) 256.7 % 0.0 % 2.2 4.22 % 125,915 (3,997 ) 121,918 Total Total 1,128,635 (35,542 ) 1,093,093 (c) Registration Rights Agreements Pursuant to the terms of the Registration Rights Agreement dated as of each contract date of each convertible promissory note, executed between the Company and each Lender, the Company agreed to file a registration statement with the Securities and Exchange Commission to register the shares of common stock underlying the Notes and the shares issuable upon exercise of the Warrants within sixty days from the date of each Registration Rights Agreement. The Company also granted the Lenders piggyback registration rights on such shares pursuant to the Purchase Agreements. | NOTE 11 – CONVERTIBLE PROMISSORY NOTES PAYABLE a) Convertible promissory notes In October, November, and December 2021, the Company, issued seven (7) convertible promissory notes 2,250,000 90.0 8.0 1,793,000 162,000 The details of convertible notes are as follows: Unless the Notes are converted, the principal amounts of the Notes, and accrued interest at the rate of 8 16 The Lenders have the right to convert any or all of the principal and accrued interest on the Notes into shares of common stock of the Company on the earlier of (i) 180 calendar days after the issuance date of the Notes or (ii) the closing of a listing for trading of the common stock of the Company on a national securities exchange offering resulting in gross proceeds to the Company of $ 15,000,000 Uplist Offering th 70 0.75 Subject to customary exceptions, if the Company issues shares or any securities convertible into shares of common stock at an effective price per share lower than the conversion price of the Notes, the conversion rate of the Notes shall be reduced to such lower price. Until the Notes are either paid or converted in their entirety, the Company agreed with the Lenders not to sell any securities convertible into shares of common stock of the Company (i) at a conversion price that is based on the trading price of the stock or (ii) with a conversion price that is subject to being reset at a future date or upon an event directly or indirectly related to the business of the Company or the market for the common stock. The Company also agreed to not issue securities at a future determined price. The Lenders have the right to require the Company to repay the Notes if the Company receives cash proceeds, including proceeds from customers and the issuance of equity (including in the Uplist Offering). If the Company prepays the Notes prior to the Maturity Date, the Company shall pay a 10% prepayment penalty. For the year ended December 31, 2021, the Company recognized interest expenses of the Notes in the amount of US$ 27,447 The following is the summary of outstanding promissory notes as of December 31, 2021: SUMMARY OF OUTSTANDING PROMISSORY NOTES Interest rate Principal Amount Net Proceeds Warrants Shares Maturity Date Convertible Note- Tarlos Victory (Note 9 (b)) 8 % $ 250,000 $ 197,000 200,000 October 27, 2022 Convertible Note-Mast Hill (Note 9 (b)) 8 % 750,000 601,000 600,000 November 5, 2022 Convertible Note-First Fire (Note 9 (b)) 8 % 250,000 197,000 200,000 November 16, 2022 Convertible Note-LGH Note 9 (b)) 8 % 250,000 207,000 200,000 November 24, 2022 Convertible Note -Fourth Man (Note 9 (b)) 8 % 250,000 197,000 200,000 November 29, 2022 Convertible Note-Jeffery Street Note 9 (b)) 8 % 250,000 197,000 200,000 December 2, 2022 Convertible Note -Blue Lake Note 9 (b)) 8 % 250,000 197,000 200,000 December 2, 2022 Total 2,250,000 1,793,000 1,800,000 Debt Discounts (225,000 ) Amortization of discounts for the year ended December 31, 2021 5,550 Convertible Promissory Notes payable as of December 31, 2021 $ 2,030,550 *The Company prepaid $ 10,000 b) Warrants Accounting for Warrants In connection with the issuance of a convertible promissory notes (see Note 11 (a) seven (7) three-year warrant (the “Warrant”) to purchase an aggregate of 1,800,000 The Warrants issued to the Lenders granted each of the Lenders the right to purchase up to 200,000 1.25 th 125 1.25 The Lenders have the right to exercise the Warrants on a cashless basis if the highest traded price of a share of common stock of the Company during the 150 trading days prior to exercise of the Warrants exceeds the exercise price, unless there is an effective registration statement of the Company which covers the resale of the Lenders. If the Company issues shares or any securities convertible into shares at an effective price per share lower than the exercise price of the Warrants, the exercise price of the Warrants shall be reduced to such lower price, subject to customary exceptions. The Lenders may not convert the Notes or exercise the Warrants if such conversion or exercise will result in each of the Lenders, together with any affiliates, beneficially owning in excess of 4.9 The fair values of these warrants as of December 31, 2021 were calculated using the Black-Scholes option-pricing model with the following assumptions: SCHEDULE OF FAIR VALUE OF WARRANTS December 31, 2021 Volatility (%) Expected dividends yield (%) Weighted average expected life (year) Risk-free interest rate (%) (per annum) Initial value of common stock purchase warrants liability (US$) Changes of fair value of common stock purchase warrants liability (- (gains)/+ losses(US$) Common stock purchase sarrants liability as of December 31, 2021(US$) Convertible Note- Tarlos Victory (Note 9 (a)) 187.3 % $ 0.0 % $ 2.8 0.97 % 311,649 (186,893 ) 124,756 Convertible Note-Mast Hill (Note 9 (a)) 187.3 % 0.0 % 2.8 0.97 % 576,233 (201,077 ) 375,156 Convertible Note-First Fire (Note 9 (a)) 187.3 % 0.0 % 2.9 0.97 % 196,037 (70,629 ) 125,408 Convertible Note-LGH Note 9 (a)) 187.3 % 0.0 % 2.9 0.97 % 214,644 (88,980 ) 125,664 Convertible Note -Fourth Man (Note 9 (ab)) 187.3 % 0.0 % 2.9 0.97 % 214,867 (89,046 ) 125,821 Convertible Note-Jeffery Street Note 9 (a)) 187.3 % 0.0 % 2.9 0.97 % 187,338 (61,423 ) 125,915 Convertible Note -Blue Lake Note 9 (a)) 187.3 % 0.0 % 2.9 0.97 % 187,338 (61,423 ) 125,915 Total Total 1,888,106 (759,471 ) 1,128,635 (c) Registration Rights Agreements Pursuant to the terms of the Registration Rights Agreement dated as of contract date of each convertible promissory note, 2021, executed between the Company and Lender, the Registration Rights Agreement dated as of each contract date, executed between the Company and Lenders, the Company agreed to file a registration statement with the Securities and Exchange Commission to register the shares of common stock underlying the Notes and the shares issuable upon exercise of the Warrants within sixty days from the date of each Registration Rights Agreement. The Company also granted the Lenders piggyback registration rights on such shares pursuant to the Purchase Agreements. |
SHAREHOLDERS_ EQUITY
SHAREHOLDERS’ EQUITY | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Equity [Abstract] | ||
SHAREHOLDERS’ EQUITY | NOTE 10— SHAREHOLDERS’ EQUITY Ordinary Shares The Company’s authorized number of ordinary shares was 300,000,000 0.001 On December 22, 2020, the Company issued 103,610 On January 1, 2021, the Company issued an aggregate of 310,830 On April 14 and April 27, 2022, the Company issued cashless warrant shares of 115,540 111,972 From August 24 and September 27, 2022, the Company issued cashless warrants shares of 1,306,506 As of September 30, 2022, the Company had 33,345,541 | NOTE 12— SHAREHOLDERS’ EQUITY Ordinary Shares The Company’s authorized number of ordinary shares was 300,000,000 0.001 On December 22,2020, the Company issued 103,610 On January 1, 2021, the Company issued an aggregate of 310,830 As of December 31, 2021, the Company had 31,811,523 Statutory reserve and restricted net assets Under PRC rules and regulations, all subsidiaries of Wetouch in the PRC 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, 2021 and 2020, the Company made appropriations to the reserve fund of RMB 12,933,795 2,005,084 6,907,298 1,058,590 |
SHARE BASED COMPENSATION
SHARE BASED COMPENSATION | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | ||
SHARE BASED COMPENSATION | NOTE 11- SHARE BASED COMPENSATION The Company applied ASC 718 and related interpretations in accounting for measuring the cost of share-based compensation over the period during which the consultants are required to provide services in exchange for the issued shares. The fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses. On December 22, 2020, the Board of Directors of the Company authorized the issuance of an aggregate of 103,610 210,360 The shares of 103,610 no 2.5 0 43.5 0.11 On January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 310,830 631,080 The 310,830 631,080 1.5 0 215.4 2.96 As of September 30, 2022, the Company had 841,440 0.01 1.00 0.5 For the three-month periods and nine-month periods ended September 30, 2022 and 2021, the Company recognized relevant share-based compensation expense of nil 1,041,281 nil 2,107,825 | NOTE 13- SHARE BASED COMPENSATION The Company applied ASC 718 and related interpretations in accounting for measuring the cost of share-based compensation over the period during which the consultants are required to provide services in exchange for the issued shares. The fair value of above award was estimated at the grant date using Black-Scholes model for pricing the share compensation expenses. On December 22, 2020, the Board of Directors of the Company authorized the issuance of an aggregate of 103,610 210,360 five The shares of 103,610 no 2.5 0 43.5 0.11 On January 1, 2021, the Board of Directors of the Company authorized the issuance of an aggregate of 310,830 631,080 five The 310,830 631,080 2.5 0 51.3 0.12 As of December 31, 2021, the Company had 841,440 0.01 1.5 0.6 For years ended December 31, 2021 and 2020, the Company recognized relevant share-based compensation expense of $ 1,041,281 351,238 2,107,825 713,120 |
RISKS AND UNCERTAINTIES
RISKS AND UNCERTAINTIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
