ESG Inc., a Nevada-based holding company focused on sustainable food production, reported a significant decline in financial performance for the fiscal year ending December 31, 2025. The company generated revenues of $6.1 million, a decrease of 51.7% from $12.7 million in 2024. This drop was primarily attributed to operational disruptions caused by the construction of an Environmental Protection Agency (EPA) compliance facility, which adversely affected production capabilities, particularly in mushroom composting. Consequently, the company recorded an operating loss of $2.25 million compared to an operating profit of $1.69 million in the previous year.
In terms of operational metrics, ESG's production capacity was notably impacted, with no fresh mushroom sales recorded in September 2025 due to compromised compost quality. The cost of goods sold decreased to $5.6 million from $9.1 million, reflecting lower production volumes. However, the gross profit margin fell sharply to 8.5% from 28.0% in 2024, indicating that the company struggled to maintain profitability amid reduced sales and fixed operating costs. The company’s total liabilities stood at $15.1 million, slightly down from $16.0 million in 2024, while total equity decreased to $11.9 million from $13.8 million.
Strategically, ESG has undergone significant organizational changes, including a merger with Funan Allied United Farmer Products Co., Ltd. (AUFP), which became a 74.52% subsidiary. This merger, finalized in late 2023, was part of a broader strategy to enhance the company’s footprint in the sustainable food sector, particularly in mushroom cultivation and processing. The company also launched a new product line in 2024, focusing on mushroom seasoning powder, which is expected to contribute to future revenue streams.
As of December 31, 2025, ESG employed approximately 20 full-time management staff and 60 full-time operational workers, alongside 145 part-time harvesters. The company reported a total of 25,899,468 shares outstanding, with no cash dividends declared or paid. Looking ahead, ESG's management has outlined plans to restore production and improve liquidity, including pursuing additional financing options. However, the company faces substantial uncertainty regarding its ability to continue as a going concern, given its ongoing operational challenges and liquidity constraints.
In summary, ESG Inc. is navigating a challenging financial landscape marked by significant revenue declines and operational disruptions. The company is focused on strategic growth through its subsidiaries and new product offerings, while also addressing internal control weaknesses identified in its financial reporting processes. The outlook remains cautious as management works to stabilize operations and enhance financial performance in the coming fiscal periods.
About ESG Inc.
ESG Inc. is a holding company focused on sustainable food production, primarily through subsidiaries in China involved in mushroom cultivation, composting, and food processing. It emphasizes environmentally friendly, high-quality mushroom-based products and ingredients, targeting global demand for plant-based foods. The company leverages expertise in agriculture, food safety, and sustainable practices, operating through Chinese subsidiaries while managing risks associated with foreign investment and Chinese regulations.
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