false 2024 FY 0001883835

 2023-09-01
 2023-09-28

 ESGH:Mr. ZhiYangMember

 ESGH:ZhihanMember

 ESGH:Mr. ChrisAlonzoMember

 ESGH:ESGMember
 ESGH:ZhihanMember

 ESGH:ESGMember
 ESGH:Mr. ChristopherAlonzoMember

 ESGH:SubsidiariesInChinaMember

 us-gaap: BuildingAndBuildingImprovementsMember

 us-gaap: MachineryAndEquipmentMember
 srt: MinimumMember

 us-gaap: MachineryAndEquipmentMember
 srt: MaximumMember

 us-gaap: OfficeEquipmentMember
 srt: MinimumMember

 us-gaap: OfficeEquipmentMember
 srt: MaximumMember

 ESGH:LandPurchasedMember

 us-gaap: PatentsMember

 us-gaap: ComputerSoftwareIntangibleAssetMember

 ESGH:AUMAndAUMTMember

 ESGH:AUMAndAUMTMember

 ESGH:AUMAndAUMTMember

 country: HK

 country: HK

 us-gaap: BuildingAndBuildingImprovementsMember

 ESGH:MachineryEquipmentAndVehicleFleetMember

 ESGH:MachineryEquipmentAndVehicleFleetMember

 us-gaap: ConstructionInProgressMember

 us-gaap: ConstructionInProgressMember

 ESGH:LandUseRightMember

 ESGH:LandUseRightMember

 us-gaap: ComputerSoftwareIntangibleAssetMember

 us-gaap: PatentsMember

 ESGH:AgriculturalBankOfChinaFunanBranchMember

 ESGH:AgriculturalBankOfChinaFunanBranchMember

 ESGH:AgriculturalBankOfChinaFunanBranchMember

 ESGH:AgriculturalBankOfChinaFunanBranchMember

 ESGH:AnhuiFunanRuralCommercialBankMember

 ESGH:AnhuiFunanRuralCommercialBankMember

 ESGH:AnhuiFunanRuralCommercialBankMember

 ESGH:AnhuiFunanRuralCommercialBankMember

 ESGH:AnhuiFunanRuralCommercialBankOneMember

 ESGH:AnhuiFunanRuralCommercialBankOneMember

 ESGH:AnhuiFunanRuralCommercialBankOneMember

 ESGH:AnhuiFunanRuralCommercialBankOneMember

 ESGH:AnhuiFunanRuralCommercialBankTwoMember

 ESGH:AnhuiFunanRuralCommercialBankTwoMember

 ESGH:AnhuiFunanRuralCommercialBankTwoMember

 ESGH:AnhuiFunanRuralCommercialBankTwoMember

 ESGH:IndustrialAndCommercialBankOfChinaFunanMember

 ESGH:IndustrialAndCommercialBankOfChinaFunanMember

 ESGH:IndustrialAndCommercialBankOfChinaFunanMember

 ESGH:BankOfChinaFunanBranchMember

 ESGH:BankOfChinaFunanBranchMember

 ESGH:BankOfChinaFunanBranchMember

 ESGH:BankOfChinaFunanBranchMember

 ESGH:FunanAgriculturalInvestmentCoLtdMember

 ESGH:FunanSmallBusinessFinancingServiceCenterMember

 ESGH:UnrelatedPrivateFundMember

 ESGH:FunanZhihuaMushroomCoLtdMember

 ESGH:CustomerMember

 ESGH:FunanAgriculturalInvestmentCoLtdMember

 ESGH:FunanSmallBusinessFinancingServiceCenterMember

 2022-12-01
 2022-12-02

 ESGH:MrZhiYangMember

 2022-10-22

 ESGH:MrZhiYangMember

 2022-10-01
 2022-10-22

 ESGH:GovernmentGrantsMember

 ESGH:GovernmentGrantsMember

 ESGH:AssetBasedGrantsMember

 ESGH:IncomeBasedGrantsMember

 ESGH:AssetBasedGrantsMember

 ESGH:IncomeBasedGrantsMember

 country: US

 country: US

 ESGH:CustomerOneMember

 ESGH:CustomerTwoMember

 ESGH:CustomerThreeMember

 ESGH:CustomerFourMember

 ESGH:CustomerFiveMember

 ESGH:CustomerOneMember

 ESGH:CustomerTwoMember

 ESGH:OneSupplierMember

 us-gaap: AccountsReceivableMember
 ESGH:OneCustomerMember

 us-gaap: CorporateMember

 ESGH:EliminationsMember

 us-gaap: CorporateMember

 ESGH:EliminationsMember

 us-gaap: CorporateMember

 ESGH:EliminationsMember

 us-gaap: CorporateMember

 ESGH:EliminationsMember

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-K

 (Mark One)

 ANNUAL REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended: December 31,
2024

 or

 TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 Commission file number: 000-56532

 (Exact name of small business issuer as specified in
its charter)

 Nevada

 87-1918342

 (State or other jurisdiction of

 (I.R.S. employer

 incorporation or formation)

 Identification No.)

 433 East Hillendale Road

 Chadds Ford, PA 19317

 (Address of principal executive offices)

 267 - 467-5871

 (Issuer's telephone number)

 Securities registered pursuant to Section 12(b)
of the Act:

 None

 Securities registered pursuant to Section 12(g)
of the Act:

 Common Stock

 Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. No

 Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act. No

 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 (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

 Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange
Act. (Check one):

 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. No

 If securities are registered pursuant to Section 12(b)
of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of
an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to §240.10D-1(b).

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

 The aggregate market
value of the voting and non-voting common equity held by non-affiliates computed by the average bid and asked price of such common equity,
as of the last business day of the registrant's most recently completed fiscal quarter was $ 35,077,567.

 State the number of shares outstanding of each of
the issuer's classes of common equity, as of the latest practicable date: 25,899,468 common shares issued and outstanding
as of December 31, 2024.

 - 1 -

 PAGE

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibits

 SIGNATURES

 - 2 -

 FORWARD-LOOKING STATEMENTS

 Certain statements made in this Annual Report on Form 10-K
are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the
plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements of the Registrant to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current
expectations that involve numerous risks and uncertainties. The Registrant's plans and objectives are based, in part, on assumptions
involving the continued expansion of business. Assumptions relating to the foregoing involve judgments with respect to, among other things,
future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the control of the Registrant. Although the Registrant believes its assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the
forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Registrant
or any other person that the objectives and plans of the Registrant will be achieved.

 Unless stated otherwise, the words "we,"
"us," "our," "the Company" or "ESG" in this Annual Report collectively refers to ESG Inc.,
a Nevada corporation.

 Item 1. Business

 DESCRIPTION OF BUSINESS

 Company Overview

 We were incorporated under the name Plasma Innovative
Inc. on July 22, 2021 an emerging cold plasma application company. We intended to use our proprietary, cold plasma technology to
treat crops and plant seeds for agriculture. However, we have decided that it is in the best interest of our shareholders to cease operations
in the plasma application in the agriculture sector.

 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.

 Immediately after completion of such share exchange, the Company has 65,000,000
authorized shares of common stock and a total of 25,899,468 issued and outstanding shares of common stock.

 On November 22, 2023, Plasma Innovative Inc. filed
Articles of Merger with the State of Nevada to merge ESG Inc. into Plasma Innovative Inc. Plasma Innovative Inc. was the surviving entity
with its name changed into ESG Inc.

 Effective February 23, 2024 upon approval from FINRA,
the Company's name was changed from Plasma Innovative Inc. to ESG Inc., and its trading symbol was changed from PMIN to ESGH.

 Business Overview

 ESG Inc. ("ESGI") was incorporated
in October 2022 as a Nevada holding corporation and is headquartered at Kennett Square, PA and develops and operates sustainable
plant-based ingredients and food production and distribution with the planned expansion into the food related business with the substantial experience of its management team, including experience and
relationships in the industry of mushroom, agriculture and food in the world and the capital markets in the States.

 On September 28, 2023, ESG Inc. ("ESGI")
entered into a share exchange agreement with Funan Allied United Farmer Products Co., Ltd., a China corporation ("AUFP"),
the shareholders of AUFP, (each a "Shareholder," and collectively, the "Shareholders"), and Hainan ESG Technology
Co., Ltd., a China corporation ("Hainan ESG"). Pursuant to such agreement, the Shareholders exchanged their equity of AUFP
to Hainan ESG for shares of common stock of ESGI, and ESGI has agreed to offer the ESGI shares. Following this transaction, AUFP became
a 74.52% subsidiary of ESGI through Hainan ESG.

 Neither the Company nor ESGI are Chinese operating
companies. They are Nevada holding companies that operate business through Funan Allied United Farmer Products Co., Ltd., which owns Anhui
Allied United Mushroom Technology Co., Ltd. and Anhui Allied United Mushroom Co., Ltd., all of whom are Chinese operating companies.

 The Company exercises control over the operations
of its subsidiaries. On February 17, 2023, the China Securities Regulatory Commission, or CSRC, issued the Trial Administrative Measures
of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which became effective on March 31, 2023. Pursuant
to the Trial Measures, domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill
the filing procedure and report relevant information to the CSRC. We have not sought CSRC approval by relying on the legal opinion attached
hereto as Exhibit 99.1.

 Our subsidiaries are formed and operating in the People's
Republic of China (together, the "Material PRC Company") and have been duly established and is validly existing as a company
under the laws of the People's Republic of China ("PRC Laws") and has received all authorizations required by the People's
Republic of China (the "Governmental Authorizations") for its establishment to the extent such Governmental Authorizations
are required under applicable PRC Laws, and its business license is in full force and effect. The Material PRC Company has the capacity
and authority to own assets, to conduct business, and to sue and be sued in its own name under PRC Laws. The articles of association,
business license and other constitutional documents (if any) of the Material PRC Company complies with the requirements of applicable
PRC Laws and are in full force and effect. The Material PRC Company has not taken any corporate action, nor has any legal proceedings
commenced against it, for its liquidation, winding up, dissolution, or bankruptcy, for the appointment of a liquidation committee, team
of receivers or similar officers in respect of its assets or for any adverse suspension, withdrawal, revocation or cancellation of its
business license.

 - 3 -

 All of the equity interests of the Material PRC Company
are owned by ESG, through ESG China Limited, a Hong Kong company, and Hainan ESG Technology Co., Ltd, a PRC company, and we believe the
Material PRC Company has obtained all necessary Governmental Authorizations. The equity interests of the Material PRC Company are owned
by ESG, through its subsidiaries, free and clear of any pledge or other encumbrance under PRC Laws, and there are no outstanding rights,
warrants or options to acquire, or instruments convertible into or exchangeable for, any equity interest in the Material PRC Company under
PRC Laws.

 All of our operations are conducted by our subsidiaries
and through our wholly-foreign-owned entity ("WFOE") based in China which involves unique risks to investors.

 The legal and operational risks associated with being
based in or having the majority of the Company's operations in China could result in a material change in the value of the securities
we are registering for sale or could significantly limit or completely hinder our ability to offer or continue to offer securities to
investors and cause the value of such securities to significantly decline or be worthless. Please see the Risk Factor titled "We
are faced with risks and uncertainties as a foreign enterprise under PRC laws".

 Regulatory Permission

 As substantially all of our operations are currently
conducted by our PRC Subsidiaries in China, we are subject to the associated legal and operational risks, including risks related to the
legal, political and economic policies of the Chinese government, the relations between China and the United States, or Chinese or United
States regulations, which risks could result in a material change in our operations and/or cause the value of our ordinary shares to significantly
decline or become worthless, and affect our ability to offer or continue to offer securities to investors. Recently, the PRC government
initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with
little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based
companies listed overseas, and adopting new measures to extend the scope of cybersecurity reviews.

 On July 6, 2021, the relevant PRC government authorities
made public the Opinions on Strictly Cracking Down Illegal Securities Activities, which provided that the administration and supervision
of overseas-listed China-based companies will be strengthened, and the special provisions of the State Council on overseas issuance and
listing of shares by such companies will be revised, clarifying the responsibilities of domestic industry competent authorities and regulatory
authorities. However, the Opinions on Strictly Cracking Down Illegal Securities Activities were only issued recently, leaving uncertainties
regarding the interpretation and implementation of these opinions. It is possible that any new rules or regulations may impose additional
requirements on us.

 The Regulations on Mergers and Acquisitions of Domestic
Companies by Foreign Investors, or the M&A Rules, adopted by six PRC regulatory agencies in 2006 and amended in 2009, requires an
overseas special purpose vehicle formed for listing purposes through acquisitions of PRC domestic companies and controlled by PRC companies
or individuals to obtain the approval of the China Securities Regulatory Commission, or the CSRC, prior to the listing and trading of
such special purpose vehicle's securities on an overseas stock exchange.

 On December 28, 2021, the Cyberspace Administration
of China (the "CAC") jointly with the relevant authorities formally published Measures for Cybersecurity Review (2021) which
took effect on February 15, 2022 and replace the former Measures for Cybersecurity Review (2020). Measures for Cybersecurity Review (2021)
stipulates that operators of critical information infrastructure purchasing network products and services, and online platform operator
(together with the operators of critical information infrastructure, the "Operators") carrying out data processing activities
that affect or may affect national security, shall conduct a cybersecurity review, any online platform operator who controls more than
one million users' personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to
be listed in a foreign country.

 According to the Notice by the General Office of the
State Council of Comprehensively Implementing the List-based Management of Administrative Licensing Items (No. 2 [2022] of the General
Office of the State Council) and its attachment, the List of Administrative Licensing Items Set by Laws, Administrative Regulations, and
Decisions of the State Council (2022 Edition), as of the date hereof, our PRC subsidiaries has received from PRC authorities all requisite
licenses, permissions or approvals needed to engage in the businesses currently conducted in China. As of the date hereof, neither we
nor our PRC Subsidiaries (i) are required to obtain permissions from any PRC authorities to operate or issue our ordinary shares to foreign
investors, (ii) are subject to permission requirements from the CSRC, the CAC or any other entity that is required to approve our PRC
subsidiaries' operations, or (iii) have received or were denied such permissions by any PRC authorities.

 The only permission required for operations is the
business license of the PRC subsidiaries. The business license in PRC is a permit issued by Market Supervision and Administration that
allows the company to conduct specific business within the government's geographical jurisdiction. As of the date hereof, our PRC
subsidiaries have received from PRC authorities all requisite licenses, permissions or approvals needed to engage in the businesses currently
conducted in China, and no permission or approval has been denied. At present, we do not believe our operations require any other approvals
and or permissions of Chinese authorities.

 If we were required to obtain approval from the CSRC
in the future and were denied permission from Chinese authorities to list or become quoted on U.S. exchanges and/or quotation servicers,
we will not be able to continue to be quoted or listed on U.S. exchanges, which would materially affect the interests of the investors.
It is uncertain when and whether the Company will be required to obtain permission from the PRC government to list or become quoted on
U.S. exchanges in the future, and even when such permission is obtained, whether it will be denied or rescinded. Although the Company
is currently not required to obtain permission from any of the PRC central or local government to obtain such permission and has not received
any denial to list or become quoted on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing
or future laws and regulations relating to its business or industry; if we inadvertently conclude that such approvals are not required
when they are, or applicable laws, regulations, or interpretations change and we are required to obtain approval in the future.

 - 4 -

 On December 24, 2021, the China Securities Regulatory
Commission, or the CSRC, issued Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic
Companies (Draft for Comments) (the "Administration Provisions"), and the Administrative Measures for the Filing of Overseas
Securities Offering and Listing by Domestic Companies (the "Measures"), which were open for public comments by January 23,
2022. The Administration Provisions and Measures for overseas listings lay out specific requirements for filing documents and include
unified regulation management, strengthening regulatory coordination, and cross-border regulatory cooperation. Domestic companies seeking
to list abroad must carry out relevant security screening procedures if their businesses involve supervisions such as foreign investment
security and cyber security reviews. Companies endangering national security are among those off-limits for overseas listings. We believe
the Company is not affected by this based upon the legal opinion attached hereto as Exhibit 99.1.

 On February 17, 2023, with the approval of the State
Council, the CSRC released the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the "Trial
Measures") and five supporting guidelines, which came into effect on March 31, 2023. According to the Trial Measures, among other
requirements, (1) domestic companies that seek to offer or list securities overseas, both directly and indirectly, should fulfill the
filing procedures with the CSRC; if a domestic company fails to complete the filing procedures, such domestic company may be subject to
administrative penalties; and (2) where a domestic company seeks to indirectly offer and list securities in an overseas market, the issuer
shall designate a major domestic operating entity responsible for all filing procedures with the CSRC, and such filings shall be submitted
to the CSRC within three business days after the submission of the overseas offering and listing application. On the same day, the CSRC
also held a press conference for the release of the Trial Measures and issued the Notice on Administration for the Filing of Overseas
Offering and Listing by Domestic Companies, which clarifies that (1) on or prior to the effective date of the Trial Measures, domestic
companies that have already submitted valid applications for overseas offering and listing but have not obtained approval from overseas
regulatory authorities or stock exchanges may reasonably arrange the timing for submitting their filing applications with the CSRC, and
must complete the filing before the completion of their overseas offering and listing; (2) a six-month transition period will be granted
to domestic companies which, prior to the effective date of the Trial Measures, have already obtained the approval from overseas regulatory
authorities or stock exchanges, but have not completed the indirect overseas listing; if domestic companies fail to complete the overseas
listing within such six-month transition period, they shall file with the CSRC according to the requirements; and (3) the CSRC will solicit
opinions from relevant regulatory authorities and complete the filing of the overseas listing of companies with contractual arrangements
which duly meet the compliance requirements, and support the development and growth of these companies.

 With respect to the domestic company, non-compliance
with the Trial Measures or an overseas listing completed in breach of it may result in a warning or a fine ranging from RMB 1 million
to RMB10 million. Furthermore, the directly responsible executives and other directly responsible personnel of the domestic company may
be warned or fined between RMB 500,000 and RMB 5 million and the controlling shareholder, actual controllers, and other legally appointed
persons of the domestic company may be warned, or fined between RMB 1 million and RMB 10 million. If, during the filing process, the domestic
company conceals important factors or the content is materially false, and securities are not issued, they are subject to a fine of RMB1
million to RMB10 million. With respect to the directly responsible executives and other directly responsible personnel of the domestic
company, they are subject to a warning and fine between RMB 500,000 and RMB 5 million, and with respect to the controlling shareholder,
actual controllers, and other legally appointed persons of the domestic company, they are subject to a warning and fine between RMB 1
million and RMB 10 million.

 The Trial Measures have come into effect. After March
31, 2023, any failure or perceived failure by the domestic company or PRC subsidiaries to comply with the above confidentiality and archives
administration requirements under the Trial Measures and other PRC laws and regulations may result in that the relevant entities would
be held legally liable by competent authorities and referred to the judicial organization to be investigated for criminal liability if
suspected of committing a crime.

