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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

OR

☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 20212023

OR

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

OR

☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from   to

Commission file number: 001-39978

CN ENERGY GROUP. INC.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

British Virgin Islands

(Jurisdiction of incorporation or organization)

Building 2-B,2‑B, Room 206, No. 268 Shiniu Road

Liandu District, Lishui City,, Zhejiang Province

PRC

+86-571-87555823People's Republic of China

(Address of principal executive offices)

Ye Ren

Jinwu Huang, Chief Financial Officer

Telephone: + 86-571-86‑571‑87555823

Email:ry@f0086.com

At the address of the Company set forth above

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

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Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

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An aggregate of 20,319,2762,285,826 Class A ordinary shares and 100,698 Class B ordinary shares, no par value, as of September 30, 2021.2023.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐ No ☒

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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 an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-212b‑2 of the Exchange Act.

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If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

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 which basis of accounting the registrant has used to prepare the financial statements included in this filing:

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If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-212b‑2 of the Exchange Act). Yes ☐ No ☒

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​INTRODUCTION

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INTRODUCTION

In this annual report on Form 20-F,20‑F, unless the context otherwise requires, references to:

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This annual report on Form 20-F20‑F includes our audited consolidated financial statements for the fiscal years ended September 30, 2021, 2020,2023, 2022, and 2019.2021. In this annual report, we refer to assets, obligations, commitments, and liabilities in our consolidated financial statements in United States dollars. These dollar references are based on the exchange rate of RMB to United States dollars, determined as of a specific date or for a specific period. Changes in the exchange rate will affect the amount of our obligations and the value of our assets in terms of United States dollars which may result in an increase or decrease in the amount of our obligations and the value of our assets.

This annual report contains translations of certain RMB amounts into U.S. dollars at specified rates. Unless otherwise stated, the following exchange rates are used in this annual report:

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Part I

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.applicable.

Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.applicable.

Item 3. KEY INFORMATION

We are incorporated in the British Virgin Islands and conduct our operations primarily in China. As a holding company with no material operations of our own, our operations are conducted in China through the operating entities. Our ordinary shares are shares of CN Energy, the offshore holding company in the British Virgin Islands, instead of shares of our operating companies in China. Therefore, our shareholders will not directly hold any equity interests in our operating companies.

Wholly owned subsidiaries of CN Energy Development include Khingan Forasen, Hangzhou Forasen, Zhongxing Energy, and Zhejiang New Material, Ningbo Nadoutong Trading Co., Ltd., Zhoushan Xinyue, and Zhejiang Yongfeng New Material, all of which were established as companies with limited liabilities pursuant to PRC laws. Khingan Forasen produces activated carbon and biomass electricity through its branch office, Tahe Biopower Plant, which houses the operating entities’ current manufacturing facility; Hangzhou Forasen is engaged in the marketing of activated carbon products; Zhongxing Energy is expected to hold the operating entities’ second biopower plant and produce activated carbon and heat in the future; Zhejiang New Material is expected to be engaged in the manufacturing and marketing of activated carbon products used for water treatment and purification in 2023; Ningbo Nadoutong is engaged in the marketing of activated carbon products; Zhoushan Xinyue is engaged in the marketing of activated carbon products; and Zhejiang Yongfeng New Material is expected to be engaged in the marketing of activated carbon products.

Wholly owned subsidiaries of MZ HK include MZ Pintai, Yunnan Yuemu and Yunnan Honghao, all of which were incorporated as companies with limited liabilities in pursuant to PRC laws. MZ HK is a holding company with no business operation; MZ Pintai is engaged in sales of minerals, stone, metal materials, construction materials, wood, chemical materials and products, rubber products, and paper products; Yunnan Yuemu is engaged in management and conversion of forest and natural ecosystem; and Yunnan Honghao is engaged in forest acquisition, rights transfer, and nurturing, and timber harvesting and processing.

2023 Corporate Restructuring

In December 2023, we conducted a corporate reorganization, which represented a strategic shift to streamline management control and enhance our operational efficiency. This restructuring is marked by four equity transfer agreements that redefine our corporate landscape.

On December 12, 2023, Zhejiang CN Energy and CN Energy Development entered into an equity transfer agreement. According to the terms of that agreement, CN Energy Development transferred 100% of the equity of Zhejiang New Material to Zhejiang CN Energy for no consideration. This equity transfer resulted in Zhejiang New Material being a wholly-owned subsidiary of Zhejiang CN Energy.

On December 15, 2023, Hangzhou Forasen and Zhejiang New Material signed an equity transfer agreement. Under this agreement, Hangzhou Forasen agreed to transfer 100% of its equity in Zhoushan Xinyue to Zhejiang New Material for no consideration. Upon the completion of this equity transfer, Zhoushan Xinyue became a wholly-owned subsidiary of Zhejiang New Material. On the same date, Zhejiang New Material and CN Energy Development entered into an equity transfer agreement, pursuant to which CN Energy Development transferred all its equity interest in Ningbo Nadoutong to Zhejiang New Material for no consideration. After this transfer, Ningbo Nadoutong became a wholly-owned subsidiary of Zhejiang New Material.

