How can I factory reset Apple Watch with our password

You can't do any major change on any device without the password. See below.

See If you forgot your Apple ID password https://support.apple.com/en-us/HT201487

You also can use Having trouble signing in/iForgot https://iforgot.apple.com/password/verify/appleid to try to recover it.

And you may need to see If you forgot the answers to your Apple ID security questions https://support.apple.com/en-us/HT201485

Before trying to answer your security questions is very important that you think about your questions, including your birth date, and their answers carefully and try to recall all details you can. If you don't answer them correctly enough, then you easily can lose control of your account.

Note that If you're using two-factor authentication and can’t recover your password, you usually will need to enter account recovery. See Recover your Apple ID when you can’t reset your password  https://support.apple.com/en-us/HT204921

And, in general, if things go badly using the above links, you will need to try to recover your account if you want to use it again. Again, see Recover your Apple ID when you can’t reset your password https://support.apple.com/en-us/HT204921 Use this link to request account recovery to regain access to your account.

See if anything here helps.

Watch - Unpair and erase your.