# EDGAR Filing Document

**Accession Number:** 0001883835
**File Stem:** 0001520138-26-000169
**Filing Date:** 2026-5
**Character Count:** 51464
**Document Hash:** 297c2c596584ce43ff6555a7b78336eb
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001520138-26-000169.hdr.sgml**: 20260515

**ACCESSION NUMBER**: 0001520138-26-000169

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 55

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260515

**DATE AS OF CHANGE**: 20260515

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ESG Inc.
- **CENTRAL INDEX KEY:** 0001883835
- **STANDARD INDUSTRIAL CLASSIFICATION:** AGRICULTURE PRODUCTION - CROPS [0100]
- **ORGANIZATION NAME:** 08 Industrial Applications and Services
- **EIN:** 871918342
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-56532
- **FILM NUMBER:** 26983722

**BUSINESS ADDRESS:**
- **STREET 1:** 433 EAST HILLENDALE RD.
- **CITY:** CHADDS FORD
- **STATE:** PA
- **ZIP:** 19317
- **BUSINESS PHONE:** 267-467-5871

**MAIL ADDRESS:**
- **STREET 1:** 433 EAST HILLENDALE RD.
- **CITY:** CHADDS FORD
- **STATE:** PA
- **ZIP:** 19317

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** PLASMA INNOVATIVE INC.
- **DATE OF NAME CHANGE:** 20210920

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

Washington, D.C. 20549

**FORM 10-Q**

&nbsp;&nbsp;&nbsp;&nbsp;☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934

**For the quarterly period ended March 31, 2026**

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

**Commission File Number: 000-56532**

**ESG INC.**

(Exact name of registrant as specified in its charter)

---

| | |
|:---|:---|
| **Nevada** | **87-1918342** |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |

---

433 East Hillendale Road, Chadds Ford, PA 19317

(Address of Principal Executive Offices) (Zip Code)

267-467-5871

(Registrant's telephone number, including area code)

N/A

(Former Name, former address and former fiscal year, if changed since last report)

Securities registered under Section 12(b) of the Exchange Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 25,908,268 common shares issued and outstanding as of May 14, 2026.

**ESG INC.**

**QUARTERLY REPORT ON FORM 10-Q**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| [PART I](#a_001) | [FINANCIAL INFORMATION](#a_001) |  |
| [Item 1.](#a_002) | [Financial Statements (Unaudited)](#a_002) | [F-1](#a_002) |
| [Item 2.](#a_003) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#a_003) | [3](#a_003) |
| [Item 3.](#a_004) | [Quantitative and Qualitative Disclosures About Market Risk](#a_004) | [4](#a_004) |
| [Item 4.](#a_005) | [Controls and Procedures](#a_005) | [4](#a_005) |
| [PART II](#a_006) | [OTHER INFORMATION](#a_006) | [5](#a_006) |
| [Item 1.](#a_007) | [Legal Proceedings](#a_007) | [5](#a_007) |
| [Item 1A.](#a_008) | [Risk Factors](#a_008) | [5](#a_008) |
| [Item 2.](#a_009) | [Unregistered Sales of Equity Securities and Use of Proceeds](#a_009) | [5](#a_009) |
| [Item 3.](#a_010) | [Defaults Upon Senior Securities](#a_010) | [5](#a_010) |
| [Item 4.](#a_011) | [Mine Safety Disclosures](#a_011) | [5](#a_011) |
| [Item 5.](#a_012) | [Other Information](#a_012) | [5](#a_012) |
| [Item 6.](#a_013) | [Exhibits](#a_013) | [5](#a_013) |
|  | [Signatures](#a_014) | [6](#a_014) |