On December 21, 2023, Hangzhou Forasen and Zhejiang New Material entered into another equity transfer agreement, under which Hangzhou Forasen transferred 100% of its equity in Zhejiang Yongfeng New Material to Zhejiang New Material for no consideration. Upon the completion of this equity transfer, Zhejiang Yongfeng New Material became a wholly-owned subsidiary of Zhejiang New Material.

As of the date of this annual report, we have completed our corporate restructuring. The following diagram illustrates our corporate structure as of the date of this annual report.

Notes: All percentages reflect the voting ownership interests instead of the equity interests held by each of our shareholders given that each holder of Class B ordinary shares will be entitled to 50 votes per one Class B ordinary share and each holder of Class A ordinary shares will be entitled to one vote per one Class A ordinary share.

Share Consolidation

On December 20, 2023, our board of directors approved a resolution that resulted in (i) a share consolidation of 30 issued Class A ordinary shares with no par value into one Class A ordinary share, and (2) a share consolidation of 30 issued Class B ordinary shares into one Class B ordinary share (collectively, the “Share Consolidation”). Immediately after the Share Consolidation, each of our shareholder’s percentage ownership interest and proportional voting power remained unchanged, except for minor changes and adjustments resulting from the treatment of fractional shares. The rights and privileges of the holders of ordinary shares remained substantially unaffected by the Share Consolidation. The Share Consolidation was effective at 5:00 p.m. British Virgin Islands time on January 18, 2024. Beginning with the opening of trading on January 19, 2024, our Class A ordinary shares started to trade on a post-Share Consolidation basis on the Nasdaq Capital Market. The Share Consolidation was primarily being effectuated to regain compliance with Nasdaq Listing Rule 5450(a)(1) related to the minimum price per share of our Class A ordinary shares.

Risks Associated with Our Corporate Structure

Our holding company structure involves certain risks in terms of dividend distribution, direct investment in PRC entities, and obtaining benefits under relevant tax treaty. See “—D. Risk Factors—Risks Related to Doing Business in the PRC—We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirement we may have, and any limitation on the ability of our subsidiaries to make payments to us and any tax we are required to pay could have a materially adverse effect on our ability to conduct our business,” “—D. Risk Factors—Risks Related to Doing Business in the PRC—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 us from using proceeds from our future financing activities to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business,” “—D. Risk Factors—Risks Related to Doing Business in the PRC—PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or otherwise expose us or our PRC resident shareholders to liabilities or penalties,” and “—D. Risk Factors—Risks Related to Doing Business in the PRC—Under the EIT Law, we may be classified as a ‘resident enterprise’ of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.” See also “Item 4. Information on the Company—B. Business Overview—Regulations—PRC Regulations Relating to Foreign Exchange.”

Risks Associated with Doing Business in the PRC

We are subject to certain legal and operational risks associated with having the majority of our operations in China, which could significantly limit or completely hinder our ability to offer securities to investors and cause the value of our securities to significantly decline or be worthless. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in the PRC—Any actions by the Chinese government, including any decision to intervene or influence the operating entities’ operations or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause them to make material changes to their operations, may limit or completely hinder their ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.” Recently, the PRC government adopted a series of regulatory actions and issued statements to regulate business operations in China, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As of the date of this annual report, we and our subsidiaries have not been involved in any investigations on cybersecurity review initiated by any PRC regulatory authority, nor has any of them received any inquiry, notice or sanction. As of the date of this annual report, we are not subject to cybersecurity review by the Cyberspace Administration of China (the “CAC”), since we currently do not have over one million users’ personal information and do not anticipate that we will be collecting over one million users’ personal information in the foreseeable future, which we understand might otherwise subject us to the Cybersecurity Review Measures. We are not subject to network data security review by the CAC if the Draft Regulations on the Network Data Security Administration (Draft for Comments) (the “Security Administration Draft”) are enacted as proposed, because we currently do not have over one million users’ personal information, we do not collect data that affect or may affect national security and we do not anticipate that we will be collecting over one million users’ personal information or data that affect or may affect national security in the foreseeable future, which we understand might otherwise subject us to the Security Administration Draft. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in the PRC—Greater oversight by the CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact the operating entities’ business and our offerings.”

