ESGH

ESG Inc.

OTC · CONSUMER STAPLES · AGRICULTURAL PRODUCTION-CROPS

2.78

−0.02 −0.71%

USD · close Oct 23

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MKT CAP $43.3MP/E —DIV YIELD —FCF YIELD —REV TTM —NET INCOME −$3.1M −285.8%NET DEBT $1.1M52W 0.85 – 5.53SEC XBRL · TTM TO Invalid Date

How ESGH rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

87%

of sentences unchanged

Added

new sentences

Dropped

sentences removed

Length

+99

words, now 13,378

New in FY2025

In 2024, we improved efficiency with current facilities, the revenue of fresh mushroom reached USD 5.86 million and the processing revenue of fresh mushroom reached USD 3.94 million, respectfully; on the other side, we were expanding our composting facilities to generate compost sale revenue of USD 2.88 million in 2024.
In 2025, the revenue was USD 4.58 million due to the suspension of production in the fourth quarter.
Governmental support to the agriculture industry and/or our business may decrease or disappear.
With respect to employees for whom our PRC subsidiaries do not make HPF contributions, our PRC subsidiaries have entered into employment arrangements intended to clarify that compensation includes an amount in lieu of such contributions and that the employees are responsible for their own related housing arrangements.
However, these arrangements may not be sufficient to eliminate the risk that the PRC subsidiaries could be required by the relevant authorities to make full HPF contributions and could face employee claims or other proceedings relating to such contributions.
Although our growing facilities are indoors and operated under monitored environmental controls, we may still experience malfunctions in cooling, airflow, or heating system.
Our farms are required to comply with applicable legal and regulatory requirements.
If we fail to comply with PRC laws relating to food safety, composting, cultivation or related operations, the relevant governmental authorities could require us to suspend or modify operations.
In addition, the quality of our raw materials may affect our ability to meet our internal quality standards and applicable regulatory requirements.
Increases in our raw materials costs may negatively affect our operating results.
Insufficient insurance coverage could expose us to significant costs and business disruption.
This could have a material adverse effect on our financial condition and results of operations.
There are implications of being an emerging growth company.
We will cease to be an emerging growth company upon the earliest of: ● the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common equity securities pursuant to an effective registration statement under the Securities Act; ● the last day of the fiscal year in which our annual gross revenues equal or exceed $1.235 billion; ● the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities; or ● the date on which we become a large accelerated filer, meaning the market value of our common equity held by non-affiliates exceeds $700 million as of the end of our most recently completed second fiscal quarter, we have been subject to the reporting requirements of the Exchange Act for at least twelve calendar months, and we have filed at least one annual report.
Although substantially all of our operations are conducted in China through our subsidiaries, we are a Nevada corporation and our current independent registered public accounting firm is Tang Qian & Associates, PLLC, a Texas-based PCAOB-registered accounting firm engaged on February 18, 2026.
Nevertheless, changes in U.S. or PRC law, regulation, inspection access, data-transfer restrictions, or the cross-border audit environment could adversely affect our reporting obligations, financing activities, and the market for our securities.
New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may: ● Delay or impede our development, ● Result in negative publicity or increase our operating costs, ● Require significant management time and attention, and ● Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices.
The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities.
If an overseas securities company has entered into engagement agreements before the effectuation of the Trial Administrative Measures and is serving in practice as a sponsor or lead underwriter for overseas securities offering and listing by domestic companies, it shall file with the CSRC within 30 working days after the Trial Administrative Measures take effect.
On February 24, 2023, the CSRC promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality and Archives Administration Provisions”), which will also become effective on March 31, 2023.
Given such uncertainty, we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could materially and adversely affect our business, financial condition, and results of operations.
PRC laws and regulations governing our current business operations are sometimes vague and uncertain.
The PRC government also exercises significant control over the PRC’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.
While the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among various sectors of the economy.
Although the People’s Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the U.S.
We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of the stock of our operating company.
PRC individuals who fail to make such registrations may be subject to warnings, fines or other liabilities.
We may not be fully informed of the identities of all our beneficial owners who are PRC residents.
To provide more guidance on the implementation of Circular 82, the State Administration of Taxation issued Bulletin 45, which clarifies certain matters relating to resident status determination, post-determination administration and competent tax authorities.
The State Administration of Taxation has since issued a bulletin to provide more guidance on the implementation of Circular 82.
The M&A Rules, among other things, purport to require CSRC approval prior to the listing and trading on an overseas stock exchange of the securities of an offshore special purpose vehicle established or controlled directly or indirectly by Material PRC Companies or individuals and formed for the purpose of overseas listing through the acquisition of PRC domestic interests held by such Material PRC Companies or individuals.
Risks Related to the Market f or our Stock The OTC and share value Our Common Stock trades over the counter, which may deprive stockholders of the full value of their shares.
In any event, even if our Common Stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the Commission the authority to restrict any person from participating in a distribution of penny stock, if the Commission finds that such a restriction would be in the public interest.
Rule 144 Risks Sales of our Common Stock under Rule 144 could reduce the price of our stock.