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 - Concentrations - For the three-month periods ended September 30, 2022 and 2021, five customers accounted for 21.9 16.3 15.0 13.4 12.95 21.3 15.5 15.4 14.0 11.4 For the nine-month periods ended September 30, 2022 and 2021, six customers accounted for 20.5 15.9 15.6 14.5 12.3 10.2 18.9 17.5 14.6 14.1 11.4 And the Company’s top ten customers aggregately accounted for 99.1 98.1 99.2 96.7 As of September 30, 2022, five customers accounted for 26.2 24.3 14.5 11.5 The Company purchases its raw materials through various suppliers. Raw material purchases from these suppliers which individually exceeded 10% of the Company’s total raw material purchases, accounted for approximately 47.7 46.3 47.2 25.1 | NOTE 15- 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 - 19.5 17.3 14.5 14.2 11.1 17.8 15.9 14.6 12.7 12.2 And the Company’s top 10 customers aggregately accounted for 97.5 98.5 As of December 31, 2021, six customers accounted for 25.7 18.6 12.5 11.5 11.3 10.2 As of December 31, 2020 three customers accounted for 18.2 16.0 13.2 The Company purchases its raw materials through various suppliers. Raw material purchases from these suppliers which individually exceeded 10 11.2 37.5 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
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 September 30, 2022, there were no legal proceedings. Capital expenditure commitment On December 20, 2021, the Company entered into a contract with Shenzhen Municipal Haoyutuo Decoration & Cleaning Engineering Company Limited to purchase a facility decoration contract of RMB 20.0 3.1 15.0 2.1 5.0 0.7 | NOTE 16 — 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. Capital expenditure commitment On December 20, 2021, the Company entered into a contract with Shenzhen Municipal Haoyutuo Decoration & Cleaning Engineering Company Limited to purchase a facility decoration contract of RMB 20.0 3.1 15.0 2.4 5.0 0.7 |
REVENUES
REVENUES | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
REVENUES | NOTE 14 — REVENUES The Company’s geographical revenue information is set forth below: SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION 2022 2021 2022 2021 Three-Month Period Ended September 30, Nine-Month Period Ended September 30, 2022 2021 2022 2021 US$ US$ US$ US$ Sales in PRC $ 8,159,260 $ 7,696,992 $ 24,421,569 $ 24,652,526 Sales in Overseas —Republic of China (ROC, or Taiwan) 1,851,599 1,785,128 5,708,133 6,663,678 -South Korea 1,578,002 1,618,284 5,144,829 5,519,484 -Others 34,156 65,576 95,968 278,482 Sub-total 3,463,757 3,468,988 10,948,930 12,461,644 Total Revenue $ 11,623,018 $ 11,165,980 $ 35,370,499 $ 37,114,170 | NOTE 17 — REVENUES The Company’s geographical revenue information is set forth below: SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION 2021 2020 For the Years Ended December 31, 2021 2020 Sales in PRC $ 27,213,684 $ 21,430,226 Sales in Overseas —Republic of China (ROC, or Taiwan) 7,246,592 5,178,407 -South Korea 5,962,067 4,654,133 -Others 363,131 83,185 Sub-total 13,571,790 9,915,725 Total revenues $ 40,785,474 $ 31,345,951 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 year ended December 31, 2021, due to our proactive efforts to in marketing new models such as POS touchscreens and penetrate into new customers into new regions. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2021 | |
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, fair values of financial instruments, (c) Cash and cash equivalents Cash includes currency on hand and deposits held by banks that can be added or withdrawn without limitation. (d) Accounts receivables, net Accounts receivables are presented net of allowance for doubtful accounts. The Company determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trend. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received may differ from management’s estimate of credit worthiness and the economic environment. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the collection is not probable. (e) Inventory Inventory consists of raw materials, work-in-process and finished goods and is stated at the lower of cost or net realizable value. Cost is determined using a weighted average. For work-in-process and manufactured inventories, cost consists of raw materials, direct labor and an allocated portion of the Company’s production overhead. The Company writes down excess and obsolete inventory to its estimated net realizable value based upon assumptions about future demand and market conditions. For finished goods and work-in-process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write-downs are included in the cost of revenues in the consolidated statements of operations. Inventories are carried at this lower cost basis until sold or scrapped. Nil 66,944 (f) Convertible Promissory Notes The Company accounts for its convertible promissory notes according to guidance of ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815. We analyze the convertible notes for the existence of a beneficial conversion feature. the Company considered the three characteristics of a derivative instrument listed in ASC 815-10-15-83: (i) having one or more underlyings and one or more notional amounts or payment provisions or both; (ii) requiring no initial net investment; (iii) permitting net settlement; Since the Company’s notes have fixed interest rate, specified notional principal and settlement date, which no other events would affect specified settlement, and the Company received net proceeds after issuance costs and discount, which the Company recorded as the net proceeds or net settled investment, the management assessed that the Notes did not do not meet the definition of a derivative instruments and an embedded feature would not be bifurcated. The discounts on the convertible notes, are amortized to interest expense, using the effective interest method, over the terms of the related convertible notes. (g) Common stock purchase warrants The Company also analyzed the Warrants in accordance with ASC 815, to determine whether the Warrants meet the definition of a derivative and, if so, whether the Warrants meet the scope exception of ASC 815-40, which is that contracts issued or held by the reporting entity that are both (1) indexed to its own stock and (2) classified in stockholders’ equity shall not be considered to be derivative instruments for purposes of ASC 815-40. The Company concluded that the Warrants issued in November and December 2021 financing should be treated as a derivative liability because the Warrants are entitled to a price adjustment provision to allow the exercise price to be increased or reduced in the event the Company issues or sells any additional shares of common stock at a price per share more or less than the then-applicable exercise price or without consideration, which is typically referred to as a “Down-round protection” or “anti-dilution” provision. According to ASC 815-40, the “Down-round protection” provision is not considered to be an input to the fair value of a fixed-for-fixed option on equity shares which leads the Warrants to fail to be qualified as indexed to the Company’s own stock and then to fail to meet the scope exceptions of ASC 815. Therefore, the Company accounted for the Warrants as derivative liabilities under ASC 815. Pursuant to ASC 815, derivatives are measured at fair value and re-measured at fair value with changes in fair value recorded in earnings at each reporting period. The Company used an black-scholes-pricing model to estimate the fair values of common stock purchase warrants at the balance sheet dates. As of December 31, 2021, the Company recorded $ 1,128,635 759,471 (h) Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and due to related parties, common stock purchase warrants liability, approximate the fair value of the respective assets and liabilities as of December 31, 2021 and 2020 based upon the nature of the assets and liabilities. (i) Property, plant and equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is provided using the straight-line method over their expected useful lives, as follows: 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. (l) 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 (m) 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 impairment of intangible assets recognized for the years ended December 31, 2021 and 2020. (n) 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 CURRENT EXCHANGE RATES December 31, December 31, Year-end spot rate US$1=RMB 6.3726 US$1=RMB 6.5250 Average rate US$1=RMB 6.4505 US$1=RMB 6.9042 (o) 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, 2021 and 2020, 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, 2021 and 2020 are disclosed in Note 16 to the financial statements. (p) 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. (q) Research and Development Expense Research and development costs are expensed as incurred. (r) 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. (s) 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. (t) 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% On December 22, 2017 the Tax Cut and Jobs Act of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces the U.S. federal corporate income tax rate to 21% from 34 (u) 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. (v) 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, 2021, warrants were included for the dilutive EPS calculation. (w) 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. (x) Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” including interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years . The Company adopted ASU 2020-06 effective January 1, 2021. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-13 utilizing the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on the Company’s condensed consolidated 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. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 12 Months Ended |
Dec. 31, 2021 | |