On February 17, 2023, the China Securities Regulatory Commission (the “CSRC”) promulgated 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. As our registration statement on Form F-1 was declared effective on February 4, 2021 and we completed our initial public offering and listing on February 9, 2021, we are currently not required to complete the filing procedures pursuant to the Trial Measures. However, in the event that we undertake new offerings or fundraising activities in the future, we may be required to complete the filing procedures. Other than the foregoing, as of the date of this annual report, according to our PRC counsel, Universal Law Offices of Hangzhou, no relevant PRC laws or regulations in effect require that we obtain additional permission from any PRC authorities to issue securities to foreign investors, and we have not received any inquiry, notice, warning, sanction, or any regulatory objection to our offerings from the CSRC, the CAC, or any other PRC authorities that have jurisdiction over our operations. The Standing Committee of the National People’s Congress (the “SCNPC”) or PRC regulatory authorities may in the future promulgate additional laws, regulations, or implementing rules that require us and/or our subsidiaries to obtain regulatory approval from Chinese authorities for our continued listing in the U.S. If we do not receive or maintain such approval, or inadvertently conclude that such approval is not required, or applicable laws, regulations, or interpretations change such that we are required to obtain approval in the future, we may be subject to an investigation by competent regulators, fines or penalties, or an order prohibiting us from conducting a subsequent offering, and these risks could result in a material adverse change in our operations and the value of our Class A ordinary shares, significantly limit or completely hinder our ability to offer or continue to offer securities to investors, or cause such securities to significantly decline in value or become worthless. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in the PRC—Given the Chinese government’s significant oversight and discretion over the conduct of the operating entities’ business, the Chinese government may intervene or influence the operating entities’ operations at any time, which could result in a material change in their operations and/or the value of our ordinary shares.”

Since 2021, the Chinese government has strengthened its anti-monopoly supervision, mainly in three aspects: (i) establishing the National Anti-Monopoly Bureau; (ii) revising and promulgating anti-monopoly laws and regulations, including: the Anti-Monopoly Law of the PRC (amended on June 24, 2022 and effective on August 1, 2022), the anti-monopoly guidelines for various industries, and the Detailed Rules for the Implementation of the Fair Competition Review System; and (iii) expanding the anti-monopoly law enforcement targeting Internet companies and large enterprises. As of the date of this annual report, the Chinese government’s recent statements and regulatory actions related to anti-monopoly concerns have not impacted our or our operating entities’ ability to conduct business, our ability to accept foreign investments or issue our securities to foreign investors because neither we nor our operating entities engage in monopolistic behaviors that are subject to these statements or regulatory actions

Permissions Required from PRC Authorities

As of the date of this annual report, we and the operating entities (i) are not covered by additional permissions or approval requirements from any governmental agency that is required to approve the operating entities’ operations, (ii) have received from PRC authorities all requisite licenses, permissions, and approvals needed to engage in the businesses currently conducted in the PRC, and (iii) no such permission or approval has been denied.

As advised by our PRC counsel, Universal Law Offices of Hangzhou, other than those requisite for a domestic company in China to engage in the businesses similar to those of the operating entities, the operating entities are not required to obtain any additional permission from Chinese authorities, including the CSRC, the CAC, or any other governmental agency that is required to approve the operating entities’ operations. However, we cannot assure you that the PRC regulatory agencies, including the CAC or the CSRC, would take the same view as we do, and there is no assurance that our operating entities are always able to successfully update or renew the licenses or permits required for the relevant business in a timely manner or that these licenses or permits are sufficient to conduct all of their present or future business. If the operating entities (i) do not receive or maintain required permissions or approvals, (ii) inadvertently conclude that such permissions or approvals are not required, or (iii) applicable laws, regulations, or interpretations change and our operating entities are required to obtain such permissions or approvals in the future, they could be subject to fines, legal sanctions, or an order to suspend their relevant services, which may materially and adversely affect our financial condition and results of operations and cause our securities to significantly decline in value or become worthless.

According to the Notice on the Administrative Arrangements for the Filing of the Overseas Securities Offering and Listing by Domestic Companies from the CSRC, or “the CSRC Notice,” the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as existing issuers (the “Existing Issuers”). Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Based on the foregoing, as our registration statement on Form F-1 in connection with our initial public offering was declared effective on February 4, 2021 and we completed our initial public offering and listing on February 9, 2021, we are currently not required to complete the filing procedures pursuant to the Trial Measures. However, in the event that we undertake new offerings or fundraising activities in the future, we may be required to complete the filing procedures.

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 were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision over overseas listings by Chinese companies. The 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. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirements in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of different interpretation and enforcement of the rules and regulations in the PRC adverse to us, which may take place quickly with little advance notice. See “—D. Risk Factors—Risks Relating to Doing Business in the PRC—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 operating entities to additional compliance requirement in the future.”

Transfer of Funds and Other Assets Between Our Company and Our Subsidiaries

As of the date of this annual report, CN Energy has transferred the net proceeds from our initial public offering, through Energy Holdings and Zhejiang CN Energy, to CN Energy Development and its subsidiaries, including RMB64,134,688.25 (approximately $9,537,500) to CN Energy Development, RMB103,921,379 (approximately $15,848,010) to Hangzhou Forasen, and RMB12,891,800 (approximately $1,966,000) to Zhongxing Energy.

