8-K: Wetouch Technology Faces Nasdaq Delisting Threat, Dismisses Auditor Amid Delayed Filings

Wetouch Technology Inc. received a Nasdaq extension to regain compliance for overdue financial reports but simultaneously dismissed its independent auditor, raising concerns about financial transparency.

Summary

• Wetouch Technology Inc. (WETH) received a letter from Nasdaq on June 26, 2025, regarding its non-compliance with Listing Rule 5250(c)(1) for timely filing of periodic financial reports.
• The non-compliance stems from delays in filing its Annual Report on Form 10-K for the year ended December 31, 2024, and its Quarterly Report on Form 10-Q for the period ended March 31, 2025.
• Nasdaq accepted the company's plan of compliance and granted an exception until October 13, 2025, to regain compliance.
• To comply, the company must file its outstanding Form 10-K for December 31, 2024, and Form 10-Qs for March 31, 2025, and June 30, 2025, by the October 13, 2025 deadline.
• On June 27, 2025, the Audit Committee dismissed Enrome LLP as the company's independent registered public accounting firm, effective immediately.
• Enrome LLP was engaged on May 10, 2024, and had not rendered any report on the company's financial statements.
• The company stated there were no disagreements with Enrome on accounting principles, financial statement disclosure, or auditing scope, nor any reportable events, during Enrome's engagement period.
• The company has requested a letter from Enrome to the SEC confirming agreement with the disclosures in this 8-K, which it intends to file as an amendment.

Sentiment

Score: 3

Explanation: The sentiment is negative due to the company's non-compliance with Nasdaq listing rules, the necessity of an extension to avoid delisting, and the dismissal of an auditor who had not completed any reports. While an extension was granted, the underlying issues of delayed filings and auditor change are significant red flags.

Positives

• Nasdaq accepted the company's compliance plan, granting an extension until October 13, 2025, to avoid immediate delisting.
• The company reported no disagreements with the dismissed auditor, Enrome LLP, on accounting principles, financial statement disclosure, or auditing scope, nor any reportable events.

Negatives

• The company is non-compliant with Nasdaq listing rules due to significant delays in filing its Annual Report on Form 10-K for December 31, 2024, and Quarterly Report on Form 10-Q for March 31, 2025.
• The company dismissed its independent registered public accounting firm, Enrome LLP, which had only been engaged for a little over a year and had not yet rendered any report on the company's financial statements.
• Multiple financial reports (10-K for 2024, 10-Q for Q1 2025, and 10-Q for Q2 2025) are outstanding and must be filed by October 13, 2025.

Risks

• Risk of delisting from Nasdaq if the company fails to file all outstanding financial reports (10-K for 2024, 10-Q for Q1 2025, and 10-Q for Q2 2025) by the extended deadline of October 13, 2025.
• Reputational damage and loss of investor confidence due to non-compliance with listing rules and the dismissal of an auditor who had not completed any financial reports.
• Uncertainty regarding the company's financial reporting and internal controls given the delays and auditor change.

Future Outlook

The company is working diligently to complete the required audits and reviews and remains committed to regaining and maintaining compliance with all applicable Nasdaq continued listing requirements by the October 13, 2025 deadline.

Management Comments

• "The Company is working diligently to complete the required audits and reviews and remains committed to regaining and maintaining compliance with all applicable Nasdaq continued listing requirements."

Industry Context

This announcement highlights the ongoing scrutiny by regulatory bodies like Nasdaq on public companies to maintain timely and transparent financial reporting. Delays in filings and auditor changes, even without reported disagreements, can signal underlying operational or financial challenges, which is a common concern across various industries, particularly for smaller or emerging growth companies.

Comparison to Industry Standards

• Timely filing of periodic financial reports (10-K, 10-Q) is a fundamental requirement for all publicly traded companies on major exchanges like Nasdaq. Wetouch Technology Inc.'s non-compliance with Nasdaq Listing Rule 5250(c)(1) falls short of this basic industry standard.
• Dismissal of an auditor, especially one that has not yet completed any financial reports, is an unusual event. While the company stated no disagreements or reportable events, such a change can raise questions about the company's financial processes and readiness for audit, contrasting with the stability typically seen in established companies' auditor relationships.
• Companies like Apple (AAPL), Microsoft (MSFT), or even smaller, well-managed public companies consistently meet their filing deadlines and maintain long-term relationships with their auditors, setting a benchmark that Wetouch Technology Inc. is currently not meeting.

Corporate Governance

Stakeholder Impact

• Shareholders: Face increased uncertainty and risk of potential delisting if compliance is not regained. The delayed financial reports limit transparency and access to critical information for investment decisions. The auditor change may also raise concerns about the reliability of future financial statements.
• Regulatory Authorities (Nasdaq, SEC): Will continue to monitor the company's progress closely to ensure compliance with listing and reporting requirements. Failure to meet the extended deadline could result in further enforcement actions, including delisting.

Next Steps

• File the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, on or before October 13, 2025.
• File the Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, on or before October 13, 2025.
• File the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, on or before October 13, 2025.
• File an amendment to this Form 8-K promptly after receipt of the letter from Enrome LLP addressed to the Securities and Exchange Commission.

Key Dates

Recommendation

Keywords

SEC filing, 8-K, Nasdaq compliance, delisting notice, auditor change, financial reporting, Form 10-K, Form 10-Q, corporate governance, WETH, Wetouch Technology