 According to a translated copy of the current and
effective regulations promulgated by the China Securities Regulatory Commission, that is, the "Trial Administrative Measures of
Overseas Securities Offering and Listing by Domestic Companies" Article 2 states, "Direct overseas offering and listing by
domestic companies refers to such overseas offering and listing by joint-stock company incorporated domestically. Indirect overseas offering
and listing by domestic companies refers to such overseas offering and listing by a company in the name of an overseas incorporated entity,
whereas the company's major business operations are located domestically, and such offering and listing is based on the underlying
equity, assets, earnings or other similar rights of a domestic company". Article 16 states, "Subsequent securities offerings
of an issuer in the same overseas market where it has previously offered and listed securities shall be filed with the CSRC within 3 working
days after the offering is completed.

 According to a translated copy of the current and
effective regulations promulgated by the China Securities Regulatory Commission, that is, the "Regulations on Strengthening the
Confidentiality and Archives Management Work Related to the Overseas Issuance and Listing of Securities" Article 3 states, "A
domestic company that plans to, either directly or through its overseas listed entity, publicly disclose or provide to relevant entities
or individuals including securities companies, securities service providers, and overseas regulators, documents and materials that contain
state secrets or government work secrets, shall first obtain approval from competent authorities according to law, and file with the secrecy
administrative department at the same level. Where there is ambiguity or dispute over the identification of a state secret, a request
shall be submitted to the competent secrecy administrative department for determination; where there is ambiguity or dispute over the
identification of a government work secret, a request shall be submitted to the competent government authority for determination."
Further, Article 4 states that, "A domestic company that plans to, either directly or through its overseas listed entity, publicly
disclose or provide to relevant entities or individuals including securities companies, securities service providers, and overseas regulators,
other documents and materials that, if divulged, will jeopardize national security or public interest, shall strictly fulfill relevant
procedures stipulated by applicable national regulations." Accordingly, as the Company does not believe its operations fall into
the above legal provisions, the Company does not believe that it is required to seek authorizations from Chinese authorities.

 On December 28, 2021, the Cyberspace Administration
of China (the "CAC") jointly with the relevant authorities formally published Measures for Cybersecurity Review (2021) which
took effect on February 15, 2022 and replace the former Measures for Cybersecurity Review (2020). Measures for Cybersecurity Review (2021)
stipulates that operators of critical information infrastructure purchasing network products and services, and online platform operator
(together with the operators of critical information infrastructure, the "Operators") carrying out data processing activities
that affect or may affect national security, shall conduct a cybersecurity review, any online platform operator who controls more than
one million users' personal information must go through a cybersecurity review by the cybersecurity review office if it seeks to
be listed in a foreign country.

 - 5 -

 At present, we do not believe our operations require
the approval and or permission of Chinese authorities, based upon the legal opinion attached hereto as Exhibit 99.1. This is because the
Company's primary business is food supply, which we were informed by counsel does not require the approval and permission of the
Chinese government. Please see related legal opinion attached hereto as Exhibit 99.1. The "Special Management Measures for Foreign
Investment Access (Negative List) (2021 Edition)" and "Market Access Negative List (2022 Edition)" issued by the Chinese
government do not include the industry and business the Company is involved in. The Company will settle amounts owed under the WFOE structure
by transferring dividends, or distributions between the holding company and its subsidiaries, or to investors, which have not yet occurred.
We intend to rely primarily on dividends paid by the WFOE for our cash needs, including the funds necessary to pay dividends and other
cash distributions, if any, to our shareholders, to service any debt we may incur and to pay our operating expenses. The Company has made
no such distributions to date nor has it received any distributions from the WFOE to date, and the Company has no current cash management
policies in place. The Company will look to implement one in the near future. The PRC government also imposes controls on the conversion
of RMB into foreign currencies and the remittance of currencies out of the PRC. Therefore, our WFOE may experience difficulties in completing
the administrative procedures necessary to pay distributions from its profits, if any. Furthermore, if our WFOE incurs debt on its own
in the future, the instruments governing the debt may restrict their ability to pay distributions or make other payments. If the Company
or our subsidiaries are unable to receive all of the revenues from our operations, we may be unable to pay dividends on our Shares.

 Cash dividends, if any, on the Company's Shares
will be paid in U.S. dollars. If the Company is considered a PRC tax resident enterprise for tax purposes, any dividends paid to our overseas
shareholders may be regarded as China-sourced income and as a result may be subject to PRC withholding tax at a rate of up to 10.0%.

 There are no legal, or governmental proceedings, regulatory
investigations or other governmental decisions, rulings, orders, or actions before any Governmental Agencies in progress or pending in
the PRC to which the Company or the Material PRC Company is a party or to which any assets of the Material PRC Company is a subject.

 All dividends declared and payable upon the equity
interests in the WFOE may be converted into foreign currency and freely transferred out of the PRC free of any deductions in the PRC,
provided that (i) the declaration and payment of such dividends complies with applicable PRC Laws and the constitutional documents of
the WFOE, and (ii) the remittance of such dividends out of the PRC complies with the procedures required by the relevant PRC Laws relating
to foreign exchange administration.

 We face uncertainties with respect to indirect transfers
of equity interests in PRC resident enterprises by their non-PRC holding companies.

 Adverse changes in economic and political policies
of the PRC government could have a material and adverse effect on overall economic growth in China, which could materially and adversely
affect our business. General macroeconomic conditions may materially and adversely affect our business, prospects, results of operations
and financial position. The PRC government's control over foreign currency conversion may adversely affect our business and results
of operations and our ability to remit dividends.

 There is no tax or duty payable by or on behalf of
the Material PRC Company under applicable PRC Laws in connection with the creation, allotment and issuance of Common Shares, provided
that each person taking the aforementioned actions is not subject to PRC tax by reason of citizenship, permanent establishment, residence
or otherwise subject to PRC tax imposed on or measured by net income or net profits.

 There are no reporting obligations to any Governmental
Agency under PRC Laws on those holders of Common Shares who are not deemed to be PRC residents as defined under applicable PRC Laws, to
the extent that no reporting obligation is triggered by the purchase or holding of Common Shares under the PRC anti-monopoly laws, rules
and regulations.

 We currently intend to retain all available funds
and future earnings, if any, for the operation and expansion of our business and do not anticipate declaring or paying any dividends in
the foreseeable future. Any future determination related to our dividend policy will be made at the discretion of our board of directors
after considering our financial condition, results of operations, capital requirements, contractual requirements, business prospects and
other factors the board of directors deem relevant, and subject to the restrictions contained in any future financing instruments.

 All of our business operations are conducted in China.
Accordingly, our business, financial condition, results of operations and prospects are affected significantly by economic, political
and legal developments in China. Although the PRC economy has been transitioning from a planned economy to a more market-oriented economy
since the late 1970s, the PRC government continues to exercise significant control over China's economic growth through direct allocation
of resources, monetary and tax policies, and a host of other government policies such as those that encourage or restrict investment in
certain industries by foreign investors, control the exchange between the Renminbi and foreign currencies, and regulate the growth of
the general or specific market. While the Chinese economy has experienced significant growth in the past 30 years, growth has been uneven,
both geographically and among various sectors of the economy. As the PRC economy has become increasingly linked with the global economy,
China is affected in various respects by downturns and recessions of major economies around the world. The various economic and policy
measures enacted by the PRC government to forestall economic downturns or bolster China's economic growth could materially affect
our business. Any adverse change in the economic conditions in China, in policies of the PRC government or in laws and regulations in
China could have a material adverse effect on the overall economic growth of China and market demand for our products. Such developments
could adversely affect our businesses, lead to reduction in demand for our products and adversely affect our competitive position.

 The PRC legal system is based on written statutes.
Prior court decisions may be cited for reference but have limited precedential value. Since the late 1970s, the PRC government has been
building a comprehensive system of laws and regulations governing economic matters in general. The overall effect has been to significantly
enhance the protections afforded to various forms of foreign investments in China. We conduct our business primarily through our WFOE,
and the WFOE is established in China. These companies are generally subject to laws and regulations applicable to foreign investment in
China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations
of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties,
which may limit legal protections available to us. In addition, some regulatory requirements issued by certain PRC government authorities
may not be consistently applied by other government authorities (including local government authorities), thus making strict compliance
with all regulatory requirements impractical, or in some circumstances impossible. For example, we may have to resort to administrative
and court proceedings to enforce the legal protection that we enjoy either by law or contract.

 - 6 -

 ESG the Driving Force behind the Company

 ESG's core business philosophy is to
develop and operate sustainable and technology-driving food related businesses consistent with the principles of Environmental,
Sustainable and Governance investing.

 An explanation of the three domains of Environmental,
Sustainable and corporate Governance -- is critical to understanding ESG's development of its own business.

 Environmental and Sustainable criteria include technology
and equipment application, energy use, waste, pollution, natural resource conservation, and treatment of animals and natural resources
and help us avoid a company that might pose a greater financial risk due to their environmental or other practices. The United Nations
projects that the world's population is to reach 8.5 billion by 2030, 9.7 billion by 2050 and exceed 11 billion in 2100. Food production
needs to meet the projected demands in the coming years. Thus, food production should be technology-driven, environmentally friendly,
sustainable and not have a negative impact on the ecosystem and natural resources. Thus the "E and S" in ESG is the first
keen focus in developing and operating our business.

 Corporate Governance deals with a company's
top-down leadership and how it governs itself in an ethical, transparent and manner devoid of conflicts of interest and focuses on executive
pay, audits, internal controls, and shareholder rights. We see an ever-increasing consumer and investor demand for sustainable food production
and distribution. We believe that many consumers will expect that food is produced under stringent scrutiny for food safety and that ethical
policies underlie every part of the process. We believe they will be willing to pay a premium for food sourced through such channels.
In addition, we expect governments everywhere will promulgate and enforce stricter food safety regulations, which should eliminate a large
number of food producers who will be unable to comply with these respective regulations. These market conditions will require food companies
to embrace new means of production and technology. We believe this will lead to consolidation in various segments of the food industry,
in which only forward-thinking participants like ESG will survive and prosper.

 Our Operating Subsidiary Companies

 ESG is a holding company engaged in sustainable food
production and distribution directly or indirectly through our subsidiaries and currently owns operating subsidiaries in China. Our operating
subsidiaries are involved in direct mushroom composting, growing, food production, distribution as well as import and export of food.
We believe that the growing global demand for sustainable high-quality food presents a unique opportunity for companies engaged in this
critical area that is being paid increasing attention by global investors.

 - 7 -

 Funan Allied United Farmer Product Co., Ltd. ("AUFP")
was created in 2017 in China by US mushroom industry participants with the support of strategic investors to revolutionize China's
mushroom industry and create enhanced standards for food safety, sustainability, greenness, and resulting high-quality food products to
serve Chinese consumers and regional Asian export markets. AUFP engages in the research and development, composting, cultivation, processing,
packaging, and distribution of high-quality white button mushrooms from Fuyang, China. As a bio-sustainable and resources-recyclable company,
with wheat straw and animal manure as the major raw materials, kinds of agricultural waste, AUFP is dedicated to building Fuyang into
the hub to supply high-quality mushroom, compost and organic fertilizer in Asia with the support of industrial experts and capital.

 Currently, AUFP owns approximately 56 acres of industrial
land use rights and built bunkers, tunnels and growing facilities, totaling approximately 300,000 square feet, with fresh white button
mushrooms capacity of 7,300 tons per year and production capacity to 90,000 tons of Phase IIII compost per year, of which two-thirds are
planned to be sold to third party's farms.

 As an AUFP's subsidiary, Anhui Allied United
Mushroom Technology Co., Ltd. ("AUMT") operates a Phase III compost manufacturing facility to distribute to its own and third-party
growing facilities in China and east and southeast Asia while Anhui Allied United Mushroom Co. Ltd. ("AUM"), an AUFP subsidiary,
is a company engaged in growing, packing and distributing fresh white button mushrooms in China.

 Anhui Allied United Mushroom Technology Co., Ltd.

 Anhui Allied United Mushroom Technology Co., Ltd.
("AUMT") was created in China in March 2018, to manufacture white button mushroom compost.

 White button mushroom compost is a unique living organism.
It varies according to the environment where it is produced. Making mushroom compost is a complex process that AUMT has been perfecting.
AUMT uses the art of the state phase III composting process to make compost under the supervision of a team of specialists, taking raw
materials from the local area, for our own farms and other mushroom growers.

 - 8 -

 Phase III composting process is
composed of:

 Phase I: Bales of straw are mixed
with animal manure, water and gypsum. When mixed, the material is filled into large aerated concrete vessels, called bunkers. During this
phase the compost reaches temperatures of 80 degrees Celsius. After 10–13 days the Phase I process is completed, ready for the Phase
II process to begin.

 Phase II: The material is removed
from the bunkers and filled into closed tunnels, where we monitor and control a series of temperature changes – the most important
of which is pasteurization. Pasteurization helps remove any unwanted organisms from the compost. The next and most important stage of
Phase II is the conditioning of the compost. This means that microbes convert ammonia and amines into protein. Phase II takes approximately
10 days. The climate controlled "tunnel" heats the compost to 58 degrees Celsius for pasteurization and then conditions
it at 48 degrees Celsius.

 Phase III: Once the Phase II process
is completed, the compost is cooled and removed from the Phase 2 tunnels. Mushroom spawn is added and the compost is then refilled into
Phase III tunnels. Spawn is usually made with rye or millet grain that has been sterilized and inoculated with mushroom tissue (mycelium).
This Phase III incubation process takes 17-19 days. During this time mycelium grows throughout the substrate. After the 17-19 days
incubation period, the Phase III compost is loaded into specially designed trucks for transport to the growing facility.

 Currently AUMT owns 9 bunkers, 31 tunnels and related
auxiliary facilities and equipment with the capacity of 90,000 tons annually of Phase III compost to supply.

 Anhui Allied United Mushroom Co., Ltd.

 Anhui Allied United Mushroom Co., Ltd. ("AUM")
was created in China in April 2018, to grow fresh white button mushroom and provide white button mushroom growing management services.
AUM produces high quality fresh white button mushrooms.

 The growing process is composed of the following steps:

 As the mushroom compost is filled
into the growing rooms, a layer of peat is applied to the surface of the Phase III compost. The layer is called the casing layer and is
essential for the formation of the mushrooms. Over a 3-4 days period, the mushroom tissue grows throughout the compost and up through
the casing layer.

 The environment is then altered
to simulate an autumn day, which promotes the formation of mushrooms. As a result, tiny mushroom heads (pins) begin to appear. During
the next two weeks the levels of moisture, temperature, humidity, carbon dioxide and air movement are carefully monitored.

 The pins eventually grow into
mushrooms. The mushrooms are picked by hand to maintain the highest possible quality. All our mushrooms are cooled quickly after harvesting
and are packed and transported in refrigerated trucks to wholesale markets or supermarkets.

 Currently, AUM owns approximately 335,000 square feet
of growing area, with annual production of fresh white button mushroom of approximately 20,000,000 LBS.

 From the fourth quarter of 2024, AUFP began its
processing business by drying, milling, mixing and packing of off-grade mushroom and mushroom stems into mushroom seasoning powder.
All of processed mushroom seasoning powder is exclusively for export according to the signed sale contract.

 Market Overview

 Health Diet Trend

 We believe that people are searching for vegan and
plant-based options for every aspect of their lifestyle. Mushrooms are a nutritious vegetarian delicacy and contain many vitamins and
minerals but are low on sugar and fat. We believe that they are becoming a preferable and quality ingredient source for plant-based food.
As an innovative food company with the whole production chain of mushrooms, we are committed to innovating and providing sustainable mushroom-based
food and its ingredients.

 Mushrooms are popular in most of the developed countries
and are becoming accepted in many developing countries. The market for mushrooms is growing rapidly because of their rich nutritional
value and special taste aroma, and flavor. The global plant-based food market is expected to reach 77.8 billion U.S. dollars in 2025.
The forecast projects that by 2030 the market will have more than doubled. (

 Quality Phase III Compost and Strong Demand

 We believe that the key factor for the successful
growing of white button mushrooms is composting. Composting is a delicate and difficult business, especially in large-scale and commercial
indoor growing. ESG believes it is positioning itself as the compost provider in the Asian Pacific area with its management expertise
and experience in composting and advantages of being near a raw material supply.

 Our Competitive Strengths

 Experienced Management

 ESG's management is composed of professionals
in mushroom composting, growing, food processing and marketing, and the food industry, as well as in capital markets and public companies.
We have experienced experts in white button mushroom production and, especially, composting, on our management team. Experienced and senior
experts are the most important asset to ESG. ESG is designing and executing a comprehensive training system to continue to build up the
management team for our operations and the provisions of management service.

 - 9 -

 Focusing Key Stages of Food Production

 ESG is focusing on the composting business and food
processing business, especially mushroom related, which is two ends of the most value added.

 ESG is focusing on research and development in connection
with the improvement of mushroom composting production and of the production of mushroom based food and its ingredients. We concentrate
ESG's capital and efforts on key stages.

 Production Location in the raw material base

 A location near the supply of excellent raw materials
such as wheat straw and animal manure are very important in order to control the cost of production and the quality of mushroom. ESG's
current and planned production facilities are located in excellent places of raw materials to be collected such as Funan in China.

 Employees

 We currently have around 20 full-time management employees
and 60 full-time operating workers along with around 145 part time harvesters and runners.

 Intellectual Property

 ESG has 1 invention Patent, 14 Utility Model Patents,
registered and 17 Utility Model Patents with pending effectiveness.

 Reports to Security Holders

 You may read and copy any materials the Company files
with the Commission in the Commission's Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains
an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically
with the SEC, which can be found at

 - 10 -

 Item 1A. Risk Factors

 Risk Factors

 An investment in our common stock involves a high
degree of risk. You should carefully consider the risks described below and the other information contained in this report before deciding
to invest in our common stock.

 Risks Related to our Business

 We face risks related to health epidemics that
could impact our sales and operating results.

 Our business could be adversely affected by the effects
of a widespread outbreak of contagious disease, including COVID-19. Although the impact of COVID-19 was temporary on our business and
operations in 2021 due to some shutdowns in China, any outbreak of contagious diseases in the future, and other adverse public health
developments, particularly in China, could have a material and adverse effect on our business operations. These could include disruptions
or restrictions on our ability to conduct our operations, as well as temporary closures of our facilities and ports or the facilities
of our customers and third-party service providers. Any disruption or delay of our customers or third-party service providers would likely
impact our operating results and the ability of the Company to continue as a going concern. In addition, a significant outbreak of contagious
diseases in the human population could result in a widespread health crisis that could adversely affect the economies and financial markets
of China and many other countries, resulting in an economic downturn that could affect demand for our products and significantly impact
our operating results.

 The loss of any of our key customers could reduce
our revenues and our profitability.

 Our key customers in fiscal year 2024 were distributor
in Hefei China and processor in Fujian province China. If we cannot maintain long-term relationships with these major customers, the loss
of our sales to them could have an adverse effect on our business, financial condition and results of operations. There can be no assurance
that we will maintain or improve the relationships with these customers, or that we will be able to continue to supply these customers
at current levels or at all. In addition, having a relatively small number of customers/distributors may cause our quarterly results to
be inconsistent, depending upon these customers' daily capacity to sell.

 Our failure to comply with PRC food safety laws
may require us to incur significant costs.