Our finance department is supervising cash management, following the instructions of our management. Our finance department is responsible for establishing our cash operation plan and coordinating cash management matters among our subsidiaries and departments. Each subsidiary and department initiates a cash request by putting forward a cash demand plan, which explains the specific amount and timing of cash requested, and submits it to our finance department. The finance department reviews the cash demand plan and prepares a summary for the management of our Company. Management examines and approves the allocation of cash based on the sources of cash and the priorities of the needs. Other than the above, we currently do not have other cash management policies or procedures that dictate how funds are transferred.

Dividends or Distributions and Tax Consequences

As of the date of this annual report, none of our subsidiaries have made any dividends or distributions to CN Energy and CN Energy has not made any dividends or distributions to its shareholders. We intend to keep any future earnings to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Subject to the passive foreign investment company (“PFIC”) rules, the gross amount of distributions we make to investors with respect to our ordinary shares (including the amount of any taxes withheld therefrom) will be taxable as a dividend, to the extent that the distribution is paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles.

Pursuant to the BVI Business Companies Act, 2004 as amended from time to time (the “BVI Act”), and our third amended and restated memorandum and articles of association, our board of directors may authorize and declare a dividend to shareholders at such time and of such an amount as they think appropriate, if they are satisfied on reasonable grounds that immediately following the dividend payment, the value of our assets will exceed our liabilities and we will be able to pay our debts as they become due. There is no further British Virgin Islands statutory restriction on the amount of funds which may be distributed by us by dividends.

If we determine to pay dividends on any of our ordinary shares in the future, as a holding company, we will be dependent on receipt of funds from our Hong Kong subsidiaries, Energy Holdings and MZ HK, and our U.S. subsidiary, CN Energy USA Inc.

Current PRC regulations permit our indirect PRC subsidiaries to pay dividends to Energy Holdings only out of their accumulated profits, if any, determined in accordance with Chinese accounting standards and regulations. In addition, each of our subsidiaries in China is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory reserve until such reserve reaches 50% of its registered capital. Each of such entity in China is also required to further set aside a portion of its after-tax profits to fund the employee welfare fund, although the amount to be set aside, if any, is determined at the discretion of its board of directors. Although the statutory reserves can be used, among other ways, to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation.

The PRC government imposes controls on the conversion of RMB into foreign currencies and the remittance of currencies out of the PRC (excluding the special administrative regions of Hong Kong and Macau). Under the applicable PRC regulations, RMB is freely convertible only to the extent of current account items, such as trade-related receipts and payments, interest, and dividends. Conversion of RMB into a foreign currency such as U.S. dollars for capital account items, such as direct equity investments, loans, and repatriation of investment, requires prior approval from the State Administration of Foreign Exchange or its local branch. Such approval, however, does not guarantee the availability of foreign currency conversion. Furthermore, the value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The RMB may not be stable against the U.S. dollar or other foreign currency. To the extent that we seek to convert RMB into U.S. dollars, depreciation of the RMB against the U.S. dollar would have an adverse effect on the U.S. dollar amount we receive from the conversion. Therefore, we may experience difficulties in complying with the administrative requirements necessary to obtain and remit foreign currency for the payment of dividends from our profits, if any. Furthermore, if our subsidiaries and affiliates in the PRC incur debt on their own in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments. If we or our subsidiaries are unable to receive all of the revenue from our operations, we may be unable to pay dividends on our ordinary shares.

Cash dividends, if any, on our ordinary shares will be paid in U.S. dollars. Energy Holdings or MZ HK may be considered a non-resident enterprise for PRC tax purposes. Any dividends that our PRC subsidiaries pay to Energy Holdings 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%. See “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation.”

In order for us to pay dividends to our shareholders, we will rely on payments made from (i) CN Energy Development’s subsidiaries to CN Energy Development and from CN Energy Development to Zhejiang CN Energy and indirectly to Manzhouli CN Energy, and the distribution of such payments to Energy Holdings and then to our Company and (ii) MZ Pintai’s subsidiaries to MZ Pintai, and the distribution of such payments to MZ HK and then to our Company. According to the EIT Law, such payments from subsidiaries to parent companies in China are subject to the PRC enterprise income tax at a rate of 25%. In addition, if CN Energy Development or MZ Pintai or their subsidiaries incur debt on their own behalf, the instruments governing the debt may restrict its ability to pay dividends or make other distributions to us.

Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Tax Evasion on Income (the “Double Tax Avoidance Arrangement”), the 10% withholding tax rate may be lowered to 5% if a Hong Kong resident enterprise owns no less than 25% of a PRC project. The 5% withholding tax rate, however, does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong project must be the beneficial owner of the relevant dividends; and (b) the Hong Kong project must directly hold no less than 25% share ownership in the PRC project during the 12 consecutive months preceding its receipt of the dividends. In current practice, a Hong Kong project must obtain a tax resident certificate from the Hong Kong tax authority to apply for the 5% lower PRC withholding tax rate. As the Hong Kong tax authority will issue such a tax resident certificate on a case-by-case basis, we cannot assure you that we will be able to obtain the tax resident certificate from the relevant Hong Kong tax authority and enjoy the preferential withholding tax rate of 5% under the Double Taxation Avoidance Arrangement with respect to any dividends paid by our PRC subsidiaries to their immediate holding company, Energy Holdings and MZ HK. As of the date of this annual report, we have not applied for the tax resident certificate from the relevant Hong Kong tax authority. Energy Holdings intends to apply for the tax resident certificate if and when Zhejiang CN Energy and Manzhouli CN Energy plan to declare and pay dividends to Energy Holdings and MZ HK intends to apply for the tax resident certificate if and when MZ Pintai plans to declare and pay dividends to MZ HK. See “—D. Risk Factors—Risks Relating to Doing Business in the PRC—There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our Hong Kong subsidiaries may not qualify to enjoy certain treaty benefits.”

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Risks Related to Our Business

Our

The operating entities’ financial results could be materially and adversely affected by an interruption of supply of raw materials.

We

The operating entities are dependent on a variety of raw materials (including forestry residues, little fuelwood, and wood wastes) that support ourtheir manufacturing activities. OurThe operating entities’ ability to meet ourtheir customers’ needs depends heavily on an uninterrupted supply of these materials. Although wethe operating entities source strategic raw materials from multiple suppliers whenever possible and have instituted back-up procedures or contracted with a secondary supplier for any raw material that is sourced primarily from one location or supplier, production problems, lack of capacity, breach of contractual obligations by ourtheir third-party suppliers, changes in theirthird-party suppliers’ financial or business condition, or planned and unplanned shutdowns of their production facilities that affect their ability to supply usthe operating entities with raw materials that meet ourthe operating entities’ specifications, or at all, could disrupt ourthe operating entities’ ability to supply products to ourtheir customers. In addition, interruptions in raw material supply caused by events outside ourtheir suppliers’ control, such as wildfires, labor disputes, or transportation disruptions, could also disrupt ourthe operating entities’ ability to meet customer demand. These supply disruptions could cause usthe operating entities to miss deliveries and breach ourtheir contracts, which could damage ourtheir relationships with ourtheir customers and subject usthe operating entities to claims for damages under ourtheir contracts. If any of these events were to occur for more than a temporary period, wethe operating entities may not be able to make arrangements for transition supply and qualified replacement suppliers on terms acceptable to usthe operating entities or at all, which could have a material adverse effect on ourtheir business and financial results.

Increases in the prices of raw materials could materially and adversely affect ourthe operating entities’ financial results.

If the prices wethe operating entities have to pay for raw materials under ourtheir existing supply contracts or under replacement supply contracts increase, wethey could face significantly higher production costs. Although ourthe operating entities’ long-term supply contracts typically provide for a specific price, increases in raw material prices could adversely affect ourtheir ability to renew these contracts on similar terms or at all. Similarly, increases in raw material prices could adversely affect ourtheir ability to enter into shorter-term supply agreements at favorable prices. WeThe operating entities may not be able to pass the whole price increase through to ourtheir customers, which could have a material adverse effect on ourtheir financial results.

A majority of ourthe operating entities’ activated carbon sales are currently derived from a small number of customers. If any of these customers experiences a material business disruption, wethe operating entities would likely incur substantial losses of revenue.

For the fiscal year ended September 30, 2023, three major customers accounted for 13%, 13%, and 10% of the Company’s total sales, respectively. For the fiscal year ended September 30, 2022, one major customer accounted for approximately 58% of the operating entities’ total sales. For the fiscal year ended September 30, 2021, three major customers accounted for approximately 44%, 33%, and 11% of ourthe operating entities’ total sales, respectively. For the fiscal year ended September 30, 2020, three major customers accounted for approximately 36%, 26%, and 20% of our total sales, respectively. For the fiscal year ended September 30, 2019, four major customers accounted for approximately

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15%, 14%, 12%, and 10% of our total sales, respectively. OurThe operating entities’ major customers may change as wethey adjust marketing strategies, and any material business disruption affecting ourthe operating entities’ major customers or any decrease in sales to ourtheir major customers may negatively impact ourtheir operations and cash flows if wethey fail to increase our sales to other customers.

We

The operating entities have sourced ourtheir raw materials and activated carbon primarily from a limited number of suppliers. If wethey lose one or more of thetheir suppliers, our operationtheir operations may be disrupted, and ourtheir results of operations may be adversely and materially impacted.