---

**PART I. FINANCIAL INFORMATION**

**Item 1. Financial Statements.**

**ESG INC.**

**Consolidated Balance Sheet**

---

| | | |
|:---|:---|:---|
|  | **March 31,**<br>**2026**<br> **(Unaudited)** | **December 31,**<br>**2025<br> (Audited)** |
| **Assets** |  |  |
| Current Assets |  |  |
| Cash | $168479 | $42978 |
| Restricted cash | 37912 | 36892 |
| Accounts receivable | 3089551 | 3223334 |
| Inventories | 113891 | 112250 |
| Other receivable | 438781 | 432458 |
| Advance to suppliers | 849392 | 837152 |
| Value added tax receivable, current | 2104253 | 2104253 |
| Total Current Assets | 6802259 | 6789318 |
| Property, plant and equipment, net | 16072133 | 16313411 |
| Intangible assets, net | 3018625 | 2992157 |
| Value added tax receivable | 880901 | 838274 |
| Total Non-current Assets | 19971659 | 20143842 |
| **Total Assets** | $26773918 | $26933159 |
| **Liabilities and Shareholders' Equity** |  |  |
| Current Liabilities |  |  |
| Short-term bank loans | $6236675 | $6146809 |
| Convertible notes payable | 475000 | $275000 |
| Accounts payable | 1561724 | 1534421 |
| Accrued expenses and other current liabilities | 5291184 | 5030921 |
| Deferred income, current | 110590 | 110590 |
| Total Current liabilities | 13675173 | 13097741 |
| Deferred income | 1012878 | 1022465 |
| Long-term payable | 931513 | 960836 |
| Total Noncurrent liabilities | 1944391 | 1983301 |
| **Total Liabilities** | 15619564 | 15081041 |
| **Commitments and Contingencies** |  |  |
| **Shareholders' Equity** |  |  |
| Common stock ($0.001 par value; 65,000,000 shares authorized; 25,902,268 shares issued and outstanding as of March 31, 2026 and 25,899,468 issued and outstanding as of December 31, 2025, respectively) | 25903 | 25900 |
| Additional paid in capital | 11164106 | 11152388 |
| Accumulated comprehensive income (loss) | (180791) | (310877) |
| Accumulated deficit | (2798132) | (2115918) |
| Total Company stockholders' Equity | 8211086 | 8751493 |
| Noncontrolling interest | 2943268 | 3100625 |
| Total Equity | 11154354 | 11852118 |
| **Total Liabilities and Stockholders' Equity** | $26773918 | $26933159 |

---

The accompanying notes are an integral part of these unaudited consolidated financial statements.

**ESG INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **For the three months ended** | **For the three months ended** |
|  | **March 31, 2026** | **March 31, 2025** |
| Revenues | $- | 1587144 |
| Cost of goods sold |  | 1506212 |
| Gross profit | - | 80932 |
| Operating expenses |  |  |
| Selling, General and administrative expense | 787081 | 289330 |
| Research and development cost |  | 66323 |
| Total operating expenses | 787081 | 355653 |
| Income (Loss) from operations | (787081) | (274721) |
| Non-operating income (expense) |  |  |
| Interest expense | (123011) | (130402) |
| Other Income | 26043 | 128970 |
| Total non-operating income (expenses), net | (96969) | (1432) |
| Income (Loss) before income taxes | (884050) | (276153) |
| Income taxes | - |  |
| Net income (loss) | (884050) | (276153) |
| Less: income (loss) attributable to noncontrolling interest | (201836) | (63489) |
| Net income (loss) to ESG Inc. | $(682214) | (212664) |
| Other comprehensive item |  |  |
| Foreign currency translation gain (loss) attributable to the Company | 130086 | 291886 |
| Foreign currency translation gain (loss) attributable to noncontrolling interest | 44479 | 99802 |
| Comprehensive income (loss) attributable to the Company | (552128) | 79222 |
| Comprehensive income (loss) attributable to noncontrolling interest | (157357) | 36313 |
| Net income (loss) per share - basic and diluted | $(0.03) | $(0.01) |
| Weighted average shares outstanding - basic and diluted | 25902268 | 25899468 |

---

The accompanying notes are an integral part of these unaudited consolidated financial statements.

**ESG INC.**

**CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Common stock** | **Common stock** | | | | | | |
|  | **Share** | **Amount** | **Additional paid aid-in**<br>**capital** | **Accumulated income**<br>**(deficit)** | **Accumulated other comprehensive**<br>**income** | **Total Company's**<br>**equity** | **Noncontrolling**<br>**interest** |<br>**Total** |
| **Balance at December 31, 2024** | 25899468 | $25900 | $11152388 | $(168600) | $(711270) | 10298418 | $3519577 | $13817995 |
| **Net income** |  |  |  | (212664) |  | (212664) | (63489) | (276153) |
| **Foreign currency translation adjustment** | - | - | - | - | 291886 | 291886 | 99802 | 391688 |
| **Balance at March 31, 2025** | 25899468 | $25900 | $11152388 | $(381264) | $(419384) | 10377640 | $3555890 | $13933530 |
| **Balance at December 31, 2025** | 25899468 | $25900 | $11152388 | $(2115918) | $(310877) | 8751493 | $3100625 | $11852118 |
| **Net income** |  |  |  | (682214) |  | (682214) | (201836) | (884050) |
| **Foreign currency translation adjustment** |  |  |  |  | 130086 | 130086 | 44479 | 174565 |
| **issue new shares (2,800 common shares)** | 2800 | 3 | 11718 | - | - | 11721 | - | - |
| **Balance at March 31, 2026** | 25902268 | $25903 | $11164106 | $(2798132) | $(180791) | 8211086 | $2943268 | $11154354 |

---

The accompanying notes are an integral part of these unaudited consolidated financial statements.