 Manufacturers in the Chinese food industry are subject
to compliance with PRC food safety laws and regulations. Such laws require manufacturers to comply with regulations with respect to food,
food additives, packaging, and food production sites, facilities and equipment. Failure to comply with PRC food safety laws may result
in fines, suspension of operations and, in more extreme cases, criminal proceedings against an enterprise and its management. The Chinese
government may also change the existing laws or regulations or impose additional or stricter laws or regulations, compliance with which
may cause us to incur significant capital expenditures, which we may be unable to pass on to our customers through higher prices for our
products.

 We lack product and business diversification.
Accordingly, our future revenues and earnings are more susceptible to fluctuations than a more diversified company.

 Our primary business activities have historically
focused on fresh white button mushrooms products although we began a fresh mushroom processing business in the fourth quarter of 2024.
Because our focus has historically been limited in this way, any risk affecting the fresh mushrooms industry or consumers' desire
for fresh mushrooms products could disproportionately affect our business. To enhance our ability to continue to operate, we are dedicating
resources to generate recurring revenues and sustainable operating cash flows. On December 31, 2022, AUM, a subsidiary of ESG acquired
12 mushroom houses by assuming debt. The new operations further increase the production of mushrooms and reduce fixed cost per unit to
reach the scale effect of economics. On January 5, 2022, Funan Agricultural Reclining Investment Co. Ltd signed an agreement to fund $18.09
million by 10-year debt financing for the expansion of composting facilities, which will further generate revenue on compost sales with
a higher profit margin. 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.

 Currently the Chinese government is supporting agriculture
with tax exemption, especially e-commerce in agriculture. In addition, our local government has been supporting our company by providing
subsidies from time to time. These beneficial policies may change, so the support we receive from the government may decrease or disappear,
which may impact our development.

 Beneficial tax incentives may disappear.

 We operate our business through our Chinese subsidiaries.
Currently the agriculture industry is highly supported by the Chinese government. For example, to further strengthen and standardize the
support of comprehensive agricultural development to the characteristic industries with agricultural advantages, the Chinese National
Office of Comprehensive Agricultural Development has decided to carry out the compilation of The Plan for Comprehensive Agricultural
Development to Support the Agricultural Advantage and Characteristic Industries (2019-2021) (the "New Plan").
Mushrooms are emphasized and classified as a "dominant and characteristic industry," which may become the objects
of policy-support issue in the future. However, the New Plan has not yet been formally approved and the final result remains to be further
observed.

 As an agricultural production enterprise, we are enjoying
certain tax benefits, including a tax waiver of VAT and income tax. If the tax policies change in a way that some or all of the tax benefits
we presently receive are cancelled, we may need to pay much higher taxes which will reduce or eliminate our profit margin.

 We are subject to extensive regulations by the
Chinese government.

 The food industry is subject to extensive regulations
by Chinese government agencies. Among other things, these regulations govern the manufacturing, importation, processing, packaging, storage,
exportation, distribution and labelling of our products. New or amended statutes and regulations, increased production at our existing
facilities, and our expansion into new operations and jurisdictions may require us to obtain new licenses and permits and could require
us to change our methods of operations at costs that could be substantial.

 Failure to make adequate contributions to the
Housing Provident Fund for certain employees of our PRC subsidiaries could subject us to labor disputes or complaints and adversely affect
our financial condition.

 Pursuant to the Regulations on Management of Housing
Provident Fund ("HPF"), promulgated by the State Council on April 3, 1999 and amended on March 24, 2002, PRC enterprises must
register with relevant HPF management center, open special HPF accounts at a designated bank and make timely HPF contributions for their
employees. In accordance with the Regulations on Management of Housing Provident Fund and the Rules for Administrative Enforcement of
Housing Provident Fund in Anhui Province, an enterprise that fails to register with HPF management center or open accounts for its employees
shall be ordered to do so within the prescribed time; if a PRC company fails to comply within the prescribed time, it could be fined between
RMB10,000 and RMB50,000.

 Furthermore, if such enterprise fails to pay in full
or in part its HPF contributions, such enterprise will be ordered by the HPF enforcement authorities to make such contributions, and may
be compelled by the people's court that has jurisdiction over the matter to make such contributions. Pursuant to the relevant HPF
laws and regulations, HPF contributions are only required for employees with urban housing registration. For employees with rural housing
registration, contributions are voluntary and are not required. In addition, there are discrepancies in the interpretation and enforcement
of such regulations at the national and local level. Local and national enforcement practices at times vary significantly.

 Our PRC subsidiaries have not opened HPF accounts
for their employees (almost all of them are with rural housing registration). 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. As of
the date of this report, our PRC subsidiaries have not received any demand or order from the competent authorities with respect to their
HPF contribution. To the extent the PRC subsidiaries are required to make such payments, our financial condition will likely be adversely
affected.

 Mushrooms are subject to risks related to diseases,
pests, and system malfunction.

 Mushrooms are exposed to diseases and pests. Pests
and diseases during the cultivation process may significantly decrease the quantity of quality mushrooms, which may impact our revenue.

 Temperature can have a significant impact on the growth
and the quality of mushrooms. 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 may fail to comply with the legal
requirements and our quality standards and be negatively impacted by the quality of our raw materials.

 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.

 The price of the raw materials we use may be inelastic
when we wish to purchase supplies. We cannot guarantee that we will be able to control our material expenses. In addition, as we are competing
based upon low cost, we will risk losing customers by increasing our selling prices. To the extent our costs increase beyond the price
we can charge our customers, our operating results could be harmed.

 We may require additional financing in the future
and our operations could be curtailed if we are unable to obtain required additional financing when needed.

 While we do not anticipate seeking additional financing
in the immediate future, any additional equity may result in dilution to the holders of our outstanding shares of capital stock. Additional
debt financing may include conditions that would restrict our freedom to operate our business, such as conditions that:

 increase our vulnerability to general adverse economic and industry conditions;

 require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and

 limit our flexibility in planning for, or reacting to, changes in our business and our industry.

 We cannot guarantee that we will be able to obtain
any additional financing on terms that are acceptable to us, or at all.

 We are substantially dependent upon our senior
management.

 We are highly dependent on our senior management to
manage our business and operations. In particular, we rely substantially on our Chief Executive Officer Zhi Yang on current stage.

 Failure to manage our growth could strain our
management, operational and other resources, which could materially and adversely affect our business and prospects.

 Our growth strategy includes building a food processing
facility, developing export customers of our existing fresh mushroom and Phase III compost, and increasing varieties of agricultural and
food products. Pursuing these strategies has resulted in and will continue to result in substantial demands on management resources. In
particular, the management of our growth will require, among other things:

 stringent cost controls and sufficient liquidity;

 strengthening of financial and management controls;

 increased marketing, sales and support activities; and

 hiring and training of new personnel.

 If we are not able to manage our growth successfully,
our business and prospects would be materially and adversely affected.

 An insufficient amount of insurance could expose
us to significant costs and business disruption.

 While we have purchased insurance to cover certain
events, the amounts and scope of coverage could leave our business inadequately protected from loss. If we were to incur substantial losses
or liabilities due to fire, explosions, floods, other natural disasters or accidents or business interruption, our results of operations
could be materially and adversely affected.

 If we fail to protect our intellectual property
rights, it could harm our business and competitive position.

 We rely on a combination of patents, trademark, domain
name laws and non-disclosure agreements and other methods to protect our intellectual property rights.

 Implementation of PRC intellectual property-related
laws have historically been lacking, primarily because of ambiguities in the PRC laws and enforcement difficulties. Accordingly, intellectual
property rights and confidentiality protections in China may not be as effective as in the United States or other western countries. Furthermore,
policing unauthorized use of proprietary technology is difficult and expensive, and we may need to resort to litigation to enforce or
defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. Such
litigation and an adverse determination in any such litigation, if any, could result in substantial costs and diversion of resources and
management attention, which could harm our business and competitive position.

 We may be exposed to trademark infringement
and other claims by third parties which, if successful, could disrupt our business and have a material adverse effect on our financial
condition and results of operations.

 If we sell our branded products internationally, and
as litigation becomes more common in China, we face a higher risk of being the subject of claims for trademark infringement, invalidity
or indemnification relating to other parties' proprietary rights. The defense of trademark suits, including trademark infringement
suits, and related legal and administrative proceedings can be both costly and time consuming and may significantly divert the efforts
and resources of our management personnel. Furthermore, an adverse determination in any such litigation or proceedings to which we may
become a party could cause us to:

 pay damage awards;

 seek licenses from third parties;

 pay ongoing royalties;

 redesign our branded products; or

 be restricted by injunctions,

 each of which could effectively prevent us from pursuing
some or all of our business and result in our customers or potential customers deferring or limiting their purchase or use of our products.
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.

 As a company with less than $2.0 billion in revenue
during its last fiscal year, we qualify as an "emerging growth company" as defined in the JOBS Act. For as long as a company
is deemed to be an emerging growth company, it may take advantage of specified reduced reporting and other regulatory requirements that
are generally unavailable to other public companies. These provisions include:

 -

 a requirement to have only two years of audited financial statements and only two years of related Management's Discussion and Analysis included in an initial public offering registration statement;

 -

 an exemption to provide less than five years of selected financial data in an initial public offering registration statement;

 -

 an exemption from the auditor attestation requirement in the assessment of our internal controls over financial reporting;

 -

 an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies;

 -

 an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; and

 -

 reduced disclosure about our executive compensation arrangements.

 An emerging growth company is also exempt from Section
404(b) of the Sarbanes Oxley Act, which requires that the registered accounting firm shall, in the same report, attest to and report on
the assessment on the effectiveness of the internal control structure and procedures for financial reporting. Similarly, as a Smaller
Reporting Company we are exempt from Section 404(b) of the Sarbanes-Oxley Act and our independent registered public accounting firm will
not be required to formally attest to the effectiveness of our internal control over financial reporting until such time as we cease being
a Smaller Reporting Company.

 As an emerging growth company, we are exempt from
Section 14A (a) and (b) of the Exchange Act which require stockholder approval of executive compensation and golden parachutes.

 Section 107 of the JOBS Act provides that an emerging
growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying
with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards
until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition
period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting
standards.

 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.

 Risks Related to Doing Business in China

 Because all of our operations are in China currently,
our business is subject to the complex and rapidly evolving laws and regulations there. The PRC government may exercise significant oversight
and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a
material change in our operations and/or the value of our common stock.

 As a business operating in the PRC, we are subject
to the laws and regulations of the PRC, which can be complex and evolve rapidly. The PRC government has the power to exercise significant
oversight and discretion over the conduct of our business, and the regulations to which we are subject may change rapidly and with little
notice to us or our shareholders. As a result, the application, interpretation, and enforcement of new and existing laws and regulations
in the PRC are often uncertain. In addition, these laws and regulations may be interpreted and applied inconsistently by different agencies
or authorities, and inconsistently with our current policies and practices. 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. To the extent any new or more stringent measures are required to be implemented, our business, financial
condition and results of operations could be adversely affected as well as materially decrease the value of our common stock.

 The Chinese government has exercised and continues
to exercise substantial control over virtually every sector of the Chinese economy. Our ability to operate in China may be harmed by changes
in its laws and regulations, including those relating to customer rights, taxation, employment, property and other matters. The central
or local governments of China may impose new, stricter regulations or interpretations of existing regulations that would require additional
expenditures and efforts on our part to ensure our compliance with such regulations or interpretations. Accordingly, government actions
in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy
or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in
China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties. Given
recent statements by the Chinese government indicating an intent to exert more oversight and control over offerings that are conducted
overseas and/or foreign investment in China-based issuers, any such action could significantly limit or completely hinder our ability
to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or become worthless.

 Recently, the General Office of the Central Committee
of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Severely Cracking Down on Illegal
Securities Activities According to Law, or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized
the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas
listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems, will be taken to
deal with the risks and incidents of China-concept overseas listed companies. Such future administrative measure or actions may have material
adverse effects on the offering of our securities to investors, our proposed listing in the U.S. or our business operation, for example
in the event that it is required that we should obtain permission from the Chinese government to offer our securities to investors or
list on U.S. exchanges, it is unpredictable whether such permission can be obtained by us, as the case may be, or, if permission is obtained,
whether it could be later denied or rescinded. If we, including our subsidiaries, do not receive or maintain such permissions or approvals,
or inadvertently conclude that such permissions or approvals are not required, it could significantly limit or completely hinder our ability
to offer or continue to offer our securities to investors, list in the U.S. and cause the value of our securities to significantly decline
or become worthless. As of the date hereof, we have not received any inquiry, notice, warning, or sanctions from PRC government authorities
in connection with the Opinions.

 On June 10, 2021, the Standing Committee of the National
People's Congress of China (the "SCNPC"), promulgated the PRC Data Security Law, which took effect in September 2021.
The PRC Data Security Law imposes data security and privacy obligations on entities and individuals carrying out data activities, and
introduces a data classification and hierarchical protection system based on the importance of data in economic and social development,
and the degree of harm it will cause to national security, public interests, or legitimate rights and interests of individuals or organizations
when such data is tampered with, destroyed, leaked, illegally acquired or used. The PRC Data Security Law also provides for a national
security review procedure for data activities that may affect national security and imposes export restrictions on certain data and information.

 In early July 2021, regulatory authorities in China
launched cybersecurity investigations with regard to several China-based companies that are listed in the United States. In July 2021,
the Chinese cybersecurity regulator launched the investigation on three Internet platforms.

 On November 14, 2021, the CAC released the Regulations
on the Network Data Security Management (Draft for Comments) (the "Data Security Management Regulations Draft"), to solicit
public opinion and comments. Pursuant to the Data Security Management Regulations Draft, data processors holding more than one million
users' individual information shall be subject to cybersecurity review before listing abroad. Data processing activities refers
to activities such as the collection, retention, use, processing, transmission, provision, disclosure, or deletion of data. According
to the latest amended Cybersecurity Review Measures, which was promulgated on December 28, 2021 and became effective on February 15, 2022,
and replaced the Cybersecurity Review Measures promulgated on April 13, 2020, online platform operator holding more than one million users'
individual information shall be subject to cybersecurity review before listing abroad. Since the Cybersecurity Review Measures is new,
the implementation and interpretation thereof is not yet clear.

 On July 30, 2021, the State Council promulgated the
Regulations on the Protection of the Security of Critical Information Infrastructure, or the Regulations, which took effect on September
1, 2021. The Regulations supplement and specify the provisions on the security of critical information infrastructure as stated in the
Cybersecurity Review Measures. The Regulations provide, among others, that protection department of certain industry or sector shall notify
the operator of the critical information infrastructure in time after the identification of certain critical information infrastructure.
On September 20, 2021, the SCNPC promulgated the Personal Information Protection Law of the PRC, or the Personal Information Protection
Law, which took effect in November 2021. As the first systematic and comprehensive law specifically for the protection of personal information
in the PRC, the Personal Information Protection Law provides, among others, that (i) an individual's consent shall be obtained to
use sensitive personal information, such as biometric characteristics and individual location tracking, (ii) personal information operators
using sensitive personal information shall notify individuals of the necessity of such use and impact on the individual's rights,
and (iii) where personal information operators reject an individual's request to exercise his or her rights, the individual may
file a lawsuit with a People's Court.

 On February 17, 2023, the CSRC issued the New Administrative
Rules Regarding Overseas Listings, which became effective on March 31, 2023. According to the new administrative rules, among other things,
a domestic company in the PRC that seeks to offer and list securities in overseas markets shall fulfill the filing procedure with the
CSRC as per requirements thereof. Initial public offerings or listings in overseas markets shall be filed with the CSRC within 3 working
days after the relevant application is submitted overseas. If an issuer offers securities in the same overseas market where it has previously
offered and listed securities subsequently, filings shall be made with the CSRC within 3 working days after the offering is completed.
Upon occurrence of any material event, such as change of control, investigations or sanctions imposed by overseas securities regulatory
agencies or other relevant competent authorities, change of listing status or transfer of listing segment, or voluntary or mandatory delisting,
after an issuer has offered and listed securities in an overseas market, the issuer shall submit a report thereof to CSRC within 3 working
days after the occurrence and public disclosure of such event. Further, an overseas securities company that serves as a sponsor or lead
underwriter for overseas securities offering and listing by domestic companies shall file with the CSRC within 10 working days after signing
its first engagement agreement for such business, and submit to the CSRC, no later than January 31 each year, an annual report on its
business activities in the previous year associated with overseas securities offering and listing by domestic companies. 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. The Confidentiality and Archives Administration
Provisions set out rules, requirements and procedures relating to provision of documents, materials and accounting archives for securities
companies, securities service providers, overseas regulators and other entities and individuals in connection with overseas offering and
listing, including without limitation to, domestic companies that carry out overseas offering and listing (either in direct or indirect
means) and the securities companies and securities service providers (either incorporated domestically or overseas) that undertake relevant
businesses shall not leak any state secret and working secret of government agencies, or harm national security and public interest, and
a domestic company shall first obtain approval from competent authorities according to law, and file with the secrecy administrative department
at the same level, if it plans to, either directly or through its overseas listed entity, publicly disclose or provide any documents and
materials that contain state secrets or working secrets of government agencies. Working papers produced in the Chinese mainland by securities
companies and securities service providers in the process of undertaking businesses related to overseas offering and listing by domestic
companies shall be retained in the Chinese mainland. Where such documents need to be transferred or transmitted to outside the Chinese
mainland, relevant approval procedures stipulated by regulations shall be followed.

 Our business may be subject to a variety of
PRC laws and other obligations regarding cybersecurity and data protection.

 Our business may be subject to PRC laws relating to
the collection, use, sharing, retention, security, and transfer of confidential and private information, such as personal information
and other data. These laws continue to develop, and the PRC government may adopt other rules and restrictions in the future. Non-compliance
could result in penalties or other significant legal liabilities.

 Pursuant to the PRC Cybersecurity Law, which was promulgated
by the Standing Committee of the National People's Congress on November 7, 2016 and took effect on June 1, 2017, personal information
and important data collected and generated by a critical information infrastructure operator in the course of its operations in China
must be stored in China, and if a critical information infrastructure operator purchases internet products and services that affects or
may affect national security, it should be subject to cybersecurity review by the Cyberspace Administration of China ("CAC").
Due to the lack of further interpretations, the exact scope of "critical information infrastructure operator" remains unclear.

 On April 13, 2020, twelve Chinese government agencies
jointly promulgated the Measures for Cybersecurity Review, which became effective on June 1, 2020, set forth the cybersecurity review
mechanism for critical information infrastructure operators, and provided that critical information infrastructure operators who intend
to purchase internet products and services that affect or may affect national security shall be subject to a cybersecurity review. On
June 10, 2021, the Standing Committee of the National People's Congress promulgated the PRC Data Security Law, which will take effect
in September 2021. The Data Security Law provides for a security review procedure for data activities that may affect national security.
Moreover, the State Internet Information Office issued the Measures of Cybersecurity Review (Revised Draft for Comments, not yet effective)
on July 10, 2021, which requires operators with personal information of more than 1 million users who want to list abroad to file a cybersecurity
review with the CAC. Furthermore, the General Office of the Central Committee of the Communist Party of China and the General Office of
the State Council jointly issued the Opinions on Severe and Lawful Crackdown on Illegal Securities Activities, which was available to
the public on July 6, 2021. These opinions emphasized the need to strengthen the administration over illegal securities activities and
the supervision on overseas listings by China-based companies. These opinions proposed to take effective measures, such as promoting the
construction of relevant regulatory systems, to deal with the risks and incidents facing China-based overseas-listed companies and the
demand for cybersecurity and data privacy protection. As these laws, opinions and the draft measures were recently issued, official guidance
and interpretation of these remain unclear in several respects at this time, and the PRC government authorities may have wide discretion
in the interpretation and enforcement of these laws, opinions and the draft measures. Therefore, it is uncertain whether the future regulatory
changes would impose additional restrictions on our business.