For the fiscal year ended September 30, 2021, we2023, the operating entities sourced 26 %, 25%,14% and 16%12% of ourtheir raw materials and activated carbon from ourtheir top threetwo suppliers, respectively. For the fiscal year ended September 30, 2020, we2022, the operating entities sourced 29%35% and 14% of their raw materials from their top two suppliers, respectively. For the fiscal year ended September 30, 2021, the operating entities sourced 26%, 17%25%, and 10%16% of ourtheir raw materials and activated carbon from ourtheir top three suppliers, respectively; for the fiscal year ended September 30, 2019, we sourced 13%, 12%, 11%, and 11% of our raw materials and activated carbon from our top four suppliers, respectively. If wethey lose one or more of these suppliers and are unable to swiftly engage new suppliers, ourthe operating entities’ production operationoperations may be disrupted or even suspended, and wethey may not be able to deliver products to ourtheir customers on time. WeThe operating entities may also have to pay a higher price to source from a different supplier on short notice. While wethe operating entities are actively searching for and negotiating with new suppliers, there is no guarantee that wethey will be able to locate appropriate new suppliers in ourtheir desired timeline. As a result, ourthe operating entities’ results of operations may be adversely and materially impacted.

A disruption or delay in production at ourthe operating entities’ existing production facilities could have a material adverse effect on ourtheir financial results.

If ourthe operating entities’ production facilities were to cease production unexpectedly in whole or in part, ourtheir sales and financial results could be materially and adversely affected. Such a disruption could be caused by a number of different events, including:

If any of these or other events were to result in a material disruption of ourthe operating entities’ current manufacturing operations, production of ourtheir products may be delayed and ourtheir ability to meet ourthe production capacity targets and satisfy customer requirements may be materially adversely affected or wethe operating entities may be required to recognize impairment charges, any of which could have a material adverse effect on ourtheir financial results. In addition, a prolonged shutdown of any of ourthe operating entities’ production facilities could cause usthem to miss deliveries and breach ourtheir contracts, which could damage ourtheir relationships with ourtheir customers and subject usthem to claims for damages under ourtheir contracts. Any of these events could have a material adverse effect on ourthe operating entities’ business and financial results.

We

The operating entities rely on third-party manufacturers to produce some of ourtheir activated carbon products and problems with, or loss of, these manufacturers could harm ourthe operating entities’ business and operating results.

We

The operating entities have outsourced some of ourtheir customer orders to third-party manufacturers to keep up with the demand for ourthe operating entities’ activated carbon products. WeThe operating entities face the risk that these third-party manufacturers may not produce and deliver activated carbon products on a timely basis, or at all. WeThe operating entities may also experience difficulties with ourtheir third-party manufacturers since they do not have the same manufacturing processes or quality control as wethe operating entities do. These difficulties include reductions in the availability of production capacity, errors in complying with product specifications and regulatory and customer requirements, failures to meet production deadlines, failure to achieve ourthe operating entities’ product quality standards, increases in costs of materials, and manufacturing or other business interruptions. The ability of ourthe operating entities’ third-party manufacturers to effectively satisfy ourtheir production requirements could also be impacted by manufacturer financial difficulty or damage to their operations caused by fire, a terrorist attack, natural disasters, or other events. Although wethe operating entities carefully select third–party

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manufacturers, the failure of any manufacturer to perform to ourthe operating entities’ expectations could result in supply shortages or delays for ourthe operating entities’ activated carbon products and harm ourtheir business. If wethe operating entities experience significantly increased demand, or if wethey need to replace an existing manufacturer due to lack of performance, wethe operating entities may be unable to supplement or replace their manufacturing capacity on a timely basis, or identify manufacturers with the same or similar quality controls in place as the existing manufacturers do, or on terms that are acceptable to us,the operating entities, which may increase ourtheir costs, reduce ourtheir margins, and harm ourtheir ability to deliver our activated carbon products on time.

We

The operating entities may incur delays and budget overruns with respect to a facility under construction.any facilities it constructs. Any such delays or cost overruns may have a material adverse effect on ourthe operating entities’ operating results.

We are

The operating entities currently constructing a new facility in Manzhouli City. Suchhave no construction projects. If the operating entities launch any construction projects in the future, such projects may entail significant risks that can give rise to delays or cost overruns, including the following:

The anticipated costs and construction periods are based upon budgets, conceptual design documents, and construction estimates prepared by usthe operating entities in consultation with ourtheir architects and contractors. Construction, equipment, staffing requirements, and problems or difficulties in obtaining and maintaining any of the requisite licenses, permits, allocations, or authorizations from regulatory authorities can increase the costs or delay the construction or commencement of production or otherwise affect the planned design and features of the facility. We cannot be sure that wethe operating entities will not exceed the budgeted costs of the facility or that the facility will commence production within the contemplated time frame, if at all. Budget overruns and delays with respect to the construction could have a material adverse impact on ourthe operating entities’ results of operations.