**ESG INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | |
|:---|:---|:---|
|  | **For the three months ended** | **For the three months ended** |
|  | **March 31, 2026** | **March 31, 2025** |
| **Cash flows from operating activities:** |  |  |
| Net income (loss) | $(884050) | $(276153) |
| Adjustments to reconcile loss to net cash used in operating activities: |  |  |
| Depreciation and amortization | 494998 | 456938 |
| Changes in assets and liabilities: |  |  |
| Accounts receivable | (133783) | 450976 |
| Other receivable | 6323 |  |
| Advance to suppliers | 12240 |  |
| Inventories | 1641 | 520144 |
| Value added tax receivable | 42626 |  |
| Notes receivable |  |  |
| Accounts payables | (27303) | (2849351) |
| Other payables |  |  |
| Paybel to related party |  |  |
| Accrued expenses and other current liabilities | (230940) | 72021 |
| Deferred income | 9587 |  |
| Net cash used in operating activities | (708659) | (1625425) |
| **Cash flows from investing activities:** |  |  |
| Acquisition of fixed assets |  | (88321) |
| Net cash used in investing activities |  | (88321) |
| **Cash flows from financing activities:** |  |  |
| Proceeds of convertible notes | 200000 |  |
| Repayment of bank loans |  | (194627) |
| Proceeds of non-bank loans | - | 1611350 |
| Net cash used in financing activities | 200000 | 1416723 |
| **Effect of exchange rate changes on cash** | 635180 | 307851 |
| **Net increase (decrease) in cash** | 126521 | 10828 |
| **Cash, beginning of year** | 79870 | 166741 |
| **Cash, end of year** | $206391 | $177569 |
| **Supplemental disclosures of cash flow information:** |  |  |
| Cash paid for interest | - | $76639 |
| Cash paid for income tax | - | - |

---

The accompanying notes are an integral part of these unaudited consolidated financial statements.

**NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS**

**Note 1 - Basis of Presentation**

The accompanying unaudited consolidated financial statements include the accounts of ESG Inc. and its subsidiaries (collectively, the "Company," "ESG," "we," "us" or "our"). In the opinion of management, the unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company's financial position and results of operations for the periods presented. These unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2025.

Proposed Split-Off of China Operations

On April 10, 2026, after the balance sheet date, the Company entered into a Split-Off and Share Exchange Agreement relating to the proposed split-off of ESG China Limited and the Company's China operations. Because the agreement was entered into after March 31, 2026 and the proposed transaction had not closed as of March 31, 2026, the Company has not classified the China operations as held for sale or discontinued operations in these unaudited consolidated financial statements. The proposed split-off is disclosed as a subsequent event. The Company will continue to evaluate the accounting presentation in future reporting periods.

Correction of Immaterial Error in Previously Issued Financial Statements

During the preparation of the Company's consolidated financial statements, management identified certain intercompany revenue and corresponding cost of revenue for the year ended December 31, 2025 that were not eliminated in consolidation. The correction reduced consolidated revenue and cost of revenue by approximately $1,749,093 for the year ended December 31, 2025, with no impact on gross profit, loss from operations, net loss, loss per share, total assets, total liabilities, stockholders' equity, or cash flows. Management evaluated the correction under SAB 99 and SAB 108 and concluded that the correction was not material to the previously issued consolidated financial statements. Accordingly, the Company has not restated its previously issued consolidated financial statements.

**Note 2 - Going Concern**

The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As of March 31, 2026, the Company had limited cash, recurring losses and a working capital deficiency. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management is pursuing additional financing and business development activities, including North America product commercialization initiatives, but there can be no assurance that such efforts will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Note 3 - Revenue**

The Company generated no revenue during the three months ended March 31, 2026, compared to $1,587,144 during the three months ended March 31, 2025. The absence of revenue in 2026 was primarily due to the suspension of the Company's PRC mushroom operations during the period.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | Three Months Ended | Three Months Ended | % of Total Revenue | % of Total Revenue |
| Geographic | Products | March 31,<br> 2026 | March 31,<br> 2025 | March 31,<br> 2026 | March 31,<br> 2025 |
| China, mainland | Compost III | $- | $111778 |  | 7.0% |
| China, mainland | White Button Mushroom |  | 393648 |  | 24.8% |
| Hong Kong, China | Mushroom powder seasonings | - | 1081718 |  | 68.2% |
| Total | Total net sales | $- | $1587144 |  | 100% |

---

**Note 4 - Concentrations**

For the three months ended March 31, 2025, three customers individually represented 10% or more of total sales, accounting for approximately 11.0%, 12.6% and 68.2% of total sales. The Company had no sales during the three months ended March 31, 2026. As of March 31, 2026 and March 31, 2025, one customer accounted for approximately 80.9% and 93.9%, respectively, of accounts receivable.

