20-F: CN Energy Faces Delisting, Reports Losses Amid Strategic Shift

CN Energy Group Inc. reports a net loss of $11.1 million for fiscal year 2025, faces Nasdaq delisting, and shifts strategic focus to North American robotics and energy sectors.

Summary

• Reported a net loss of $11.1 million for the fiscal year ended September 30, 2025, an improvement from a $14.0 million net loss in fiscal year 2024.
• Revenue decreased by 30.2% to $35.6 million in fiscal year 2025 from $51.0 million in fiscal year 2024, primarily due to a 29.0% decrease in activated carbon sales volume.
• Gross profit increased to $0.65 million (1.8% margin) in fiscal year 2025 from a gross loss of $0.18 million (0.5% margin) in fiscal year 2024.
• Received a Nasdaq delisting notice on January 16, 2026, due to its Class A ordinary shares closing below $1.00 for 30 consecutive business days, and is not eligible for a compliance period due to prior reverse stock splits.
• The company has appealed the Nasdaq delisting determination and intends to present a plan to a hearings panel.
• The auditor included an explanatory paragraph in their opinion regarding substantial doubt about the company's ability to continue as a going concern.
• Expanded business operations into the United States in October 2025 by launching Pathenbot Group Inc., focusing on robotics and automation solutions for small and medium-sized enterprises.
• Acquired a 45% equity interest in Ynong International Group Limited on April 30, 2025, for a total consideration of $40.9 million, involving cash, Class A ordinary shares, and assigned accounts receivables.
• Secured a secured promissory note in the principal amount of $7,510,000.00 from Streeterville Capital, LLC on January 16, 2026, for gross proceeds of $7,000,000.
• Issued 1,977,302 Class A Ordinary Shares for approximately $4.55 million and 631,391 Class B Ordinary Shares for approximately $1.45 million in private placements on August 1, 2025.
• Effected a 1-for-25 reverse stock split on May 19, 2025, and a 1-for-30 reverse stock split on January 19, 2024.
• Identified a material weakness in internal control over financial reporting due to insufficient in-house personnel with U.S. GAAP and SEC reporting knowledge.
• Ceased spending on research and development expenses since November 2023 as part of cost-cutting measures.
• The acquisition of Yunnan Honghao Forestry Development Co., Ltd. was rescinded by a Dali City Peoples Court ruling on April 24, 2025, requiring the original owner to return cash payments and shares.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this as a highly negative report due to persistent net losses, significant revenue decline, a Nasdaq delisting notice with no compliance period, and an auditor's going concern warning, despite some strategic diversification efforts.

Positives

• Net loss decreased by 20.6% to $11.1 million in fiscal year 2025 from $14.0 million in fiscal year 2024.
• Gross profit improved significantly to $0.65 million (1.8% margin) in fiscal year 2025 from a gross loss of $0.18 million (0.5% margin) in fiscal year 2024.
• Successfully expanded into the U.S. robotics and automation market through Pathenbot Group Inc. in October 2025, diversifying business operations.
• Acquired a 45% equity interest in Ynong International Group Limited, expanding into Indonesian forestry and related operations.
• Secured $7.0 million in gross proceeds from a secured promissory note with Streeterville Capital, LLC in January 2026, providing additional liquidity.
• Pathenbot Group Inc. received the 'Best Investment-Ready Innovation Award' at the 2026 Consumer Electronics Show, indicating recognition for its new venture.
• Maintained a positive working capital of $61.0 million and net assets of $102.0 million as of September 30, 2025.

Negatives

• Revenue decreased by 30.2% to $35.6 million in fiscal year 2025, primarily due to a 29.0% decrease in activated carbon sales volume.
• Received a Nasdaq delisting notice on January 16, 2026, due to bid price non-compliance, and is not eligible for a compliance period due to previous reverse stock splits, posing a significant risk to its public listing.
• The independent auditor included an explanatory paragraph in their opinion regarding substantial doubt about the company's ability to continue as a going concern.
• Reported accumulated deficits of $27.9 million and net cash used in operating activities of $2.0 million for fiscal year 2025, indicating ongoing financial challenges.
• Identified a material weakness in internal control over financial reporting due to insufficient in-house personnel with U.S. GAAP and SEC reporting expertise.
• Ceased research and development spending since November 2023 as part of cost-cutting measures, which may hinder future innovation and competitiveness.
• The company's activated carbon sales are highly concentrated, with one major customer accounting for 59% of total sales in fiscal 2025, and raw material sourcing is also concentrated among a few suppliers.
• Disposed of several subsidiaries (CN Energy Development, Hangzhou Forasen, Energy Holdings, Yunnan Honghao) in 2024 and 2025, indicating significant business restructuring or divestment of assets.
• The acquisition of Yunnan Honghao was rescinded by a court order in April 2025, leading to frozen assets of the original owner and a requirement to return cash and shares.
• The dual-class share structure concentrates 86.4% of voting control with Ms. Yefang Zhang, potentially misaligning interests with other shareholders.

