ESG Inc 10-K/A for FY2025
ESG Inc. (ESGH)
About this 10-K/A
ESG Inc filed this 10-K/A on October 13, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $7.51M
- down 64.9% from $21.42M a year earlier
- Net loss
- $1.95M
- compared with net income of $944.63K a year earlier
- Diluted EPS
- -$0.02
- compared with $0.04 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
AMENDMENT NO. 1
For the fiscal year ended
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices)
Securities registered under Section 12(b) of the Act: None
Securities registered under Section 12(g) of the Act: Common Stock
Well-known seasoned issuer: Yes ☐
Not required to file reports under Section 13 or 15(d): Yes ☐
Reports filed during the preceding 12 months and subject to filing requirements
for the past 90 days:
Interactive Data Files submitted as required:
Large accelerated filer ☐
Accelerated filer ☐
Smaller reporting company
Emerging growth company election not to use extended transition period:
Shell company: Yes ☐
Aggregate market value of common equity held by non-affiliates as of June
30, 2025: approximately $
shares of common stock issued and outstanding as of October 13, 2026.
EXPLANATORY NOTE
ESG Inc. (the “Company”) is filing Amendment No. 1 on Form 10-K/A (this “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission on March 31, 2026 (the “Original Form 10-K”).
The sole substantive purpose of this Amendment is to correct the report of TQ International, PLLC (formerly Tang Qian & Associates, PLLC) (the “Auditor”) on the Company’s consolidated financial statements for the year ended December 31, 2025, included in Part II, Item 8 of the Original Form 10-K. The corrected auditor’s report includes an explanatory paragraph concerning substantial doubt about the Company’s ability to continue as a going concern and identifies Flower Mound, Texas, as the city and state of issuance. The Auditor’s opinion on the fair presentation of the financial statements remains unqualified. The report of Prager Metis CPAs, LLC on the 2024 financial statements is unchanged.
Pursuant to Exchange Act Rule 12b-15, this Amendment sets forth the complete text of Part II, Item 8, including both independent auditors’ reports and all consolidated financial statements and notes. Part IV, Item 15 is also included in full to update the exhibit index and certifications. The outstanding-share information on the cover page is presented as of October 13, 2026.
Except for the corrected 2025 auditor’s report, the filing-specific cover information, and exhibits being filed or furnished herewith, this Amendment does not amend or update any other information in the Original Form 10-K. No amounts in the 2025 or 2024 financial statements are changed by this Amendment, and this Amendment does not constitute a restatement. The Company has not otherwise updated the Original Form 10-K for events after its filing date.
PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, accompanying notes and reports of the independent registered public accounting firms follow.
 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of ESG Inc.
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of ESG Inc. (the “Company”) as of December 31, 2024, and the related consolidated statements of comprehensive income (loss), changes in stockholders’ equity and cash flows for the year ended December 31, 2024, and related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern The accompanying financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The Company had limited cash and had working capital deficiency of $6,835,342 as of December 31, 2024. These factors, among others, raise the substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 3 to the financial statements. These financial statements do not include any adjustments that may result from the outcome of these uncertainties.
Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
/s/
We have served as the Company’s auditor since 2025.
April 15, 2025 PCAOB ID Number |
| F-1 |
Report of Independent Registered Public Accounting Firm
To the shareholders and the board of directors of ESG Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of ESG Inc. and its subsidiaries (collectively, the “Group”) as of December 31, 2025, and the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity, and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Group as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt About the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has incurred recurring losses from operations and faces liquidity constraints, including a high debt-to-asset ratio and dependence on additional external financing to fund its operations and meet its obligations as they become due. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on the Group’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Group is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ |
formerly Tang Qian & Associates, PLLC
We have served as the Company’s auditor since 2026
March 30, 2026
PCAOB ID:
| F-2 |
ESG INC.
Consolidated Balance Sheet
| December 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | $ | ||||||
| Restricted cash | ||||||||
| Accounts receivable, net | ||||||||
| Inventories | ||||||||
| Other receivable | ||||||||
| Advance to suppliers | ||||||||
| Value added tax receivable, current | ||||||||
| Total Current Assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Value added tax receivable | ||||||||
| Total Non-current Assets | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Shareholders' Equity | ||||||||
| Current Liabilities | ||||||||
| Short-term bank loans | $ | $ | ||||||
| Convertible notes payable | ||||||||
| Account payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred income, current | ||||||||
| Total Current liabilities | ||||||||
| Deferred income | ||||||||
| Long-term payable | ||||||||
| Total Non-current liabilities | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Shareholders' Equity | ||||||||
| Common stock, $ par value, shares authorized, shares issued and outstanding, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated comprehensive income (loss) | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Company stockholders' Equity | ||||||||
| Noncontrolling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Stockholders' Equity | $ | $ | ||||||
See accompanying notes to the consolidated financial statements.