**Note 5 – Inventories**

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | December 31, 2025 |
| raw materials | $11206 | $11044 |
| Consumable supplies | 102685 | 101206 |
| finished goods |  |  |
| work in progress | - | - |
| Total inventories | $113891 | $112250 |

---

**Note 6 - Property, Plant and Equipment, Net**

The following tables show the Company's consolidated financial statement details as of March 31, 2026 and December 31, 2025:

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | December 31, 2025 |
| Gross property, plant and equipment | $26548100 | $26165580 |
| Accumulated depreciation | (10475967) | (9852169) |
| Total property, plant and equipment, net | $16072133 | $16313411 |

---

As of March 31, 2026 and December 31, 2025, certain buildings and improvements were pledged as collateral for bank loans, respectively.

**Note 7 - Accounts Receivable**

Accounts receivable were $3,089,551 and $3,223,334 as of March 31, 2026 and December 31, 2025, respectively. Most accounts receivable related to mushroom powder seasoning sales. The collectability and timing of collection remain subject to customer payment performance and the operating and liquidity conditions of the PRC business.

**Note 8** - **Accrued expenses and other current liabilities**

---

| | | |
|:---|:---|:---|
|  | March 31, 2026 | December 31, 2025 |
| Advances from customers | $217887 | $214747 |
| Salary payable | 95160 | 93789 |
| Interest payable | 228885 | 149183 |
| Tax payable | 43834 | 27966 |
| Other payables | 4534269 | 4366441 |
| Long-term payable, current portion | 171148 | 178793 |
| Total | $5291184 | $5030921 |

---

As of March 31, 2026, the Company had $4,534,269 of other payables, including $1,740,467 of loans and related interest from Funan Agricultural Investment Co., Ltd. and Funan Business Financing Service Center, $1,256,327 of loans from private funds, and $1,451,840 of amounts payable to the owner of Funan Zhihua Mushroom Co., Ltd.

As of December 31, 2025, the Company has $4,366,441 of other payables, 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.

**Note 9 - Bank Loans**

Short-term bank loans consisted of the following:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | 03/31/2026 | Interest rate | Due date | 12/312025 | Interest rate | Due date |
| Agricultural Bank of China Funan Branch (1) | 725195 | 4.65% | 04/01/26 | 714746 | 4.65% | 04/02/26 |
| Anhui Funan Rural Commercial Bank (2) | 2030545 | 5.60% | 12/19/26 | 2001287 | 5.60% | 12/20/26 |
| Anhui Funan Rural Commercial Bank (3) | 1450389 | 5.60% | 03/23/27 | 1429490 | 5.60% | 03/24/26 |
| Anhui Funan Rural Commercial Bank (4) | 870234 | 5.60% | 01/14/27 | 857694 | 5.60% | 01/15/26 |
| Bank of China Funan Branch (5) | 1160312 | 3.60% | 03/12/27 | 1143592 | 3.60% | 03/13/26 |
| Total | $6236675 |  |  | $6146809 |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Loans are guaranteed by the founder
of AUFP and SME Guarantee Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Loans are guaranteed by legal representative,
the founder, and one shareholder of AUFP, ESG Hainan and SME Guarantee Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;(3) Loans are guaranteed by legal representative,
and the founder of AUFP, AUFP and SME Guarantee Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Loans were guaranteed by legal representative
and the founder of AUFP, AUFP and SME Guarantee Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;(5) $1,160,312 and $1,143,592 of loans
from Bank of China were pledged by buildings as of March 31, 2026, and December 31, 2025, respectively.

**Note 10 - Income Taxes**

The income tax provision of the Company was zero for the three months ended March 31, 2026 and 2025. Certain PRC agricultural products, including Compost III and white button mushrooms, are eligible for income tax or value-added tax exemptions. The Company continues to maintain a valuation allowance against deferred tax assets where realization is uncertain due to the losses incurred.

