UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): March 16, 2021
WETOUCH
TECHNOLOGY INC.
(Exact
name of registrant as specified in its charter)
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Nevada
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20-4080330
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(State
or other jurisdiction
of
incorporation)
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(IRS
Employer
Identification
Number)
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No.29,
Third Main Avenue, Shigao Town, Renshou County, Meishan, Sichuan, China
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620500
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (86) 028-37390666
Not
applicable
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2. below):
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[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Trading
Symbol(s)
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Name
of each exchange on which registered
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None
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N/A
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N/A
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Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging
growth company [ ]
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Section
1 - Registrant’s Business and Operations
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Item 1.01
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Entry into a Material Definitive Agreement.
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On
March 16, 2021, an indirectly wholly-owned operating subsidiary of Wetouch Technology Inc. (the “Company”), Sichuan
Wetouch Technology Co., Ltd. (“Sichuan Wetouch”), entered into an Agreement of Compensation on Demolition (“Compensation
Agreement”) with Sichuan Renshou Shigao Tianfu Investment Co., Ltd, a limited company owned by the local government (Sichuan
Renshou”), for the withdrawal of our right to use of state-owned land and the demolition of all buildings, facilities and
equipment on such land where we maintain our executive offices, research and development facilities and factories at No.29, Third
Main Avenue, Shigao Town, Renshou County, Meishan City, Sichuan, China (the “Property”). The Property, all
buildings, facilities, equipment and all other appurtenances on the Property are collectively referred to as “Properties”.
The Compensation Agreement was executed and delivered as a result of guidelines (the “Guidelines”) published
by the local government of The People’s Republic of China (“PRC” ) with respect to local environmental
issues and a national overall plan on Tianfu New District, Meishan City, Sichuan, PRC. In accordance with the Guidelines, a
project named “Chaisang River Ecological Wetland Park” is under construction in the areas where the manufacturing
facilities and properties of the Company are located. As a result, Sichuan Wetouch must relocate. In consideration for
such relocation, the owner of the buildings on the state-owned land will be compensated.
Under the Compensation
Agreement, based on an appraisal report issued by a mutually agreed upon third party appraiser, Sichuan Wetouch will receive a
compensation of RMB115.2 million (approximately $17.7 million based on an exchange rate of 6.5RMB per US $1.00), including
RMB100.2 million ($15.4 million) based upon the appraised value of the Properties plus an extra 15% relocation bonus of RMB15.0
million ($2.3 million).
In
order to minimize the interruption of our business, a newly acquired wholly-owned subsidiary of ours in Sichuan, China
entered into a Leaseback Agreement with Sichuan Renshou on March 16, 2021. The Leaseback Agreement entitles us to lease
back the Properties commencing from April 1, 2021 until December 31, 2021, at a monthly rent of RMB300,000 (approximately
$46,154).
On
March 18, 2021, Sichuan Wetouch received a total amount of RMB115.2 million (approximately $17.7 million) as the total amount
of compensation from Sichuan Renshou.
We
are actively searching for an appropriate parcel in Chengdu Medicine City (Technology Park), Wenjiang District, Chengdu for the
construction of our new production facilities and office buildings. As of the date of this Current Report, we estimate
that our capital needs for this acquisition and construction will be approximately RMB170.0 million (approximately $26.2 million),
but there is no assurance that the estimated amount is sufficient to achieve our goals. We may need additional financing for our
business development. In addition, we expect that this acquisition and construction will be completed prior to December 31,
2021, but there is no assurance and we may need extended time to achieve our business plan.
On
March 22, 2021, the Company issued a press release reporting certain highlights of the relocation and the Compensation Agreement.
The text of the press release is furnished as Exhibit 99.1 and incorporated herein by reference.
The
information in this Item 8.01 of this Current Report, including Exhibit 99.1 attached hereto, is being furnished and shall not
be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), nor shall it be deemed incorporated by reference in any of the Company’s filings under the Securities Act,
or the Exchange Act, whether made before or after the date hereof, except as shall be expressly set forth by specific reference
to this Form 8-K in such filing.