 The Data Security Law also sets forth the data security
protection obligations for entities and individuals handling personal data, including that no entity or individual may acquire such data
by stealing or other illegal means, and the collection and use of such data should not exceed the necessary limits The costs of compliance
with, and other burdens imposed by, PRC Cybersecurity Law and any other cybersecurity and related laws may limit the use and adoption
of our products and services and could have an adverse impact on our business. Further, if the enacted version of the Measures for Cybersecurity
Review mandates clearance of cybersecurity review and other specific actions to be completed by companies like us, we face uncertainties
as to whether such clearance can be timely obtained, or at all.

 There remains uncertainty as to how the Draft Measures
will be interpreted or implemented and whether the PRC regulatory agencies, including the CAC, may adopt new laws, regulations, rules,
or detailed implementation and interpretation related to the Draft Measures. If any such new laws, regulations, rules, or implementation
and interpretation comes into effect, we will take all reasonable measures and actions to comply and to minimize the adverse effect of
such laws on us.

 We cannot assure you that PRC regulatory agencies,
including the CAC, would take the same view as we do, and there is no assurance that we can fully or timely comply with such laws. In
the event that we are subject to any mandatory cybersecurity review and other specific actions required by the CAC, we face uncertainty
as to whether any clearance or other required actions can be timely completed, or at all. 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. Uncertainties with respect to the PRC legal system, including uncertainties regarding
the enforcement of laws, and sudden or unexpected changes in laws and regulations in China with little advance notice could have a material
adverse effect on us and limit the legal protections available to you and us.

 There are substantial uncertainties regarding the
interpretation and application of PRC laws and regulations including, but not limited to, the laws and regulations governing our business
and the enforcement and performance of our arrangements with clients in certain circumstances. The laws and regulations are sometimes
vague and may be subject to future changes, and their official interpretation and enforcement could be unpredictable, with little advance
notice. The effectiveness and interpretation of newly enacted laws or regulations, including amendments to existing laws and regulations,
may be delayed, and our business may be affected if we rely on laws and regulations which are subsequently adopted or interpreted in a
manner different from our current understanding of these laws and regulations. New laws and regulations that affect existing and proposed
future businesses may also be applied retroactively. We cannot predict what effect the interpretation of existing or new PRC laws or regulations
may have on our business.

 The PRC legal system is based on written statutes.
Prior court decisions are encouraged to be used for reference but it remains unclear to what extent the prior court decisions may impact
the current court ruling as the encouragement policy is new and there is limited judicial practice in this regard. We conduct our business
primarily through our subsidiaries established in China.

 These subsidiaries are generally subject to laws and
regulations applicable to foreign investment in China. However, since these laws and regulations are relatively new and the PRC legal
system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of
these laws, regulations and rules involves uncertainties, which may limit legal protections available to us. In addition, any new or changes
in PRC laws and regulations related to foreign investment in China could affect the business environment and our ability to operate our
business in China. Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the
State Council jointly issued the "Opinions on Severely Cracking Down on Illegal Securities Activities According to Law," or
the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration
over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective
measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept
overseas listed companies, and cybersecurity and data privacy protection requirements, etc. The Opinions and any related implementing
rules to be enacted may subject us to compliance requirement in the future. In addition, some regulatory requirements issued by certain
PRC government authorities may not be consistently applied by other government authorities (including local government authorities), thus
making strict compliance with all regulatory requirements impractical, or in some circumstances impossible. For example, we may have to
resort to administrative and court proceedings to enforce the legal protection that we enjoy either by law or contract. However, since
PRC administrative and court authorities have discretion in interpreting and implementing statutory and contractual terms, it may be more
difficult to predict the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed
legal systems. These uncertainties may impede our ability to enforce the contracts we have entered into with our business partners, clients
and suppliers. In addition, such uncertainties, including any inability to enforce our contracts, together with any development or interpretation
of PRC law that is adverse to us, could materially and adversely affect our business and operations. Furthermore, intellectual property
rights and confidentiality protections in China may not be as effective as in the United States or other more developed countries and
the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis or
at all and may have retroactive effects. As a result, we may not be aware of our violation of any of these policies and rules until sometime
after the violation. Such unpredictability towards our contractual, property, and procedural rights could adversely affect our business
and impede our ability to continue our operations. We cannot predict the effect of future developments in the PRC legal system, including
the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the pre-emption of local regulations
by national laws. These uncertainties could limit the legal protections available to us and other foreign investors, including you. In
addition, any litigation in China may be protracted and result in substantial costs and diversion of our resources and management attention.

 The PRC government has significant oversight and discretion
over the conduct of our business and may intervene or influence our operations as the government deems appropriate to further regulatory,
political and societal goals. The PRC government has recently published new policies that significantly affected certain industries such
as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies
regarding our industry that could adversely affect our business, financial condition and results of operations.

 Furthermore, if China adopts more stringent standards
with respect to certain areas such as corporate social responsibilities, we may incur increased compliance costs or become subject to
additional restrictions in our operations. We cannot predict the effects of future developments in the PRC legal system on our business
operations, including the promulgation of new laws, or changes to existing laws or the interpretation or enforcement thereof. These uncertainties
could limit the legal protections available to us and our investors, including you.

 Changes in China's economic, political
or social conditions or government policies, which could occur quickly with little advance notice, could have a material adverse effect
on our business and operations.

 Substantially all of our assets and operations are
located in the PRC. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant
degree by political, economic and social conditions in the PRC generally. The Chinese economy differs from the economies of most developed
countries in many respects, including the level of government involvement, development, growth rate, control of foreign exchange, monetary
and tax policies, allocation of resources, and regulation of the growth of the general or specific market and a host of other government
policies such as those that encourage or restrict investment in certain industries by foreign investors. Although the PRC government has
implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive
assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in
the PRC is still owned by the government. In addition, the PRC government continues to play a significant role in regulating industry
development by imposing industrial policies. 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. Any adverse changes in
economic conditions in the PRC, in the policies of the PRC government or in the laws and regulations in the PRC, which may occur quickly
with little advance notice, could have a material adverse effect on the overall economic growth of the PRC. Such developments could adversely
affect our business and operating results, lead to a reduction in demand for our products and adversely affect our competitive position.
The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these
measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results
of operations may be adversely affected by government control over capital investments or changes in tax regulations. In addition, in
the past the PRC government has implemented certain measures, including interest rate adjustment, to control the pace of economic growth.
These measures may cause decreased economic activity in the PRC, which may adversely affect our business and operating results. In addition,
although these government involvements have been instrumental in China's significant growth, if the PRC government's current
or future policies fail to help the Chinese economy achieve further growth, our growth rate or strategy, our results of operations could
also be adversely affected as a result.

 Our profitability may be seriously affected
by fluctuations in exchange rates between the Renminbi and the U.S. dollar.

 All of our revenue is denominated in Renminbi while
our financial reporting is in U.S. dollars. As a result, any significant fluctuation in exchange rates may cause us to incur currency
exchange translation and harm our financial condition and results of operations.

 Movements in Renminbi exchange rates are affected
by, among other things, changes in political and economic conditions and China's foreign exchange regime and policy. 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. Moreover, it is possible that the PRC authorities may lift restrictions on fluctuations
in Renminbi exchange rates and lessen intervention in the foreign exchange market in the future.

 To date, we have not entered into any hedging transactions
in an effort to reduce our exposure to foreign currency exchange risk. While we may decide to enter into hedging transactions in the future,
the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure at all.

 Governmental control of currency conversion
may limit our ability to use our revenues effectively and the ability of our WFOE to obtain financing.

 The PRC government imposes control on the convertibility
of the Renminbi into foreign currencies and, in certain cases, the remittance of currency out of China. We receive all our revenues in
Renminbi, which currently is not a freely convertible currency. Restrictions on currency conversion imposed by the PRC government may
limit our ability to use revenues generated in Renminbi to fund our expenditures denominated in foreign currencies or our business activities
outside China. Under China's existing foreign exchange regulations, Renminbi may be freely converted into foreign currency for payments
relating to current account transactions, which include among other things dividend payments and payments for the import of goods and
services, by complying with certain procedural requirements. Our WFOE is able to pay dividends in foreign currencies to us without prior
approval from SAFE, by complying with certain procedural requirements Our WFOE may also retain foreign currency in its current account
bank accounts for use in payment of international current account transactions. However, we cannot assure you that the PRC government
will not take measures in the future to restrict access to foreign currencies for current account transactions.

 Conversion of Renminbi into foreign currencies, and
of foreign currencies into Renminbi, for payments relating to capital account transactions, which principally includes investments and
loans, generally requires the approval of SAFE and other relevant PRC governmental authorities. Restrictions on the convertibility of
the Renminbi for capital account transactions could affect the ability of WFOE to make investments overseas or to obtain foreign currency
through debt or equity financing, including by means of loans or capital contributions from us. We cannot assure you that the registration
process will not delay or prevent our conversion of Renminbi for use outside of China.

 You may experience difficulties in effecting
service of legal process, enforcing foreign judgments or bringing actions in China against us or our management.

 We conduct substantially all of our operations in
China, and substantially all of our assets are located in China, which is an emerging market. As a result, it may be difficult for our
shareholders to affect service of process upon us.

 It may also be difficult for you to enforce the U.S.
courts judgments obtained in U.S. courts, including judgments based on the civil liability provisions of the U.S. federal securities laws
against us with a significant part of our assets are located outside of the United States. In addition, there is uncertainty as to whether
the courts of the PRC would recognize or enforce judgments of U.S. courts against us, or such persons predicated upon the civil liability
provisions of the securities laws of the United States or any state. In addition, it is uncertain whether such PRC courts would entertain
original actions brought in the courts of the PRC against us or such persons predicated upon the securities laws of the United States
or any state.

 Specifically, regarding judgment enforcement in the
PRC, the recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize
and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China
and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or
other forms of reciprocal arrangement with the United States that provide for the reciprocal recognition and enforcement of foreign judgments.
In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us if they decide that
the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest of the PRC. 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.

 Under the current PRC tax regulations, indirect transfers
of equity interests and other properties of PRC tax resident enterprises by non-PRC holding companies may be subject to PRC tax. In accordance
with the Announcement of the State Administration of Taxation on Several Issues concerning the Enterprise Income Tax on the Indirect Transfers
of Properties by Non-Resident Enterprises ("Announcement 7") issued by the SAT on February 3, 2015, if a non-PRC tax
resident enterprise indirectly transfers equities and other properties of a PRC tax resident enterprise and such indirect transfer will
produce a result identical or substantially similar to direct transfer of equity interests and other properties of the PRC tax resident
enterprise, the non-PRC tax resident enterprise may be subject to PRC withholding tax at a rate up to 10%. The Announcement of the State
Administration of Taxation on Matters Concerning Withholding of Income Tax of Non-resident Enterprises at Source ("Announcement
37"), which was issued by SAT on October 17, 2017, and became effective on December 1, 2017, renovates the principles
and procedures concerning the indirect equity transfer tax withholding for a non-PRC tax resident enterprise. Failure to comply with the
tax payment obligations by a non-PRC tax resident will result in penalties, including full payment of tax owed, fines and default interest
on those tax.

 According to Announcement 7, where a non-resident
enterprise indirectly transfers equity interests or other properties of PRC tax resident enterprises ("PRC Taxable Property")
to avoid its tax liabilities by implementing arrangements without reasonable commercial purpose, such indirect transfer shall be recharacterized
and recognized as a direct transfer of PRC Taxable Property. As a result, gains derived from such indirect transfer and attributable to
PRC Taxable Property may be subject to PRC withholding tax at a rate of up to 10%. In respect of an indirect offshore transfer of property
of a PRC establishment or place of business of a foreign enterprise, the resulting gain is to be included with the annual enterprise filing
of the PRC establishment or place of business being transferred and would consequently be subject to PRC enterprise income tax at a rate
of 25%. Announcement 7 further sets forth certain "safe harbors" which would be deemed to have a reasonable commercial purpose.
As a general principle, the SAT also issued the Administration of General Anti-Tax Avoidance (Trial Implementation) ("GATA"),
which became effective on February 1, 2015, and empowers the PRC tax authorities to apply special tax adjustments for "tax
avoidance arrangements."

 We face uncertainties as to the reporting and other
implications of certain past and future transactions where PRC Taxable Property are involved, such as offshore restructuring, sale of
the shares in our offshore subsidiaries and investments. Our Company may be subject to withholding obligations if our Company is considered
as a transferee in such transactions, under Announcement 7 and Announcement 37. For transfer of shares in our Company by investors who
are non-PRC resident enterprises, our PRC subsidiaries may be required to expend valuable resources to comply with Announcement 7 and
Announcement 37 or to request the relevant transferors from whom we purchase taxable assets to comply with these circulars, or to establish
that our company should not be taxed under these circulars, which may have an adverse effect on our financial condition and results of
operations.

 PRC regulations relating to the establishment
of offshore special purpose companies by PRC residents may subject our PRC resident shareholders to personal liability and limit our ability
to acquire PRC companies or to inject capital into WFOE, limit WFOE's ability to distribute profits to us, or otherwise materially
and adversely affect us.

 Under the Circular of the State Administration of
Foreign Exchange on Issues concerning Foreign Exchange Administration over the Overseas Investment and Financing and Round-trip Investment
by Domestic Residents via Special Purpose Vehicles, or Circular 37, issued by SAFE, prior registration with the local SAFE branch is required
for PRC residents to contribute domestic assets or interests to offshore companies, known as SPVs. Moreover, Circular 37 applies retroactively.
As a result, PRC residents who have contributed domestic assets or interest to a SPV but failed to complete foreign exchange registration
of overseas investments as required before July 4, 2014, shall send a letter to SAFE and its branches for explanation. SAFE and its
branches shall, under the principle of legality and legitimacy, conduct supplementary registration, and impose administrative punishment
on those in violation of the administrative provisions on the foreign exchange pursuant to the law.

 We have requested our shareholders who are PRC residents
to make the necessary applications, filings and amendments as required under Circular 37 and other related rules. We attempt to comply
and attempt to ensure that our shareholders who are subject to these rules comply with the relevant requirements. However, we cannot provide
any assurances that all of our shareholders who are PRC residents will comply with our request to make or obtain any application registrations
or comply with other requirements required by Circular 37 or other related rules. The failure or inability of our PRC resident shareholders
to make any required registrations or comply with other requirements may subject such shareholders to fines and legal sanctions and may
also limit our ability to contribute additional capital into or provide loans to our subsidiaries, limiting the ability of our subsidiaries
to pay dividends or otherwise distribute profits to us.

 Failure to comply with the Individual Foreign
Exchange Rules relating to the overseas direct investment or our PRC resident shareholders' engaging in the issuance or trading
of securities overseas may subject them to fines or other liabilities.

 Other than Circular 37, our ability to conduct foreign
exchange activities in China may be subject to interpretation and enforcement of the Implementation Rules of the Administrative Measures
for Individual Foreign Exchange promulgated by SAFE in January 2007 (as amended and supplemented, the "Individual Foreign Exchange
Rules"). Under the Individual Foreign Exchange Rules, any PRC individual seeking to make a direct investment overseas or engage
in the issuance or trading of negotiable securities or derivatives overseas must make the appropriate registrations in accordance with
SAFE provisions. 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. For example, because the investment in or trading of our shares will happen in an overseas
public or secondary market where shares are often held with brokers in brokerage accounts, it is unlikely that we will know the identity
of all of our beneficial owners who are PRC residents. Furthermore, we have no control over any of our future beneficial owners and we
cannot assure you that such PRC residents will be able to complete the necessary approval and registration procedures required by the
Individual Foreign Exchange Rules.

 It is uncertain how the Individual Foreign Exchange
Rules will be interpreted or enforced and whether such interpretation or enforcement will affect our ability to conduct foreign exchange
transactions.

 PRC regulation of loans and direct investment
by offshore holding companies to or in PRC entities may delay or prevent us from making loans or additional capital contributions to WFOE,
which could materially and adversely affect our liquidity and our ability to fund and expand our business.

 We may make loans to the WFOE. Any loans to either
are subject to PRC regulations and approvals. For example, loans by us to our WFOE in China cannot exceed statutory limits and must be
registered with SAFE or its local counterpart. We may also decide to finance our WFOE through capital contributions. These capital contributions
must be approved by the Ministry of Commerce in China or its local counterpart. We cannot assure you that we will be able to obtain these
government registrations or approvals on a timely basis, if at all.

 The SAFE's Circular on Reforming the Administration
Approach Regarding the Foreign Exchange Capital Settlement of Foreign-invested Enterprises ("Circular 19") provides that the
conversion from foreign currency registered capital of foreign-invested enterprises into the Renminbi capital may be at foreign-invested
enterprises' discretion, which means that the foreign currency registered capital of foreign-invested enterprises for which the
rights and interests of monetary contribution has been confirmed by the local foreign exchange bureau (or the book-entry of monetary contribution
has been registered) can be settled at the banks based on the actual operational needs of the enterprises.

 Further, according to Circular 19, the flow and use
of the RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company is regulated such that
RMB capital may not be used for the issuance of RMB entrusted loans, the repayment of inter-enterprise loans or the repayment of banks
loans that have been transferred to a third party. Although Circular 19 allows RMB capital converted from foreign currency-denominated
registered capital of a foreign-invested enterprise to be used for equity investments within China, it also reiterates the principle that
RMB converted from the foreign currency-denominated capital of a foreign-invested company may not be directly or indirectly used for purposes
beyond its business scope. Thus, it is unclear whether SAFE will permit such capital to be used for equity investments in China in actual
practice.

 In July 2016, the SAFE promulgated the Circular
on Reforming and Standardizing the Administrative Provisions on Capital Account Foreign Exchange ("Circular 16"), which applies
to all domestic enterprises in China. Circular 16 reiterates some of the rules set forth in Circular 19 but changes the prohibition against
using RMB capital converted from foreign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted
loans to a prohibition against using such capital to issue loans to non-associated enterprises.

 Circular 19 and Circular 16 may significantly limit
the ability of our WFOE to transfer and use Renminbi funds from its foreign currency denominated capital, which may adversely affect our
business, financial condition and results of operations.

 In light of the various requirements imposed by PRC
regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able
to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect
to future loans by us to our PRC subsidiaries or with respect to future capital contributions by us to our PRC subsidiaries.

 To the extent any funds or assets in the business
is in mainland China or a mainland China entity, the funds or assets may not be available to fund operations or for other use outside
of mainland China.

