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PROPERTY, PLANT AND EQUIPMENT, NET
 3 Months Ended
Mar. 31, 2023
Property, Plant and Equipment [Abstract]  
PROPERTY, PLANT AND EQUIPMENT, NET

NOTE 5— PROPERTY, PLANT AND EQUIPMENT, NET

 

   March 31, 2023   December 31, 2022 
Buildings  $12,540   $12,487 
Vehicles   42,637    42,453 
Construction in progress   10,929,958    10,883,051 
Subtotal   10,985,135    10,937,991 
Less: accumulated depreciation   (16,867)   (14,381)
Property, plant and equipment, net  $10,968,268   $10,923,610 

 

Depreciation expense was $2,433and $2,622 for the three-month period ended March 31, 2023 and 2022, respectively.

 

Pursuant to local PRC government guidelines on local environment issues and the national overall plan, Sichuan Wetouch is under the government directed relocation order to relocate no later than December 31, 2021 and received compensation accordingly. On March 18, 2021, pursuant to the agreement with the local government and an appraisal report issued by a mutual agreed appraiser, Sichuan Wetouch received a compensation of RMB115.2 million ($18.2 million) (“Compensation Funds”) for the withdrawal of the right to use of state-owned land and the demolition of all buildings, facilities, equipment and all other appurtenances on the land.

 

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. (later renamed as Meishan Huantian Industrial 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 RMB300,000 ($43,683), and renewed on December 31, 2021 at a monthly rent of RMB 400,000 ($58,244) from January 1, 2022 till October 31, 2023 for the use of the Demised Properties.