Cautionary
Statements
This
filing includes “forward-looking statements.” All statements other than statements of historical facts included or
incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or
implied in such statements and are subject to a number of risks and uncertainties. Although the Company believes that the expectations
reflected in the forward-looking statements are reasonable, the Company can give no assurance that such expectations will prove
to be correct. The forward-looking statements involve risks and uncertainties that affect the Company’s operations, financial
performance, and other factors as discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).
Among the factors that could cause results to differ materially are those risks discussed in the periodic reports the Company
files with the SEC. You are urged to carefully review and consider the cautionary statements and other disclosures made in those
filings, specifically those under the heading “Risk Factors.” The Company does not undertake any duty to update any
forward-looking statement except as required by law.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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WETOUCH
TECHNOLOGY INC.
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Date:
March 22, 2021
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By:
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/s/
Zongyi Lian
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Name:
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Zongyi
Lian
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Title:
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President
and Chief Executive officer (Principal Executive Officer)
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Exhibit
10.12
Sichuan
Wetouch Technology Co., Ltd.
Agreement
of Compensation on Demolition of Land, Buildings, Equipment, and Ancillary Facilities
Dismantled
Factory (hereinafter referred to as “Party A”): Sichuan Wetouch Technology Co., Ltd
Legal
Representative: Shengyong Li
Address:
No.29, Third Main Avenue, Shigao Industrial Park, Renshou County, Sichuan
Demolition
party (hereinafter referred to as “Party B”):
Sichuan
Renshou Shigao Tianfu Investment Co., Ltd
Legal
representative: Wencai Guo
Address:
Industrial Concentration Zone, Renshou County, Sichuan
Based
on the progress of the demolition project of the land, plant and related ancillary facilities and equipment of Sichuan Wetouch
Technology Co., Ltd. located at No.29, Third Main Avenue, Shigao Industrial Park, both parties strictly follow the relevant laws
and regulations of demolition evaluation, and on the basis of the principle of fairness, the land, housing and related appurtenances
and equipment of Sichuan Wetouch Technology Co., Ltd located at No.29, Third Main Avenue, Shigao Industrial Park, which
are now used by Sichuan Wetouch Technology Co. Ltd, shall be assessed by Sichuan Dacheng Real Estate and Land Appraisal Co., Ltd
(“Sichuan Dacheng”). Sichuan Dacheng will issue relevant assessment and consultation report, and both parties agree
to take the assessment and consultation report as the main basis of demolition compensation. Now for the results of the assessment
report, Party A and B, after friendly consultation, signed this demolition compensation agreement (hereinafter referred to as
“the Agreement”), in order to jointly comply with:
Article
1 Basic information of the demolished object
The
objects to be demolished are located at:
The
total building area is 40,126. 88 square meters and the land area is 68,353. 33 square meters.
Article
2 Compensation for land, houses, related ancillary facilities and equipment
According
to the Appraisal Report No.20210328 issued by Sichuan Dacheng Real Estate Land Appraisal Co., Ltd. on March 10, 2021, the total
appraised value is RMB 100,173,913.00.
Article
3 Other Compensation
According
to the negotiation between both parties, Party A will be given a demolition bonus of 15% of the appraised price for all other
compensation except Article 2 of the Agreement, totaling RMB 15,026,087.00.
Article
4 Total Compensation
The
total amount of compensation is the sum of Article 2 and Article 3 of this agreement, and the total amount is RMB: 115,200,000.00.
Article
5 Compensation Payment Conditions and Methods
1.Within
three days from the date of signing this agreement, Party A will vacate all the items belonging to Party B in all the houses involved
in the demolition area, and deliver all house keys with the original copy of the real estate certificate of the house and the
relevant land certificate, the list of equipment and a copy of the business license of the enterprise (stamped with official seal)
to Party B.
2.