 To the extent funds are generated in our PRC operating
subsidiaries and may need to be used to fund operations outside of mainland China, such funds may not be available due to limitations
placed by the PRC government. Furthermore, to the extent assets (other than cash) in our business are located in mainland China or held
by a mainland China entity, the assets may not be available to fund operations or for other use outside of mainland China due to interventions
in or the imposition of restrictions and limitations on the ability of us and our subsidiaries to transfer assets by the PRC government.

 We may be classified as a "resident enterprise"
for PRC enterprise income tax purposes; such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.

 The PRC enterprise income tax law and its implementing
rules provide those enterprises established outside of China whose "de facto management bodies" are located in China are considered
"resident enterprises" under PRC tax laws. The implementing rules define the term "de facto management bodies"
as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. Circular
82, issued by the State Administration of Taxation, provides that a foreign enterprise controlled by a PRC company or a group of PRC companies
will be classified as a "resident enterprise" with its "de facto management body" located within China if all
of the following requirements are satisfied: (1) the senior management and core management departments in charge of its daily operations
function are mainly in China; (2) its financial and human resources decisions are subject to determination or approval by persons or bodies
in China; (3) its major assets, accounting books, company seals, and minutes and files of its board and shareholders' meetings are
located or kept in China; and (4) at least half of the enterprise's directors with voting right or senior management reside in China.
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. This bulletin further provides that, among other things, an
entity that is classified as a "resident enterprise" in accordance with the circular shall file the application for classifying
its status of residential enterprise with the local tax authorities where its main domestic investors are registered. From the year in
which the entity is determined to be a "resident enterprise," any dividend, profit and other equity investment gain shall
be taxed in accordance with the enterprise income tax law and its implementing rules.

 Currently, there are no detailed rules or precedents
governing the procedures and specific criteria for determining de facto management bodies which are applicable to our company or our overseas
subsidiaries. If our company or any of our overseas subsidiaries is considered a PRC tax resident enterprise for PRC enterprise income
tax purposes, a number of unfavorable PRC tax consequences could follow. First, our company or our overseas subsidiaries will be subject
to the uniform 25% enterprise income tax rate as to our global income as well as PRC enterprise income tax reporting obligations. Second,
although under the Enterprise Income Tax Law and its implementing rules dividends paid to us from our PRC subsidiaries would qualify as
tax-exempted income, we cannot assure you that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange
control authorities, which enforce the withholding tax, have not yet issued guidance with respect to the processing of outbound remittances
to entities that are treated as resident enterprises for PRC enterprise income tax purposes. Finally, dividends payable by us to our shareholders
and gain on the sale of our shares may become subject to PRC withholding tax. It is possible that future guidance issued with respect
to the new resident enterprise classification could result in a situation in which a withholding tax of 10% for our non-PRC enterprise
shareholders or a potential withholding tax of 20% for individual investors is imposed on dividends we pay to them and with respect to
gains derived by such investors from transferring our shares. In addition to the uncertainty in how the new resident enterprise classification
could apply, it is also possible that the rules may change in the future, possibly with retroactive effect. If we are required under the
Enterprise Income Tax law to withhold PRC income tax on our dividends payable to our foreign shareholders, or if we are required to pay
PRC income tax on the transfer of our shares under the circumstances mentioned above, the value of your investment in our shares may be
materially and adversely affected. It is unclear whether, if we are considered a PRC resident enterprise, holders of our shares would
be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas.

 Our current employment practices may be restricted
under the PRC Labor Contract Law and our labor costs may increase as a result.

 The PRC Labor Contract Law and its implementing rules
impose requirements concerning contracts entered into between an employer and its employees and establishes time limits for probationary
periods and for how long an employee can be placed in a fixed-term labor contract. Because the Labor Contract Law and its implementing
rules have not been in effect very long and because there is lack of clarity with respect to their implementation and potential penalties
and fines, it is uncertain how it will impact our current employment policies and practices. We cannot assure you that our employment
policies and practices do not, or will not, violate the Labor Contract Law or its implementing rules and that we will not be subject to
related penalties, fines or legal fees. If we are subject to large penalties or fees related to the Labor Contract Law or its implementing
rules, our business, financial condition and results of operations may be materially and adversely affected. In addition, according to
the Labor Contract Law and its implementing rules, if we intend to enforce the non-compete provision with an employee in a labor contract
or non-competition agreement, we have to compensate the employee on a monthly basis during the term of the restriction period after the
termination or ending of the labor contract, which may cause extra expenses to us. Moreover, the Labor Contract Law and its implementation
rules require certain terminations to be based upon seniority rather than merit, which significantly affects the cost of reducing workforce
for employers. In the event we decide to significantly change or decrease our workforce in the PRC, the Labor Contract Law could adversely
affect our ability to enact such changes in a manner that is most advantageous to our circumstances or in a timely and cost effective
manner, thus our results of operations could be adversely affected.

 Furthermore, the economy in China has experienced
increases in inflation and labor costs in recent years. As a result, average wages in the PRC are expected to continue to increase. In
addition, we are required by PRC laws and regulations to pay various statutory employee benefits, including pension, housing fund, medical
insurance, on-the-job injury insurance, unemployment insurance and maternity insurance to designated government agencies for the benefit
of our employees. We expect that our labor costs, including wages and employee benefits, will continue to increase. Unless we are able
to control our labor costs or pass on these increased labor costs to our users by increasing the fees of our products, our financial condition
and results of operations may be adversely affected.

 We face uncertainties with respect to our business
operations and direct and indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies.

 We face uncertainties with respect to our business
operations and direct and indirect transfers of equity interests in PRC resident enterprises by their non-PRC holding companies. PRC Governmental
Agencies may intervene or influence the Company's operations at any time, which could result in a material change in the Company's
operations and/or the value of the Common shares. Given recent statements by the Chinese government indicating an intent to exert more
oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers, any such action could
significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such
securities to significantly decline or become worthless.

 Adverse changes in economic and political policies
of the PRC government could have a material and adverse effect on overall economic growth in China, which could materially and adversely
affect our business. General macroeconomic conditions may materially and adversely affect our business, prospects, results of operations
and financial position. The PRC government's control over foreign currency conversion may adversely affect our business and results
of operations and our ability to remit dividends.

 The M&A Rules and certain other PRC regulations
may make it more difficult for us to pursue growth through acquisitions. Under the Enterprise Income Tax Law, we may be classified as
a "Resident Enterprise" of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC
shareholders and have a material adverse effect on our results of operations and the value of your investment. 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. Our stock is quoted via the Over-The-Counter ("OTC") Pink Sheets under
the ticker symbol "ESGH". Therefore, our Common Stock is expected to have fewer market makers, lower trading volumes, and
larger spreads between bid and asked prices than securities listed on an exchange such as the New York Stock Exchange or the NASDAQ Stock
Market. These factors may result in higher price volatility and less market liquidity for our Common Stock.

 Low market price

 A low market price would severely limit the potential
market for our Common Stock. Our Common Stock is expected to trade at a price substantially below $5.00 per share, subjecting trading
in the stock to certain Commission rules requiring additional disclosures by broker-dealers. These rules generally apply to any non-NASDAQ
equity security that has a market price share of less than $5.00 per share, subject to certain exceptions (a "penny stock").
Such rules require the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and
the risks associated therewith and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other
than established customers and institutional or wealthy investors. For these types of transactions, the broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to the sale.
The broker-dealer also must disclose the commissions payable to the broker-dealer, current bid and offer quotations for the penny stock
and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Such information must be provided to the customer orally or in writing before or with the written confirmation of trade
sent to the customer. Monthly statements must be sent disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. The additional burdens imposed upon broker-dealers by such requirements could discourage
broker-dealers from effecting transactions in our Common Stock.

 Lack of market and state blue sky laws

 Investors may have difficulty in reselling their shares
due to the lack of market or state Blue Sky laws. The holders of our shares of Common Stock and persons who desire to purchase them in
any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability
of investors to resell our shares. Accordingly, even if we are successful in having the shares available for trading on the OTC, investors
should consider any secondary market for our securities to be a limited one. We intend to seek coverage and publication of information
regarding our Company in an accepted publication which permits a "manual exemption." This manual exemption permits a security
to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in
a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing
entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement
for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure
a listing containing all of this information. Furthermore, the manual exemption is a non-issuer exemption restricted to secondary trading
transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard
and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states
expressly recognize these manuals. A smaller number of states declare that they "recognize securities manuals" but do not
specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption:
Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont, and Wisconsin.

 Accordingly, our shares of Common Stock should be
considered totally illiquid, which inhibits investors' ability to resell their shares.

 Penny stock regulations

 We will be subject to penny stock regulations and
restrictions and you may have difficulty selling shares of our Common Stock. The Commission has adopted regulations which generally define
so-called "penny stocks" to be an equity security that has a market price less than $5.00 per share or an exercise price of
less than $5.00 per share, subject to certain exemptions. We anticipate that our Common Stock will become a "penny stock",
and we will become subject to Rule 15g-9 under the Exchange Act, or the "Penny Stock Rule". This rule imposes additional sales
practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered
by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities
and may affect the ability of purchasers to sell any of our securities in the secondary market.

 For any transaction involving a penny stock, unless
exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the Commission relating
to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price
information for the penny stock held in the account and information on the limited market in penny stock.

 We do not anticipate that our Common Stock will qualify
for exemption from the Penny Stock Rule. 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. There are 18,273,910 issued and outstanding shares of our Common Stock held by affiliates that Rule 144 of the
Securities Act defines as restricted securities.

 These shares will be subject to the resale restrictions
of Rule 144, since we are not deemed a "shell company". In general, persons holding restricted securities, including affiliates,
must hold their shares for a period of at least six month. Affiliates may not sell more than 1.0% of the total issued and outstanding
shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability
for sale of substantial amounts of Common Stock under Rule 144 could reduce prevailing market prices for our securities.

 Security laws exposure

 We are subject to compliance with securities laws,
which expose us to potential liabilities, including potential rescission rights. We may offer to sell shares of our Common Stock to investors
pursuant to certain exemptions from the registration requirements of the Securities Act, as well as those of various state securities
laws. The basis for relying on such exemptions is factual; that is, the applicability of such exemptions depends upon our conduct and
that of those persons contacting prospective investors and making the offering. We may not seek any legal opinion to the effect that any
such offering would be exempt from registration under any federal or state law. Instead, we may elect to relay upon the operative facts
as the basis for such exemption, including information provided by investor themselves.

 If any such offering did not qualify for such exemptions,
an investor would have the right to rescind its purchase of the securities if it so desired. It is possible that if an investor should
seek rescission, such investor would succeed. A similar situation prevails under state law in those states where the securities may be
offered without registration in reliance on the partial pre-emption from the registration or qualification provisions of such state statutes
under the National Securities Markets Improvement Act of 1996. If investors were successful in seeking rescission, we would face severe
financial demands that could adversely affect our business and operations. Additionally, if we did not in fact qualify for the exemptions
upon which we have relied, we may become subject to significant fines and penalties imposed by the Commission and state securities agencies.

 No cash dividends

 Because we do not intend to pay any cash dividends
on our Common Stock, our stockholders will not be able to receive a return on their shares unless they sell them. We intend to retain
any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on shares
of our Common Stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their
shares unless they sell them. There is no assurance that stockholders will be able to sell shares of our Common Stock when desired.

 Delayed adoption of accounting standards

 We have delayed the adoption of certain accounting
standards through an opt-in right for emerging growth companies. We have elected to use the extended transition period for complying
with new or revised accounting standards under Section 102(b)(2) of the Jobs Act, which allows us to delay the adoption of new or revised
accounting standards that have different effective dates for public and private companies until those standards apply to private companies.
As a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates.

 Item 1B. Unresolved Staff Comments

 None.

 Item 1C. Cybersecurity

 The Company has not adopted any formal cybersecurity
risk management program or formal processes for assessing, identifying, and managing material risks from cybersecurity threats. The full
board of directors has oversight responsibility for the Company's overall risk management, including cybersecurity risk, and has
not delegated oversight authority for cybersecurity risks to any committee. In fiscal year 2024, we did not identify any cybersecurity
threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations, or
financial condition.

 Item 2. Properties

 The Company does not own any real property. Our corporate offices are
located at 433 East Hillendale Road, Chadds Ford, Pennsylvania, 19317. The lease began on January 1, 2025, is month to month and
is rent free. The principal of the lessor is a business associate of Mr. Yang, our CEO. The Company's Chinese subsidiaries, AUFP,
AUM, and AUMT, operate from a 407,119 square foot facility in Anhui, China that consists of 17,990 square feet of dormitory and cafeteria
space, with the balance divided into production and auxiliary facilities for button mushroom composting, growing, and processing.

 Item 3. Legal Proceedings

 We are currently not involved in any litigation
that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit,
proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company,
our common stock, any of our subsidiaries or of our companies or our subsidiaries' officers or directors in their capacities as
such, in which an adverse decision could have a material adverse effect.

 Item 4. Mine Safety Disclosures

 None.

 - 23 -

 Item 5. Market for Registrant ' s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Market Information

 While the Company is quoted on OTC Markets under the
ticker symbol "ESGH", there is no active trading in our common stock, and such may never develop.

 Authorized Capital Stock

 Our authorized capital stock consists of 65,000,000
shares of common stock, $0.001 par value per share and 10,000,000 shares of preferred stock, $0.001 par value per share. As of the date
of this annual report, there are 25,899,468 shares of our common stock issued and outstanding and no shares of preferred stock issued
and outstanding.

 Dividend Policy

 The Company has not declared or paid any cash dividends
on its Common Stock and does not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any,
is within the discretion of the Board of Directors and will depend on the Company's earnings, if any, its capital requirements and
financial condition and such other factors as the Board of Directors may consider.

 Securities Authorized for Issuance under Equity
Compensation Plans

 The Company does not have any equity compensation
plans or any individual compensation arrangements with respect to its Common Stock or Preferred Stock. The issuance of any of our Common
Stock or Preferred Stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized
but unissued shares without stockholder approval.

 Recent Sales of Unregistered Securities

 On November 6, 2023, Plasma Innovative Inc. entered
into a share exchange agreement (the "Share Exchange Agreement") with ESGI and the ESGI Shareholders, Under the Share Exchange
Agreement, 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 former stockholders of ESGI acquired a majority of the issued and outstanding common stock following
the share exchange transaction, when combined with their previous holdings. The transaction has been accounted for as a recapitalization
of the Company, whereby ESGI. is the accounting acquirer.

 Immediately after completion of such share exchange,
the Company has a total of 25,899,468 issued and outstanding shares, with authorized share capital for common shares of 65,000,000.

 Issuer Purchases of Equity Securities

 None.

 - 24 -

 Item 6.

 Smaller reporting companies are not required to provide
the information required by this Item 6.

 Item 7. Management ' s Discussion
and Analysis of Financial Condition and Results of Operations

 Cautionary Note Regarding Forward-Looking Statements

 This report contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. All statements other than statements of historical
fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future
operations; any statements concerning proposed new business or developments; any statements regarding future economic conditions of performance;
and statements of belief; and any statements of assumptions underlying any of the foregoing. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different
from any future results, performance or achievements expressed or implied by such forward-looking statements.

 In some cases, you can identify forward looking statements
by terms such as "may," "intend," "might," "will," "should," "could,"
"would," "expect," "believe," "anticipate," "estimate," "predict,"
"potential," or the negative of these terms. These terms and similar expressions are intended to identify forward-looking
statements. The forward-looking statements in this report are based upon management's current expectations and belief, which management
believes are reasonable. However, we cannot assess the impact of each factor on our business or the extent to which any factor or combination
of factors, or factors we are aware of, may cause actual results to differ materially from those contained in any forward-looking statements.
You are cautioned not to place undue reliance on any forward-looking statements. These statements represent our estimates and assumptions
only as of the date of this report. Except to the extent required by federal securities laws, we undertake no obligation to update any
forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

 You should be aware that our actual results could
differ materially from those contained in the forward-looking statements due to a number of factors, including:

 uncertainties relating to our ability to establish and operate our business and generate revenue;

 uncertainties relating to general economic, political and business conditions in China;

 industry trends and changes in demand for our products;

 uncertainties relating to customer plans and commitments and the timing of orders received from customers;

 announcements or changes in our advertising model and related pricing policies or that of our competitors;

 unanticipated delays in the development, market acceptance of our products;

 changes in Chinese government regulations;

 availability, terms and deployment of capital, relationships with third-party equipment suppliers; and

 influences of COVID-19 on China's economy and society.

 Overview

 ESG Inc. ("ESG") was incorporated in
July 2021, a Nevada corporation and headquartered at Kennett Square, Pennsylvania, USA, and is a holding company to develop and
operate sustainable plant based ingredients and food production and distribution with the planned expansion into the food
related business with the substantial experience of its management team, the board of directors including expertise and
relationships in the industry of mushroom, agriculture and food in the world and the capital markets in the States.

 With the core business philosophy to develop and
operate sustainable and technology driving food related businesses consistent with the principles of Environmental, Sustainable and
Governance investing, ESG is devoting to contribute on feeding the world by growing, processing and distributing plant-based food
ingredients mainly from all kinds of mushrooms.

 As a holding company with no material operations,
ESG currently conducts a majority of business through the operating entities incorporated in the People's Republic of China, or
the PRC, with the plan to expand in Asia Pacific and the rest world. Through legally 100% owned by ESG Inc. (a Nevada company) of ESG
China Limited (a HK company) and Hainan ESG Technology Co., Ltd. (a PRC company), ESG Inc. currently owns 74.52% of operating subsidiaries
in China including Funan Allied United Farmer Products Co., Ltd., Anhui Allied United Mushroom Technology Co., Ltd. and Anhui Allied United
Mushroom Co., Ltd.

 The primary operational goals are to feed the world
by providing quality and safe food. Specifically, ESG currently has capacity to produce 90,000 tons of Phase III compost yearly and more
than 7300 tons of fresh white button mushroom yearly separately by operating composting facility including 9 bunkers and 31 tunnels and
growing facility of 36 rooms.

 - 25 -

 Processing mushrooms including but not limited to
button mushroom is a brand-new product line by cooperating with trade houses in and out of China. The class of processed mushroom is mushroom
seasoning powder from white button off-grade mushroom and mushroom stem currently. The middle class of processed mushroom is instant mushroom
and vegetable snacks, which are being manufactured with sample by working with third party manufacturers. Advanced class of processed
mushroom is mushroom supplement and mushroom mycelium based meat alternative, animal leather alternative and industrial materials, which
is still at the early stage of discussion with research institutions.

 As a holding entity, ESG will continue to work with
gourmet food experts in the United States and Europe to pick up other plant-based food and ingredients to standardize and franchise its
production and distribution in Asian and Pacific area.

 Critical Accounting Policies and Estimates

 The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America requires management to make estimates, assumptions, and
judgments that affect the amounts reported in the financial statements, including the notes thereto. We base our estimates on historical
experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis
for making judgments about carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could
differ from those estimates. We do not consider any of our policies or estimates to be critical.