Risks

• Expansion into the United States through Pathenbot Group Inc. may not be successful and could expose the company to additional legal, regulatory, and commercial risks.
• Financial results could be materially and adversely affected by an interruption of raw material supply or increases in raw material prices.
• A majority of activated carbon sales are currently derived from a small number of customers; any material business disruption affecting these customers could lead to substantial losses of revenue.
• Reliance on a limited number of suppliers for raw materials and activated carbon could disrupt operations if any supplier is lost.
• A disruption or delay in production at existing production facilities could have a material adverse effect on financial results.
• Reliance on third-party manufacturers to produce some activated carbon products poses risks of production delays, quality control issues, and increased costs.
• Future construction projects may incur delays and budget overruns, materially affecting operating results.
• Uncertainties regarding future environmental and health and safety laws and regulations could adversely affect demand for products.
• Disclosure of trade secrets and other proprietary information, or a failure to adequately protect intellectual property rights, could result in increased competition.
• Third parties may claim that products or processes infringe their intellectual property rights, leading to litigation costs or preventing product sales.
• Compliance with environmental and other laws and regulations could result in significant costs and liabilities.
• Operations are subject to various litigation risks that could increase expenses and adversely affect financial results.
• Inability to keep up with competitive changes affecting the activated carbon industry, including evolving standards, new products, and changing customer demand.
• The activated carbon industry is highly competitive, and inability to compete effectively could adversely affect business and financial results.
• Development of competitive technologies could materially and adversely affect the business and financial results.
• Failure to hire, train, and retain qualified managerial and other employees could materially and adversely affect business and results of operations.
• Lease agreements for leased properties have not been registered with relevant PRC government authorities, potentially exposing the company to fines.
• Unexpected termination of leases or other arrangements, or failure to renew them at acceptable terms, could materially and adversely affect business.
• Dependence on third parties for certain construction, maintenance, engineering, transportation, warehousing, and logistics services poses risks of delays and disruptions.
• Future acquisitions may have an adverse effect on the ability to manage the business.
• A severe or prolonged slowdown in the Chinese economy could materially and adversely affect business and financial condition.
• Changes in the policies, regulations, rules, and enforcement of laws of the PRC government may be quick with little advance notice and could significantly impact profitability.
• The Chinese government's significant oversight and discretion over business could lead to intervention or influence at any time.
• Any actions by the Chinese government, including intervention or control over overseas securities offerings and/or foreign investment, may cause material changes to operations or limit the ability to offer securities.
• Greater oversight by the Cyberspace Administration of China (CAC) over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact business and offerings.
• The Opinions issued by the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council may subject the company to additional compliance requirements in the future.
• Tariffs by the U.S. government and the trade war between the U.S. and China may dampen global growth and negatively impact business.
• Increases in labor costs in the PRC may adversely affect business and profitability.
• Non-compliance with PRC regulations relating to employee benefit plans (social insurance, housing funds) may lead to penalties.
• Difficulty for shareholders to bring an action against the company or its officers and directors in the United States or to enforce any judgment due to British Virgin Islands incorporation and PRC operations.
• Joint statement by the SEC and the PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act could add uncertainties to offerings and potentially lead to delisting.
• PRC regulations relating to offshore investment activities by PRC residents may limit PRC subsidiaries' ability to increase registered capital or distribute profits.
• Reliance on dividends and other distributions from PRC subsidiaries, which are subject to limitations and taxes, could adversely affect the ability to fund business.
• PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currency conversion may delay or prevent the use of financing proceeds.
• Changes in currency conversion rates between RMB and U.S. dollars may affect the company's financial results.
• Classification as a resident enterprise of China under the EIT Law could result in unfavorable tax consequences to the company and non-PRC shareholders.
• Uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises by non-PRC holding companies.
• Direct scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies could harm business operations, stock price, and reputation.
• Disclosures in SEC reports and other filings are not subject to the scrutiny of any regulatory bodies in the PRC.
• The M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by foreign investors, making growth through acquisitions more difficult.
• Substantial future sales of Class A ordinary shares or the anticipation of future sales could cause the price to decline.
• No expected dividends in the foreseeable future; reliance on price appreciation for return on investment.
• Share incentive plan and future grants could lead to share-based compensation expenses and significant dilutive effect to existing shareholders.
• Securities analysts may not cover Class A ordinary shares, negatively impacting the market price.
• The trading price of Class A ordinary shares is likely to be volatile.
• Techniques employed by short sellers may drive down the market price of Class A ordinary shares.
• Requirements of being a public company may strain resources and divert management's attention.
• Ceasing to qualify as a foreign private issuer would require full compliance with U.S. domestic issuer reporting requirements, incurring significant additional expenses.
• Reliance on British Virgin Islands home country practice for certain Nasdaq corporate governance standards provides less protection than U.S. domestic issuers.
• Inability to satisfy, or continue to satisfy, the continued listing requirements and other rules of the Nasdaq Capital Market could lead to delisting.
• Auditor's explanatory paragraph regarding the ability to continue as a going concern indicates significant financial uncertainty.
• An inactive market for Class A ordinary shares may make it difficult to sell shares.
• Anti-takeover provisions in the memorandum and articles of association may discourage, delay, or prevent a change in control.
• The exclusive jurisdiction provision in the articles of association may limit shareholders' ability to obtain a favorable judicial forum for disputes.
• The board of directors may refuse or delay the registration of the transfer of ordinary shares in certain circumstances.
• Material weakness in internal control over financial reporting could adversely affect accurate and timely financial reporting or fraud prevention.
• Emerging growth company status allows exemptions from disclosure requirements, making it difficult to compare performance with other public companies.
• Laws of the British Virgin Islands may not provide shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.
• Economic substance legislation of the British Virgin Islands may adversely impact the company or its operations.
• Classification as a PFIC could have adverse United States federal income tax consequences for U.S. taxpayers who own Class A ordinary shares.

