ESG Inc.

What they do

ESG Inc. is a Nevada holding company. Through its 74.52% owned Chinese subsidiary AUFP and its affiliates Anhui Allied United Mushroom Technology Co., Ltd. and Anhui Allied United Mushroom Co., Ltd., it was engaged in mushroom composting, cultivation and processing. As of March 31, 2026, these PRC operations are suspended and generated no revenue. The company is pursuing a strategic repositioning toward North America food operations, including mushroom-based snacks and alternative protein products through ESG Provisions, Inc.

Revenue drivers

• Mushroom products (China operations) — In fiscal 2025, revenue was $7.5M, down from $21.4M in 2024. For the three months ended March 31, 2025, revenue was $1.6M, with cost of goods sold of $1.5M and gross profit of $80,932. These operations are currently suspended.
• Distribution in China — Key customers in fiscal 2024 were a distributor in Hefei, China and a processor in Fujian province, China. The company's reliance on a small number of customers/distributors may cause quarterly revenue inconsistency.

Recent performance

For the three months ended March 31, 2026, the company generated zero revenue, compared to $1,587,144 in the same period of 2025, due to the suspension of PRC mushroom operations. Cost of goods sold was $0, and gross profit was $0, versus $80,932 in the prior year period. SG&A expenses increased 172% to $787,081 from $289,330. Net loss attributable to ESG Inc. was $682,214 for Q1 2026, compared to $212,664 in Q1 2025. As of March 31, 2026, cash was $206,391 with a working capital deficiency of about $6.9 million.

Strategy

Management is pursuing a strategic repositioning toward North America food operations, focusing on mushroom-based snacks and alternative protein products through ESG Provisions, Inc. The company entered into financing transactions with Monroe Street Capital Partners, LP and Crom Structured Opportunities Fund I, LP in Q1 2026 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, though it had not closed as of March 31, 2026 and China operations are still consolidated. The company expects to reassess presentation of China operations in future periods if the transaction meets accounting criteria.

Risks

• Going concern substantial doubt — As of March 31, 2026, the company had only $206,391 cash and a working capital deficiency of ~$6.9 million, raising substantial doubt about its ability to continue as a going concern.
• No revenue from suspended China operations — PRC mushroom operations remained suspended during Q1 2026 and generated no revenue, causing a complete loss of revenue versus the prior year.
• Key customer concentration — In fiscal 2024, the company relied on a distributor in Hefei and a processor in Fujian province; losing either would materially hurt revenue and profitability.
• Regulatory and legal risks in China — The company is subject to PRC food safety laws and CSRC filing requirements for overseas listings; failure to comply could incur significant costs and penalties.

Outlook

Management expects to need additional financing through debt, equity or strategic transactions, as existing cash is not sufficient to fund operations for the next twelve months. The company is pursuing the split-off of its China operations and the development of North America food products, but there is no assurance financing will be available on acceptable terms. The company expects to reassess the classification of China operations in future reporting periods if the split-off satisfies accounting criteria.