Within three days from the date when Party A vacates the house to Party B and submits the above-mentioned documents and materials,
Party B shall pay Party A the total demolition amount of RMB 115,200,000.00.
3.
Since Party B needs time to build new plants off-site, Party B will give Party A a maximum of 9 months, and Party A will unconditionally
take back and implement demolition when the time expires. During this period, Party A will pay Party B RMB300,000 for the lease
of buildings, land, ancillary facilities, and equipment on the 30th of each month from April 1, 2021 to December 31, 2021, which
will be paid by Party A or other third parties designated by Party A.
4.
If any event obstructing the demolition occurs
during the demolition process before the expiration of the 9-month period, Party A shall deal with it on its own and has nothing
to do with Party B, and all economic losses shall be borne by Party A.
Article
6 Liability for breach of contract and prohibited actions
1.
Party A is prohibited to postpone the delivery
of the house for any reason during the 9-month period agreed in this contract, and for each day of postponement, Party A shall
pay Party B liquidated damages in accordance with 1% of the total compensation, which shall be cumulative. Party B has the right
to deduct directly from the compensation.
2.
Party B is prohibited to postpone payment for
any reason. For each day of postponement of payment, Party B shall pay liquidated damages to Party A in accordance with 1% of
the total amount of compensation, which shall be cumulative.
3.
Any illegal and violent resistance to delivery
of the house and illegal demolition is prohibited.
4.
Both parties shall fulfill their confidentiality
obligations and shall not disclose or reveal the contents of this agreement to any other party.
Article
7 Settlement of disputes
All
disputes related to this agreement or the implementation of this agreement shall be settled through friendly negotiation; if it
cannot be settled through negotiation, it shall be submitted to the local court where the real estate is located for litigation.
Article
8 Entry into force of the agreement
1.
This agreement is effective from the date of signing and sealing by both parties. This agreement (including exhibits) is the complete
agreement between Party A and Party B.
2.
All terms set forth in the agreement shall not be changed or modified by either Party A or B without authorization. Any amendment,
change, addition or deletion to this agreement shall only become effective after being signed and confirmed by the authorized
representatives of both parties.
3.
If there is any matter not covered in this agreement, both parties need to negotiate and make a supplementary agreement attached
to this agreement. All supplementary agreements shall have the same legal effect as this agreement.
4.
The establishment, entry into force, interpretation and performance of this agreement are based on the relevant laws of the People’s
Republic of China.
5.
This agreement is in four copies, each party holds two copies, and each agreement signed by both parties shall be the original
copy.
Article
9 Exhibits
The
exhibit to this agreement includes: Summary of Evaluation Report
(No text below)
Party
A: Sichuan Wetouch Technology Co., Ltd (Seal)
Legal
representative: (seal or signature)
Party
B: Sichuan Renshou Shigao Tianfu Investment Co., Ltd (Seal)
Legal
representative: (seal or signature)
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Date:
03.16. 2021
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Signed
At: Shigao Town
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Exhibit
10.13
Leaseback
Agreement on Land, Buildings, Facilities and Equipment
Lessor
(Party A): Sichuan Renshou Shigao Tianfu Investment Co., Ltd
Lessee
(Party B): Sichuan Vtouch Technology Co.Ltd
According
to the relevant national regulations, on the basis of a voluntary, equal, and mutually benefits, party A and party B agree that
Party A shall have its lawfully owned land, building, facilities, equipment (“Leased Property”) leased to Party B
for use. The two parties agreed and signed an agreement with terms and conditions as follows:
1.
Status of Lease Property
Because
of the government’s overall plan to expropriate the land, plant and equipment of Sichuan Wetouch Technology Co.,
Ltd, and given the new plant construction need time to complete, the Leased Property are leased back to Party B for temporary
production.
2.
Lease Term
a)
The lease period is 10 months, from April 1, 2021 to December 31, 2021.
b)
At the end of the lease period, Party A has the right to take back the Leased Property for dismantling, and Party B shall return
them as scheduled.
3.