Our

The operating entities’ financial condition, results of operations, and cash flows have been adversely affected by the COVID-19 pandemic.

In December 2019, COVID-19 was first identified in Wuhan, China. Less than four months later, on March 11,

Since early 2020, the World Health Organization declared COVID-19 a pandemic—the first pandemic caused by a coronavirus. The pandemic has reached more than 160 countries, resulting insignificantly impacted the implementation of significant governmental measures, including lockdowns, closures, quarantines, and travel bans, intended to control the spreadbusiness operations of the virus. Theoperating entities. In response to the COVID-19 pandemic, the Chinese government has ordered quarantines, travel restrictions, and the temporary closure of stores and facilities. Companies are also taking precautions, such as requiring employees to work remotely, imposing travel restrictions, and temporarily closing businesses.

Because ofimplemented the shelter-in-place orders and travel restrictions mandated byrestrictions. As a result, the Chinese government, employees of Tahe Biopower Plant and Hangzhou Forasen could not return to work on time after the Chinese New Year of 2020 and the transportation of raw materials and activated carbon was delayed or even stopped duringin January and February 2020, which adversely impacted ourthe operating entities’ production and sales during that period.period, as well as the construction of their new facility in Manzhouli City. In addition, wethe operating entities suspended the construction of ourtheir new facility in Manzhouli City due to the impact of COVID-19 and bad weather. Although our production and sales have gradually recovered sinceDuring fiscal year 2021, the end of March 2020 and we resumed the construction of our new facility in Manzhouli City in August 2020, ouroperating entities’ production, sales, and construction of the new facility in Manzhouli City were disrupted several times by government regulations in response to the COVID-19 pandemic. In 2022, the repeated COVID-19 outbreaks in China have continued to impact the operating entities’ production, sales, and construction activities. Due to regulations of the Chinese government in response to the COVID-19 pandemic, the operating entities had to halt the transportation of raw materials several times, which led to higher costs of raw materials and transportation. The construction of the new facility in Manzhouli City was also disrupted several times. From late 2022 to early 2023, the Chinese government gradually released controls on the COVID-19 pandemic, and the operating entities returned to normal operation step-by-step. Despite this progress, the wood market in Northeast China has been slow to recover, continuing to experience lower trading volumes than pre-pandemic levels. During 2023, this significantly impacted the operating entities’ supply chain in Northeast China, placing a strain on its ability to secure sufficient raw materials for daily production. Consequently, the operating entities’ business was still affected by the COVID-19 pandemic during the fiscal year 2021.ended September 30, 2023.

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The COVID-19 pandemic may continue to have an adverseadversely impact on ourthe operating entities’ business operations and condition and operating results, including material negative impact on our totaldecreasing their revenue, slowerslowing the collection of accounts receivables, generating additional allowance for doubtful accounts, disruption on thedisrupting their supply chain, and an increase inincreasing the costcosts of raw materials. Because of the significant uncertainties surrounding the COVID-19 pandemic, however wethe operating entities cannot reasonably estimate the extent of theits impact on their business disruptionoperations and the related financial impactcondition at this time.

Uncertainties as to the future of existing and planned environmental and health and safety laws and regulations, as well as delays of or changes to these laws and regulations, could have a material adverse effect on demand for ourthe operating entities’ products.

Our

The operating entities’ strategic growth initiatives rely significantly upon the enactment of restrictive environmental and health and safety laws and regulations, particularly those that would require industrial facilities to reduce the quantity of air and water pollutants they release. If stricter regulations are delayed, are not enacted as proposed, are enacted but subsequently repealed or amended to be less strict, or are enacted with prolonged phase-in periods, demand for ourthe operating entities’ products could be materially and adversely affected and wethey may not be able to meet sales growth and return on invested capital targets, which could materially and adversely affect ourthe operating entities’ financial results.

For example, a significant market driver for ourthe operating entities’ activated carbon products and biomass electricity is the Notice on Issuing the Work Plan for Greenhouse Gas Emission Control During the 13th14th Five-Year Plan Period (the “Work Plan”) of the State Council of the PRC (the “State Council”), which supports the development of clean energy, including biomass electricity, and restricts the emission of industrial pollutants. Although the Work Plan would potentially promote the use of activated carbon products, we are unable to predict with certainty when and how the Work Plan will affect demand for ourthe operating entities’ products. Changes to, or delays in implementing, the Work Plan could reduce or delay an expected increase in future demand for ourthe operating entities’ products, which could have a material adverse effect on ourthe operating entities’ business and financial results.

On the other hand, increased costs to utilities and other potential customers in complying with environmental regulations could limit production and reduce or delay an expected increase in demand for ourthe operating entities’ products, which could also have a material adverse effect on ourthe operating entities’ business and financial results.