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 December 31, December 31, 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 $ 113,908 76,141 Due to the relocation pursuit to the Compensation Fund agreement with the local government (See Note 6), the Company accelerated the amortization expense and recorded a loss of $ 872,045 |
DEFERRED GRANTS
DEFERRED GRANTS | 12 Months Ended |
Dec. 31, 2021 | |
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 year ended December 31, 2021, the Company recognized the remaining balance of deferred grant as income due to the government directed relocation order disclosed in Note 4. |
WEIGHTED AVERAGE NUMBER OF SHAR
WEIGHTED AVERAGE NUMBER OF SHARES | 12 Months Ended |
Dec. 31, 2021 | |
EARNINGS PER COMMON SHARE | |
WEIGHTED AVERAGE NUMBER OF SHARES | NOTE 14. 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. |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Use of Estimates | 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. | (b) Uses of estimates In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, fair values of financial instruments, |
Significant Accounting Policies | 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 Company’s 2021 audited consolidated financial statements. During the three-month and nine-month periods ended September 30, 2022, there were no significant changes made to Wetouch significant accounting policies. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
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. | |
Uses of estimates | 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. | (b) Uses of estimates In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible receivables, fair values of financial instruments, |
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. | |
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. | |
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. Nil 66,944 | |
Convertible Promissory Notes | (f) Convertible Promissory Notes The Company accounts for its convertible promissory notes according to guidance of ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”, which simplifies the accounting for convertible instruments by eliminating the requirement to separate embedded conversion features from the host contract when the conversion features are not required to be accounted for as derivatives under Topic 815. We analyze the convertible notes for the existence of a beneficial conversion feature. the Company considered the three characteristics of a derivative instrument listed in ASC 815-10-15-83: (i) having one or more underlyings and one or more notional amounts or payment provisions or both; (ii) requiring no initial net investment; (iii) permitting net settlement; Since the Company’s notes have fixed interest rate, specified notional principal and settlement date, which no other events would affect specified settlement, and the Company received net proceeds after issuance costs and discount, which the Company recorded as the net proceeds or net settled investment, the management assessed that the Notes did not do not meet the definition of a derivative instruments and an embedded feature would not be bifurcated. The discounts on the convertible notes, are amortized to interest expense, using the effective interest method, over the terms of the related convertible notes. | |
Common stock purchase warrants | (g) Common stock purchase warrants The Company also analyzed the Warrants in accordance with ASC 815, to determine whether the Warrants meet the definition of a derivative and, if so, whether the Warrants meet the scope exception of ASC 815-40, which is that contracts issued or held by the reporting entity that are both (1) indexed to its own stock and (2) classified in stockholders’ equity shall not be considered to be derivative instruments for purposes of ASC 815-40. The Company concluded that the Warrants issued in November and December 2021 financing should be treated as a derivative liability because the Warrants are entitled to a price adjustment provision to allow the exercise price to be increased or reduced in the event the Company issues or sells any additional shares of common stock at a price per share more or less than the then-applicable exercise price or without consideration, which is typically referred to as a “Down-round protection” or “anti-dilution” provision. According to ASC 815-40, the “Down-round protection” provision is not considered to be an input to the fair value of a fixed-for-fixed option on equity shares which leads the Warrants to fail to be qualified as indexed to the Company’s own stock and then to fail to meet the scope exceptions of ASC 815. Therefore, the Company accounted for the Warrants as derivative liabilities under ASC 815. Pursuant to ASC 815, derivatives are measured at fair value and re-measured at fair value with changes in fair value recorded in earnings at each reporting period. The Company used an black-scholes-pricing model to estimate the fair values of common stock purchase warrants at the balance sheet dates. As of December 31, 2021, the Company recorded $ 1,128,635 759,471 | |
Fair value of financial instruments | (h) Fair value of financial instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: ● Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted market prices for identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived from or corroborated by observable market data. ● Level 3 — inputs to the valuation methodology are unobservable. Unless otherwise disclosed, the fair value of the Company’s financial instruments, including cash, accounts receivable, prepaid expenses and other current assets, accounts payable, short-term bank loans, accrued expenses and other current liabilities, taxes payable and due to related parties, common stock purchase warrants liability, approximate the fair value of the respective assets and liabilities as of December 31, 2021 and 2020 based upon the nature of the assets and liabilities. | |
Property, plant and equipment, net | (i) Property, plant and equipment, net Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of property and equipment is provided using the straight-line method over their expected useful lives, as follows: 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 | (l) 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 | (m) 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 impairment of intangible assets recognized for the years ended December 31, 2021 and 2020. | |
Foreign Currency Translation | (n) 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 CURRENT EXCHANGE RATES December 31, December 31, Year-end spot rate US$1=RMB 6.3726 US$1=RMB 6.5250 Average rate US$1=RMB 6.4505 US$1=RMB 6.9042 | |
Revenue recognition | (o) 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, 2021 and 2020, 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, 2021 and 2020 are disclosed in Note 16 to the financial statements. | |
Selling, General and Administrative Expenses | (p) 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 | (q) Research and Development Expense Research and development costs are expensed as incurred. | |
Share-Based Compensation | (r) 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 | (s) 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 | (t) 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% On December 22, 2017 the Tax Cut and Jobs Act of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces the U.S. federal corporate income tax rate to 21% from 34 | |
Value added tax (“VAT”) | (u) 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 | (v) 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, 2021, warrants were included for the dilutive EPS calculation. | |
Comprehensive income (loss) | (w) 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 | (x) Recent Accounting Pronouncements The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued. In August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” including interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years . The Company adopted ASU 2020-06 effective January 1, 2021. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which introduces new guidance for the accounting for credit losses on instruments within its scope. The new guidance introduces an approach based on expected losses to estimate credit losses on certain types of financial instruments. It also modifies the impairment model for available-for-sale (AFS) debt securities and provides for a simplified accounting model for purchased financial assets with credit deterioration since their origination. The pronouncement will be effective for public business entities that are SEC filers in fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early application of the guidance will be permitted for all entities for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted ASU 2016-13 utilizing the modified retrospective transition method. The adoption of ASU 2016-13 did not have a material impact on the Company’s condensed consolidated 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 (Tables)
ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Receivables [Abstract] | ||
SCHEDULE OF ACCOUNTS RECEIVABLE | Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE September 30, 2022 December 31 2021 Accounts receivable $ 14,281,922 $ 7,991,037 Allowance for doubtful accounts - - Accounts receivable, net $ 14,281,922 $ 7,991,037 | Accounts receivable consists of the following: SCHEDULE OF ACCOUNTS RECEIVABLE December 31, December 31 Accounts receivable $ 7,991,037 $ 12,002,454 Allowance for doubtful accounts - (75,619 ) Accounts receivable, net $ 7,991,037 $ 11,926,835 |
PREPAID EXPENSES AND OTHER CU_2