 Management believes its application of accounting
policies, and the estimates inherently required therein, are reasonable. These accounting policies and estimates are periodically reevaluated,
and adjustments are made when facts and circumstances dictate a change.

 Revenue Recognition

 Revenue is generated by selling fresh mushroom,
phase III compost and mushroom powder seasoning. We recognize product revenues from customers following a five-step model, which requires
us to exercise judgment when considering the terms of contracts and includes (1) identifying the contracts or agreements with a customer,
(2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction
price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied, which occurs when
our products are delivered to customers. We do not allow sales returns or exchanges.

 Recent Accounting Standards

 From time to time, new accounting pronouncements
are issued by the FASB or other standard-setting bodies and adopted by the Company as of the specified effective date. The Company believes
that the impact of recently issued standards will not have a material impact on its financial position or results of operations upon adoption.

 Results of Operations

 Comparison of the years ending December 31,
2024 and 2023

 Net Operating Revenues

 The net operating revenue were $12,682,330 for
the year ended December 31, 2024, compared to $7,452,129 of net operating revenues for the year ended December 31, 2023, an increase of
$5,230,201, or 70.2%.

 The increase was due to the expanded capacity
and sale on Phase III compost as well as the production and export sale of the seasoning powder from the processed mushroom.

 Cost of goods sold

 Cost of goods sold was $9,134,997 for the year
ended December 31, 2024, compared to $5,697,351 of cost of goods sold for the year ended December 31, 2023, an increase of $3,437,646
or 60.3%.

 The expansion of triple capacity completed, and the Company underwent operational
testing of the expanded facility in 2024. The increase was due to the increased input for the expanded capacity along with the increase in sales.

 Gross Profit Margin

 Gross profit margin is a ratio calculated by dividing gross profit
by net operating revenues. Our gross profit margin increased to 28.0% for the year ended December 31, 2024, compared to 23.5% for the
year ended December 31, 2023. The increase was primarily due to the increase of scale margin from the expansion of capacity. Fixed costs such as depreciation expense spread over more products along with the expanded production scale resulted
in a decrease in unit cost.

 Research and Development expenses

 During the year ended December 31, 2024, Research and development expenses
increased $99,012, or 16.2% versus the prior year. In 2024, Research and development input increased.

 - 26 -

 Selling, General and Administrative Expenses

 For the year ended December 31, 2024, selling, general and administrative
expenses decreased $203,822, or 15.0% versus the prior year. The decrease in administrative expenses was mainly due to cutting expenditures
and improving efficiency.

 Interest Expense

 For the year ended December 31, 2024, interest expense was $653,114,
compared to $413,165 for the year ended December 31, 2023, an increase of $239,949, or 58.1%. The increases were primarily due to the
impact of interest accrued from loans and asset acquisition in 2024. (Refer to Note 12 – ASSET ACQUISITION)

 Other Income and Loss

 Net income was $213,315 for the year ended December 31, 2024 compared
to $230,635 for the year ended December 31, 2023, an decrease of $17,320, or 7.5%. The decrease in other income was primarily due to the
decrease of government grants.

 Income Taxes

 The Company recorded no income taxes for the year ended December 31, 2024,
and 2023, respectively. AUM and AUMT are exempt from income tax and AUFP had operating loss for the year ended December 31, 2024 and 2023.

 LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL POSITION

 Cash Flows from Operating Activities

 Net cash provided by operating activities for the year ended December
31, 2024 and 2023 was $1,546,524 and $119,934, respectively, an increase of $1,426,588 or 1189.5%. This increase was primarily due to the
increase of revenue.

 Cash Flows from Investing Activities

 Net cash used in investing activities for the year ended December 31,
2024 and 2023 were $685,056 and $0, respectively. The Company purchased $685,056 of machinery equipment for the year ended December
31, 2024.

 Cash Flows from Financing Activities

 Net cash used in financing activities were $1,031,380 and $344,354,
respectively for the year ended December 31, 2024 and 2023. The Company made payments of debts of $8,010,030 and long-term payable of
$293,064, borrowed $7,271,714 of loans for the year ended December 31, 2024, comparing to $7,045,131 of loan and $7,389,485 of payment
made for the year ended December 31, 2023.

 Off-Balance Sheet Arrangements

 There were no off-balance sheet arrangements as of
December 31, 2024 and December 31, 2023, or that in the opinion of management that are likely to have, a current or future material
effect on our financial condition or results of operations.

 Contractual Obligations

 Our long-term debt obligations as of December
31, 2024 were $1,095,690. $152,550 was included in accrued expenses and other current labilities as current portion of long-term
liabilities and expected to be paid within 12 months. Our long-term debt obligation are related to assets acquisition. See Note 11
Assets Acquisition and Long-term Payable, to the consolidated financial statements included in Part II, Item 8, Financial
Statements.

 Item 7A. Quantitative
and Qualitative Disclosures About Market Risk

 Not applicable to smaller
reporting companies.

 - 27 -

 Items 8. Financial Statements

 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 operation and comprehensive
 income (loss), changes in stockholders' equity, and cash flows for the year ended December 31, 2024, 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 Company as of December 31, 2024, and the results of its operations and its cash flows for 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. As described in Note 3 to the financial statements, 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
 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 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 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 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 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 Company'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.

 /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

 F- 1

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

 To the Board of Directors and Stockholders

 of ESG, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated balance
sheets of ESG, Inc. and subsidiaries (the "Company") as of December 31, 2023 and the related consolidated statements of operations,
stockholders' equity, and cash flows for the years then ended, 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 ESG,
Inc. as of December 31, 2023 and the results of its operations and cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States.

 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.

 Our audit 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 audit 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 audit provides a reasonable basis for our opinion.

 Going Concern Uncertainty

 The accompanying financial statements referred to
above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements,
the Company's present financial situation raises substantial doubt about its ability to continue as a going concern. Management's
plans in regard to this matter are also described in Note 3. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.

 Critical Audit Matters

 The critical audit matters communicated below are
matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the
audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions
on the critical audit matters or on the accounts or disclosures to which they relate.

 F- 2

 Revenue Recognition– Refer to Note

 Critical Audit Matter Description

 As described in Note 2 to the consolidated financial
statements, management follows the guidance provided in ASC 606, Revenue from Contracts with Customers, for determining and recognizing
revenue. Revenue recognition was identified as the critical audit matter due to its significance to the financial statements as a whole.
The sale is from a sole product.

 How the Critical Audit Matter was Addressed in the
Audit:

 Our principal audit procedures related to the Company's
sales included:

 1.

 Reviewed the Company's revenue recognition process and ascertained the Company has adopted ASC 606.

 2.

 Performed detail testing on sales to ascertain sales are valid and accurate

 3.

 Performed sales cutoff procedures to verify sales are recorded in the proper period.

 4.

 Considered the adequacy of the disclosure in the financial statements in relation to sales.

 Qi CPA LLC

 Valley Stream, New York

 April 12, 2024

 We have served as the Company's auditor since
2024.

 F- 3

 Consolidated Balance Sheets

 December 31,

 2024

 2023

 Assets

 Current Assets

 Cash

 $
 110,343

 $
 342,342

 Restricted cash

 56,398

 -

 Accounts receivable

 2,917,093

 -

 Inventories

 2,906,383

 1,651,376

 Other receivables

 245,232

 79,221

 Advance to suppliers

 736,094

 166,010

 Total Current Assets

 6,971,543

 2,238,949

 Property, plant and equipment, net

 17,184,192

 18,694,969

 Intangible assets, net

 2,934,213

 3,085,906

 Value added tax receivable

 2,704,109

 2,211,980

 Notes receivable

 -

 41,848

 Total Non-current Assets

 22,822,514

 24,034,703

 Total Assets

 $
 29,794,057

 $
 26,273,652

 Liabilities and Stockholders' Equity

 Current Liabilities

 Short-term bank loans

 $
 5,988,024

 $
 6,904,228

 Account payables

 4,604,011

 1,300,676

 Accrued expenses and other current liabilities

 3,092,953

 2,312,772

 Payable to related party

 -

 30,000

 Deferred income, current

 121,897

 125,345

 Total Current liabilities

 13,806,885

 10,673,021

 Deferred income

 1,073,487

 1,230,207

 Long-term payable

 1,095,690

 1,423,116

 Total Non-current liabilities

 2,169,177

 2,653,323

 Total Liabilities

 15,976,062

 13,326,344

 Commitments and Contingencies

 Shareholders' Equity

 Common stock, $ 0.001 par value, 65,000,000 shares authorized, 25,899,468 shares issued and outstanding,
 respectively

 Additional paid in capital

 Accumulated comprehensive income (loss)

 ( 711,270
)

 ( 430,206
)

 Accumulated deficit

 ( 168,600
)

 ( 1,113,233
)

 Total Company stockholders' Equity

 10,298,418

 9,634,849

 Noncontrolling interest

 3,519,577

 3,312,459

 Total Stockholders' Equity

 13,817,995

 12,947,308

 Total Liabilities and Stockholders' Equity

 $
 29,794,057

 $
 26,273,652

 See accompanying notes to the consolidated financial
statements.

 F- 4

 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
INCOME (LOSS)

 Year ended December 31,

 2024

 2023

 Revenues

 $
 12,682,330

 $
 7,452,129

 Cost of goods sold

 9,134,997

 5,697,351

 Gross profit

 3,547,333

 1,754,778

 Operating expenses

 Selling, general and administrative expense

 1,150,927

 1,354,749

 Research and development expenses

 708,754

 609,742

 Total operating expenses

 1,859,681

 1,964,491

 Income (Loss) from operations

 1,687,652

 ( 209,713
)

 Non-operating income (expense)

 Interest expense

 ( 653,114
)

 ( 413,165
)

 Other Income

 213,315

 230,635

 Total non-operating expenses, net

 ( 439,799
)

 ( 182,530
)

 Income (Loss) before income taxes

 ( 392,243
)

 Income taxes

 -

 -

 Net income (loss)

 ( 392,243
)

 Less: income (loss) attributable to noncontrolling interest

 303,220

 ( 67,530
)

 Net income (loss) to ESG Inc.

 $
 944,633

 $
 ( 324,713
)

 Other comprehensive item

 Foreign currency translation loss attributable to ESG Inc.

 ( 281,064
)

 ( 281,616
)

 Foreign currency translation loss attributable to noncontrolling interest

 ( 96,102
)

 ( 96,291
)

 Comprehensive income (loss) attributable to ESG Inc.

 663,569

 ( 606,329
)

 Comprehensive income (loss) attributable to noncontrolling interest

 207,118

 ( 163,821
)

 Net income (loss) per share - basic and diluted

 $
 0.04

 $
 ( 0.02
)

 Weighted average shares outstanding - basic and diluted

 See accompanying notes to the consolidated financial
statements.

 F- 5

 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS'
EQUITY

 Common stock

 Additional
 paid aid-in

 Accumulated
 income

 Accumulated
 other
 comprehensive

 Total
 Company's

 Noncontrolling

 Share

 Amount

 capital

 (deficit)

 income

 equity

 interest

 Total

 Balance at December 31, 2022

 $

 $

 $
 ( 788,520
)

 $
 ( 148,590
)

 $
 10,241,178

 $
 3,476,280

 $
 13,717,458

 Net loss

 -

 -

 -

 ( 324,713
)

 -

 ( 324,713
)

 ( 67,530
)

 ( 392,243
)

 Foreign currency translation loss

 -

 -

 -

 -

 ( 281,616
)

 ( 281,616
)

 ( 96,291
)

 ( 377,907
)

 Balance at December 31, 2023

 $

 $

 $
 ( 1,113,233
)

 $
 ( 430,206
)

 $
 9,634,849

 $
 3,312,459

 $
 12,947,308

 Net income

 -

 -

 -

 944,633

 -

 944,633

 303,220

 Foreign currency translation loss

 -

 -

 -

 -

 ( 281,064
)

 ( 281,064
)

 ( 96,102
)

 ( 377,166
)

 Balance at December 31, 2024

 $

 $

 $
 ( 168,600
)

 $
 ( 711,270
)

 $
 10,298,418

 $
 3,519,577

 $
 13,817,995

 See accompanying notes to the consolidated financial
statements.

 F- 6

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 Year ended December 31,

 2024

 2023

 Cash flows from operating activities:

 Net income (loss)

 $

 $
 ( 392,243
)

 Adjustments to reconcile income (loss) to net cash provided by operating activities:

 Depreciation and amortization

 1,765,929

 1,456,990

 Changes in assets and liabilities:

 Accounts receivable

 ( 2,965,613
)

 -

 Other receivables

 ( 170,988
)

 38,249

 Advance to suppliers

 ( 584,210
)

 ( 58,147
)

 Advance to suppliers - related party

 -

 9,133

 Inventory

 ( 1,322,075
)

 ( 523,698
)

 Value added tax receivable

 ( 562,189
)

 28,507

 Notes receivable

 41,374

 17,010

 Account payables

 3,423,166

 217,287

 Oher payables

 828,191

 ( 468,996
)

 Payable to related party

 ( 30,000
)

 8,689

 Deferred income

 ( 124,914
)

 ( 212,847
)

 Net cash provided by operating activities

 1,546,524

 119,934

 Cash flows from investing activities:

 Acquisition of fixed assets

 ( 685,056
)

 -

 Net cash used in investing activities

 ( 685,056
)

 -

 Cash flows from financing activities:

 Proceeds from bank loans

 7,271,714

 7,045,131

 Repayments of bank loans

 ( 8,010,030
)

 ( 7,389,485
)

 Payments of long term payable

 ( 293,064
)

 -

 Net cash used in financing activities

 ( 1,031,380
)

 ( 344,354
)

 Effect of exchange rate changes on cash and restricted cash

 ( 5,688
)

 360,141

 Net (decrease) increase in cash and restricted cash

 ( 175,601
)

 135,721

 Cash, beginning of year

 342,342

 206,621

 Cash and restricted cash, end of year

 $
 166,741

 $
 342,342

 Supplemental disclosures of cash flow information:

 Cash paid for interest

 $
 331,989

 $
 413,165

 Cash paid for income tax

 $
 -

 $
 -

 See accompanying notes to the consolidated financial
statements.

 F- 7

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 DECEMBER 31, 2024 AND 2023

 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 Kennett Square, 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 of the Company voted to change
the Company's fiscal year end to December 31st in order to align it with AUFP. On November 9, 2023, the change to the fiscal year
end on August 31, 2023 was filed. On November 22, 2023, Effective November 27, 2023, we filed Form Articles of Merger (the "Articles
of Merger") with the Secretary of the state of Nevada to change our name Plasma Innovative Inc. to ESG Inc. The financial statements
of Plasma Innovative Inc., now ESG Inc. were restated on fiscal year end of December 31 for 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.

 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

 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. As of December 31, 2024 and
2023, allowance for doubtful accounts was nil 0
and nil 0,
respectively.

 F- 8

 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, 2024 and 2023, 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, 2024 and 2023.

 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.

 Disaggregation of Revenue

 The primary geographical market is Asia.

 The table below present disaggregated revenue
from three products:

 Schedule of disaggregation of revenue

 Geographic

 Products

 Revenue

 % of Total

Revenue

 China, mainland

 White button mushroom

 $
 5,858,322

 46.2
 %

 China, mainland

 Compost III

 2,884,364

 22.7
 %

 China, Hongkong

 Mushroom powder seasonings

 3,939,644

 31.1
 %

 Total

 $
 12,682,330

 100.0
 %

 Contract liabilities

 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

 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. Gains
from lawsuits are the compensatory damages awarded in lawsuits.

 F- 9

 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.

 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 $ 3,519,577 and $ 3,312,459 of equity were attributable to noncontrolling interest as of December 31,
2024 and 2023, respectively. For the years ended December 31, 2024 and 2023, the Company had net income of $ 303,220 and net loss of $ 67,530
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
management and 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.

 F- 10

 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

 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 is currently evaluating the effect ASU 2023-09
may have on its consolidated financial statements and related disclosures.

 NOTE 3 – GOING
CONCERN

 The accompanying consolidated 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. As of December 31, 2024, the Company had limited cash and working capital deficiency of $ 6,835,342.
These factors, among others, raise the substantial doubt about the Company's ability to continue as a going concern. These consolidated
financial statements do not include any adjustments that may result from the outcome of these uncertainties.

 The working capital deficiency was primarily caused by short-term bank
loans and payables. The short-term bank loans had total balance of $ 5,988,024, and all the bank loans need to be renewed yearly and classified
as current liabilities. Management is working to replace current bank loans with long-term loans to improve our capital structure. In
addition, the Company had $ 2,704,109 of value added tax receivable which was classified as non-current assets as of December 31, 2024,
Management plans to apply for a tax refund in 2025 to enhance our liquidity. However, there is no assurance that all management's
plans will be successful.

 NOTE 4 – CASH AND RESTRICTED CASH

 The cash and restricted cash were $ 166,741
and $ 342,342
as of December 31, 2024 and 2023, respectively. AUM's bank accounts of $ 56,398
were legally restricted because AUM's one supplier was under investigation, and AUM had account payable to the supplier. In
January of 2025, AUM turned the raw material unpaid in and filed petition to lift the restriction. The restriction release was
issued on Feb. 2, 2025. There was no significant impact on the Company's operation. There was no
restricted cash as of December 31, 2023.

 NOTE 5 - PROPERTY, PLANT AND EQUIPMENT

 The following table summarizes our property, plant and equipment:

 Schedule of property and equipment

 December 31,

 2024

 2023

 Buildings and improvements

 $
 12,800,087

 $
 16,276,614

 Machinery, equipment and vehicle fleet

 11,993,713

 8,597,430

 Construction in progress

 90,809

 21,682

 Property, plant and equipment - cost

 24,884,609

 24,895,726

 Less: Accumulated depreciation

 ( 7,700,417
)

 ( 6,200,757
)

 Property, plant and equipment - net

 $
 17,184,192

 $
 18,694,969

 Construction in progress was $ 90,809 as of December
31, 2024, and $ 21,682 as of December 31, 2023.

 Depreciation expense was $ 1,698,033 and $ 1,388,096
for the year ended December 31, 2024 and 2023, respectively. Depreciation was recorded primarily as cost of goods sold for the year ended
December 31, 2024 and 2023.

 There were no retirement of fixed assets in 2024. The decrease of buildings
and improvements and the increase of machinery, equipment and vehicle fleet was due to the correction of classification presentation in
2023.

 NOTE 6 – INVENTORIES

 Inventories consisted of the following:

 Schedule of inventories

 2024

 2023

 Raw materials

 $
 1,808,253

 $
 1,516,634

 Inventory in transit

 125,917

 -

 Finished goods

 650,282

 -

 Work in progress

 321,931

 134,742

 Total

 $
 2,906,383

 $
 1,651,376

 F- 11

 NOTE 7 - INTANGIBLE ASSETS

 Intangible assets consist of the following:

 Schedule of intangible assets

 2024

 2023

 Land use right

 $
 3,236,419

 $
 3,327,987

 Software

 7,489

 7,701

 Patent

 6,851

 7,045

 Subtotal

 3,250,759

 3,342,733

 Less: Accumulated amortization

 ( 316,546
)

 ( 256,827
)

 Total

 $
 2,934,213

 $
 3,085,906

 Amortization expenses for the year ended December 31, 2024 and 2023 were
$ 67,896 and $ 68,894,
respectively.