**Note 11 - Segment Information**

The following table shows information by reportable segment for the three months ended March 31, 2026 and March 31, 2025:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | White button<br> mushroom | Compost III | Mushroom <br> powder<br> seasonings | Corporate | Eliminations | Total |
| **March 31, 2026** |  |  |  |  |  |  |
| Net operating revenues: |  |  |  |  |  |  |
| Third party |  |  |  | $- | $- |  |
| Intersegment |  |  |  |  |  |  |
| Total net operating revenues |  |  |  |  |  |  |
| Cost of goods sold |  |  |  |  |  |  |
| Selling, general administrative expenses | 62978 | 25509 | 606679 | 91915 |  | 787081 |
| Research and development |  |  |  |  |  |  |
| Operating income (loss) | (62978) | (25509) | (606679) | (91915) |  | (787081) |
| Interest income (expense) | (64993) | (8858) | (49160) |  |  | (123011) |
| Other income (loss) — net | 14443 | 1264 | 10336 | - | - | 26043 |
| Income before income taxes | $(113528) | $(33104) | $(645503) | $(91915) | - | $(884050) |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | White button<br> mushroom | Compost III | Mushroom<br> powder<br> seasonings | Corporate | Eliminations | Total |
| **March 31, 2025** | **March 31, 2025** |  |  |  |  |  |
| Net operating revenues: |  |  |  |  |  |  |
| Third party | $393648 | $111778 | $1081718 | $- | $- | $1587144 |
| Intersegment | 993081 | 207498 |  |  | (1200579) |  |
| Total net operating revenues | 1386729 | 319276 | 1081718 |  |  | 2787723 |
| Cost of goods sold | (200137) | (146568) | (1159507) |  |  | (1506212) |
| Intersegment cost of goods sold | (207498) |  | (228978) |  | 436476 |  |
| Total net operating cost | (407635) | (146568) | (1388485) |  |  | (1942688) |
| Selling, general administrative expenses | (44758) | (6468) | (211123) | (26981) |  | (289330) |
| Research and development | (36755) | (29568) |  |  |  | (66323) |
| Operating income (loss) | 111998 | (70826) | (288912) | (26981) |  | (274721) |
| Interest income (expense) | (89930) | (10084) | (30388) |  |  | (130402) |
| Other income (loss) — net | 31194 | 83727 | 14049 |  |  | 128970 |
| Income before income taxes | $53262 | $2817 | $(305251) | $(26981) | $- | $(276153) |

---

**Note 12 -** Convertible Notes, Warrants and Potential Dilution

Convertible notes payable were $475,000 and $275,000 as of March 31, 2026 and December 31, 2025, respectively. On August 5, 2025, the Company issued a convertible promissory note in the principal amount of $275,000 to Labrys Fund II, L.P. for an aggregate cash purchase price of $250,000 and issued a warrant to purchase 45,833 shares at an initial exercise price of $6.00 per share.

On February 6, 2026, the holder of the Labrys note converted $11,720.52 of accrued interest and fees into 2,800 shares of the Company's common stock at a conversion price of $4.1859 per share. The conversion reduced the Company's accrued liabilities and increased common stock and additional paid-in capital.

On March 6, 2026 and March 9, 2026, the Company issued convertible promissory notes in the principal amount of $110,000 each to Monroe Street Capital Partners, LP and Crom Structured Opportunities Fund I, LP, respectively. In connection with the issuance of the notes, the Company also issued warrants to each investor to purchase 18,333 shares of common stock at an exercise price of $6.00 per share.

The convertible notes and warrants may result in the issuance of additional shares of common stock upon conversion or exercise and therefore may have a dilutive effect on the Company's existing stockholders. For the period ended March 31, 2026, the Company incurred a net loss; accordingly, the effect of the convertible notes, warrants and other potentially dilutive securities was anti-dilutive and excluded from the calculation of diluted loss per share. Therefore, basic and diluted loss per share were the same for the period presented.

**Note 13 - Commitments and Contingencies**

The Company's PRC operating subsidiaries and affiliates have been involved in several supplier and contract payment disputes arising after the suspension of PRC mushroom operations and related liquidity constraints. These matters primarily relate to raw material, straw, construction, deposit refund and similar operating payables, several of which have been resolved by court-mediated settlements, judgments or staged payment arrangements. Management believes the liabilities related to these matters have been accrued, continues to monitor compliance with applicable settlements and judgments, and is evaluating any further enforcement exposure.