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS | Prepaid expenses and other current assets consists of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS September 30, 2022 December 31, 2021 Advance to suppliers $ 297,260 $ 244,758 VAT input credits - 307,575 Issue cost related to convertible promissory notes 138,687 159,000 Deferred marketing expenses - 1,000,000 Prepayment for land use right/ (i) (i) 551,800 615,955 Security deposit (ii) (ii) 55,247 61,670 Others receivable (iii) (iii) 130,255 56,936 Prepaid expenses and other current assets $ 1,173,249 $ 2,445,894 (i) On July 23, 2021, Sichuan Vtouch entered into a contract with Chengdu Wenjiang District Planning and Natural Resources Bureau for purchasing a land use right of 131,010 3,925,233 551,800 (ii) On July 28, 2021, Sichuan Vtouch made a security deposit of RMB 393,000 55,247 (iii) Other receivables are mainly employee advances, and prepaid expenses. | Prepaid expenses and other current assets consists of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS December 31, December 31, Advance to suppliers $ 244,758 $ 117,819 VAT input credits 307,575 - Issue cost related to convertible promissory notes 159,000 - Deferred marketing expenses 1,000,000 - Prepayment for land use right/ (i) 615,955 - Security deposit (ii) 61,670 - Others receivable (iii) 56,936 110,624 Prepaid expenses and other current assets $ 2,445,894 $ 228,443 |
PROPERTY, PLANT AND EQUIPMENT_2
PROPERTY, PLANT AND EQUIPMENT, NET (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT | SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT September 30, 2022 December 31, 2021 Buildings $ 12,107 $ 13,514 Vehicles 41,162 45,948 Construction in progress 10,552,131 11,778,957 Subtotal 10,605,400 11,838,419 Less: accumulated depreciation (11,604 ) (5,117 ) Property, plant and equipment, net $ 10,593,796 $ 11,833,302 | SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT December 31, December 31, Buildings $ 13,514 $ 10,330,767 Machinery, equipment and furniture 45,948 5,830,470 Construction in progress 11,778,957 - Subtotal 11,838,419 16,161,237 Less: accumulated depreciation (5,117 ) (6,670,042 ) Property, plant and equipment, net $ 11,833,302 $ 9,491,195 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | ||
SCHEDULE OF REVENUES FROM RELATED PARTY TRANSACTIONS | The related party transactions are summarized as follows: SCHEDULE OF REVENUES FROM RELATED PARTY TRANSACTIONS 2022 2021 2022 2021 Three-Month Period Ended September 30, Nine-Month Period Ended September 30, 2022 2021 2022 2021 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 | The related party transactions are summarized as follows: SCHEDULE OF REVENUES FROM RELATED PARTY TRANSACTIONS Years Ended December 31, 2021 2020 US$ US$ Revenues resulting from related parties: Sales to Chengdu Wetouch Technology Co., Ltd (“Chengdu Wetouch”) 10,483 - Sales to Meishan Wetouch Electronics Technology Co., Ltd. (“Meishan Wetouch”) 87,367 - Total revenue $ 97,850 $ - |
SCHEDULE OF RELATED PARTY TRANSACTIONS | Amounts due to related parties are as follows: SCHEDULE OF RELATED PARTY TRANSACTIONS Relationship September 30, December 31, 2021 Note Mr. Zongyi Lian President and CEO of the Company $ 1,614 $ 1,802 Payable to employee Mr. Guangde Cai Chairman of the Company 104,276 32,867 Payable to employee Total $ 105,890 $ 34,669 | SCHEDULE OF RELATED PARTY TRANSACTIONS Amounts due from related parties are as follows: Amounts due from related parties Relationship December 31, 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 December 31, 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. Zongyi Lian President and CEO of the Company 1,802 - Payable to employee Mr. Guangde Cai Chairman of the Company 32,867 326,042 Payable to employee Total $ 34,669 $ 529,060 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
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, December 31, Advance from customers $ 199,491 $ 59,111 Accrued payroll and employee benefits 86,686 99,342 Accrued interest expenses 153,275 20,795 Other tax payables (i) (i) 253 - Others (ii) (ii) 344,208 131,159 Accrued expenses and other current liabilities $ 783,913 $ 310,407 (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, 2021 December 31, 2020 Advance from customers $ 59,111 $ 9,493 Accrued payroll and employee benefits 99,342 105,801 Accrued interest expenses 20,795 - Other tax payables (i) - 325,719 Others (ii) 131,159 62,442 Accrued expenses and other current liabilities $ 310,407 $ 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. |
CONVERTIBLE PROMISSORY NOTES _2
CONVERTIBLE PROMISSORY NOTES PAYABLE (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
SUMMARY OF OUTSTANDING PROMISSORY NOTES | The following is the summary of outstanding promissory notes as of September 30, 2022: SUMMARY OF OUTSTANDING PROMISSORY NOTES Interest rate Principal Amount Net Proceeds Warrants Shares Maturity Date Convertible Note- Talos Victory (Note 9 (b)) 8 % $ 250,000 $ 197,000 200,000 October 27, 2022 Convertible Note-Mast Hill (Note 9 (b)) 8 % 750,000 601,000 600,000 November 5, 2022 Convertible Note-First Fire (Note 9 (b)) 8 % 250,000 197,000 200,000 November 16, 2022 Convertible Note-LGH Note 9 (b)) 8 % 250,000 207,000 200,000 November 24, 2022 Convertible Note -Fourth Man (Note 9 (b)) 8 % 250,000 197,000 200,000 November 29, 2022 Convertible Note-Jeffery Street Note 9 (b)) 8 % 250,000 197,000 200,000 December 2, 2022 Convertible Note -Blue Lake Note 9 (b)) 8 % 250,000 197,000 200,000 December 2, 2022 Total 2,250,000 1,793,000 1,800,000 Debt Discounts (225,000 ) Amortization of discounts for the year ended December 31, 2021 5,550 Convertible promissory notes payable as of December 31, 2021 2,030,550 Repayment of principals for the nine-month period ended September 30, 2022 (115,000 ) Amortization of discounts for the nine-month period ended September 30, 202 19,461 Convertible promissory notes payable as of September 30,2022 $ 1,935,010 *The Company prepaid $ 10,000 | The following is the summary of outstanding promissory notes as of December 31, 2021: SUMMARY OF OUTSTANDING PROMISSORY NOTES Interest rate Principal Amount Net Proceeds Warrants Shares Maturity Date Convertible Note- Tarlos Victory (Note 9 (b)) 8 % $ 250,000 $ 197,000 200,000 October 27, 2022 Convertible Note-Mast Hill (Note 9 (b)) 8 % 750,000 601,000 600,000 November 5, 2022 Convertible Note-First Fire (Note 9 (b)) 8 % 250,000 197,000 200,000 November 16, 2022 Convertible Note-LGH Note 9 (b)) 8 % 250,000 207,000 200,000 November 24, 2022 Convertible Note -Fourth Man (Note 9 (b)) 8 % 250,000 197,000 200,000 November 29, 2022 Convertible Note-Jeffery Street Note 9 (b)) 8 % 250,000 197,000 200,000 December 2, 2022 Convertible Note -Blue Lake Note 9 (b)) 8 % 250,000 197,000 200,000 December 2, 2022 Total 2,250,000 1,793,000 1,800,000 Debt Discounts (225,000 ) Amortization of discounts for the year ended December 31, 2021 5,550 Convertible Promissory Notes payable as of December 31, 2021 $ 2,030,550 *The Company prepaid $ 10,000 |
SCHEDULE OF FAIR VALUE OF WARRANTS | The fair values of these warrants as of September 30, 2022 were calculated using the Black-Scholes option-pricing model with the following assumptions: SCHEDULE OF FAIR VALUE OF WARRANTS September 30, 2022 Volatility (%) Expected dividends yield (%) Weighted average expected life (year) Risk-free interest rate (%) (per annum) Common stock purchase warrants liability as of December 31, 2021(US$) Changes of fair value of common stock purchase warrants liability Common stock purchase warrants liability as of September 30, 2022 (US$) Convertible Note- Talos Victory (Note 9 (a)) 256.7 % $ 0.0 % $ 2.1 4.22 % 124,756 (3,895 ) 120,861 Convertible Note-Mast Hill (Note 9 (a)) 256.7 % 0.0 % 2.1 4.22 % 375,156 (11,749 ) 363,407 Convertible Note-First Fire (Note 9 (a)) 256.7 % 0.0 % 2.1 4.22 % 125,408 (3,946 ) 121,462 Convertible Note-LGH Note 9 (a)) 256.7 % 0.0 % 2.1 4.22 % 125,664 (3,971 ) 121,693 Convertible Note -Fourth Man (Note 9 (ab)) 256.7 % 0.0 % 2.2 4.22 % 125,821 (3,987 ) 121,834 Convertible Note-Jeffery Street Note 9 (a))3,054 256.7 % 0.0 % 2.2 4.22 % 125,915 (3,997 ) 121,918 Convertible Note -Blue Lake Note 9 (a)) 256.7 % 0.0 % 2.2 4.22 % 125,915 (3,997 ) 121,918 Total Total 1,128,635 (35,542 ) 1,093,093 | The fair values of these warrants as of December 31, 2021 were calculated using the Black-Scholes option-pricing model with the following assumptions: SCHEDULE OF FAIR VALUE OF WARRANTS December 31, 2021 Volatility (%) Expected dividends yield (%) Weighted average expected life (year) Risk-free interest rate (%) (per annum) Initial value of common stock purchase warrants liability (US$) Changes of fair value of common stock purchase warrants liability (- (gains)/+ losses(US$) Common stock purchase sarrants liability as of December 31, 2021(US$) Convertible Note- Tarlos Victory (Note 9 (a)) 187.3 % $ 0.0 % $ 2.8 0.97 % 311,649 (186,893 ) 124,756 Convertible Note-Mast Hill (Note 9 (a)) 187.3 % 0.0 % 2.8 0.97 % 576,233 (201,077 ) 375,156 Convertible Note-First Fire (Note 9 (a)) 187.3 % 0.0 % 2.9 0.97 % 196,037 (70,629 ) 125,408 Convertible Note-LGH Note 9 (a)) 187.3 % 0.0 % 2.9 0.97 % 214,644 (88,980 ) 125,664 Convertible Note -Fourth Man (Note 9 (ab)) 187.3 % 0.0 % 2.9 0.97 % 214,867 (89,046 ) 125,821 Convertible Note-Jeffery Street Note 9 (a)) 187.3 % 0.0 % 2.9 0.97 % 187,338 (61,423 ) 125,915 Convertible Note -Blue Lake Note 9 (a)) 187.3 % 0.0 % 2.9 0.97 % 187,338 (61,423 ) 125,915 Total Total 1,888,106 (759,471 ) 1,128,635 |
REVENUES (Tables)
REVENUES (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION | The Company’s geographical revenue information is set forth below: SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION 2022 2021 2022 2021 Three-Month Period Ended September 30, Nine-Month Period Ended September 30, 2022 2021 2022 2021 US$ US$ US$ US$ Sales in PRC $ 8,159,260 $ 7,696,992 $ 24,421,569 $ 24,652,526 Sales in Overseas —Republic of China (ROC, or Taiwan) 1,851,599 1,785,128 5,708,133 6,663,678 -South Korea 1,578,002 1,618,284 5,144,829 5,519,484 -Others 34,156 65,576 95,968 278,482 Sub-total 3,463,757 3,468,988 10,948,930 12,461,644 Total Revenue $ 11,623,018 $ 11,165,980 $ 35,370,499 $ 37,114,170 | The Company’s geographical revenue information is set forth below: SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION 2021 2020 For the Years Ended December 31, 2021 2020 Sales in PRC $ 27,213,684 $ 21,430,226 Sales in Overseas —Republic of China (ROC, or Taiwan) 7,246,592 5,178,407 -South Korea 5,962,067 4,654,133 -Others 363,131 83,185 Sub-total 13,571,790 9,915,725 Total revenues $ 40,785,474 $ 31,345,951 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