F-3
ESG INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | |||||||
| Cost of goods sold | ||||||||
| Gross profit | ||||||||
| Operating expenses | - | |||||||
| Selling, General and administrative expense | ||||||||
| Research and development cost | ||||||||
| Total operating expenses | ||||||||
| Income (Loss) from operations | ( | ) | ||||||
| Non-operating income (expense) | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other Income | ||||||||
| Total non-operating income (expenses), net | ( | ) | ( | ) | ||||
| Income (Loss) before income taxes | ( | ) | ||||||
| Income taxes | ||||||||
| Net income (loss) | ( | ) | ||||||
| Less: income (loss) attributable to noncontrolling interest | ( | ) | ||||||
| Net income (loss) to ESG Inc. | $ | ( | ) | |||||
| Other comprehensive item | ||||||||
| Foreign currency translation gain (loss) attributable to the Company | ( | ) | ||||||
| Foreign currency translation gain (loss) attributable to noncontrolling interest | ( | ) | ||||||
| Comprehensive income (loss) attributable to the Company | ( | ) | ||||||
| Comprehensive income (loss) attributable to noncontrolling interest | ( | ) | ||||||
| Net income (loss) per share - basic and diluted | $ | ) | $ | |||||
| Weighted average shares outstanding - basic and diluted | ||||||||
See accompanying notes to the consolidated financial statements.
F-4
ESG INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| Common stock | Noncontrolling | |||||||||||||||||||||||||||||||
| Share | Amount | Additional paid aid-in capital | Accumulated income (deficit) | Accumulated other comprehensive income | Total Company's equity | interest | Total | |||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Balance at December, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||
| Net income | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ||||||||||||||||||||||
See accompanying notes to the consolidated financial statements.
F-5
ESG INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the year ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | ( | ) | $ | ||||
| Adjustments to reconcile loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Other receivable | ( | ) | ( | ) | ||||
| Advance to suppliers | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Value added tax receivable | ( | ) | ( | ) | ||||
| Notes receivable | ||||||||
| Accounts payables | ( | ) | ||||||
| Other payables | ||||||||
| Payable to related party | ( | ) | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Deferred income | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Cash flows from investing activities: | ||||||||
| Acquisition of fixed assets | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from loans | ||||||||
| Repayment of bank loans | ( | ) | ( | ) | ||||
| Payment of loans payable | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash | ( | ) | ( | ) | ||||
| Cash, beginning of year | ||||||||
| Cash, end of year | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | ( | ) | $ | ||||
| Cash paid for income tax | ||||||||
See accompanying notes to the consolidated financial statements.
F-6
ESG INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2025 AND 2024
NOTE 1- ORGANIZATION AND DESCRIPTION OF BUSINESS
Plasma Innovative Inc., now ESG Inc. (“ESG”) was incorporated in July 2021, a Nevada corporation and headquartered at Chadds Ford, Pennsylvania, USA, and is a holding company with operations through our subsidiaries in China. Our operating subsidiaries are involved in direct white button mushroom, composting, growing, food production and distribution.
ESG incorporated ESG China Limited as ESG’s wholly owned subsidiary in Hong Kong on November 18, 2022. ESG China Limited incorporated Hainan ESG Technology Co., Ltd., a China corporation (“Hainan ESG”) with 100% of ownership on January 16, 2023. ESG China Limited and Hainan ESG have no operations or transactions.
On September 28, 2023,
On November 6, 2023, Plasma Innovative Inc. entered into a share exchange agreement (the “Share Exchange Agreement”) with ESG Inc. (“ESGI”), a Nevada corporation, and the shareholders of ESGI (the “ESGI Shareholders”), whereby One Hundred Percent (100%) of the ownership interest of ESGI was exchanged for 10,432,800 shares of common stock of the Company issued to the ESGI Shareholders. The transaction has been accounted for as a recapitalization of the Company, whereby ESGI is the accounting acquirer.
Prior to the share exchange, Mr. Zhi Yang owned
AUFP incorporated Anhui Allied United Mushroom Technology Co., Ltd. (“AUMT”) in China in March 2018, to manufacture white button mushroom compost while AUFP incorporated Anhui Allied United Mushroom Co., Ltd. (“AUM”) in China in April, 2018, to grow fresh white button mushroom and provide mushroom growing management services. AUFP, AUMT and AUM are operating entities in China.
Since the Company is effectively controlled by the same controlling shareholders before and after the share exchange agreement, it is considered under common control. Therefore the above mentioned transactions were accounted for as recapitalization. The recapitalization has been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying financial statements of the Company.
The Board of Directors approved a change in the Company’s fiscal year end to December 31 in order to align it with AUFP. On November 9, 2023, the Company filed a report to reflect the fiscal year change from August 31 to December 31. On November 22, 2023, effective November 27, 2023, the Company filed Articles of Merger with the Nevada Secretary of State to change its name from Plasma Innovative Inc. to ESG Inc. The financial statements of Plasma Innovative Inc., now ESG Inc., have been recast to conform to the December 31 fiscal year end, and share and per share information has been retrospectively adjusted to reflect the recapitalization.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation and 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 include all adjustments necessary for the fair presentation of the Company’s financial position for the periods presented.
The consolidated financial statements of the Company
include the financial statements of the Company, its wholly owned subsidiaries and its
Use of estimates
In preparing the consolidated financial statements in conformity with U.S. GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting year. Significant items subject to such estimates and assumptions include allowance for doubtful accounts, advances to suppliers, valuation of inventories, useful lives of property, plant, and equipment and intangible assets.
Research and development (“R&D”)
R&D costs may be incurred by performing R&D directly, contracting with another party to perform R&D activities. R&D costs are accounted for in accordance with ASC 730, Research and Development. All R&D costs are recognized as an expense when incurred.
F-7
Cash and restricted cash
Cash includes demand deposits with financial institutions that are highly liquid in nature with original maturities of three months or less, which are unrestricted as to withdrawal and use. Restricted cash includes any cash that is legally restricted as to withdrawal or usage.
Account receivable, net
Accounts receivable are recorded at the invoiced amount and presented net of an allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts for estimated losses. The Company reviews its accounts receivable on a periodic basis and makes general and specific allowance when there is doubt as to the collectability of individual balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balance, customer’s payment history, its current creditworthiness and current economic trends. Accounts are written off after efforts at collection prove unsuccessful.
Allowance for Expected Credit Losses
The Company evaluates accounts receivable for expected credit losses in accordance with ASC 326. The allowance is based on historical loss experience, current conditions, and reasonable and supportable forecasts, as well as customer-specific factors such as aging, payment history, and collection trends. As of December 31, 2025, the Company recorded a specific allowance equal to 15% of the accounts receivable due from Jin Shui Limited. No additional material allowance was recorded for other receivable balances.
As of December 31, 2025 and 2024, allowance for
doubtful accounts was $
Advances to suppliers, net
Advances to suppliers represent prepayments made to suppliers and vendors. These advances are settled upon suppliers delivering raw materials to the Company or services performed. The Company review its advances to suppliers on a periodic basis and makes general and specific allowances when there is doubt as to the ability of a supplier to provide supplies to the Company or refund an advance. As of December 31, 2025 and 2024, allowance for doubtful accounts was nil and nil, respectively.
Inventory
Inventory is comprised primarily of raw materials, work-in-progress and finished goods. Inventory amounts are stated at the lower of cost or net realizable value and reported in net of allowances. Inventories are reviewed periodically for obsolescence and slow-moving items. When necessary, a provision is made for obsolete or slow-moving inventory based on an assessment of the inventory's age and marketability. Write-downs to net realizable value are charged to cost of goods sold in the period in which the inventory is identified as being impaired.
Cost of goods sold
Cost of goods sold includes all of the costs and expenses directly related to the production of goods, primarily includes the cost of raw materials, direct labor and overhead. Cost of goods sold excludes costs such as sales and marketing.
Property, plant and equipment, net
Property, plant and equipment are stated at cost,
less accumulated depreciation. Major repair and improvements that significantly extend original useful lives or improve productivity are
capitalized and depreciated over the period benefited. Repair and maintenance costs are expensed as incurred. Depreciation is recorded
principally by the straight-line method over the estimated useful lives of our property, plant and equipment which generally have the
following ranges: buildings and improvements:
Intangible assets, net
Intangible assets with finite lives are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability of intangible assets is made to take into account events or circumstances that warrant revise estimates of useful lives or that indicate that impairment exists. All of the Company’s intangible assets are subject to amortization. No impairment of intangible assets has been identified for the years ended December 31, 2025 and 2024.
F-8
Intangible assets consist of land use rights,
patent and purchased software. Intangible assets are stated at cost less accumulated amortization. The land use rights purchased for industrial
use has the right of use for 50 years. We amortized the right to use land in
Revenue Recognition
The Company follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606).
FASB ASC Topic 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires 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 each performance obligation.
Revenue is generated by selling fresh mushrooms, phase III compost and mushroom powder seasonings. Contracts were signed after the communication of the price and quantities with main distributers and customers.
Fresh mushrooms are sold to distributes who purchase all the mushrooms produced daily. The distributers verify the volume and quality of produce when produce delivered to warehouse and take responsibility for transportation. Control of the products is transferred upon receipt at our warehouse. Control of Compost III is transferred when loaded in the truck of carriers and control of mushroom powder seasonings is transferred when loaded in ship free of board. Upon transfer of control to the customer, which completes our performance obligation, revenue is recognized.
F-9
Disaggregation of Revenue
The primary geographical market is Asia.
The table below present disaggregated revenue from three products:
| Schedule of disaggregation of revenue | ||||||||||||||||||
| Revenue | % of Total Revenue | |||||||||||||||||
| Geographic | Products | December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | |||||||||||||
| China, mainland | Compost III | $ | $ | % | % | |||||||||||||
| China, mainland | White Button Mushroom | % | % | |||||||||||||||
| China, Hongkong | Mushroom powder seasonings | % | % | |||||||||||||||
| Total | Total net sales | $ | $ | % | % | |||||||||||||
Contract liability
Contract liabilities represents cash payment received from customers in advance of the Company satisfying performance obligations under contractual arrangements, including those with performance obligations to be satisfied over a period and point in time. Contract liabilities are derecognized when or as revenue is recognized.
Advances from the fresh mushroom distributers are required, Advances are deducted when revenue recognized. Deferred income
Convertible Notes
The Company accounts for convertible notes as debt instruments and records them at the proceeds received, net of any unamortized discount and issuance costs. Discounts and issuance costs are amortized to interest expense over the contractual term of the notes. The Company evaluates conversion features and other embedded terms to determine whether separate accounting is required under applicable accounting guidance.
Deferred income
Deferred income consists primarily of government grants. Government grants (sometimes referred to as subsidies, subventions, etc.) are as assistance by government in the form of transfers of resources to an entity in return for past or future compliance with certain conditions relating to the operating activities of the entity.
Government grants received relating to depreciable assets are recorded as deferred income and recognized as income using straight line method over the life of the related assets.
Other income
Other income consists primarily of grants and net gain or loss from lawsuits. The Company recorded income when receiving a grant which constitutes compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the entity with no future related costs. When a government grant received relating to depreciable assets amortized over the life of the related assets. The Company recorded the amortization amount in other income.
Noncontrolling Interests
The Company follows FASB ASC Topic 810, “Consolidation,” governing the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCI (previously referred to as minority interests) be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to non- controlling interests even when such allocation might result in a deficit balance.
F-10
The net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss). Losses attributable to NCI in a subsidiary may exceed a non-controlling interest’s interests in the subsidiary’s equity. The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCI balance.
AUFP and its subsidiaries, AUM and AUMT were
Income taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with FASB ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) tax payable or refundable for the current period and (ii)deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets also include the prior year’s net operating losses carried forward.
The Company accounts for income for income taxes in accordance with ASC 740, Income Taxes. ASC 740 requires an asset and liability approach for financial accounting and reporting for income taxes and allows recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net effects of temporary difference between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits or not be deductible in the future.
Contingencies
Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. In accordance with ASC 450, the Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company’s consolidated financial statements.
If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.
Comprehensive income (loss)
Foreign currency translation and comprehensive income (loss)The accounts of the Company’s Chinese entities are maintained in Chinese Yuan (“RMB”) and the accounts of the U.S. parent company are maintained in United States dollar (“USD”). The accounts of the Chinese entities were translated into USD in accordance with FASB ASC Topic 830 “Foreign Currency Matters.” All assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders’ equity is translated at historical rates and the statements of operations and cash flows are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with FASB ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from foreign currency transactions are reflected in the statements of operations.
The Company follows FASB ASC Topic 220-10, “Comprehensive Income (loss).” Comprehensive income (loss) comprises net income (loss) and all changes to the statements of changes in stockholders’ equity, except those due to investments by stockholders, changes in additional paid-in capital and distributions to stockholders.
Segment reporting
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments. The Company uses the management approach to determine reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making decisions, allocating resources and assessing performance. The Company’s CODM has been identified as the Company’s chief financial officer, who review consolidated results when making decisions about allocating resources and assessing performance of the Company. Based on management’s assessment, the Company has determined that the Company has three operating segments, white button mushroom, compost III and mushroom seasonings, as defined by ASC Topic 280 “Segment Reporting
F-11
Correction of Immaterial Misstatement
During the year ended December 31, 2024, the Company identified an error that occurred in 2019. The payment of approximately
$420,067 was posted under the wrong supplier account
which was subsequently settled based on a settlement agreement. The Company determined that the prior year financial statements should
be corrected, even though such revision previously was and continues to be immaterial to the prior year financial statements. As a result,
the accompanying consolidated balance sheet for the year ended December 31, 2023 has been corrected for the following: accounts payable
decreased from $1,450,405 to $
Recently Issued Accounting Pronouncements
Disaggregation of Income Statement Expenses
In November 2024, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2024- 03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) and in January 2025, the FASB issued ASU No. 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date, which clarified the effective date of ASU 2024-03. ASU 2024-03 will require the Company to disclose the amounts of purchases of inventory, employee compensation, depreciation and intangible asset amortization, as applicable, included in certain expense captions in the Consolidated Statements of Operations, as well as qualitatively describe remaining amounts included in those captions. ASU 2024-03 will also require the Company to disclose both the amount and the Company’s definition of selling expenses. The Company is currently evaluating the effect ASU 2024-03 may have on its consolidated financial statements and related disclosures.
Income Taxes
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which will require the Company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the Company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company adopted ASU 2023-09 effective January 1, 2025, and the adoption impacted disclosures only.
NOTE 3 – GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of December 31, 2025, the Company had recurring losses, liquidity constraints, a high debt-to-asset ratio, restricted cash, and a temporary suspension of production. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued.
On March 10, 2026, the Company raised $
F-12
The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 – CASH AND RESTRICTED CASH
As
of December 31, 2025 and 2024, cash was $
NOTE 5 – ACCOUNTS RECEIVABLE
As of December 31, 2025, accounts receivable, net were $
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
The following table summarizes our property, plant and equipment:
| Schedule of property and equipment | ||||||||
| December 31, | 2025 | 2024 | ||||||
| Buildings and improvements | ||||||||
| Machinery, equipment and vehicle fleet | ||||||||
| Construction in progress | ||||||||
| Property, plant and equipment - cost | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment - net | $ | $ | ||||||
Construction in progress was $
NOTE 7 – INVENTORIES
Inventories consisted of the following:
| Schedule of inventories | ||||||||
| 2025 | 2024 | |||||||
| Raw materials | $ | $ | ||||||
| Inventory in transit | ||||||||
| Finished goods | ||||||||
| Work in progress | ||||||||
| Total | $ | $ | ||||||
There were $
F-13
NOTE 8 - INTANGIBLE ASSETS
Intangible assets consist of the following:
| Schedule of intangible assets | ||||||||
| 2025 | 2024 | |||||||
| Land use right | $ | $ | ||||||
| Software | ||||||||
| Patent | ||||||||
| Subtotal | ||||||||
| Less: Accumulated amortization | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Amortization expenses for the year ended December 31, 2025 and 2024
were $
NOTE 9 - BANK LOANS
Short-term bank loans consisted of the following:
| Schedule of short-term bank loans | ||||||||||||||||||||
| December 31, | 2025 | Interest rate | Due date | 2024 | Interest rate | Due date | ||||||||||||||
| Agricultural Bank of China Funan Branch (1) | % | % | ||||||||||||||||||
| Anhui Funan Rural Commercial Bank (2) | % | % | ||||||||||||||||||
| Anhui Funan Rural Commercial Bank (3) | % | % | ||||||||||||||||||
| Anhui Funan Rural Commercial Bank (4) | % | % | ||||||||||||||||||
| Bank of China Funan Branch (5) | % | % | ||||||||||||||||||
| Total | $ | $ | ||||||||||||||||||
| (1) |
| (2) |
| (3) |
| (4) |
| (5) |
F-14
NOTE 10 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consisted of the following:
| Schedule of accrued expenses and other current liabilities | ||||||||
| 2,025 | 2,024 | |||||||
| Advances from customers | $ | $ | ||||||
| Salary payable | ||||||||
| Interest payable | ||||||||
| Tax payable | ||||||||
| Other payable | ||||||||
| Long-term payable, current portion | ||||||||
| total | $ | $ | ||||||
Other payable was primarily comprised of loans
from non-bank institution and private funds including accrued interest, which consisted of $
Other payable was primarily comprised of loan
and related interest and other private funds, including $
NOTE 11 - VALUE ADDED TAX RECEIVABLE
Selling merchandise in China is generally
subject to the value-added tax (“VAT”). The amount of VAT liability is determined by applying the applicable tax rate to
the invoiced amount of goods sold (output VAT) less VAT paid on purchases made with the relevant supporting invoices (input VAT).
VAT input was primarily due to purchase of property, plant and equipment. As of December 31, 2025, VAT input was $
NOTE 12 - ASSET ACQUISITION AND LONG-TERM PAYABLE
On May 11, 2021, Anhui Allied United Mushroom
Co., Ltd. signed the Agreement (“Agreement”) with Suhua Yang and Hao Yan, the owners of Funan Zhihua Mushroom Co., Ltd. (“Target
Company”). As the consideration of transferring
Following the guidance of ASC 805, we performed the screen test to evaluate whether the acquired set is a business or a group of assets. The group of assets was buildings and equipment related to growing mushrooms and didn’t include an input and a substantive process that together significantly contribute to the ability to create outputs because the target company had no employees and no operations. The transaction was accounted for as an asset acquisition in accordance with ASC 805 -50.
F-15
The Company calculated the present value of the
debt assumed at a compound monthly interest rate of 1% at the acquisition date and recognized $
On April 30, 2023, the owner of Target Company and AUM agreed that the payment of consideration began on the production of growing rooms on January 1, 2024.
Long-term payable were $
The future payment schedule presents as follow:
| Schedule of long-term payable | |||
| USD | |||
| 2026 | |||
| 2027 | |||
| 2028 | |||
| 2029 | |||
| 2030 | |||
| Imputed interest | ( | ) | |
| Net | |||
| Long-term payable-Current Portion | |||
| Long-term payable-Non-Current Portion | |||
NOTE 13 - COMMITMENTS AND CONTINGENCIES
Commitments
On January 5, 2022, Funan Modern Recycling Agriculture Investment Co., Ltd. (“FMRA”) signed an agreement with AUFP to fund AUFP 115 million RMB ($18.09 million) on the expansion of composting facilities including 6 bunkers and 22 tunnels. According to the agreement, AUFP transfers the land use right of 46,393square meters which the composting facilities will be constructed on to FMRA and starts to pay rent for 10 years after FMRA delivers the facilities to AUFP legally and in writing. Once Rents and Principal are paid off, FMRA will transfer the land use right and the deed of the composting facilities back to AUFP. All the costs related to the transfer of land use right are paid by FMRA. The overall economic substance of the arrangement is that of a construction financing arrangement; accordingly, the land use right was not derecognized from the balance sheet, which amounted to $623,515. Rent payment method: the calculations will start from the date of the delivery of the facilities and rent will be paid quarterly. The principal amount will be determined and confirmed in writing by both parties at the time of the facilities delivery; if the parties cannot reach an agreement, the agreement will prevail if there is provisions in the agreement; if there is no agreement, the confirmation by a third-party audit will prevail. AUFP will repay the principal and pay rent on an annual basis. For the first to fifth years, AUFP will pay 4.32% of the total investment (principal amount confirmed) as annual rent to FMRA. From the sixth to the tenth year, AUFP will pay 20% of the determined principal amount each year to repurchase 20% of the shares in the platform company (incorporated by FMRA to own the composting facilities). After AUFP’s payment, FMRA will complete the necessary changes to the industrial and commercial registration of the platform company within one month. Once AUFP starts the payment of principal, the rent will be 4.32% of the remaining principal that AUFP has not pay, as the annual rent. The facilities were under operative testing in 2024. FMRA has not met the conditions of delivery as of December 31, 2025 and the date these consolidated financial statements are issued.