**Note 14 - Subsequent Events**

On April 10, 2026, the Company entered into a Split-Off and Share Exchange Agreement providing for the proposed split-off of ESG China Limited and the Company's China operations in exchange for the surrender, redemption, retirement and cancellation of 10,432,800 shares of the Company's common stock, subject to the terms and closing conditions described therein, including completion of the applicable Schedule 14C process and waiting period. Because the proposed transaction occurred after March 31, 2026 and had not closed as of the date of these unaudited consolidated financial statements, the Company has not reflected the China operations as discontinued operations as of March 31, 2026. If consummated, the transaction is expected to materially change the Company's asset base, liabilities, historical operations, revenue sources and liquidity profile. The Company will evaluate discontinued operations presentation and related pro forma or other disclosure requirements in the reporting period in which the applicable criteria are met.

The Company's consolidated financial statements as of March 31, 2026 continue to include the assets, liabilities and operating results of the China operations because the proposed split-off had not been completed as of the balance sheet date or the date of issuance of these unaudited consolidated financial statements. If consummated, the proposed split-off would significantly reduce the Company's historical operating assets, liabilities and revenue-generating activities associated with the PRC operations and the Company would become substantially dependent on its North America operations and its ability to obtain additional financing. The proposed transaction may also materially affect the Company's future liquidity, cash flows and going concern evaluation. There can be no assurance that the proposed split-off or related strategic repositioning efforts will be completed successfully.

On April 13, 2026, the holder of the Labrys note converted $10,080 of accrued interest and fees into 6,000 shares of the Company's common stock at a conversion price of $1.68 per share.

**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

You should read the following discussion and analysis together with the unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

**Forward-Looking Statements**

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding our plans, expectations, financing needs, operating strategy, possible split-off of China operations, North America product development and commercialization, and other future events. These statements are based on current expectations and assumptions and involve risks and uncertainties. Actual results may differ materially from those expressed or implied by forward-looking statements. We undertake no obligation to update forward-looking statements except as required by law.

**Overview**

ESG Inc. is a Nevada holding company. Historically, the Company conducted substantially all operations through PRC subsidiaries engaged in mushroom composting, cultivation and processing. During the three months ended March 31, 2026, the PRC mushroom operations remained suspended and generated no revenue. The suspension, together with liquidity constraints and supplier payable matters, materially affected the Company's results of operations and cash flows.

The Company is pursuing a strategic repositioning toward North America food operations, including mushroom-based snacks and alternative protein products through ESG Provisions, Inc. In the first quarter of 2026, the Company entered into financing transactions with Monroe Street Capital Partners, LP and Crom Structured Opportunities Fund I, LP and completed a limited conversion of accrued interest and fees under the Labrys note.

After quarter-end, the Company entered into a Split-Off and Share Exchange Agreement relating to its China operations, as described in Note 14. As of March 31, 2026, the Company continued to consolidate the China operations. Because the proposed split-off was entered into after quarter-end and had not closed as of March 31, 2026, the China operations are not presented as held for sale or discontinued operations in this Quarterly Report. The Company expects to reassess the presentation in future reporting periods if and when the transaction satisfies the applicable accounting criteria.

**Results of Operations**

**Comparison of the three months ended March 31, 2026 and 2025**

Revenue

For the three months ended March 31, 2026, the Company generated no revenue, compared to revenue of $1,587,144 for the three months ended March 31, 2025. The decrease was primarily due to the suspension of the PRC mushroom operations during the 2026 period.

Cost of Goods Sold and Gross Profit

Cost of goods sold was $0 for the three months ended March 31, 2026, compared to $1,506,212 for the three months ended March 31, 2025. Gross profit was $0 for the three months ended March 31, 2026, compared to $80,932 for the 2025 period. The decrease was consistent with the absence of revenue during the 2026 period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $497,751 or 172.0%, to 787,081 for the three months ended March 31, 2026 from $289,330 for the three months ended March 31, 2025. The increase was primarily attributable to the classification of depreciation expense related to property, plant and equipment as selling, general and administrative expense during the suspension of production operations, together with public company and administrative costs.

Research and Development Expenses

Research and development expenses were $0 for the three months ended March 31, 2026, compared to $66,323 for the comparable 2025 period, due to the suspension of research and testing activities related to the PRC operations.

Interest Expense

Interest expense decreased by $7,391, or 5.7%, to $123,011 for the three months ended March 31, 2026 from $130,402 for the three months ended March 31, 2025.

Other Income

Other income decreased by $102,927, or 79.8%, to $26,043 for the three months ended March 31, 2026 from $128,970 for the three months ended March 31, 2025, primarily due to reduced government grant and subsidy income.

Net Loss

Net loss was $884,050 for the three months ended March 31, 2026, compared to $276,153 for the three months ended March 31, 2025. Net loss attributable to ESG Inc. was $682,214 for the three months ended March 31, 2026, compared to $212,664 for the three months ended March 31, 2025.