Future Outlook

The company intends to integrate robotics, software, and artificial intelligence technologies to provide automation solutions, shifting its strategic focus toward North America (specifically the United States and Canada). It plans to develop and scale additional business lines in robotics products and technical services and actively seek energy-industry-related opportunities. The company also aims to explore new markets for its activated carbon products, establish branch offices in strategic areas, and focus on products with growing demand in water, food, beverage, and pharmaceutical industries. In the long term, it plans to strategically establish or acquire companies that use activated carbon as raw materials. Management believes current operations can satisfy daily working capital needs for the next 12 months but may require additional capital for future expansion through equity, debt, or credit facilities. A comprehensive cybersecurity framework is planned for development and implementation as financial resources become available.

Management Comments

• Management believes that income generated from our current operations can satisfy our daily working capital needs over the next 12 months.
• The Company intends to continue to actively monitor its compliance with the Bid Price Rule and, as appropriate, will consider available options to resolve any deficiencies and regain compliance.
• The Company intends to present a plan to the Panel seeking an exception or other relief to address the deficiencies identified in the Staff Determination [regarding Nasdaq delisting].
• The Company initiated cost cutting measures and ceased its spending in research and development expenses since November 2023.
• Our management is currently in the process of evaluating the steps necessary to remediate the ineffectiveness [of internal controls], such as (i) hiring more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework, and (ii) implementing regular and continuous U.S. GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel.
• The Company plans to develop and implement [a comprehensive cybersecurity framework] as soon as financial resources become available.

Industry Context

StockSavvy.ai notes that the company's strategic shift towards North American robotics and energy sectors represents a significant diversification from its traditional PRC-based activated carbon business. This move could potentially mitigate geographic concentration risks in China but introduces new market and operational challenges in highly competitive technology sectors. The activated carbon industry in the PRC is described as mature and competitive, which aligns with the company's reported decrease in average price per ton. The company's focus on high-purity wood-based activated carbon for pharmaceutical and food/beverage industries targets a niche with potentially higher margins and growing demand, differentiating it from lower-quality coal-based alternatives. The expansion into robotics aligns with global trends in industrial automation and logistics, suggesting an attempt to tap into high-growth technology markets outside its traditional base.

Comparison to Industry Standards

• The filing does not provide specific industry benchmarks or comparable company data for direct comparison of financial metrics or operational efficiency.
• The company highlights its 'Advanced Activated Carbon Production Technology and Steam-Based Cogeneration Process' as a competitive strength, claiming it is more efficient, results in less pollution, and yields higher profits compared to traditional steam activation. However, no specific industry-wide metrics are provided to benchmark this claim against competitors like Fujian Xinsen Carbon Industry Co., Ltd. or Shanxi Xinhua Activated Carbon Co., Ltd.
• The company states its wood-based activated carbon products are of 'higher quality than carbon activated products manufactured through the chemical activation process,' allowing for use in pharmaceutical and food/beverage production, implying a differentiation from lower-quality competitors. No specific comparable companies or their product quality metrics are listed to substantiate this claim.

Management Changes

Corporate Governance

Legal Proceedings

• On April 24, 2025, the Dali City Peoples Court issued a ruling (the Execution Order) regarding Yunnan Honghao Forestry Development Co., Ltd., rescinding its acquisition by the Company and freezing the assets of Shenzhen Xiangfeng Trading Co., Ltd., the original owner. Shenzhen Xiangfeng is required to return cash payments and shares to the Company.

Related Party Transactions

• As of September 30, 2025, the company owed Ms. Yefang Zhang (principal shareholder) $611,327, which is interest-free, unsecured, and due upon demand.
• Zhejiang New Material has a lease agreement with Zhejiang Forasen Energy Technology Co., Ltd., controlled by Mr. Zhengyu Wang (spouse of Ms. Yefang Zhang), for office space with an annual rent of approximately $60,742.
• On September 16, 2025, Weastfinace Group Inc. (100% owned by Xinyang Wang, a director) and Ms. Yefang Zhang entered into a Voting Agreement, granting Ms. Zhang an irrevocable proxy to vote 631,391 Class B Ordinary Shares owned by Weastfinace, consolidating approximately 86.4% of the company's aggregate voting power with Ms. Zhang.
• On August 1, 2025, Weastfinace Group Inc. purchased 631,391 Class B Ordinary Shares from the company for approximately $1,452,200 in a private placement.

Stakeholder Impact

• Shareholders face significant risk of value loss due to the Nasdaq delisting notice, auditor's going concern warning, persistent net losses, and declining revenue. The dual-class share structure concentrates voting power, potentially limiting influence for other shareholders.
• Employees have been impacted by cost-cutting measures, including a reduction in headcount from 133 in fiscal 2023 to 27 in fiscal 2024. There is a risk of penalties due to non-compliance with PRC employee benefit plans.
• Customers may experience disruptions in supply due to potential issues with raw material sourcing or third-party manufacturers.
• Creditors, particularly those with unsecured debt, face increased risk due to the company's going concern warning and accumulated deficits, although the recent secured promissory note includes collateral.

Next Steps

• Negotiate in good faith toward a definitive share purchase agreement for the potential acquisition of Blessing Logistics Ltd. within 60 days following January 25, 2026.
• Present a plan to the Nasdaq hearings panel seeking an exception or other relief to address the delisting deficiencies.
• Improve accounts receivable management, strengthen collection by shortening the collection cycle, and optimize credit policy to reduce bad debt risk.
• Consider using factoring or financing to relieve cash flow pressure through accounts receivable financing.
• Implement strategic adjustments through business restructuring, divesting loss-making businesses, and focusing on profitable business segments.
• Acquire new technologies or market share through mergers and acquisitions or collaborations to enhance competitiveness.
• Improve production efficiency and product competitiveness through technological innovation and digital transformation.
• Increase income by expanding the market, entering new markets, or launching new products.
• Strengthen sales and optimize sales strategies to increase customer order volumes.
• Develop and implement a comprehensive cybersecurity framework as financial resources become available.
• Hire more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience and qualifications.
• Implement regular and continuous U.S. GAAP accounting and financial reporting training programs for accounting and financial reporting personnel.
• Set up an internal audit department and enhance the effectiveness of the internal control system.
• MZ HK intends to apply for a tax resident certificate if and when MZ Pintai plans to declare and pay dividends to MZ HK.
• PWAN will appoint an individual designated by the Company to serve on the board of directors of PWAN on or prior to June 30, 2025.

Key Dates

Recommendation

The company faces severe existential threats, including a Nasdaq delisting notice with no compliance period, an auditor's 'going concern' warning, persistent net losses, and a significant decline in core business revenue. While strategic shifts into robotics and new energy are noted, their impact is highly uncertain and insufficient to offset immediate financial and operational distress. The concentrated voting power and internal control weaknesses further exacerbate investment risk. A seasoned investor would view this as a high-risk, distressed asset with significant downside potential.

Keywords

Activated carbon, Robotics, Automation, China, U.S. expansion, Nasdaq delisting, Financial performance, Corporate governance, Risk management, SEC filing, 20-F, CNEY, Supply chain, Environmental regulations, Intellectual property, Capital raise, Related party transactions, Going concern, Internal controls