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 FINITE LIVED INTANGIBLE ASSETS | SCHEDULE OF FINITE LIVED INTANGIBLE ASSETS Useful life Land use right 50 Patents 10 |
SCHEDULE OF CURRENT EXCHANGE RATES | The following table outlines the currency exchange rates that were used in creating the consolidated financial statements in this report: SCHEDULE OF CURRENT EXCHANGE RATES December 31, December 31, Year-end spot rate US$1=RMB 6.3726 US$1=RMB 6.5250 Average rate US$1=RMB 6.4505 US$1=RMB 6.9042 |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
SCHEDULE OF INTANGIBLE ASSETS | Intangible assets, net mainly consist of the following: SCHEDULE OF INTANGIBLE ASSETS December 31, December 31, 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 |
SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFITS) | The components of the income tax provision are as follows: SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFITS) For the Years Ended December 31, 2021 2020 Current tax provision PRC $ 4,409,589 $ 1,549,333 Total current tax provision $ 4,409,589 $ 1,549,333 Deferred tax provision BVI - - Hong Kong - - China - - Total deferred tax provision - - Income tax provision $ 4,409,589 $ 1,549,333 |
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, 2021 and 2020: SCHEDULE OF INCOME TAX RATE For the Years Ended 2021 2020 PRC statutory income tax rate 25.0 % 25.0 % Effect of income tax holiday (1.0 )% (10.0 )% Tax rate differential on entities not subject to PRC income (0.6 )% 0.0 % R&D additional deduction (0.5 )% 0.0 % Non-deductible expenses in the PRC (2.7 )% (0.2 )% Effective tax rate 20.2 % 14.8 % |
BUSINESS DESCRIPTION (Details N
BUSINESS DESCRIPTION (Details Narrative) - shares | Oct. 09, 2020 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 19, 2016 |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Common stock, shares issued | 33,345,541 | 31,811,523 | 31,500,693 | ||
Common stock, shares outstanding | 33,345,541 | 31,811,523 | 31,500,693 | ||
Sichuan Wetouch Technology Co. Ltd. [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Ownership percentage | 100% | 100% | |||
BVI shareholders [Member] | |||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |||||
Stock issued during period, shares, acquisitions | 28,000,000 | ||||
Number of reverse merger stock | 2,800 | ||||
Common stock, shares issued | 31,396,394 | ||||
Common stock, shares outstanding | 31,396,394 |
SCHEDULE OF ACCOUNTS RECEIVABLE
SCHEDULE OF ACCOUNTS RECEIVABLE (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Receivables [Abstract] | |||
Accounts receivable | $ 14,281,922 | $ 7,991,037 | $ 12,002,454 |
Allowance for doubtful accounts | 75,619 | ||
Accounts receivable, net | 14,281,922 | 7,991,037 | 11,926,835 |
Allowance for doubtful accounts | $ (75,619) |
SCHEDULE OF PREPAID EXPENSES AN
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||
Advance to suppliers | $ 297,260 | $ 244,758 | $ 117,819 | |||
VAT input credits | 307,575 | |||||
Issue cost related to convertible promissory notes | 138,687 | 159,000 | ||||
Deferred marketing expenses | 1,000,000 | |||||
Prepayment for land use right/ (i) | 551,800 | [1] | 615,955 | [1] | ||
Security deposit | 55,247 | [2] | 61,670 | [2],[3] | [3] | |
Others receivable | 130,255 | [4] | 56,936 | [4] | 110,624 | [5] |
Prepaid expenses and other current assets | $ 1,173,249 | $ 2,445,894 | $ 228,443 | |||
[1]On July 23, 2021, Sichuan Vtouch entered into a contract with Chengdu Wenjiang District Planning and Natural Resources Bureau for purchasing a land use right of 131,010 3,925,233 551,800 393,000 55,247 393,000 (equivalent to $ 61,670 ) to Chengdu Cross-Strait Science and Technology Industry Development Park Management Committee to obtain a construction license for new facility. This deposit will be refunded upon the issuance of the construction license by end of April, 2022. |
SCHEDULE OF PREPAID EXPENSES _2
SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) (Parenthetical) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jul. 28, 2021 USD ($) | Jul. 28, 2021 CNY (¥) | Jul. 23, 2021 USD ($) ft² | Jul. 23, 2021 CNY (¥) ft² | Dec. 31, 2020 USD ($) | |||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||||||||
Prepayment for land use right | $ 551,800 | [1] | $ 615,955 | [1] | ||||||
Security deposit | $ 55,247 | [2] | $ 61,670 | [2],[3] | [3] | |||||
Sichuan Vtouch [Member] | ||||||||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||||||||
Area of land | ft² | 131,010 | 131,010 | ||||||||
Prepayment for land use right | $ 551,800 | ¥ 3,925,233 | ||||||||
Security deposit | $ 55,247 | ¥ 393,000 | ||||||||
Sichuan Vtouch [Member] | Foreign Exchange [Member] | ||||||||||
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | ||||||||||
Prepayment for land use right | $ 615,955 | |||||||||
Security deposit | $ 61,670 | |||||||||
[1]On July 23, 2021, Sichuan Vtouch entered into a contract with Chengdu Wenjiang District Planning and Natural Resources Bureau for purchasing a land use right of 131,010 3,925,233 551,800 393,000 55,247 393,000 (equivalent to $ 61,670 ) to Chengdu Cross-Strait Science and Technology Industry Development Park Management Committee to obtain a construction license for new facility. This deposit will be refunded upon the issuance of the construction license by end of April, 2022. |
SCHEDULE OF PROPERTY, PLANT AND
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 10,605,400 | $ 11,838,419 | $ 16,161,237 |
Less: accumulated depreciation | (11,604) | (5,117) | (6,670,042) |
Property, plant and equipment, net | 10,593,796 | 11,833,302 | 9,491,195 |
Property, plant and equipment, net | 10,593,796 | 11,833,302 | 9,491,195 |
Building [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 12,107 | 13,514 | 10,330,767 |
Vehicles [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 41,162 | 45,948 | |
Construction in Progress [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 10,552,131 | 11,778,957 | |
Machinery equipment and furniture [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 45,948 | $ 5,830,470 |
PROPERTY, PLANT AND EQUIPMENT_3
PROPERTY, PLANT AND EQUIPMENT, NET (Details Narrative) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Mar. 18, 2021 USD ($) | Mar. 18, 2021 CNY (¥) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Depreciation expense | $ 2,340 | $ 2,477 | $ 12,494 | $ 263,873 | $ 5,117 | $ 979,999 | ||||
Compensation expenses | $ 16,200,000 | ¥ 115,200,000 | ||||||||
Gain (loss) on disposition of assets | 7,611,646 | |||||||||
Gain (loss) on disposition of intangible assets | $ 7,625,279 | 7,648,423 | ||||||||
Gain (loss) on disposition of intangible assets | $ 872,045 | |||||||||
Foreign Exchange [Member] | ||||||||||
Compensation expenses | $ 18,100,000 | |||||||||
Sichuan Vtouch [Member] | ||||||||||
Rent expenses | $ 47,076 | ¥ 300,000 | ||||||||
Lease renewal description | renewed on December 31, 2022 at a monthly rent of RMB 400,000 ($56,231) from January 1, 2022 till October 31, 2022 for the use of the Demised Properties | renewed on December 31, 2022 at a monthly rent of RMB 400,000 ($56,231) from January 1, 2022 till October 31, 2022 for the use of the Demised Properties | ||||||||
Sichuan Vtouch [Member] | Foreign Exchange [Member] | ||||||||||
Rent expenses | $ 42,173 |
SCHEDULE OF REVENUES FROM RELAT
SCHEDULE OF REVENUES FROM RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | ||||||
Total revenue | $ 97,554 | $ 97,850 | ||||
Chengdu Wetouch Technology Co Ltd [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Total revenue | 10,451 | 10,483 | ||||
Meishan Wetouch Electronics Technology Co., Ltd. [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Total revenue | $ 87,103 | $ 87,367 |
SCHEDULE OF RELATED PARTY TRANS
SCHEDULE OF RELATED PARTY TRANSACTIONS (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related Party Transaction [Line Items] | |||
Amounts due to related parties | $ 105,890 | $ 34,669 | $ 529,060 |
Amounts due from related parties | $ 76,619 | ||
Mr Zongyi Lian [Member] | |||
Related Party Transaction [Line Items] | |||
Related party transaction relationship | President and CEO of the Company | President and CEO of the Company | President and CEO of the Company |
Amounts due to related parties | $ 1,614 | $ 1,802 | |
Mr. Guangde Cai [Member] | |||
Related Party Transaction [Line Items] | |||
Related party transaction relationship | Chairman of the Company | Chairman of the Company | Chairman of the Company |
Amounts due to related parties | $ 104,276 | $ 32,867 | $ 326,042 |
Vision Touch Technology AG [Member] | |||
Related Party Transaction [Line Items] | |||
Related party transaction relationship | 100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch | 100% owned by Mr. Yong Yang, Sales Director of Sichuan Wetouch | |
Amounts due from related parties | $ 76,619 | ||
Chengdu Wetouch Technology Co., Ltd ("Chengdu Wetouch") [Member] | |||
Related Party Transaction [Line Items] | |||
Related party transaction relationship | 94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li | 94% owned by Mr. Guangde Cai & 2% by Mr. Shengyong Li | |
Amounts due to related parties | $ 134,616 | ||
Meishan Wetouch Electronics Technology Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
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 | ||
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 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) | Dec. 31, 2021 | Jun. 30, 2021 |
Chengdu Wetouch [Member] | ||
Equity ownership percentage | 94% | 94% |
Meishan Wetouch [Member] | ||
Equity ownership percentage | 95% | 95% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | 36 Months Ended | ||||