**Liquidity and Capital Resources**

As of March 31, 2026, the Company had cash of $206,391 and a working capital deficiency of approximately $6.9 million. Current liabilities included $6.2 million of short-term bank loans, $475,000 of convertible notes payable, $1.6 million of accounts payable, $110,590 of current deferred income and $5.3 million of accrued expenses and other current liabilities. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

The Company does not believe that its existing cash will be sufficient to fund operations and obligations for the next twelve months. The Company will need additional financing through debt, equity or strategic transactions. Financing may not be available on acceptable terms, or at all, and may involve dilution, restrictive covenants or other limitations.

Cash Flows from Operating Activities

Net cash used in operating activities was $708,659 for the three months ended March 31, 2026, compared to $1,625,425 for the three months ended March 31, 2025. The decrease in cash used was primarily attributable to lower accounts payable reductions for the three months ended March 31, 2026.

Cash Flows from Investing Activities

Net cash used in investing activities was $0 for the three months ended March 31, 2026, compared to $88,321 for the three months ended March 31, 2025. The decrease was due to no purchases of property, plant and equipment during the 2026 period.

Cash Flows from Financing Activities

Net cash provided by financing activities was $200,000 for the three months ended March 31, 2026, compared to $1,416,723 for the three months ended March 31, 2025. During the 2026 period, the Company received $200,000 in aggregate gross proceeds from convertible note financings.

**Off-Balance Sheet Arrangements**

The Company had no off-balance sheet arrangements as of March 31, 2026 that management believes are reasonably likely to have a current or future material effect on the Company's financial condition or results of operations.

**Recently Issued Accounting Pronouncements**

Management continues to evaluate recently issued accounting standards, including ASU 2024-03 relating to disaggregation of income statement expenses and ASU 2023-09 relating to income tax disclosures. The Company does not expect these standards to have a material impact on its financial statements upon adoption, although they may require additional disclosures.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk.**

As a smaller reporting company, the Company is not required to provide the information required by this Item.

**Item 4. Controls and Procedures.**

**Evaluation of Disclosure Controls and Procedures**

In connection with the preparation of this Form 10-Q, management, with the participation of the Company's principal executive officer and principal financial and accounting officer, evaluated the effectiveness of the Company's disclosure controls and procedures as of March 31, 2026. Based on that evaluation, management concluded that the Company's disclosure controls and procedures were not effective as of March 31, 2026.

**Changes in Internal Control over Financial Reporting**

During the three months ended March 31, 2026, there were no changes in the Company's internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

**Limitations on Effectiveness of Controls**

A control system can provide only reasonable, not absolute, assurance that its objectives are met. Because of inherent limitations, no evaluation of controls can provide absolute assurance that all control issues, errors or fraud, if any, have been detected.

**PART II. OTHER INFORMATION**

**Item 1. Legal Proceedings**

The Company's PRC operating subsidiaries and affiliates have been involved in supplier and contract payment disputes arising from unpaid amounts owed to vendors following the suspension of PRC mushroom operations and related liquidity constraints. These matters are summarized in Note 13 to the unaudited consolidated financial statements and in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. Management believes the related liabilities have been accrued and continues to monitor settlement, judgment and enforcement exposure.

**Item 1A. Risk Factors**

As a smaller reporting company, the Company is not required to provide the information required by this Item. There have been no material changes from the risk factors disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2025, except that investors should consider the Company's continuing liquidity constraints, suspension of PRC operations, proposed split-off of China operations and early-stage North America product commercialization plans.

**Item 2. Unregistered Sales of Equity Securities and Use of Proceeds**

On February 6, 2026, the holder of the Labrys note converted $11,720.52 of accrued interest and fees into 2,800 shares of common stock at a conversion price of $4.1859 per share. On March 6, 2026 and March 9, 2026, the Company issued convertible promissory notes in the principal amount of $110,000 each to Monroe Street Capital Partners, LP and Crom Structured Opportunities Fund I, LP, respectively, and issued warrants to purchase 18,333 shares to each investor at an exercise price of $6.00 per share. These securities were issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D.

**Item 3. Defaults Upon Senior Securities**

None.

**Item 4. Mine Safety Disclosures**

Not applicable.

**Item 5. Other Information**

On February 6, 2026, the Company entered into transactions relating to the Moku brand and continued to evaluate North America mushroom-based snack opportunities. On April 10, 2026, after the quarter-end, the Company entered into a Split-Off and Share Exchange Agreement relating to the proposed split-off of its China operations and disclosed intended continuing North America activities through ESG Provisions, Inc. These matters are summarized in Note 14.