Disclosure of ourthe operating entities’ trade secrets and other proprietary information, or a failure to adequately protect these or ourthe operating entities’ other intellectual property rights, could result in increased competition and have a material adverse effect on ourthe operating entities’ business and financial results.

Our

The operating entities’ ability to compete effectively depends in part on ourtheir ability to obtain, maintain, and protect ourtheir trade secrets, proprietary information, and other intellectual property rights. WeThe operating entities rely on a combination of trade secret, patent, trademark, and copyright laws, as well as contractual restrictions and physical security measures, to protect ourthe operating entities’ proprietary information and other intellectual property rights.

Where we believe patent protection is not appropriate or obtainable, wethe operating entities rely on trade secret laws and practices to protect ourtheir proprietary technology and processes, including physical security, limited dissemination and access, and confidentiality agreements with ourtheir employees, customers, consultants, business partners, potential licensees and others, to protect ourtheir trade secrets and other proprietary information. However, trade secrets are difficult to protect, and courts outside the PRC may be less willing to protect ourtheir trade secrets. There can be no assurance that ourthe operating entities’ protective measures will effectively prevent disclosure or unauthorized use of proprietary information or provide an adequate remedy in the event of misappropriation, infringement, or other violations of ourthe operating entities’ proprietary information and other intellectual property rights.

Existing laws afford only limited protection for ourthe operating entities’ intellectual property rights. Despite ourthe operating entities’ efforts, wethey may not be able to protect some of ourtheir technology, or the protection that wethey receive may not be sufficient. WeThe operating entities face additional risks that ourtheir protective measures, including ourtheir patents and trademarks, could prove to be inadequate, including:

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From time to time, wethe operating entities may seek to enforce ourtheir intellectual property and proprietary rights against third parties. Policing unauthorized use of intellectual property can be difficult and expensive. WeThe operating entities may not be successful in ourtheir attempts to enforce ourtheir intellectual property rights against third parties. Any such litigation may result in substantial diversion of financial and management resources and, if decided unfavorably to us, could have a material adverse effect on ourthe operating entities’ business and financial results.

Third parties may claim that ourthe operating entities’ products or processes infringe their intellectual property rights, which may cause usthem to pay unexpected litigation costs or damages or prevent usthem from selling ourtheir products.

It is ourthe operating entities’ intention to avoid infringing, misappropriating, or otherwise violating the intellectual property rights of others. We cannot, however, be certain that the conduct of ourthe operating entities’ business or ourtheir products or processes do not infringe or otherwise violate these rights. From time to time, wethe operating entities may become subject to legal proceedings, including allegations and claims of alleged infringement or misappropriation by usthem of the patents and other intellectual property rights of third parties. As ourthe operating entities’ business expands and faces increasing competition, the number of such claims may grow. In addition, attempts to enforce ourthe operating entities’ own intellectual property claims may subject usthem to counterclaims that ourtheir intellectual property rights are invalid, unenforceable, or are licensed to the party against whom wethey are asserting the claim or that wethey are infringing that party’s alleged intellectual property rights.

Legal proceedings involving intellectual property rights, regardless of merit, are highly uncertain and can involve complex legal and scientific analyses, can be time consuming, expensive to litigate or settle, and can significantly divert resources. OurThe operating entities’ failure to prevail in such matters could result in loss of intellectual property rights or judgments awarding substantial damages and injunctive or other equitable relief against us. If wethe operating entities were to be held liable or discover or be notified that ourtheir products or processes potentially infringe or otherwise violate the intellectual property rights of others, wethey may face a loss of reputation, may not be able to exploit some or all of ourthe operating entities’ intellectual property rights or technology, and may need to obtain licenses from third parties or substantially re-engineer ourthe operating entities’ products or processes in order to avoid infringement. WeThe operating entities might not be able to obtain the necessary licenses on acceptable terms, or at all, or be able to re-engineer ourthe operating entities’ products or processes successfully or cost effectively and these efforts may cause usthem to delay or stop selling and marketing ourtheir products or processes.

Any of the foregoing may require considerable effort and expense, result in substantial increases in operating costs, delay or inhibit sales, and may preclude usthem from effectively competing in the marketplace, which in turn could have a material adverse effect on ourthe operating entities’ business and financial results.

Compliance with environmental and other laws and regulations could result in significant costs and liabilities.

The operation and expansion of ourthe operating entities’ manufacturing facilities are subject to strict environmental laws and regulations at the state, provincial, and local level in various jurisdictions, and, over the next several years, we expect that wethe operating entities and the industry in general will become subject to new or more stringent environmental requirements. These laws and regulations generally require usthe operating entities to obtain and comply with various environmental registrations, licenses, permits, inspections, and other approvals. As required by the currentIn compliance with existing laws and regulations, Khingan Forasen obtained the License of Pollutant Discharges on February 27, 2020, with a term ofwhich was valid for three years. With the expiration of this license in 2023, