CN ENERGY GROUP. INC.

Reverse share split

On May 19, 2025, the Company effectuated a 1-for-25 share split ordinary shares with no par value. The reverse share split reduced the number of Class A ordinary shares issued and outstanding from approximately 19.5 million to 781,321 and the number of Class B ordinary shares issued and outstanding from 100,698 to 4,028.

Note 17 – Concentration of major customers and suppliers

For the six months ended March 31, 2025, two major customers accounted for approximately 59%, and 10% of the Company’s total sales, respectively. For the six months ended March 31, 2024, three major customers accounted for approximately 27%,16%, and 10% of the Company’s total sales, respectively. Any decrease in sales to these major customers may negatively impact the Company’s operations and cash flows if the Company fails to increase its sales to other customers.

As of March 31, 2025, four major customers accounted for 36%,34%,15%, and 14% of the Company’s accounts receivable balance, respectively. As of September 30, 2024, four major customers accounted for 34%,29%,22%, and 12% of the Company’s accounts receivable balance, respectively.

For the six months ended March 31, 2025, two major suppliers accounted for approximately 36% and 15% of the total purchases, respectively. For the six months ended March 31, 2024, two major suppliers accounted for approximately 35% and 10% of the total purchases, respectively.

As of March 31, 2025, four suppliers accounted for approximately 31%,16%,15% and 11% of the Company’s advance to suppliers balance, respectively. As of September 30, 2024, three suppliers accounted for 40%,23%, and 14% of the Company’s advance to suppliers balance, respectively.

Note18– Commitments and contingencies

(a) Capital expenditure commitments

As of March 31, 2025, the Company does not have any capital expenditure commitment.

(b) Contingencies

The requirement of employee benefit plans has not been implemented consistently by the local governments in China given the different levels of economic development in different locations. Biopower Plant has not paid adequate social insurance for all its employees, and the Company’s PRC subsidiaries have not made adequate housing provident fund payments for all their employees. The relevant PRC authorities may order the Company to make up the contributions to these plans. In addition, failure to make adequate social insurance payments on time may subject the Company to 0.05% late fees per day, starting from the date of underpayment, and fines equal to one to three times the underpaid amount. For failure to make adequate housing provident fund payments as required, the Company may be fined RMB 10,000 to RMB 50,000. If the Company is subject to late fees or fines in relation to underpaid employee benefits, the financial condition and results of operations may be adversely affected. However, the risk of regulatory penalty that the relevant authorities may impose on the Company’s PRC subsidiaries in relation to its failure to make adequate contributions to the employee benefit plans for all the Company’s employees as required is remote, because the relevant local authorities confirmed in writing that no records of violation were found on the Company’s PRC subsidiaries for social insurance plan and/or housing provident fund contributions.

Note19– 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 details on the Company’s business segments. The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s chief operating decision maker makes operating decisions and assesses performance solely based on activated carbon sales orders received. The Company has determined that it has only one operating segment and therefore one reportable segment as defined by ASC.

The following table presents revenue by major product categories for the six months ended March 31, 2025 and 2024, respectively:

All of the Company’s long-lived assets are located in the PRC. All of the Company’s products are sold in the PRC.

Note 20 – Disposal of subsidiaries

On January 20, 2025, CN Energy Group. Inc. (the “Company”), entered into a Share Transfer Agreement (the “Agreement”) with Asia Rubber Resources Limited (“Asia Rubber Resources”). Pursuant to the Agreement, the Company agreed to transfer 100% of its equity in Clean Energy Holdings Limited to Asia Rubber Resources (the “Transfer”) for a total purchase price of HKD10,000 (approximately $1,281).

The following is a reconciliation of the carrying amounts of major classes of assets and liabilities in the consolidated balance sheets as of March 31, 2025 and September 30, 2024.

The following is a reconciliation of the amounts of major classes of operations of disposed entities in the consolidated statements of income (loss) and comprehensive income (loss) for the six months ended March 31, 2025 and 2024.

Note 21 – Subsequent events