ESG Inc. 2025年财报显示持续经营重大不确定性

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

AMENDMENT NO. 1

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐ 

For the fiscal year ended December 31, 2025
Commission File Number: 000-56532

ESG  INC.

(Exact name of registrant as specified in its charter)

433 East Hillendale Road, Chadds Ford, Pennsylvania 19317
(Address of principal executive offices)
267-467-5871

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 ☐ No ☒

Not required to file reports under Section 13 or 15(d): Yes ☐ No ☒

Reports filed during the preceding 12 months and subject to filing requirements for the past 90 days: Yes ☒ No ☐

Interactive Data Files submitted as required: Yes ☒ No ☐

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒

Smaller reporting company ☒ Emerging growth company ☒

Emerging growth company election not to use extended transition period: ☐

 ☐

Shell company: Yes ☐ No ☒

Aggregate market value of common equity held by non-affiliates as of June 30, 2025: approximately $45,753,348 (as reported in the Original Form 10-K).

15,591,376 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/ Prager Metis CPAs, LLC We have served as the Company’s auditor since 2025. Hackensack, New Jersey April 15, 2025 PCAOB ID Number 273

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.

formerly Tang Qian & Associates, PLLC

We have served as the Company’s auditor since 2026

Flower Mound, Texas

March 30, 2026

PCAOB ID: 7080

ESG INC.

Consolidated Balance Sheet

See accompanying notes to the consolidated financial statements.

F-3

ESG INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

See accompanying notes to the consolidated financial statements.

F-4

ESG INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

See accompanying notes to the consolidated financial statements.

F-5

ESG INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

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, ESG entered into a share exchange agreement with Funan Allied United Farmer Products Co., Ltd., a China corporation incorporated in May 2017 (“AUFP”), and 74.52% of shareholders of AUFP, (each a “Shareholder,” and collectively, the “Shareholders”), through Hainan ESG. Pursuant to such agreement, the Shareholders exchanged their equity of AUFP to Hainan ESG for shares of common stock of ESG, and ESG has agreed to offer the ESG shares. Following this transaction, AUFP became a 74.52% subsidiary of ESG through Hainan ESG.

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 30% of AUFP, Fuyang Zhihan Agricultural Information Co. Ltd. (“Zhihan”) owned 24.52% of AUFP and Mr. Chris Alonzo owned 10% of AUFP. ESG, after the share exchange agreement described above is completed, owns 74.52% of AUFP and its subsidiaries, AUM and AUMT in China. Mr. Zhi Yang and “Zhihan” control 83.53% of ESG through DCG China Limited, and Mr. Christopher Alonzo owns 5.4% of ESG.

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 74.52% owned subsidiaries in China. All inter-company transactions and balances between the Company and its subsidiaries have been eliminated upon consolidation.

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.

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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 $534,904 and nil 0, respectively.

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: 20 years; machinery and equipment: 5-10 years; office equipment: 3-5 years. Construction in progress is not depreciated until ready for service.

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 50 years. Patent and software amortized using the straight-line method with estimated useful lives of 12 years and 5 years, respectively.

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:

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 25.48% owned by noncontrolling interest and $3,100,625 and $3,519,577 of equity were attributable to noncontrolling interest as of December 31, 2025 and 2024, respectively. For the years ended December 31, 2025 and 2024, the Company had net loss of $555,855 and net income of $303,220 attributable to the noncontrolling interest, respectively.

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 $1,300,676, the accumulated deficit decreased from $1,224,811 to $1,113,233 and noncontrolling interest increased from $3,274,308 to 3,312,459. The Company assessed the materiality of the misstatement quantitatively and qualitatively and has concluded that the correction of the classification error is immaterial to the consolidated financials taken as a whole.

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 $200,000 of additional capital, which improved its near-term liquidity. Management has developed plans intended to improve liquidity and support continued operations, including restoring production in the near term, which management currently expects could occur within approximately one month, subject to completion of remaining operational and facility-readiness steps, pursuing additional financing sources, including potential equity line and other financing arrangements, and continuing cost-control measures. However, these plans are dependent on future events and there can be no assurance that they will be successfully implemented. Accordingly, substantial doubt about the Company’s ability to continue as a going concern has not been alleviated.

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 $42,978 and $110,343, respectively, and restricted cash was $36,892 and $56,398, respectively. Restricted cash as of December 31, 2025 related to pending litigation matters. See Note 12 – Commitments and Contingencies. Restricted cash as of December 31, 2024 related to the legal restriction of certain AUM bank accounts in connection with a supplier investigation involving unpaid amounts owed by AUM. In January 2025, AUM deposited the unpaid amount and petitioned for release of the restriction. The restriction was lifted on February 2, 2025. Management does not believe the restriction had a material impact on the Company’s operations.

NOTE 5 – ACCOUNTS RECEIVABLE

As of December 31, 2025, accounts receivable, net were $3,223,334 after giving effect to an allowance of $534,904. As of December 31, 2024, accounts receivable was $2,917,093 and no allowance had been recorded.

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT

The following table summarizes our property, plant and equipment:

Construction in progress was $48,276 as of December 31, 2025, and $90,809 as of December 31, 2024. Depreciation expense was $1,814,435 and $1,698,033 for the year ended December 31, 2025 and 2024, respectively. As of December 31, 2025, buildings and improvements were pledged as collateral for loans.

NOTE 7 – INVENTORIES

Inventories consisted of the following:

There were $604,959 of raw materials write-off for the year ended December 31, 2025 due to spoilage.

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NOTE 8 - INTANGIBLE ASSETS

Intangible assets consist of the following:

Amortization expenses for the year ended December 31, 2025 and 2024 were $67,056 and $67,896, respectively.

NOTE 9 - BANK LOANS

Short-term bank loans consisted of the following:

F-14

NOTE 10 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following:

Other payable was primarily comprised of loans from non-bank institution and private funds including accrued interest, which consisted of $274,051 of loan at 9% of annual interest rate with a due date of June 30,2023 from Funan Agricultural Investment Co. Ltd, $1,370,257 of loan at 3.45% of annual interest rate with a due date of December 29,2022 from Funan Small Business Financing Service Center and $185,356 of accrued interests, $404,703 from unrelated private fund with non-interest bearing and due on demand, $217,871 of accrued payment to the owner of Funan Zhihua Mushroom Co., Ltd (Refer to Note 10) and $301,457 of deposit received from customers as of December 31,2024.

Other payable was primarily comprised of loan and related interest and other private funds, including $1,970,940 of loans and related interest from Funan Agricultural Investment Co. Ltd and Funan Business Financing Service Center, $1,788,786 of loans from private funds and $555,882 of payable to the owner of Funan Zhihua Mushroom Co., Ltd as of December 31, 2025.

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 $2,104,253 of current portion and $838,274 of non-current portion. As of December 31, 2024, VAT input was $2,704,109. VAT input can deduct VAT output or be refunded. Anhui Allied United Mushroom Technology and Anhui Allied United Mushroom are engaged in agricultural production in China, and their value- added tax are exempted, and AUFP are engaged in non-exempt business. AUFP field an application for a refund of VAT receivable in 2025.

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 100% equity of Target Company, AUM will pay Shareholders with $2,151,383 (RMB 14,840,028), which is $25,612 (RMB 176,667) per month for 84 months at the end of each month after the delivery of the growing rooms. Target Company was dissolved after the asset acquisition.

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 $1,464,214 of fixed assets and $1,464,214 of long-term payable.

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 $1,139,629, including $178,793 of current portion and $960,836 of long term payable, and $1,095,690, respectively as of December 31, 2025 and 2024. $290,495 was recorded as other payable for the year ended December 31, 2024, including $135,725 of capital and $154,770 of interest at 1% compound monthly interest rate, among them, $73,832 was paid.

The future payment schedule presents as follow:

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 $66,066. Liu Pengpeng signed a contract with AUFP on installation work and drainage construction. Liu Pengpeng breached the contract and failed to complete the construction work on time which caused a loss to AUFP. On July 7, 2023, Liu Pengpeng withdrew the lawsuit. On November 20, 2023, Liu Pengpeng filed a lawsuit for the same claim. In 2024, the lawsuit was settled and $65,263 of settlement payment was paid.

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 $275,000 and $0 as of December 31, 2025 and 2024, respectively.

On August 5, 2025, the Company issued a convertible promissory note (the “Note”) in the principal amount of $275,000 to Labrys Fund II, L.P.  for an aggregate cash purchase of $250,000 in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Rule 506(b) thereunder. As additional consideration for the purchase of the Note, the Company issues a common stock purchase warrant to purchase 45,833 shares of common stock at an initial price per share of $6.00 to the Purchaser. The Note bears interest at 10% per annum and matures on the twelve (12) months from the Issue Date. The Purchaser may have conversion rights at the date that an Event of Default occurs or the date that the Company failed to pay any Amortization Payment to convert the Convertible Note into shares of the Company’s common stock at a conversion price equal to the 90% of the lowest closing bid price of the Common Stock on Principal Market during the ten (10) Trading Day period immediately preceding the respective conversion date. The Company’s convertible notes have original maturities of less than one year and contain certain features that are contingent upon the occurrence of events of default. The Company evaluated the contingent feature under ASC 815 and concluded that separate bifurcation and accounting as an embedded derivative was not necessary, as the fair value of the feature was immaterial to the financial statements. Accordingly, the convertible notes are accounted for as a single financial liability. The convertible notes were initially recognized at their principal amount, which approximates their fair value at issuance. The difference between the proceeds received and the principal amount was not material and was recognized in expenses upon initial recognition.

NOTE 15 - DEFERRED INCOME

As of December 31, 2025 and 2024, deferred income was $1,133,055 and $1,195,384, respectively. Of these amounts, $110,590 and $121,897 were classified as current and $1,022,465 and $1,073,487, respectively were classified as non current. . The Company recognized $124,023 and $165,646, respectively, of government grants for the year ended December 31, 2025 and 2024, which consisted of $124,914 of asset-based grants and $40,732 of income-based grants for the year ended December 31, 2024, and $124,023 of asset-based grants for the year ended December 31, 2025,

The future amortization of deferred revenue schedule as follow:

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 21% and files U.S. federal income tax return. As of December 31, 2025 and 2024, the U.S. entity had net operating loss (“NOL”) carry forwards for income tax purposes of $456,665 and $195,027. Management believes the realization of benefits from these losses remains uncertain. Accordingly, a 100% deferred tax asset valuation allowance was provided.

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 $817,802 and $3,281,821 were exempt from income tax for the years ended December 31, 2025 and 2024, respectively. The estimated tax savings as the result of the 25% tax break for the years ended December 31, 2025 and 2024 amounted to $204,451 and $820,455, respectively. The deferred tax assets were $641,840 and $517,978 as of December 31, 2025 and 2024, respectively. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance as of December 31, 2025 and 2024. The Company’s management reviews this valuation allowance periodically and makes adjustments as necessary.

There were no uncertain tax positions as of December 31, 2025 and 2024.

As of December 31, 2025 and 2024, the Company had net operating loss (“NOL”) carryforwards of $11,550,599 and $10,287,694, respectively, in PRC. The NOL carryforwards will begin to expire in the PRC in the calendar year 2026 through 2030, if not utilized $1,084,680 was expired for the year ended December 31,2025.

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:

The provision for income tax expense (benefit) for the periods ended December 31, 2025 and 2024 consisted of the following:

F-19

The Company’s net deferred tax assets as of December 31, 2025 and 2024 is as follows:

NOTE 17 - RELATED PARTY TRANSACTIONS

For the year ended December 31,2025, Mr. Zhi Yang, our founder loaned the Company $142,929, and the Company repaid $21,235. As of December 31, 2025, the Company had outstanding loans payable to Mr. Zhi Yang in the aggregate amount of $121,714. Such loans were non-interest-bearing and due on demand.

On October 22, 2022, Mr. Zhi Yang subscribed 12 million shares of common stock. Mr. Yang paid $30,000 for the 12,000,000 shares of ESG Inc. stock. The subscription was canceled on September 28, 2023, and the capital was recorded as a payable to Mr. Yang. The payable was paid off on February 5, 2024.

NOTE 18 - CONCENTRATIONS

Customers:

The Company had two customers that individually represented 10% or more of total sales, which accounted for 36.1% and 13.3% for the year ended December 31, 2025. For the year ended December 31, 2024, there were five customers’ sales over 10% and accounted for 31.1%, 16.0%, 14.6%, 14.0%, and 12.7%.

Suppliers:

Purchasing from One supplier accounted for 37.7% of the Company’s purchases for the year ended December 31, 2024. One supplier accounted for 12.0% of the Company’s purchases in 2025.

Accounts receivable:

As of December 31, 2025, the account receivable from one customer accounted for 82.0% of the total Company’s accounts receivable. As of December 31, 2024, Accounts receivable from one customer accounted for 95.4% of the total Company’s accounts receivable balance.

Accounts payable:

As of December 31, 2025, the account payable from one supplier accounted for 25.7% of the total Company’s accounts payable.

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.

F-21

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 $110,000 in exchange for $100,000 in gross proceeds (the “Monroe Note”). In connection with the Monroe SPA, the Company also issued a common stock purchase warrant to purchase 18,333 shares of the Company’s common stock at an exercise price of $6.00 per share (the “Monroe Warrant”).

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 $110,000 in exchange for $100,000 in gross proceeds (the “Crom Note”). In connection with the Crom SPA, the Company also issued a common stock purchase warrant to purchase 18,333 shares of the Company’s common stock at an exercise price of $6.00 per share (the “Crom Warrant”).

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.

* 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