F-16
Legal Proceedings
The Company’s PRC operating subsidiaries and affiliates have been involved in several disputes with suppliers arising from unpaid amounts owed to raw material vendors following the suspension of production and related liquidity constraints. These matters primarily involve claims by suppliers of chicken manure, straw, and other production inputs, and several have been resolved through court-mediated settlements or judgments requiring staged payments or confirming liability.
In Fengyang Leqi Trading Co., Ltd. v. Anhui Allied United Mushroom Technology Co., Ltd. and Funan Allied United Farmer Products Co., Ltd., the plaintiff sought payment of RMB 252,780 for unpaid raw-material purchases consisting of rice husk chicken manure, plus interest, attorneys’ fees, and court costs. The Funan County People’s Court issued a civil mediation statement under case number (2025)Wan1225 MinChu No.13121, pursuant to which the defendants agreed to pay the RMB 252,780 in installments through January 30, 2026, with default interest at 3% per annum on any unpaid balance.
In Funan Yihe Agricultural Machinery Specialized Cooperative v. Anhui Allied United Mushroom Technology Co., Ltd., Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd., the plaintiff claimed unpaid straw purchase amounts of RMB 1,620,456.3, plus interest and related costs. The Funan County People’s Court issued a civil mediation statement under case number (2025)Wan1225 Min Chu No.7019, pursuant to which the defendants agreed to pay RMB 820,000, with the remaining RMB 800,000 to be paid in installments.
In Mengcheng Shunjie Straw Recycling Co., Ltd. v. Anhui Allied United Mushroom Technology Co., Ltd., the plaintiff sought payment of RMB 1,154,204.5 for unpaid straw deliveries, plus interest and preservation costs, and the defendant disputed the amount and asserted quality-related defenses. After the plaintiff received straw to offset the account payable under try-parties agreement, the case was closed.
In Funan County Jieyu Agricultural Machinery Specialized Cooperative v. Anhui Allied United Mushroom Technology Co., Ltd., Anhui Allied United Mushroom Co., Ltd., Funan Allied United Farmer Products Co., Ltd., Zhang Zhen and Yang Shoubin (“Jieyu Case”), the plaintiff sought RMB 866,279.8 for unpaid straw purchase amounts, plus interest and other costs. By civil judgment under case number (2025)Wan1225Mi Min Chu No.10471, the Funan County People’s Court held that Anhui Allied United Mushroom Technology Co., Ltd. was liable for RMB 859,129.3 plus interest, and further held that Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd. were jointly and severally liable, while dismissing the claims against the two individual employee defendants.
In Meng Jie v. Anhui Allied United Mushroom Technology Co., Ltd. (“Mengjie Case”), the asserted payable was approximately RMB 162,566 and related to a straw-pellet supplier. The parties reached a settlement agreement.
Hefei Wuxing Junye filed an execution-related matter against Anhui Allied United Mushroom Co., Ltd. and Funan Allied United Farmer Products Co., Ltd. (“Wuxing Case”) concerning a deposit refund originally in the amount of RMB 2,000,000 under case number (2025)Wan1225 Min Chu No.8232. The remaining balance of RMB 237,729.27 is to be paid by June 30, 2026.
On
December 2, 2022, Liu Pengpeng filed a lawsuit against AUFP for $
AUFP filed a lawsuit against Heng Guang Sheng Construction Corporation in 2024. AUFP post advances to suppliers on wrong suppliers and caused overpayment of $280,144 made in 2019. The verdict was ordered and favored AUFP in December of 2024 for the full amount. AUFP collected $104,315 in April, 2025.
F-17
As of the date of this report, all the liabilities above were accrued, the Company believes that these matters arose in the ordinary course of business in connection with supplier and contract payment disputes following the suspension of the PRC mushroom operations. The Company is monitoring compliance with the applicable settlements, judgments and related payment obligations, and evaluating any further enforcement exposure.
Note 14 – CONVERTIBLE NOTES PAYABLE
The convertible notes payable was $
On August 5, 2025, the Company issued a convertible
promissory note (the “Note”) in the principal amount of $
NOTE 15 - DEFERRED INCOME
As of December 31, 2025 and 2024, deferred income
was $
The future amortization of deferred revenue schedule as follow:
| Schedule of deferred revenue | ||||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| thereafter | ||||
| total | $ |
NOTE 16 - INCOME TAXES
The company is subject to income taxes on an entity basis on income derived from the location in which each entity is domiciled. ESG China Limited and Hainan ESG Tech are holding companies without operations.