Jan. 01, 2008 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2018 | Oct. 11, 2020 | |
IncomeTaxDisclosureLineItems [Line Items] | |||||||
Income tax rate | 21% | 20.20% | 14.80% | ||||
Income tax description | 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 | ||||||
Statutory income tax | 21% | ||||||
Statutory income tax | 25% | 25% | |||||
Deferred tax assets | $ 0 | $ 0 | |||||
Domestic Enterprises And Foreign Investmen tEnterprises [Member] | |||||||
IncomeTaxDisclosureLineItems [Line Items] | |||||||
Statutory income tax | 25% | ||||||
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 until October 20, 2023 | |||||
HONG KONG | |||||||
IncomeTaxDisclosureLineItems [Line Items] | |||||||
Income tax rate | 16.50% | 16.50% | |||||
PRC [Member] | |||||||
IncomeTaxDisclosureLineItems [Line Items] | |||||||
Income tax rate | 15% | ||||||
Statutory income tax | 25% | 25% | 25% | 25% | |||
Nondeductible expense, amount | $ 35,542 | ||||||
Sichuan Vtouch [Member] | |||||||
IncomeTaxDisclosureLineItems [Line Items] | |||||||
Income tax rate | 27.90% | 20.60% |
SCHEDULE OF ACCRUED EXPENSES AN
SCHEDULE OF ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||||
Payables and Accruals [Abstract] | |||||||
Advance from customers | $ 199,491 | $ 59,111 | $ 9,493 | ||||
Accrued payroll and employee benefits | 86,686 | 99,342 | 105,801 | ||||
Accrued interest expenses | 153,275 | 20,795 | |||||
Other tax payables (i) | [1] | 253 | |||||
Others (ii) | 344,208 | [2] | 131,159 | [2] | 62,442 | [3] | |
Accrued expenses and other current liabilities | $ 783,913 | 310,407 | 503,455 | ||||
Other tax payables (i) | [4] | $ 325,719 | |||||
[1]Other tax payables are mainly value added tax payable.[2]Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses.[3]Others mainly represent accrued employee reimbursement payable and other accrued miscellaneous operating expenses.[4]Other tax payables are mainly value added tax payable. |
SUMMARY OF OUTSTANDING PROMISSO
SUMMARY OF OUTSTANDING PROMISSORY NOTES (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Short-Term Debt [Line Items] | |||
Principal amount | $ 2,250,000 | $ 2,250,000 | |
Net proceeds | $ 1,793,000 | $ 1,793,000 | |
Warrants shares | 1,800,000 | 1,800,000 | |
Debt discounts | $ (225,000) | ||
Amortization of discounts | $ 19,461 | 5,550 | |
Convertible promissory notes payable | 1,935,010 | $ 2,030,550 | |
Repayments of principal amount | $ (115,000) | ||
Convertible Note Talos Victory [Member] | |||
Short-Term Debt [Line Items] | |||
Interest rate | 8% | ||
Principal amount | $ 250,000 | ||
Net proceeds | $ 197,000 | ||
Warrants shares | 200,000 | ||
Maturity date | Oct. 27, 2022 | ||
Convertible Note-Mast Hill [Member] | |||
Short-Term Debt [Line Items] | |||
Interest rate | 8% | 8% | |
Principal amount | $ 750,000 | $ 750,000 | |
Net proceeds | $ 601,000 | $ 601,000 | |
Warrants shares | 600,000 | 600,000 | |
Maturity date | Nov. 05, 2022 | Nov. 05, 2022 | |
Convertible Note-First Fire [Member] | |||
Short-Term Debt [Line Items] | |||
Interest rate | 8% | 8% | |
Principal amount | $ 250,000 | $ 250,000 | |
Net proceeds | $ 197,000 | $ 197,000 | |
Warrants shares | 200,000 | 200,000 | |
Maturity date | Nov. 16, 2022 | Nov. 16, 2022 | |
Convertible Note-LGH [Member] | |||
Short-Term Debt [Line Items] | |||
Interest rate | 8% | 8% | |
Principal amount | $ 250,000 | $ 250,000 | |
Net proceeds | $ 207,000 | $ 207,000 | |
Warrants shares | 200,000 | 200,000 | |
Maturity date | Nov. 24, 2022 | Nov. 24, 2022 | |
Convertible Note -Fourth Man [Member] | |||
Short-Term Debt [Line Items] | |||
Interest rate | 8% | 8% | |
Principal amount | $ 250,000 | $ 250,000 | |
Net proceeds | $ 197,000 | $ 197,000 | |
Warrants shares | 200,000 | 200,000 | |
Maturity date | Nov. 29, 2022 | Nov. 29, 2022 | |
Convertible Note-Jeffery Street [Member] | |||
Short-Term Debt [Line Items] | |||
Interest rate | 8% | 8% | |
Principal amount | $ 250,000 | $ 250,000 | |
Net proceeds | $ 197,000 | $ 197,000 | |
Warrants shares | 200,000 | 200,000 | |
Maturity date | Dec. 02, 2022 | Dec. 02, 2022 | |
Convertible Note -Blue Lake [Member] | |||
Short-Term Debt [Line Items] | |||
Interest rate | 8% | 8% | |
Principal amount | $ 250,000 | $ 250,000 | |
Net proceeds | $ 197,000 | $ 197,000 | |
Warrants shares | 200,000 | 200,000 | |
Maturity date | Dec. 02, 2022 | Dec. 02, 2022 | |
Convertible Note- Tarlos Victory [Member] | |||
Short-Term Debt [Line Items] | |||
Interest rate | 8% | ||
Principal amount | $ 250,000 | ||
Net proceeds | $ 197,000 | ||
Warrants shares | 200,000 | ||
Maturity date | Oct. 27, 2022 |
SUMMARY OF OUTSTANDING PROMIS_2
SUMMARY OF OUTSTANDING PROMISSORY NOTES (Details) (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Repayment of notes | $ 10,000 | $ 10,000 |
SCHEDULE OF FAIR VALUE OF WARRA
SCHEDULE OF FAIR VALUE OF WARRANTS (Details) | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2022 USD ($) shares | Sep. 30, 2021 USD ($) shares | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) shares | Apr. 27, 2022 shares | Apr. 14, 2022 shares | |
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 1,093,093 | 1,128,635 | 1,888,106 | 111,972 | 115,540 | |
Changes of fair value of common stock purchase warrants liability | $ | $ (35,542) | $ (759,471) | ||||
Initial value of common stock purchase warrants liability | 1,128,635 | 1,888,106 | 1,888,106 | |||
Common stock purchase sarrants liability as of December 31, 2021 | 1,093,093 | 1,128,635 | 1,888,106 | |||
Convertible Note Talos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 120,861 | 124,756 | ||||
Changes of fair value of common stock purchase warrants liability | $ | $ (3,895) | |||||
Initial value of common stock purchase warrants liability | 124,756 | |||||
Common stock purchase sarrants liability as of December 31, 2021 | 120,861 | 124,756 | ||||
Convertible Note-Mast Hill [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 363,407 | 375,156 | 576,233 | |||
Changes of fair value of common stock purchase warrants liability | $ | $ (11,749) | $ (201,077) | ||||
Initial value of common stock purchase warrants liability | 375,156 | 576,233 | 576,233 | |||
Common stock purchase sarrants liability as of December 31, 2021 | 363,407 | 375,156 | 576,233 | |||
Convertible Note-First Fire [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 121,462 | 125,408 | 196,037 | |||
Changes of fair value of common stock purchase warrants liability | $ | $ (3,946) | $ (70,629) | ||||
Initial value of common stock purchase warrants liability | 125,408 | 196,037 | 196,037 | |||
Common stock purchase sarrants liability as of December 31, 2021 | 121,462 | 125,408 | 196,037 | |||
Convertible Note-LGH [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 121,693 | 125,664 | 214,644 | |||
Changes of fair value of common stock purchase warrants liability | $ | $ (3,971) | $ (88,980) | ||||
Initial value of common stock purchase warrants liability | 125,664 | 214,644 | 214,644 | |||
Common stock purchase sarrants liability as of December 31, 2021 | 121,693 | 125,664 | 214,644 | |||
Convertible Note -Fourth Man [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 121,834 | 125,821 | 214,867 | |||
Changes of fair value of common stock purchase warrants liability | $ | $ (3,987) | $ (89,046) | ||||
Initial value of common stock purchase warrants liability | 125,821 | 214,867 | 214,867 | |||
Common stock purchase sarrants liability as of December 31, 2021 | 121,834 | 125,821 | 214,867 | |||
Convertible Note-Jeffery Street [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 121,918 | 125,915 | 187,338 | |||
Changes of fair value of common stock purchase warrants liability | $ | $ (3,997) | $ (61,423) | ||||
Initial value of common stock purchase warrants liability | 125,915 | 187,338 | 187,338 | |||
Common stock purchase sarrants liability as of December 31, 2021 | 121,918 | 125,915 | 187,338 | |||
Convertible Note -Blue Lake [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 121,918 | 125,915 | 187,338 | |||
Changes of fair value of common stock purchase warrants liability | $ | $ (3,997) | $ (61,423) | ||||
Initial value of common stock purchase warrants liability | 125,915 | 187,338 | 187,338 | |||
Common stock purchase sarrants liability as of December 31, 2021 | 121,918 | 125,915 | 187,338 | |||
Convertible Note- Tarlos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Common stock purchase warrants liability as of December 31, 2021 | 124,756 | 311,649 | ||||
Changes of fair value of common stock purchase warrants liability | $ | $ (186,893) | |||||
Initial value of common stock purchase warrants liability | 124,756 | 311,649 | 311,649 | |||
Common stock purchase sarrants liability as of December 31, 2021 | 124,756 | 311,649 | ||||
Measurement Input, Price Volatility [Member] | Convertible Note Talos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 256.7 | |||||
Measurement Input, Price Volatility [Member] | Convertible Note-Mast Hill [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 256.7 | 187.3 | ||||
Measurement Input, Price Volatility [Member] | Convertible Note-First Fire [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 256.7 | 187.3 | ||||
Measurement Input, Price Volatility [Member] | Convertible Note-LGH [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 256.7 | 187.3 | ||||
Measurement Input, Price Volatility [Member] | Convertible Note -Fourth Man [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 256.7 | 187.3 | ||||
Measurement Input, Price Volatility [Member] | Convertible Note-Jeffery Street [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 256.7 | 187.3 | ||||
Measurement Input, Price Volatility [Member] | Convertible Note -Blue Lake [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 256.7 | 187.3 | ||||
Measurement Input, Price Volatility [Member] | Convertible Note- Tarlos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 187.3 | |||||
Measurement Input, Expected Dividend Rate [Member] | Convertible Note Talos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0 | |||||