Rent and Deposit Payment
a)
Party A and Party B agree that the monthly rent of the Leased Property is RMB 300,000.
b)
Once both parties A and B sign the Agreement, the rent shall be paid monthly and Party B shall pay the next month’s rent
to Party A before the 25th of each month.
4.
Other costs
a)
During the lease period, the cost of water, electricity, gas, phone, and other communications incurred by the use of the Lease
Property shall be borne by Party B, and payment shall be made within three days upon receipt of the receipt or invoice.
5.
Use Requirements and Maintenance Responsibilities of Leased Property
a)
During the lease period, if Party B find that the plant and its ancillary facilities have damage or failure, Party B should promptly
notify Party A to repair; Party A should repair within three days after receiving Party B’s notice. If overdue, Party B
can repair it on behalf of Party A, and the cost shall be borne by Party A.
b)
During the lease period, Party B shall reasonably use and take care of the plant and its ancillary facilities. Due to improper
use or unreasonable use of Party B, resulting in damage or failure of the plant and its ancillary facilities, Party B shall be
responsible for maintenance. If Party B refuses to repair, Party A can repair on behalf of Party B and the cost is borne by Party
B.
c)
During the lease period, Party A shall ensure that the plant and its ancillary facilities are in a normal useable and safe condition.
Party A shall notify Party B 3 days in advance of the inspection and maintenance of the plant. Party B shall cooperate in the
inspection and maintenance. Party A shall reduce the influence on Party B’s use of the plant.
6.
Sublet and Return of Leased Property
a)
Party B shall not sublease the Leased Property during the lease period.
b)
After the lease period, the Leased Property must be returned on time, otherwise all the losses and consequences caused by this
are borne by Party B.
7.
Other Requirements During The Lease Term
a)
During the lease period, both parties A and B shall abide by the laws and regulations of the country, and shall not use the plant
lease for illegal activities.
b)
During the lease period, Party A has the right to supervise and assist Party B on fire-fighting, safety and sanitation work.
c)
During the lease period, Party B may carry out decoration according to its own business characteristics, but in principle shall
not damage the original room structure. The cost of decoration shall be borne by Party B. If Party B no longer undertake after
the lease period, Party A will not make any compensation.
d)
During the lease period, Party B shall pay the rent and all other fees payable in a timely manner. If the payment is not paid
for one month, Party A has the right to increase the late payment fee by 5% and terminate the lease agreement.
8.
Miscellaneous
a)
During the lease period, if the Agreement is terminated unilaterally resulting in breach of the Agreement, the other party shall
be compensated for three months’ rent.
b)
During the lease period, if the loss caused by the normal operation of Party B is affected by Party A’s problems, Party
A shall be responsible for all compensation.
9.
For matters not covered by this Agreement, Party A and B must negotiate and resolve together in accordance with the law.
10.This
Agreement has four copies, with each party holding two copies. The Agreement is effective upon full execution of both parties.
Lessor:
Sichuan Renshou Shigao Tianfu Investment Co., Ltd (Seal)
Authorized
representative:
Tel:
Lessee:
Sichuan Vtouch Technology Co., Ltd (Seal)
Authorized representative:
Tel:
Signed
at Shigao Town
Date:
03.16. 2021
Exhibit
99.1
Wetouch
Technology Inc. (WETH) Plans to Relocate to Chengdu and Receives $17.7 million compensation
Chengdu,
China, March 22, 2021 (GLOBE NEWSWIRE) – Wetouch Technology Inc. (OTC: WETH) (“Wetouch” or “the Company”),
a specialty manufacturer of medium to large sized projected capacitive touchscreens, today announced that it has received $17.7
million from Sichuan Renshou Shigao Tianfu Investment Co., Ltd, a limited company owned by the local government (Sichuan Renshou”),
as compensation for the Company’s relocation from its existing location in Meishan City to Chengdu, Sichuan province.