The Company’s U.S. parent company is subject
to U.S. income tax rate of
F-18
In China the Corporate Income Tax Law generally
applies an income tax rate of 25% to all enterprises. In corporate income tax article 86, “Regulations for the Implementation of
the Enterprise Income Tax Law” article 27(1) of stipulate: the income of an enterprise engaged in agriculture, forestry, animal
husbandry, and fishery projects may be exempted or reduced from income tax. Refer to: (1)Enterprises are exempted from enterprise income
tax on income derived from the following items: 1. Planting of vegetables, grains, potatoes. Anhui Allied United Mushroom Technology and
Anhui Allied United Mushroom are engaged in agricultural production in China, and their income tax are exempted. AUFP is not exempt for
income tax. Net income and net loss were not offset among the operating subsidiaries. Net income of $
There were
As of December 31, 2025 and 2024, the Company
had net operating loss (“NOL”) carryforwards of $
The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended December 31, 2025 and 2024:
| Schedule of effective tax rates | ||||||||
| 2025 | 2024 | |||||||
| US federal statutory rates | ( | %) | ( | %) | ||||
| Tax rate difference between PRC and U.S. | ( | %) | ( | %) | ||||
| Effect of income tax exemption on certain income | ( | %) | ( | %) | ||||
| Change in valuation allowance | % | % | ||||||
| Effective tax rate | $ | $ | ||||||
The provision for income tax expense (benefit) for the periods ended December 31, 2025 and 2024 consisted of the following:
| Schedule of income tax expense (benefit) | ||||||||
| 2025 | 2024 | |||||||
| Income tax expense - current | $ | $ | ||||||
| Income tax benefit -deferred | ( | ) | ( | ) | ||||
| Increase in valuation allowance | ||||||||
| Total income tax expense | $ | $ | ||||||
F-19
The Company’s net deferred tax assets as of December 31, 2025 and 2024 is as follows:
| Schedule of net deferred tax assets | ||||||||
| 2025 | 2024 | |||||||
| Deferred tax asset | ||||||||
| Net operating loss | $ | ( | ) | $ | ( | ) | ||
| Less: valuation allowance | ||||||||
| Net deferred tax asset | $ | $ | ||||||
NOTE 17 - RELATED PARTY TRANSACTIONS
For the year ended December 31,2025,
On
October 22, 2022, Mr. Zhi Yang subscribed 12 million shares of common stock. Mr. Yang paid $
NOTE 18 - CONCENTRATIONS
Customers:
The Company had two customers that individually represented 10% or
more of total sales, which accounted for
Suppliers:
Purchasing from One supplier accounted for
Accounts receivable:
As of December 31, 2025, the account receivable
from one customer accounted for
Accounts payable:
As of December 31, 2025, the account payable from one supplier
accounted for
F-20
NOTE – 19 OPERATING SEGMENTS
The Company has three reportable segments: (1) White button mushroom (2) Compost III and (3) Mushroom powder seasonings in 2025 and one segment in 2024.
| Schedule of operating segment | ||||||||||||||||||||||||
| White button mushroom | Compost III | Mushroom powder seasonings | Corporate | Eliminations | Total | |||||||||||||||||||
| For the year ended December 31, 2025 | ||||||||||||||||||||||||
| Net operating revenues: | ||||||||||||||||||||||||
| Third party | $ | $ | $ | $ | ||||||||||||||||||||
| Intersegment | ( | ) | ||||||||||||||||||||||
| Total net operating revenues | ||||||||||||||||||||||||
| Cost of goods sold | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Intersegment cost of goods sold | ( | ) | ( | ) | ||||||||||||||||||||
| Total net operating cost | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Selling, general administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Research and development | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Interest income (expense) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Other income (loss) — net | ||||||||||||||||||||||||
| Income before income taxes | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||
| Other segment information: | ||||||||||||||||||||||||
| Property, plant and equipment - net | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
F-21
| White button mushroom | Compost III | Mushroom powder seasonings | Corporate | Eliminations | Total | |||||||||||||||||||
| Year Ended December 31, 2024 | ||||||||||||||||||||||||
| Net operating revenues: | ||||||||||||||||||||||||
| Third party | $ | $ | $ | $ | $ | |||||||||||||||||||
| Intersegment | ( | ) | ||||||||||||||||||||||
| Total net operating revenues | ||||||||||||||||||||||||
| Cost of goods sold | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Intersegment cost | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Total net operating cost | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Selling expense | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
| general administrative expenses | ( | ) | ( | ) | ||||||||||||||||||||
| Research and development | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Operating income (loss) | ( | ) | ( | ) | ||||||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Other income (loss) — net | ||||||||||||||||||||||||
| Income before income taxes | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||
| Other segment information: | ||||||||||||||||||||||||
| Property, plant and equipment - net | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Depreciation and amortization | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| * | $310,928 of the balance of elimination is the inter-segment unsold inventory. |
NOTE 20 - SUBSEQUENT EVENTS
Management evaluated subsequent events through the date the consolidated financial statements were issued and determined that, except as disclosed below and in Note 12 – Commitments and Contingencies, there were no material subsequent events requiring recognition or additional disclosure in the accompanying consolidated financial statements.