Measurement Input, Expected Dividend Rate [Member] | Convertible Note-Mast Hill [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0 | 0 | ||||
Measurement Input, Expected Dividend Rate [Member] | Convertible Note-First Fire [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0 | 0 | ||||
Measurement Input, Expected Dividend Rate [Member] | Convertible Note-LGH [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0 | 0 | ||||
Measurement Input, Expected Dividend Rate [Member] | Convertible Note -Fourth Man [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0 | 0 | ||||
Measurement Input, Expected Dividend Rate [Member] | Convertible Note-Jeffery Street [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0 | 0 | ||||
Measurement Input, Expected Dividend Rate [Member] | Convertible Note -Blue Lake [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0 | 0 | ||||
Measurement Input, Expected Dividend Rate [Member] | Convertible Note- Tarlos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0 | |||||
Measurement Input, Expected Term [Member] | Convertible Note Talos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Weighted average expected life | 2 years 1 month 6 days | |||||
Measurement Input, Expected Term [Member] | Convertible Note-Mast Hill [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Weighted average expected life | 2 years 1 month 6 days | 2 years 9 months 18 days | ||||
Measurement Input, Expected Term [Member] | Convertible Note-First Fire [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Weighted average expected life | 2 years 1 month 6 days | 2 years 10 months 24 days | ||||
Measurement Input, Expected Term [Member] | Convertible Note-LGH [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Weighted average expected life | 2 years 1 month 6 days | 2 years 10 months 24 days | ||||
Measurement Input, Expected Term [Member] | Convertible Note -Fourth Man [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Weighted average expected life | 2 years 2 months 12 days | 2 years 10 months 24 days | ||||
Measurement Input, Expected Term [Member] | Convertible Note-Jeffery Street [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Weighted average expected life | 2 years 2 months 12 days | 2 years 10 months 24 days | ||||
Measurement Input, Expected Term [Member] | Convertible Note -Blue Lake [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Weighted average expected life | 2 years 2 months 12 days | 2 years 10 months 24 days | ||||
Measurement Input, Expected Term [Member] | Convertible Note- Tarlos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Weighted average expected life | 2 years 9 months 18 days | |||||
Measurement Input, Risk Free Interest Rate [Member] | Convertible Note Talos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 4.22 | |||||
Measurement Input, Risk Free Interest Rate [Member] | Convertible Note-Mast Hill [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 4.22 | 0.97 | ||||
Measurement Input, Risk Free Interest Rate [Member] | Convertible Note-First Fire [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 4.22 | 0.97 | ||||
Measurement Input, Risk Free Interest Rate [Member] | Convertible Note-LGH [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 4.22 | 0.97 | ||||
Measurement Input, Risk Free Interest Rate [Member] | Convertible Note -Fourth Man [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 4.22 | 0.97 | ||||
Measurement Input, Risk Free Interest Rate [Member] | Convertible Note-Jeffery Street [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 4.22 | 0.97 | ||||
Measurement Input, Risk Free Interest Rate [Member] | Convertible Note -Blue Lake [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 4.22 | 0.97 | ||||
Measurement Input, Risk Free Interest Rate [Member] | Convertible Note- Tarlos Victory [Member] | ||||||
Short-Term Debt [Line Items] | ||||||
Warrants measurement input | 0.97 |
CONVERTIBLE PROMISSORY NOTES _3
CONVERTIBLE PROMISSORY NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||
Sep. 20, 2022 | Aug. 09, 2022 | May 03, 2022 | Nov. 30, 2022 | Dec. 31, 2021 | Nov. 30, 2021 | Oct. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Apr. 27, 2022 | Apr. 14, 2022 | |
Short-Term Debt [Line Items] | |||||||||||||||
Principal amount | $ 2,250,000 | $ 2,250,000 | $ 2,250,000 | $ 2,250,000 | |||||||||||
Repayment of debt | 115,000 | ||||||||||||||
Interest expense | $ 58,692 | $ 172,255 | $ 27,450 | $ 1,728,961 | |||||||||||
Warrants to purchase | 1,306,506 | 1,306,506 | 115,540 | ||||||||||||
Cashless warrant shares exercised | 1,128,635 | 1,093,093 | 1,093,093 | 1,128,635 | 1,888,106 | 111,972 | 115,540 | ||||||||
Repayment of notes | $ 10,000 | $ 10,000 | |||||||||||||
Warrant [Member] | |||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||
Warrants to purchase | 1,800,000 | 1,800,000 | 1,800,000 | 1,800,000 | |||||||||||
Warrant [Member] | Lenders [Member] | |||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||
Ownership percentage | 4.90% | 4.90% | 4.90% | 4.90% | |||||||||||
Lenders [Member] | Warrant [Member] | |||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||
Warrants to purchase | 200,000 | 200,000 | 200,000 | 200,000 | |||||||||||
Excise price | $ 1.25 | $ 1.25 | $ 1.25 | $ 1.25 | |||||||||||
Excise price, percentage | 125% | 125% | |||||||||||||
Seven Convertible Promissory Note [Member] | |||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||
Principal amount | $ 2,250,000 | $ 2,250,000 | $ 2,250,000 | $ 2,250,000 | |||||||||||
Default interest rate | 90% | 90% | 90% | 90% | |||||||||||
Interest rate | 8% | 8% | 8% | 8% | |||||||||||
Proceeds from debt issuance costs | $ 1,793,000 | $ 1,793,000 | $ 1,793,000 | $ 1,793,000 | |||||||||||
Debt issuance cost | $ 162,000 | $ 162,000 | $ 162,000 | $ 162,000 | |||||||||||
Issuance price discounted percentage | 90% | 90% | 90% | ||||||||||||
Convertible Notes Payable [Member] | |||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||
Default interest rate | 16% | 16% | |||||||||||||
Interest rate | 8% | 8% | 8% | 8% | |||||||||||
Default interest rate | 16% | 16% | |||||||||||||
Proceeds from offering costs | $ 15,000,000 | $ 15,000,000 | |||||||||||||
Conversion rate | 70% | 70% | |||||||||||||
Conversion price | $ 0.75 | $ 0.75 | $ 0.75 | $ 0.75 | |||||||||||
Interest expense | $ 27,447 | ||||||||||||||
Promissory Note [Member] | Lender [Member] | |||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||
Percentage of prepayment penalty | 10% | ||||||||||||||
Repayment of debt | $ 25,000 | ||||||||||||||
Promissory Note [Member] | Six Lender [Member] | |||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||
Repayment of debt | $ 50,000 | ||||||||||||||
Promissory Note [Member] | Five Lender [Member] | |||||||||||||||
Short-Term Debt [Line Items] | |||||||||||||||
Repayment of debt | $ 65,000 |
SHAREHOLDERS_ EQUITY (Details N
SHAREHOLDERS’ EQUITY (Details Narrative) | Jan. 02, 2021 shares | Dec. 22, 2020 shares | Sep. 30, 2022 $ / shares shares | Apr. 27, 2022 shares | Apr. 14, 2022 shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2021 CNY (¥) shares | Dec. 31, 2020 USD ($) $ / shares shares | Dec. 31, 2020 CNY (¥) shares |
Common stock, shares authorized | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 | ||||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Cashless warrant shares exercised | 1,306,506 | 115,540 | |||||||
Cashless warrant shares exercised | 1,093,093 | 111,972 | 115,540 | 1,128,635 | 1,128,635 | 1,888,106 | 1,888,106 | ||
Common stock, shares issued | 33,345,541 | 31,811,523 | 31,811,523 | 31,500,693 | 31,500,693 | ||||
Common stock, shares outstanding | 33,345,541 | 31,811,523 | 31,811,523 | 31,500,693 | 31,500,693 | ||||
Third Party Service Provider [Member] | |||||||||
Number of shares issued for services | 310,830 | ||||||||
The Crone Law Group, P.C. [Member] | |||||||||
Number of shares issued | 103,610 | ||||||||
Sichuan Wetouch Technology Co. Ltd. [Member] | |||||||||
Reserve fund | $ 2,005,084 | ¥ 12,933,795 | $ 1,058,590 | ¥ 6,907,298 |
SHARE BASED COMPENSATION (Detai
SHARE BASED COMPENSATION (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended | |||||
Jan. 02, 2021 | Dec. 22, 2020 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | Jan. 01, 2021 | |
Warrants outstanding | 1,800,000 | 1,800,000 | |||||
Share-based compensation expense | $ 1,041,281 | $ 1,041,281 | $ 351,238 | ||||
Warrant [Member] | |||||||
Warrants outstanding | 841,440 | 841,440 | |||||
Weighted average exercise price | $ 0.01 | $ 0.01 | |||||
Weighted average remaining contractual term | 1 year | ||||||
Aggregate intrinsic value | $ 500,000 | $ 600,000 | |||||
Share-based compensation expense | $ 2,107,825 | $ 2,107,825 | $ 713,120 | ||||
Weighted average remaining contractual term | 1 year 6 months | ||||||
Board of Directors [Member] | |||||||
Number of shares authorized | 310,830 | 310,830 | |||||
Number of shares vested | 310,830 | ||||||
Number of warrants exercised | 631,080 | ||||||
Share based compensation, expected term of fair value | 1 year 6 months | ||||||
Share-based compensation, expected dividend rate | 0% | ||||||
Share-based compensation, volatility | 215.40% | ||||||
Share-based compensation, average interest rate | 2.96% | ||||||
Board of Directors [Member] | Warrant [Member] | |||||||
Number of shares authorized | 631,080 | 631,080 | |||||
Share based compensation, expected term of fair value | 2 years 6 months | ||||||
Share-based compensation, expected dividend rate | 0% | ||||||
Share-based compensation, volatility | 51.30% | ||||||
Share-based compensation, average interest rate | 0.12% | ||||||
Warrant exercisable, period | 5 years | ||||||
Board of Directors [Member] | The Crone Law Group, P.C. [Member] | |||||||
Number of shares authorized | 103,610 | ||||||
Number of shares vested | 103,610 | ||||||
Number of warrants exercised | 0 | ||||||
Share based compensation, expected term of fair value | 2 years 6 months | ||||||
Share-based compensation, expected dividend rate | 0% | ||||||
Share-based compensation, volatility | 43.50% | ||||||
Share-based compensation, average interest rate | 0.11% | ||||||
Board of Directors [Member] | The Crone Law Group, P.C. [Member] | Warrant [Member] | |||||||
Number of shares authorized | 210,360 | ||||||
Warrant exercisable, period | 5 years |
RISKS AND UNCERTAINTIES (Detail
RISKS AND UNCERTAINTIES (Details Narrative) - CNY (¥) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 21.90% | 21.30% | 20.50% | 18.90% | 19.50% | 17.80% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 16.30% | 15.50% | 15.90% | 17.50% | 17.30% | 15.90% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 15% | 15.40% | 15.60% | 14.60% | 14.50% | 14.60% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 13.40% | 14% | 14.50% | 14.10% | 14.20% | 12.70% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Five [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 12.95% | 11.40% | 12.30% | 11.40% | 11.10% | 12.20% |
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer Six [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 10.20% | |||||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Top 10 Customers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 99.10% | 98.10% | 99.20% | 96.70% | 97.50% | 98.50% |
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Four Suppliers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 47.70% | 46.30% | 47.20% | |||
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Two Suppliers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 25.10% | |||||
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Suppliers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 10% | |||||
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Three Suppliers [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 11.20% | 37.50% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer One [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 26.20% | 25.70% | 18.20% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Two [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 24.30% | 18.60% | 16% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Three [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 14.50% | 12.50% | 13.20% | |||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Four [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 11.50% | 11.50% | ||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Five [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 11.30% | |||||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer Six [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Concentration risk, percentage | 10.20% | |||||
Maximum [Member] | ||||||
Concentration Risk [Line Items] | ||||||
Bank deposits | ¥ 500,000 | ¥ 500,000 | ¥ 500,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | 9 Months Ended | 12 Months Ended | ||||||||||||||||||||||||
Dec. 20, 2021 USD ($) | Dec. 20, 2021 CNY (¥) | Sep. 16, 2020 USD ($) | Sep. 16, 2020 CNY (¥) | Nov. 21, 2019 USD ($) | Nov. 21, 2019 CNY (¥) | Aug. 22, 2018 USD ($) | Aug. 22, 2018 CNY (¥) | Jul. 31, 2014 USD ($) | Jul. 31, 2014 CNY (¥) | Jul. 05, 2013 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 CNY (¥) | Dec. 31, 2021 USD ($) | Dec. 31, 2021 CNY (¥) | Dec. 31, 2021 CNY (¥) | Dec. 20, 2021 CNY (¥) | Mar. 12, 2020 USD ($) | Mar. 12, 2020 CNY (¥) | Dec. 30, 2018 USD ($) | Dec. 30, 2018 CNY (¥) | Dec. 31, 2017 USD ($) | Jul. 31, 2014 CNY (¥) | Mar. 19, 2014 USD ($) | Mar. 19, 2014 CNY (¥) | Jul. 05, 2013 CNY (¥) | |
Purchase commitment | $ 3,100,000 | ¥ 20,000,000 | ||||||||||||||||||||||||
Remaining balance | $ 700,000 | ¥ 5,000,000 | ||||||||||||||||||||||||
Loan obtained during period | $ 2,250,000 | $ 2,250,000 | ||||||||||||||||||||||||
Repayment of loan during period | 115,000 | |||||||||||||||||||||||||
Legal Case with Chengdu SME Credit Guarantee Co., Ltd. [Member] | ||||||||||||||||||||||||||
Loan obtained during period | $ 8,900,000 | ¥ 55,000,000 | ||||||||||||||||||||||||
Repayment of loan during period | 800,000 | ¥ 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 | 800,000 | $ 800,000 | ¥ 5,800,000 | $ 800,000 | ¥ 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 | $ 900,000 | $ 900,000 | ¥ 6,000,000 | $ 900,000 | ¥ 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 | 1,700,000 | ¥ 11,800,000 | $ 1,700,000 | |||||||||||||||||||||||
Repayment of loan during period | $ 8,000,000 | ¥ 55,000,000 | ||||||||||||||||||||||||
Repayment of loan default penalties | $ 1,700,000 | ¥ 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 | $ 9,800,000 | ¥ 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 | 1,700,000 | ¥ 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 | $ 2,200,000 | ¥ 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. | 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. | ||||||||||||||||||||||||
Asset recovery, value | $ 1,700,000 | ¥ 12,000,000 | ||||||||||||||||||||||||
Construction in Progress [Member] | ||||||||||||||||||||||||||
Purchase commitment | $ 2,100,000 | ¥ 15,000,000 | $ 2,400,000 | ¥ 15,000,000 |
SCHEDULE OF GEOGRAPHICAL REVENU
SCHEDULE OF GEOGRAPHICAL REVENUE INFORMATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||||||
Sales in PRC | $ 8,159,260 | $ 7,696,992 | $ 24,421,569 | $ 24,652,526 | $ 27,213,684 | $ 21,430,226 |
Sub-total | 3,463,757 | 3,468,988 | 10,948,930 | 12,461,644 | 13,571,790 | 9,915,725 |
Total revenues | 11,623,018 | 11,165,980 | 35,370,499 | 37,114,170 | 40,785,474 | 31,345,951 |
Republic of China [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Sub-total | 1,851,599 | 1,785,128 | 5,708,133 | 6,663,678 | 7,246,592 | 5,178,407 |
KOREA, REPUBLIC OF | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Sub-total | 1,578,002 | 1,618,284 | 5,144,829 | 5,519,484 | 5,962,067 | 4,654,133 |
Others [Member] | ||||||
Disaggregation of Revenue [Line Items] | ||||||
Sub-total | $ 34,156 | $ 65,576 | $ 95,968 | $ 278,482 | $ 363,131 | $ 83,185 |
SCHEDULE OF ESTIMATED USEFUL LI
SCHEDULE OF ESTIMATED USEFUL LIFE OF PROPERTY PLANT AND EQUIPMENT (Details) | 12 Months Ended |
Dec. 31, 2021 | |
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, 2021 | |
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 CURRENT EXCHANGE RA
SCHEDULE OF CURRENT EXCHANGE RATES (Details) | Dec. 31, 2021 | Dec. 31, 2020 |
Year-End Spot Rate US$1=RMB [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Foreign exchange rate | 0.063726 | 0.065250 |
Average Rate US$1=RMB [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Foreign exchange rate | 0.064505 | 0.069042 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 9 Months Ended | 12 Months Ended | ||||||
Apr. 01, 2019 | Mar. 31, 2019 | Sep. 30, 2022 USD ($) shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) shares | Dec. 31, 2020 USD ($) shares | Apr. 27, 2022 shares | Apr. 14, 2022 shares | |
Finite-Lived Intangible Assets [Line Items] | ||||||||
Inventory write-off | $ 66,944 | |||||||
Common stock purchase warrants liability | shares | 1,093,093 | 1,128,635 | 1,888,106 | 111,972 | 115,540 | |||
Gain on changes of fair value of common stock purchase liability | $ 35,542 | $ 759,471 | ||||||
Income tax percentage description | greater than 50% | |||||||
Income tax, description | 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 | |||||||
Income tax rate | 0.34 | |||||||
Value added tax rate | 13% | 16% | ||||||
Tax Cut and Jobs Act [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Income tax, description | On December 22, 2017 the Tax Cut and Jobs Act of 2017 (“the Tax Act”) was signed into law, which among other effects, reduces the U.S. federal corporate income tax rate to 21% from 34% (or 35% in certain cases) beginning in 2018 | |||||||
Land Use Right [Member] | ||||||||
Finite-Lived Intangible Assets [Line Items] | ||||||||
Intangible asset useful lives | 50 years |
SCHEDULE OF INTANGIBLE ASSETS (
SCHEDULE OF INTANGIBLE ASSETS (Details) - USD ($) | Dec. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | $ 1,434,134 | |
Subtotal | (459,438) | |
Intangible assets, net | 974,696 | |
Land Use Right [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | 1,016,215 | |
Subtotal | (149,045) | |
Patents [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Subtotal | 417,919 | |
Subtotal | $ (310,393) |
SCHEDULE OF COMPONENTS OF THE I
SCHEDULE OF COMPONENTS OF THE INCOME TAX PROVISION (BENEFITS) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Total current tax provision | $ 4,409,589 | $ 1,549,333 | ||||
Total deferred tax provision | ||||||
Income tax provision | $ 1,232,629 | $ 1,092,547 | $ 3,392,587 | $ 4,331,499 | 4,409,589 | 1,549,333 |
PRC [Member] | ||||||
Total current tax provision | 4,409,589 | 1,549,333 | ||||
BVI [Member] | ||||||
Total deferred tax provision | ||||||
HONG KONG | ||||||
Total deferred tax provision | ||||||
CHINA | ||||||
Total deferred tax provision |
SCHEDULE OF INCOME TAX RATE (De
SCHEDULE OF INCOME TAX RATE (Details) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
PRC statutory income tax rate | 25% | 25% | |
Effect of income tax holiday | (1.00%) | (10.00%) | |
Tax rate differential on entities not subject to PRC income | (0.60%) | 0% | |
R&D additional deduction | (0.50%) | 0% | |
Non-deductible expenses in the PRC | (2.70%) | (0.20%) | |
Effective tax rate | 21% | 20.20% | 14.80% |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2021 | Dec. 31, 2020 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Amortization expense | $ 113,908 | $ 76,141 |
Gain (loss) on disposition of intangible assets | 872,045 | |
Compensation fund agreement [Member] | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
Gain (loss) on disposition of intangible assets | $ 872,045 |
DEFERRED GRANTS (Details Narrat
DEFERRED GRANTS (Details Narrative) | Jan. 27, 2014 USD ($) | Jan. 27, 2014 CNY (¥) | Jan. 14, 2013 USD ($) | Jan. 14, 2013 CNY (¥) |
Sichuan Wetouch Technology Co. Ltd. [Member] | ||||
DeferredGrantsLineItems [Line Items] | ||||
Deferred grants | $ 800,000 | ¥ 4,800,000 | $ 1,800,000 | ¥ 11,200,000 |