**Item 6. Exhibits**

---

| | |
|:---|:---|
| **Exhibit** | **Description** |
| 3.1 | Articles of Incorporation (incorporated by reference to prior filings). |
| 3.2 | Agreement and Plan of Merger by and between Plasma Innovative Inc. and ESG Inc. (incorporated by reference). |
| 3.3 | Articles of Merger between Plasma Innovative Inc. and ESG Inc. (incorporated by reference). |
| 3.4 | Bylaws of the Company (incorporated by reference). |
| 10.1 | Technology Assignment Agreement by and between Plasma Innovative Inc. and Hanliang Shao (incorporated by reference). |
| 10.2 | Investment and Cooperation Agreement with Funan Agricultural Recycling Investment Co. Ltd. (incorporated by reference). |
| 10.3 | Share Exchange Agreement between ESG Inc. and Funan Allied United Farmer Products Co., Ltd. dated September 28, 2023 (incorporated by reference). |
| 10.4 | Share Exchange Agreement between Plasma Innovative Inc. and ESG Inc. dated November 6, 2023 (incorporated by reference). |
| 10.5 | Securities Purchase Agreement, Convertible Promissory Note and Warrant with Monroe Street Capital Partners, LP (incorporated by reference to the Form 8-K filed March 12, 2026). |
| 10.6 | Securities Purchase Agreement, Convertible Promissory Note and Warrant with Crom Structured Opportunities Fund I, LP (incorporated by reference to the Form 8-K filed March 12, 2026). |
| [31.1\*](esgh-20260331_10qex31z1.htm) | [Certification of Principal Executive Officer pursuant to Rule 13a-14(a).](esgh-20260331_10qex31z1.htm) |
| [31.2\*](esgh-20260331_10qex31z2.htm) | [Certification of Principal Financial and Accounting Officer pursuant to Rule 13a-14(a).](esgh-20260331_10qex31z2.htm) |
| [32.1\*](esgh-20260331_10qex32z1.htm) | [Certification pursuant to 18 U.S.C. Section 1350.](esgh-20260331_10qex32z1.htm) |
| [32.2\*](esgh-20260331_10qex32z2.htm) | [Certification pursuant to 18 U.S.C. Section 1350.](esgh-20260331_10qex32z2.htm) |
| 101\* | Inline XBRL documents. |
| 104\* | Cover Page Interactive Data File. |

---

\* Filed herewith.

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| **ESG INC.** | **ESG INC.** |
| Date: May 15, 2026 | Date: May 15, 2026 |
| By: | /s/ Zhi Yang |
| Name: Zhi Yang | Name: Zhi Yang |
| Title: Chief Executive Officer | Title: Chief Executive Officer |
| (Principal Executive Officer) | (Principal Executive Officer) |
| By: | /s/ Edward F. Gobora |
| Name: Edward F. Gobora | Name: Edward F. Gobora |
| Title: Chief Financial Officer | Title: Chief Financial Officer |
| (Principal Financial and Accounting Officer) | (Principal Financial and Accounting Officer) |

---

## Ex-31

**EXHIBIT 31.1**

**CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER**

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Zhi Yang, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q (this "report") of ESG Inc. (the "registrant");

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;

4. As the registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| /s/ *Zhi Yang* |
| Zhi Yang |
| President and Chief Executive Officer |
| (Principal Executive Officer) |
| Date: May 15, 2026 |

---

## Ex-31

**EXHIBIT 31.2**

**CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Edward Gobora, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q (this "report") of ESG Inc. (the "registrant");

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;

4. As the registrant's certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| |
|:---|
| /s/ *Edward Gobora* |
| Edward Gobora |
| Chief Financial Officer |
| (Principal Financial Officer) |
| Date: May 15, 2026 |

---

## Ex-32

**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 the Quarterly Report on Form 10-Q of ESG Inc. (the "Company") for the period ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, the undersigned President and Chief Executive Officer of the Company, certify, to the best knowledge and belief, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 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 required by Section 906 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.

---

| |
|:---|
| /s/ *Zhi Yang* |
| Zhi Yang |
| President and Chief Executive Officer |
| (Principal Executive Officer) |
| Date: May 15, 2026 |

---

## Ex-32

**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 the Quarterly Report on Form 10-Q of ESG Inc. (the "Company") for the period ended March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the "Report") I, the undersigned Chief Financial Officer of the Company, certify, to the best knowledge and belief of the signatory, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 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 required by Section 906 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.

---

| |
|:---|
| /s/ *Edward Gobora* |
| Edward Gobora |
| Chief Financial Officer |
| (Principal Financial Officer) |
| Date: May 15, 2026 |

---