Based
on a compensation agreement signed by the Company and Sichuan Rensou on March 16, 2021, the total compensation is RMB115.2 million
(approximately $17.7 million based on an exchange rate of 6.5RMB per US $1.00), including RMB100.2 million ($15.4 million) based
upon the appraised value of the property plus an extra 15% relocation bonus of RMB15.0 million ($2.3 million) pursuit to an appraisal
report from an independent appraiser. On March 18, 2021, Wetouch received a total amount of RMB115.2 million (approximately $17.7
million) as the total amount of compensation from Sichuan Renshou.
In
order to minimize the interruption of our business, a newly acquired wholly-owned subsidiary of ours in Sichuan, China entered
into a leaseback agreement with Sichuan Renshou on March 16, 2021. The Leaseback Agreement entitles us to lease back the Property
commencing from April 1, 2021 until December 31, 2021, at a monthly rent of RMB300,000 (approximately $46,154). The Company will
be able to continue its operation until the end of 2021. The Company is actively searching for an appropriate parcel in Chengdu
Medicine City (Technology Park), Wenjiang District, Chengdu for the construction of our new production facilities and office buildings.
We expect that the construction and relocation will be completed prior to December 31, 2021, although there is no absolute assurance.
“We
are excited to relocate our facilities to Chengdu with new corporate headquarter, manufacturing plants, and R&D center, which
will be an opportunity to upgrade our operation and drive efficiency and allow Wetouch to better accommodate future business expansion,
while simultaneously, providing a nurturing environment to foster team innovation as well as attract and retain talent in Chengdu,
a dynamic city both for work and living,” Mr. Guangde Cai, Chairman of Wetouch, commented. “We are looking forward
to sustained and healthy growth at our new home as we continue to strengthen our leading position in China’s large format
touchscreen industry.”
Caution
Concerning Forward Looking Statements
The
SEC encourages companies to disclose forward-looking information so that investors can better understand a company’s future
prospects and make informed investment decisions. The information on this website contains “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that
they do not relate strictly to historical or current facts. Forward-looking statements often include words such as “anticipates,”
“estimates,” “expects,” “projects,” “intends,” “plans,” “believes”
and words and terms of similar substance in connection with discussions of future operating or financial performance.
The
Company’s forward-looking statements are based on management’s current expectations and assumptions regarding the
Company’s business and performance, the economy and other future conditions and forecasts of future events, circumstances
and results. As with any projection or forecast, forward-looking statements are inherently susceptible to uncertainty and changes
in circumstances. The Company’s actual results may vary materially from those expressed or implied in its forward-looking
statements. Important factors that could cause the Company’s actual results to differ materially from those in its forward-looking
statements include government regulation, economic, strategic, political and social conditions and the risk factors set forth
in the Company’s Form 10 Registration Statement which can be viewed at
https://www.sec.gov/Archives/edgar/data/1826660/000149315220023313/form10-12ga.htm
About
Wetouch Technology Inc
Wetouch,
through its indirect wholly-owned subsidiary Sichuan Wetouch Technology Co. Ltd, is engaged in the manufacturing and sales of
medium to large sized projected capacitive touchscreens, ranging from 7.0 inch to 42 inch screens. The Company offers touchscreens
for a variety of applications, including GPS/car entertainment panels for automotive industry, industrial human-machine interface
(“HMI”), financial and banking terminals, point of sale, lottery and gaming machines, smart home, robots and charging
stations. Wetouch sells its products both domestically in China and internationally, covering major areas in China, including
but not limited to the eastern, southern, northern and southwest regions of China. Touchscreens produced by the Company not only
have long life span and are low maintenance, but also have strong anti-interference, anti-corrosion, multi-touch capability and
high light-transmittance ratio and stability. Wetouch has shipped products to South Korea and several European countries such
as Spain and Germany and has established a strong and diversified client base. As of September 30, 2020, Wetouch held 10 patents
and has passed a number of industry certifications, including ISO9001, ISO14001, TS16949, FCC, CE, ROHS, CCC, ROHS.
Investor
Relation Contact:
Sophie
Zhang
szhang@ascendantga.com