 NOTE 8 - BANK LOANS

 Short-term bank loans consisted of the following:

 Schedule of short-term bank loans

 December 31,

 2024

 Interest rate

 Due date

 2023

 Interest rate

 Due date

 Agricultural Bank of China Funan Branch (1)

 781,047

 4.45
 %

 04/02/25

 845,416

 3.70
 %

 04/10/24

 Anhui Funan Rural Commercial Bank (2)

 1,918,360

 5.60
 %

 12/20/25

 1,972,637

 5.90
 %

 12/22/24

 Anhui Funan Rural Commercial Bank (3)

 1,370,257

 5.60
 %

 03/24/25

 1,409,026

 5.90
 %

 03/28/24

 Anhui Funan Rural Commercial Bank (4)

 822,154

 5.60
 %

 01/16/25

 845,416

 5.90
 %

 01/25/24

 Industrial and Commercial Bank of China, Funan (5)

 -

 -

 -

 704,513

 3.45
 %

 10/12/24

 Bank of China Funan Branch (6)

 1,096,206

 3.60
 %

 03/12/25

 1,127,221

 3.60
 %

 03/15/24

 Total

 $
 5,988,024

 $
 6,904,228

 (1)
 Loans are guaranteed by the founder of AUFP and SME Guarantee Corporation. The loan was renewed on April 2, 2025 at 4.6% of the
 annual interest rate. The balance of the new loan is $685,129 and the due day is April 2, 2026.

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

 (3)
 Loans are guaranteed by
 legal representative, and the founder of AUFP, AUFP and SME Guarantee Corporation. The loan was renewed on March 24, 2025 in the same
 term and the due day is March 24, 2026.

 (4)
 Loans was guaranteed by
 legal representative and the founder of AUFP, AUFP and SME Guarantee Corporation. The loan was renewed on January 15, 2025 in the
 same term and the due day is January 15, 2026.

 (5)
 $704,513 of loans from Industrial and Commercial Bank of China,
Funan branch were pledged by buildings as of December 31, 2023, and the loans was paid off on the due day in 2024.

 (6)
 $1,096,206 and $1,127,221 of loans from Bank of China were pledged
by buildings as of December 31, 2024 and 2023, respectively. The loan was renewed on March 17, 2025 for the same amount at an interest rate of 3.10%, and the due day is March 17,2026.

 F- 12

 NOTE 9 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 Accrued expenses and other current liabilities consisted of the following:

 Schedule of accrued expenses and other current liabilities

 December 31,

 2024

 2023

 Advances from customers

 $
 81,153

 $
 63,867

 Salary payable

 87,206

 181,950

 Tax payable

 17,235

 16,131

 Other payables

 2,754,809

 1,921,669

 Long-term payables, current portion

 152,550

 129,155

 Total

 $
 3,092,953

 $
 2,312,772

 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. Currently, the loans from Funan Agricultural Investment Co. Ltd, and Funan Small Business
Financing Service Center are under negotiating.

 Other payable was primarily comprised of loans
from non-bank institution which consisted of $ 281,805
 at 6% interest rate from Funan Agricultural Investment Co. Ltd and $ 1,409,026
 of loan from Funan Small Business financing service center,$ 63,788
 of accrued interest in 2023.

 NOTE 10 - 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 and raw materials. As of December 31, 2024 and 2023, VAT input was $ 2,704,109 and
$ 2,211,980,
respectively. 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 will file an application for a refund of VAT receivable in 2025.

 NOTE 11 - 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.

 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.

 $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. Long-term payable were $ 1,095,690
and $ 1,423,116,
respectively as of December 31, 2024 and 2023.

 The future long-term payable (capital)
schedule presents as follow:

 Schedule of long-term payable

 2025

 152,550

 2026

 171,982

 2027

 192,544

 2028

 216,316

 2029

 243,023

 thereafter

 271,826

 total

 1,248,241

 F- 13

 NOTE 12 - 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 46,662 square 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. 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, 2024 and the date these consolidated
financial statements are issued.

 Legal contingencies

 The Company is
subject to various legal proceedings, claims, and litigation arising in the ordinary course of business operations. These matters are
limited to contractual disputes_. It is the opinion of management that the resolution of these matters will not have a material adverse
effect on the Company's Consolidated Financial Statements.

 We are currently not involved in any litigation
that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to
the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common
stock, any of our subsidiaries or of our companies or our subsidiaries' officers or directors in their capacities as such, in which
an adverse decision could have a material adverse effect.

 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.

 NOTE 13 - RELATED PARTY TRANSACTIONS

 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 14 - DEFERRED INCOME

 As
of December 31, 2024 and 2023, the long-term portion of deferred income was $ 1,073,487 and
$ 1,230,207 as of December
31, 2024 and 2023, respectively. The current portion of deferred income was $ 121,897
as of December 31, 2024. Deferred income in prior year's balance sheet were reclassed from current liabilities to long-term
liabilities and current portion of long-term deferred income was $ 125,345
in 2023.

 The Company
recognized $ 165,646 and
$ 286,095,
respectively of government grants for the year ended December 31, 2024 and 2023, which consisted of and $ 124,914 of
asset-based and $ 40,732 of
income-based grants for the year ended December 31, 2024, $ 232,142 of
asset-based grants and $ 53,953 of
income-based grants for the year ended December 31, 2023.

 The future amortization of deferred revenue schedule
as follow:

 Schedule of deferred revenue

 2025

 111,620

 2026

 106,008

 2027

 106,008

 2028

 106,008

 2029

 106,008

 thereafter

 659,733

 total

 1,195,384

 NOTE 15 - 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, 2024 and 2023, the U.S. entity had net operating
loss ("NOL") carry forwards for income tax purposes of $ 195,027 and $ 193,010. Management believes the realization of benefits
from these losses remains uncertain. Accordingly, a 100% deferred tax asset valuation allowance was provided.

 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. Net income and net loss were not offset among
the operating subsidiaries. Net income of $ 3,281,821 and $ 2,234,442 were exempt from income tax for the years ended December 31, 2024
and 2023, respectively. The estimated tax savings as the result of the 25% tax break for the years ended December 31, 2024 and 2023 amounted
to $ 820,455 and $ 558,611, respectively. AUFP is not exempt for income tax. The deferred tax assets were $ 517,978 and $ 668,216 as of December
31, 2024 and 2023 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, 2024 and 2023. The Company's management reviews this valuation allowance periodically and makes adjustments as necessary.

 There were no uncertain tax positions as of December
31, 2024 and 2023.

 As of December 31, 2024 and 2023, the Company had
net operating loss ("NOL") carryforwards of $ 10,287,694 and $ 9,619,491, respectively, in PRC. The NOL carryforwards will begin
to expire in the PRC in the calendar year 2025 through 2029, if not utilized.

 F- 14

 The following table reconciles the U.S. statutory
rates to the Company's effective tax rate for the years ended December 31, 2024 and 2023:

 Schedule of effective tax rates

 2024

 2023

 US federal statutory rates

 ( 21
 %)

 ( 21
 %)

 Tax rate difference between PRC and U.S.

 ( 4
 %)

 ( 4
 %)

 Effect of income tax exemption on certain income

 ( 54
 %)

 ( 123
 %)

 Change in valuation allowance

 %

 %

 Effective tax rate

 $
 -

 $
 -

 The provision for income tax expense (benefit) for
the periods ended December 31, 2024 and 2023 consisted of the following:

 Schedule of income tax expense (benefit)

 2024

 2023

 Income tax expense - current

 $
 -

 $
 -

 Income tax benefit -deferred

 ( 517,978
)

 ( 668,216
)

 Increase in valuation allowance

 517,978

 668,216

 Total income tax expense

 $
 -

 $
 -

 The Company's net deferred tax asset as of December 31, 2024 and
2023 is as follows:

 Schedule of net deferred tax assets

 2024

 2023

 Deferred tax asset

 Net operating loss

 $
 ( 3,049,122
)

 $
 ( 2,531,144
)

 Less: valuation allowance

 3,049,122

 2,531,144

 Net deferred tax asset

 $
 -

 $
 -

 NOTE 16 - EQUITY

 The Company authorized 65,000,000 shares of common
stock at par value of $ 0.001 and 10,000,000 shares of preferred stock at par value $ 0.001. 25,899,468 shares of common stock were issued
and outstanding as of December 31, 2024 and 2023, separately. There were no shares of preferred stock issued as of December 31, 2024 and
2023.

 NOTE
17 - CONCENTRATIONS

 Customers:

 5 customers sales were over 10%
and accounted for 31.1 %, 16.0 %, 14.6 %, 14.0 %, and 12.7 % for the year ended December 31, 2024. Sales to 2 customers who accounted for 43 % and 21 % of
revenue for the year ended December 31, 2023. No other customer accounted for 10% or more of the Company's
revenues for either period.

 Suppliers:

 Purchasing from 1supplier accounted for 37.7 %
of the Company's purchases for the year ended December 31, 2024. No suppliers accounted for 10% or more of the Company's revenues
in 2023.

 Accounts
receivable:

 Accounts
receivable from one customer accounted for 95.4 % of the total Company's accounts receivable balance as of December 31, 2024. There
was no accounts receivable balance as of December 31, 2023.

 Concentration of credit risk

 The Company primarily maintains cash in accounts
with state-owned banks within the PRC. Cash in state-owned banks less than $68,513 (RMB500,000) is covered by insurance. Should any institution
holding the Company's cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose
the cash on deposit with that institution. The Company has not experienced any losses in such accounts and believes it is not exposed
to any risks on its cash in these bank accounts. Cash denominated in RMB with a U.S. dollar equivalent of $ 125,225 and $ 317,947 as of
December 31, 2024 and 2023, respectively, was held in accounts at financial institutions located in the PRC which is not freely
convertible into foreign currencies.

 F- 15

 NOTE
18 - OPERATING SEGMENTS

 The Company has three reportable segments: (1)
White button mushroom (2) Compost III and (3) Mushroom powder seasonings in 2024 and 1 segment in 2023.

 Information about our Company's operations
by operating segment and Corporate is as follows:

 Schedule of operating segment

 White button mushroom

 Compost III

 Mushroom powder seasonings

 Corporate

 Eliminations*

 Total

 Year Ended December 31, 2024

 Net operating revenues:

 Third party

 $
 5,858,322

 $
 2,884,364

 $
 3,939,645

 $
 -

 $
 -

 $
 12,682,330

 Intersegment

 4,588,702

 3,270,725

 881,232

 205,000

 ( 8,945,659
)

 -

 Total net operating revenues

 10,447,024

 6,155,089

 4,820,877

 -

 -

 21,422,990

 Cost of goods sold

 ( 3,384,118
)

 ( 631,830
)

 ( 5,119,049
)

 -

 -

 ( 9,134,997
)

 Intersegment cost

 ( 4,574,213
)

 ( 3,418,261
)

 ( 576,657
)

 -

 8,569,131

 -

 Total net operating cost

 ( 7,958,331
)

 ( 4,050,091
)

 ( 5,695,707
)

 -

 -

 ( 17,704,129
)

 Selling, general administrative expenses

 ( 177,926
)

 ( 28,973
)

 ( 796,019
)

 ( 148,008
)

 -

 ( 1,150,927
)

 Intersegment G&A expenses

 ( 32,745
)

 ( 32,855
)

 -

 -

 65,600

 -

 Research and development

 ( 340,309
)

 ( 163,516
)

 ( 204,929
)

 -

 -

 ( 708,754
)

 Operating income (loss)

 1,955,969

 2,060,044

 ( 2,180,353
)

 ( 148,008
)

 -

 1,687,652

 Interest expense

 ( 328,571
)

 ( 42,686
)

 ( 281,857
)

 -

 -

 ( 653,114
)

 Other income (loss) — net

 7,576

 22,167

 182,741

 213,315

 Income before income taxes

 $
 1,634,974

 $
 2,039,525

 $
 ( 2,279,470
)

 ( 147,177
)

 $
 -

 $

 Other segment information:

 Property, plant and equipment - net

 $
 2,090,501

 $
 724,851

 $
 14,368,418

 $

 $
 -

 $
 17,184,192

 Depreciation and amortization

 $
 162,836

 $
 62,114

 $
 1,540,719

 $

 $
 -

 $
 1,765,929

 *
 $310,928 of the balance of elimination is the intersegment unsold
inventory.

 NOTE
19 - SUBSEQUENT EVENTS

 The Company evaluated all events and transactions
that occurred after December 31, 2024 through the date of the consolidated financial statements were available to be issued and concluded
that there were no other material subsequent events.

 F- 16

 Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure

 None.

 Item 9A. Controls and Procedures

 Evaluation of Disclosure Controls and Procedures

 In connection with the preparation of this annual
report, an evaluation was carried out by the Company's management, with the participation of the principal executive officer and
the principal financial officer, of the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act ("Exchange Act") as of December 31, 2024. Disclosure controls and procedures are designed
to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized,
and reported within the time periods specified in the Commission's rules and forms, and that such information is accumulated and
communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding
required disclosures.

 Based on that evaluation, the Company's management
concluded, as of the end of the period covered by this report, that the Company's disclosure controls and procedures were not effective
in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission's
rules and forms, and that such information was not accumulated and communicated to management, including the principal executive officer
and the principal financial officer, to allow timely decisions regarding required disclosures.

 Management's Report on Internal Control over
Financial Reporting

 The management of the Company is responsible for establishing
and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a
process, under the supervision of the principal executive officer and the principal financial officer, designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external
purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes
those policies and procedures that:

 Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets;

 Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and

 Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

 Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the
policies or procedures may deteriorate.

 In connection with management's assessment
of our internal control over financial reporting as of December 31, 2024, we have concluded we have material weaknesses and the
internal control is not effective. Specifically, We were unable to maintain segregation of duties within our business
operations due to our reliance on a single individual fulfilling the role of CEO and CFO. Our goal is to hire a CFO to separate the
responsibilities of principal executive officer and principal financial officer, intending to rely on two or more individuals. In
addition to segregation of duties, we have insufficient internal control written policies and procedures for accounting and
financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines also considered a material
weakness on internal control. Management plans to complete related policies and procedures.

 Changes in Internal Control Over Financial Reporting

 During the fiscal year ended December 31, 2024, we
formed an audit committee with independent board members. The audit committee has responsibility for overseeing financial reporting and
related internal controls, risk, independent and internal auditors, ethics and compliance. As a result, we remediated the weakness that
was outstanding as of December 31, 2023:

 Lack of a functioning audit committee due to a lack
of a majority of independent members and a lack of a majority of outside directors on our Board of Directors, resulting in ineffective
oversight in the establishment and monitoring of required internal control and procedures.

 Except as discussed above, there were no changes
in the Company's internal control over financial reporting that has materially affected or is reasonably likely to materially affect
internal control over financial reporting.

 - 28 -

 This annual report does not include an attestation
report of our registered public accounting firm regarding our internal controls over financial reporting. Management's report was
not subject to attestation by our registered public accounting firm pursuant to Section 404(c) of the Sarbanes-Oxley Act that permit
us to provide only management's report in this annual report.

 Item 9B. Other Information

 None

 Item 9C. Disclosure Regarding Foreign Jurisdictions
that Prevent Inspections.

 Not applicable.

 - 29 -

 Item 10. Directors, Executive Officers and
Corporate Governance

 MANAGEMENT DIRECTORS, EXECUTIVE OFFICERS AND
CORPORATE GOVERNANCE

 The following table sets forth certain information
about our executive officers, key employees and directors as of December 31, 2024.

 Name

 Age

 Position

 Appointment

 Zhi Yang

 Chief Executive Officer and Executive Director

 July 2, 2021

 John Wallace

 Chairman of the Board and Independent Director

 July 31, 2024

 Cathy Fleming

 Independent Director

 July 31, 2024

 Mark Hemmann

 Independent Director

 July 31, 2024

 Neal Naito

 Independent Director

 July 31, 2024

 Effective July 31, 2024, the Board of Directors appointed
4 new Independent Directors to serve on our newly created Audit Committee, Compensation Committee, and Nominating and Governance Committee:
John Wallace, Cathy Fleming, Mark Hemmann, and Neal Naito (together, the "New Directors"). Zhi Yang, our Chief Executive Officer,
was appointed as Executive Director.

 Zhi Yang, Chief Executive Officer and Executive
Director

 Zhi Yang is the Chief Executive Officer
of the Company. He served as our Chairman of the Board and Director since inception (July 22, 2021). On July 31, 2024, he stepped
down as Chairman upon the appointment of John Wallace. Mr. Yang is appointed as Executive Director and remains our Chief Executive Officer.
For the past 5 years, Mr. Yang has been a business consultant and more recently, in 2017, he founded a mushroom growing company in the
People's Republic of China (PRC). Mr. Yang received Master Degree in Law from China University of Political Science and Law (PRC)
and received a LLM in Law from Temple University. Mr. Yang is a founder of the Company and brings a wide range of business experience
to our board of directors.

 John Wallace, Chairman of the Board and Independent
Director

 John F. Wallace, our newly appointed Chairman and
Independent Director, is Chairman and CEO of the Wallace Securities Corporation. John is also the President and Managing Partner of Philadelphia
Financial Services, LLC ("PFS"). For the majority of his career, John was a senior executive & officer of the Philadelphia
Stock Exchange ("PHLX") including Chairman, Vice Chairman and Chief Executive Officer. John also served as Chairman of the Board
of the Stock Clearing Corporation of Philadelphia, Chairman of the Board of the Philadelphia Board of Trade, Chairman of the Board of
the Philadelphia Depository Corporation and a board member of the PHLX's technology subsidiary, Advanced Tech Source Company. Over
the course of his career in the securities industry, John has also been a member of the Toronto Stock Exchange, a seat owner of the New
York Mercantile Exchange as well as registered with the National Futures Association as a floor broker. Upon leaving NASDAQ OMX PHLX,
John was a founder of Miami International Holdings, Inc. ("MIH") a company focused on building exchange technology. He served
as the President - Chief Executive Officer and was on the board of directors for MIH. He served for 27 years in the United States Army,
the Army Reserve and the Army National Guard and retired holding the rank of Lieutenant Colonel. John saw active duty in Grenada in 1983
with 1st Special Operations Command and Desert Storm from December 1990 to July 1991 with the Third U.S. Army. He is a graduate of the
United States Army Command and General Staff College and the National Emergency Management Institute of the Federal Emergency Management
Agency (FEMA).

 Cathy Fleming, Independent Director

 Cathy Fleming, our newly appointed Independent Director,
is a litigator and corporation counsel and board member for more than 43 years. A trial lawyer, Cathy has tried more than 60 cases
to verdict across the Country, with the majority in federal courts. A former federal prosecutor, Cathy has special expertise in white
collar criminal defense, SEC and other regulatory enforcement matters, securities litigation, complex civil litigation, sanctions matters,
tax controversies and internal investigations. She has extensive experience in international matters, including money laundering
investigations and international extraditions. Her skill as a trial lawyer has been repeatedly recognized, including by the American
College of Trial Lawyers which inducted her as a Fellow in 2018, American College of Trial Lawyers, Platinum Award for Women's Initiative
& Leaders in Law, New Jersey Women Lawyers Association, 2008, Woman of Power & Influence, National Organization for Women, 2007,
Special Commendation Award, Department of Justice, 1987, for her work as a federal prosecutor, Super Lawyer, Super Lawyers New York, 2006-present
(White Collar Defense), etc. Cathy also serves as outside general counsel for corporations and on not-for-profit boards, including as
president. She frequently teaches courses focused on ethics, fraud and trial skills.. In addition, she has managed budgets, P&L and
personnel in law firms.

 Mark Hemmann, Independent Director

 Mark Hemmann, our newly appointed Independent Director,
is the co-founder of Stage Point Alternatives ("SPA"). Mark manages its global asset-based acquisitions and advisory business.
Prior to joining SPA, Mark was a co-founder of Akkadian Investment Management, which was acquired by SPA. Mark has worked over 25 years
in significant positions for top-tier international banks, companies and lessors as well as serving on the Board of Directors of an LSE-listed
private equity fund. Mark is a specialist in structured finance, capital markets, banking, and cross border private equity. Previously,
Mark built the U.S. debt capital markets, cross border distribution, and structured finance platforms for a global top-20, trillion-dollar
Asian bank. Mark also spent six years as a Director of Capital Markets at a major multinational bank where he was responsible for managing
a $2 billion portfolio. Prior to those endeavors, he worked in significant roles for the largest private aviation lessor (finance, lender
relations, marketing), a top-8 airline (Treasury, FP&A, business strategy), and in government service.

 - 30 -

 Neal Andrew Naito, Independent Director

 Neal Naito, MD, MPH, our newly appointed Independent
Director, has Over 35 years of healthcare experience including positions as a staff physician, internal medicine department head, occupational
medicine department head, assistant professor of preventive medicine, director of public health, and co-founder of several biotech companies.
As Director of Public Health, Navy Medicine, Neal has expertise in all areas of healthcare management, with a proven record of unprecedented
accomplishment along with superb senior- level experience in executive decision-making, policy development, strategic business planning,
Congressional relations, financial and personnel management, research and development, and current and future operations. As a medical
research leader, Mr. Naito obtained $2.5 million dollars in Department of Defense funding for the development of intranasal thyrotropin
releasing hormone as an anti-suicide medication, a visionary leader who spearheaded the first military medicine conference on incentives
for health as a means for developing a Department of Defense roadmap in this key area for improving health outcomes while lowering costs.
Attendees included other Federal Agencies, academic health centers, and civilian research organizations.

 There are no arrangements or understandings between
any Director and any other persons pursuant to which any Director was selected as a Director. There are no transactions in which any Director
has a direct or indirect material interest requiring disclosure under Item 404(a) of Regulation S-K.

 Board Composition and Election of Directors

 In accordance with the terms of our current Articles
of Incorporation and by-laws, the term of office of each director automatically renews at our annual meeting of stockholders or until
their successors are duly elected and qualified.

 Family Relationships

 There are no family relationships among our directors
or officers.

 Involvement in Legal Proceedings

 To the best of our knowledge, none of our directors
or executive officers, during the past ten years, has been convicted in a criminal proceeding, excluding traffic violations or similar
misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment,
decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities
laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement.
Except as set forth in our discussion below in "Certain Relationships and Related Transactions," none of our directors, director
nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or
associates which are required to be disclosed pursuant to the rules and regulations of the Securities and Exchange Commission.

 Director Independence

 Effective July 31, 2024, the Board of Directors of
the Company appointed 4 new Independent Directors to serve on our newly created Audit Committee, Compensation Committee, and Nominating
and Governance Committee: James Wallace, Cathy Fleming, Mark Hemmann, and Neal Naito (together, the "New Directors"). Zhi
Yang, our Chief Executive Officer, was appointed as Executive Director.

 Board Committees

 Effective July 31, 2024, we created an Audit Committee.
John Wallace, Cathy Fleming and Mark Hemmann will serve on the Audit Committee, with Mr. Wallace serving as Chair.

 Effective July 31, 2024, we created a Compensation
Committee. Cathy Fleming, Mark Hemmann, and Neal Naito will serve on the Compensation Committee, with Ms. Fleming serving as Chair.

 Effective July 31, 2024, we created a Nominating and
Governance Committee. Mark Hemmann, Cathy Fleming, and Neal Naito will serve on the Nominating and Governance Committee, with Mr. Hemmann
serving as Chair.

 There are no arrangements or understandings between
any Director and any other persons pursuant to which any Director was selected as a Director. There are no transactions in which any Director
has a direct or indirect material interest requiring disclosure under Item 404(a) of Regulation S-K.

 Nominating Procedures

 During the fiscal year ended December 31, 2024, there
were not any material changes to the procedures by which security holders may recommend nominees to the Company's Board of Directors.

 Directors' Fees

 No compensation has been paid to any individual for
services rendered as a director.

 Code of Ethics

 We have adopted a code of ethics that applies to all
of our directors, officers and employees, including our principal executive officer, principal financial officer and principal accounting
officer. Such Code of Ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws,
regulations and policies, including disclosure requirements under the federal securities laws, and reporting of violations of the Code.

 A copy of the Code of Ethics has been filed as an
exhibit to this Annual Report. We are required to disclose any amendment to, or waiver from, a provision of our Code of Ethics applicable
to our principal executive officer, principal financial officer, principal accounting officer, controller, or persons performing similar
functions. We intend to use our website as a method of disseminating this disclosure as well as by SEC filings, as permitted or required
by applicable SEC rules. Any such disclosure will be posted to our website within four (4) business days following the date
of any such amendment to, or waiver from, a provision of our code of ethics.

 - 31 -

 In addition, our Officers have committed to spend
a sufficient amount of time and attention to the affairs of the Company to fulfill their respective officer responsibilities. In this
regard, generally, each officer or director will spend between 15 to 40 hours per week on the affairs of the Company, depending on the
circumstances. Therefore, we may face conflicts of interest between the time and attention each officer or director devotes to the Company
and that of their other business interests.

 Other than as described above, we are not aware of
any other conflicts of interest among our executive Officers and Directors.

 Involvement in Certain Legal Proceedings

 Item 11. Executive Compensation

 Summary Executive Compensation Table

 The following table reflects the Summary Compensation
for our named executive officer for fiscal years ended December 31, 2024 and 2023, respectively. For such periods, there were no bonus,
non-equity plan compensation, nonqualified compensation earnings or other compensation other than as stated below for the named executive
officers.

 Name and principal position (a)

 Year

 Salary
 ($)

 Stock Awards
 Shares
 ($)

 Total
 ($)

 Zhi Yang

 2024

 Chief Executive Officer and Chief Financial Officer

 2023

 8333

 8333

 Employment Agreements

 The Company does not have any employment or other
compensation agreement with its executive officers. Moreover, there are no agreements or understandings for any of our executive officers
or directors to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at
the direction of any other person.

 Grants of Plan-Based Awards

 No plan-based awards were granted to any of our named
executive officers during the interim fiscal year ended December 31, 2024.

 Outstanding Equity Awards at Interim Fiscal Year
End

 No stock or stock option awards were granted to any
other officer of the Company as at December 31, 2024.

 Option Exercises and Stock Vested

 No option to purchase our capital stock was exercised
by any of our named executive officers, nor was any restricted stock held by such executive officers vested during the interim fiscal
period ended December 31, 2024.

 - 32 -

 Pension Benefits

 No named executive officers received or held pension
benefits during the interim fiscal period ended December 31, 2024.

 Item 12. Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters.

 Security Ownership of Certain Beneficial Owners
and Management

 The following table sets forth certain information
with respect to the beneficial ownership of our voting securities following the completion of the Reverse Merger described in Items 1.01
of this report by (i) any person or group owning more than 5% of any class of voting securities, (ii) each director, (iii) our chief executive
officer and (iv) all executive officers and directors as a group as of December 31, 2024.

 Name

 Number of
 Shares of
 Common Stock

 Percentage

 Zhi Yang, Director and CEO

 %

 DCG China Limited(1)

 18,273,910

 70.56
 %

 John Wallace, Independent Director

 %

 Cathy Fleming, Independent Director

 %

 Mark Hemmann, Independent Director

 %

 Neal Naito, Independent Director

 %

 (All officers and directors as a group (5 people)

 18,273,910

 70.56
 %

 (1)

 Zhi Yang is considered the beneficial owner of DCG China Limited,and thus has majority voting control over the Company. On May 8, 2024, Mr. Zhi Yang, the Company's founder and CEO transferred 14,000,000 shares of our common stock held in his name to DCG China Limited, ("DCG") a company owned by his mother, Xiayun Zhou. Under DCG China Limited, Mr. Yang is a director with voting control over DCG and is considered the beneficial owner of DCG, and therefore no change in control occurred. Prior to the transfer, DCG owned 7,632,800 shares of common stock, and now owns a total of 18,273,910, representing 70.56% of the issued and outstanding shares of common stock. As a result, our executive officers and directors may be able to: elect or defeat the election of our directors, amend or prevent amendment to our certificates of incorporation or bylaws, effect or prevent a merger, sale of assets or other corporate transaction, and control the outcome of any other matter submitted to the shareholders for vote. Accordingly, our outside stockholders may be unable to influence management and exercise control over our business.

 (2)

 Unless otherwise specified above, the mailing address for each of the
shareholders is 433 East Hillendale Road, Chadds Ford PA. 19317.

 Unless otherwise indicated in the footnotes to this
table and subject to community property laws where applicable, each of the stockholders named in this table has sole or shared voting
and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are
based upon 25,899,468 shares of common stock to be outstanding.

 Item 13. Certain Relationships and Related
Transactions, and Director Independence.

 On May 8, 2024, Mr. Zhi Yang, the Company's
founder and CEO transferred 14,000,000 shares of our common stock held in his name to DCG China Limited, ("DCG") a company owned
by his mother, Xiayun Zhou. Under DCG China Limited, Mr. Yang is a director with voting control over DCG and is considered the beneficial
owner of DCG, and therefore no change in control occurred. Prior to the transfer, DCG owned 7,632,800 shares of common stock, and now
owns a total of 18,273,910, representing 70.56% of the issued and outstanding shares of common stock.

 We are not subject to any independence standards of
a national securities exchange or national securities association dealer quotation system. Our Board of Directors has determined that
to be considered independent, an outside director may not have a direct or indirect material relationship with the company. A material
relationship is one which impairs or inhibits or has the potential to impair or inhibit a director's exercise of critical and disinterested
judgment on behalf of the company and its stockholders. To determine whether a material relationship exists, the Board consults with the
company's counsel. This ensures that the Board's determinations are consistent with:

 - 33 -

 1.

 All relevant securities and other laws; and

 2.

 Recent relevant cases and regulations regarding the definition of (independent director/business judgment) including those set forth in the listing standards of the New York Stock Exchange as in effect from time to time.

 Effective July 31, 2024, the Board of Directors appointed
4 new Independent Directors to serve on our newly created Audit Committee, Compensation Committee, and Nominating and Governance Committee:
James Wallace, Cathy Fleming, Mark Hemmann, and Neal Naito (together, the "New Directors"). Zhi Yang, our Chief Executive
Officer, was appointed as Executive Director.

 Board Committees

 Effective July 31, 2024, we created an Audit Committee.
John Wallace, Cathy Fleming and Mark Hemmann will serve on the Audit Committee, with Mr. Wallace serving as Chair.

 Effective July 31, 2024, we created a Compensation
Committee. Cathy Fleming, Mark Hemmann, and Neal Naito will serve on the Compensation Committee, with Ms. Fleming serving as Chair.

 Effective July 31, 2024, we created a Nominating and
Governance Committee. Mark Hemmann, Cathy Fleming, and Neal Naito will serve on the Nominating and Governance Committee, with Mr. Hemmann
serving as Chair.

 There are no arrangements or understandings between
any Director and any other persons pursuant to which any Director was selected as a Director. There are no transactions in which any Director
has a direct or indirect material interest requiring disclosure under Item 404(a) of Regulation S-K.

 Nominating Procedures

 During the fiscal year ended December 31, 2023, there
were not any material changes to the procedures by which security holders may recommend nominees to the Company's Board of Directors.

 Directors' Fees

 No compensation has been paid to any individual for
services rendered as a director.

 Compliance with Section 16(a) of the Securities
Exchange Act

 Not Applicable

 Item 14. Principal Accountant Fees and Services.

 On November 28, 2024, ESG Inc. ("Company") terminated Qi
CPA LLC ("Former Auditor") as its independent registered public accounting firm. On November 28, 2024, the Company hired RH
CPA ("New Auditor") as its independent registered public accountant firm which was approved by the Company's Board of
Directors. On March 23, 2025, ESG Inc. ("Company") terminated RH CPA as its independent registered public accounting firm.
On March 23, 2025, the Company hired Prager Metis CPAs, LLC ("New Auditor") as its independent registered public accounting
firm which was approved by the Company's Board of Directors.

 Pursuant to applicable
rules, the Company makes the following additional disclosures:

 (a)
 The Qi CPA's audit report on the financial statements of the
Company as at and for the fiscal year ended December 31, 2022 and 2023 did not contain any adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting principles, except that such report contained an explanatory
paragraph in respect to uncertainty as to the Company's ability to continue as a going concern.

 (b)
 During
fiscal year ended December 31, 2023 and through March 25, 2025, there were no disagreements with the Former Auditor on any matter
of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to the Former
Auditor's satisfaction would have caused it to make reference thereto in connection with the Former Auditor's reports on
the financial statements for such years. During fiscal year ended December 31, 2023 and through November 28, 2024, there were no events
of the type described in Item 304(a)(1)(v) of Regulation S-K.

 (c)
 During
fiscal year ended December 31, 2023 and through March 23, 2025, the Company did not consult with the New Auditor with respect to any
matter whatsoever including without limitation with respect to any of (i) the application of accounting principles to a specified transaction,
either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company's financial statements; or (iii) any
matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or an event of the type described
in Item 304(a)(1)(v) of Regulation S-K.

 The following
tables presents the aggregate fees for professional audit services and other services rendered by our independent registered public
accountants, Qi CPA LLC and Prager Metis for audits and reviews performed for the years ended December 31, 2024 and December 31,
2023. Fees for the years ended December 31, 2024 and 2023 were as follows:

 (1) Audit Fees

 Audit fees represent fees for professional services provided in connection with the audit of our annual financial statements and the review of our quarterly financial statements and those services normally provided in connection with statutory or regulatory filings or engagements including comfort letters, consents and other services related to SEC maters. This information is presented as of the latest practicable date for this Annual Report on Form 10-K. For the year ended December 31, 2024, and 2023, the aggregate fees for ESG Inc. related to audit services was $140,000 and $280,000. For the year ended December 2024, the aggregate fees for Prager Metis related to audit services was $120,000, and the aggregate fees for Qi CPA LLC was $20,000. For the year ended December 31, 2023, The aggregate fees related to audit services for Qi CPA LLC was $100,000 and the aggregate fees for KC CPA LLC was $180,000.

 The aggregate fees billed
by the Company's Independent Registered Public Accounting Firm for the years ended December 31, 2024 and 2023 are as follows:

 2024

 $
 140,000

 2023

 $
 280,000

 (2) Audit-Related Fees

 The aggregate fees billed in each of the last two
fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit
or review of our financial statements and are not reported in the preceding paragraph:

 2024

 $

 2023

 $

 (3) Tax Fees

 The aggregate fees billed in each of the last two
fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were:

 2024

 $

 2023

 $

 - 34 -

 (4) All Other Fees

 The aggregate fees billed in each of the last two
fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2),
and (3) were:

 2024

 $

 2023

 $

 The percentage of hours expended on the principal
accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed
by persons other than the principal accountant's full time, permanent employees was 0%.

 - 35 -

 Item 15. Exhibits, Financial Statement Schedules.

 (b) Index to Exhibits required by Item 601 of
Regulation S-K.

 Exhibit

 Description

 3.1

 Articles of Incorporation* (incorporated by reference herein to Exhibit 3.1(a) to the Company's Form 10-K filed with the SEC on November 17, 2022)

 3.2

 Bylaws

 3.3

 Plan of Merger, dated effective as of November 27, 2023, by and between Plasma Innovative Inc. and ESG Inc. (incorporated by reference herein to Exhibit 2.1 to the Company's Form 8-K filed with the SEC on December 1, 2023)

 3.4

 Form Articles of Merger between Plasma Innovative Inc. and ESG Inc. (incorporated by reference herein to Exhibit 3.1 to the Company's Form 8-K filed with the SEC on December 1, 2023)

 10.1

 Technology Assignment Agreement by and between Plasma Innovative Inc. and Hanliang Shao * (incorporated by reference herein to Exhibit 10.1 to the Company's Form 10-K filed with the SEC on November 17, 2022)

 10.2

 Financing
 Agreement with Funan Agricultural Reclining Investment Co. Ltd dated January 5, 2022

 10.3

 Share Exchange Agreement between ESG Inc. and Funan Allied United Farmer Products Co., Ltd, dated September 28, 2023 (incorporated by reference herein to Exhibit 10.1 of the Company's Form 8-K filed with the SEC on November 9, 2023)

 10.4

 Share Exchange Agreement between Plasma Innovative Inc. with ESG Inc. dated November 6, 2023 (incorporated by reference herein to Exhibit 99.1 of the Company's Form 8-K filed with the SEC on November 9, 2023)

 14.1

 Code of Business Conduct and Ethics

 31.1

 Certification
 of the Principal Executive and Financial Officer pursuant to Rule 13(a)-14(a) of the Securities Exchange Act of 1934+

 32.1

 Certification
 of the Company's Principal Executive Officer and Principal Financial pursuant to 18 U.S.C. Section 1350, as adopted pursuant
 to Section 906 of the Sarbanes-Oxley Act of 2002+

 99.1

 Legal
 Opinion from PRC counsel Anhui Dongfan Law Firm, dated February 12, 2025

 99.2

 Audit
 Committee Charter

 99.3

 Compensation
 Committee Charter

 99.4

 Nomination
 and Corporate Governance Committee

 101.INS

 INSTANCE DOCUMENT*

 101.SCH

 TAXONOMY EXTENSION SCHEMA DOCUMENT*

 101.CAL

 TAXONOMY CALCULATION LINKBASE DOCUMENT*

 101.DEF

 TAXONOMY DEFINITION LINKBASE DOCUMENT*

 101.LAB

 TAXONOMY LABEL LINKBASE DOCUMENT*

 101.PRE

 TAXONOMY PRESENTATION LINKBASE DOCUMENT*

 +
 In
accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

 Item 16. Form 10–K Summary.

 As permitted, the registrant has elected not to supply a summary of information
required by Form 10-K.

 - 36 -

 SIGNATURES

 Pursuant to the requirements of Section 13 or
15(d) 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.

 / s/ Zhi Yang

 Zhi Yang

 Chief Executive Officer

 (Principal Executive Officer)

 Chief Financial Officer

 (Principal Financial and Accounting Officer)

 Chairman

 Dated: April 15, 2025

 - 37 -