Gone since FY2024

In 2024, we improved efficiency with current facilities, the revenue of fresh mushroom reached USD 5.86 million and the processing revenue of fresh mushroom reached USD 3.94 million, respectfully; on the other side, we were expanding our composting facilities to generate compost sale revenue of USD 2.88 million in 2024. - 11 - Governmental support to the agriculture industry and/or our business may decrease or disappear.
Regarding those employees who our PRC subsidiaries make no contribution to HPF, our PRC subsidiaries have employment contracts with them to clarify salary to include contribution and employee has obligation to deal with it by themself.
Although our PRC subsidiaries do this way, they may still potentially be ordered by HPF enforcement authorities to make full contribution, and face litigation by employees in relation to their failure to make full contribution.
Although our growing facilities are indoors under the control of AI monitor, we are still potential to encounter the malfunction of cooling, airflow, and heating system.
Our farms are responsible for complying with the legal requirements.
It is possible that we fail to comply with any PRC law relating to food safety during the composting and growing.
If the governmental agency determines we are not eligible to continue the operation, we will need to pause.
Our farms may also be negatively impacted by bad quality of raw materials so fail to comply with our quality standards. - 12 - Increases in our raw materials costs may negatively affect our operating results.
An insufficient amount of insurance could expose us to significant costs and business disruption.
This could have a material adverse effect on our financial condition and results of operations. - 13 - There are implications of being an emerging growth company.
We would cease to be an emerging growth company upon the earliest of: - the first fiscal year following the fifth anniversary of the filing of Form S-1; - the first fiscal year after our annual gross revenues are $2 billion or more; - the date on which we have, during the previous three-year period, issued more than $2 billion in non-convertible debt securities; or - as of the end of any fiscal year in which the market value of our Common Stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.
New laws, regulations, and other government directives in the PRC may also be costly to comply with, and such compliance or any associated inquiries or investigations or any other government actions may: ● Delay or impede our development, ● Result in negative publicity or increase our operating costs, ● Require significant management time and attention, and ● Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices. - 14 - The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, in each case that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business to ensure compliance, which could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities.
If an overseas securities company has entered into engagement agreements before the effectuation of the Trial Administrative Measures and is serving in practice as a sponsor or lead underwriter for overseas securities offering and listing by domestic companies, it shall file with the CSRC within 30 working days after the Trial Administrative Measures take effect. - 15 - On February 24, 2023, the CSRC promulgated the Provisions on Strengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Companies (the “Confidentiality and Archives Administration Provisions”), which will also become effective on March 31, 2023.
Given such uncertainty, we may be further required to suspend our relevant business, shut down our website, or face other penalties, which could materially and adversely affect our business, financial condition, and results of operations. - 16 - PRC laws and regulations governing our current business operations are sometimes vague and uncertain.
The PRC government also exercises significant control over the PRC’s economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. - 17 - While the Chinese economy has experienced significant growth over past decades, growth has been uneven, both geographically and among various sectors of the economy.
The Renminbi has been unpegged from the U.S. dollar since July 2005 and, although the People’s Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates, the Renminbi may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term.
As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the U.S. - 18 - We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of the stock of our operating company.
PRC individuals who fail to make such registrations may be subject to warnings, fines or other liabilities. - 19 - We may not be fully informed of the identities of all our beneficial owners who are PRC residents.
To provide more guidance on the implementation of Circular 82, the State Administration of Taxation issued Bulletin 45, which clarifies certain matters relating to resident status determination, post-determination administration and competent tax authorities. - 20 - The State Administration of Taxation has since issued a bulletin to provide more guidance on the implementation of Circular 82.
The M&A Rules, among other things, purport to require CSRC approval prior to the listing and trading on an overseas stock exchange of the securities of an offshore special purpose vehicle established or controlled directly or indirectly by Material PRC Companies or individuals and formed for the purpose of overseas listing through the acquisition of PRC domestic interests held by such Material PRC Companies or individuals. - 21 - Risks Related to the Market for our Stock The OTC and share value Our Common Stock trades over the counter, which may deprive stockholders of the full value of their shares.
In any event, even if our Common Stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the Commission the authority to restrict any person from participating in a distribution of penny stock, if the Commission finds that such a restriction would be in the public interest. - 22 - Rule 144 Risks Sales of our Common Stock under Rule 144 could reduce the price of our stock.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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