On March 6, 2026, ESG Inc. (the “Company”)
entered into a Securities Purchase Agreement (the “Monroe SPA”)
with Monroe Street Capital Partners, LP (the “Monroe Investor”),
pursuant to which the Company issued a convertible promissory note in the principal amount of $
On March 9, 2026, the Company entered into a Securities Purchase Agreement
(the “Crom SPA”) with Crom Structured Opportunities Fund I,
LP (the “Crom Investor”), pursuant to which the Company issued
a convertible promissory note in the principal amount of $
In addition, as disclosed in Note 12 – Commitments and Contingencies, in Huai’an Hansen Environmental Engineering Co., Ltd. v. Funan Allied United Farmer Products Co., Ltd., the matter involves a contract dispute allegedly relating to quality issues in the amount of RMB 153,037, under case number (2026) Wan 1225 Zhi No.537.
Under the Leqi case, the Company is working on the comprehensive solution along with Jieyu, Mengjie and Wuxing cases through the Court under the local government support.
F-22
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements. The financial statements required by this Item, together with the reports of the independent registered public accounting firms, are included in Part II, Item 8 of this Amendment. Financial statement schedules, if any, are as stated in the Original Form 10-K.
(b) Exhibits. The following exhibit index includes exhibits previously filed or incorporated by reference in the Original Form 10-K and exhibits filed or furnished with this Amendment. Earlier exhibits are incorporated by reference to the filings identified below. Exhibits filed or furnished with this Amendment are indicated by an asterisk.
| 23.1 | Prager Metis CPAs, LLC consent — previously filed with Original Form 10-K. | |
| 23.2* | Consent of TQ International, PLLC (formerly Tang Qian & Associates, PLLC) relating to the corrected 2025 audit report. | |
| 31.1* | Certification of Principal Executive Officer under Rule 13a-14(a). | |
| 31.2* | Certification of Principal Financial and Accounting Officer under Rule 13a-14(a). | |
| 32.1** | Certification of Principal Executive Officer pursuant to 18 U.S.C. § 1350. | |
| 32.2** | Certification of Principal Financial Officer pursuant to 18 U.S.C. § 1350. | |
| 101* | Interactive Data Files, as required for the amended Item 8, subject to EDGAR technical confirmation. | |
| 104* | Cover Page Interactive Data File, embedded within the Inline XBRL document, as applicable. |
* Filed herewith. ** Furnished herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly authorized.
ESG INC.
Dated: October 13, 2026
| By: /s/ Zhi Yang | |
| Zhi Yang | |
| Chief Executive Officer (Principal Executive Officer) | |
| By: /s/ Edward F. Gobora | |
| Edward F. Gobora | |
| Chief Financial Officer (Principal Financial and Accounting Officer) |
EXHIBIT 23.2
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the inclusion in Amendment No. 1 to the Annual Report on Form 10-K/A of ESG Inc. for the fiscal year ended December 31, 2025 of our report dated March 30, 2026 relating to the consolidated financial statements of ESG Inc. and its subsidiaries as of December 31, 2025 and for the year then ended. Our corrected report includes an explanatory paragraph concerning substantial doubt about the Company’s ability to continue as a going concern.
TQ International, PLLC
formerly Tang Qian & Associates, PLLC
| Authorized signature: | /TQ International, PLLC | |
| Flower Mound, Texas | ||
| October 13, 2026 | ||
EXHIBIT 31.1
CERTIFICATION PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, Zhi Yang, certify that:
1. I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of ESG Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
Date: October 13, 2026
| /s/ Zhi Yang | |
| Zhi Yang | |
| Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION PURSUANT TO RULE 13a-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
I, Edward F. Gobora, certify that:
1. I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of ESG Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
Date: October 13, 2026
| /s/ Edward F. Gobora | |
| Edward F. Gobora | |
| Chief Financial Officer (Principal Financial and Accounting Officer) | |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with Amendment No. 1 to the Annual Report on Form 10-K of ESG Inc. (the “Company”) for the fiscal year ended December 31, 2025 (the “Report”), as filed with the Securities and Exchange Commission, I, Zhi Yang, certify pursuant to 18 U.S.C. § 1350 that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its Staff upon request.
Date: October 13, 2026
| /s/ Zhi Yang | |
| Zhi Yang | |
| Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. § 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with Amendment No. 1 to the Annual Report on Form 10-K of ESG Inc. (the “Company”) for the fiscal year ended December 31, 2025 (the “Report”), as filed with the Securities and Exchange Commission, I, Edward F. Gobora, certify pursuant to 18 U.S.C. § 1350 that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its Staff upon request.
Date: October 13, 2026
| /s/ Edward F. Gobora | |
| Edward F. Gobora | |
Chief Financial Officer (Principal Financial and Accounting Officer)
|
|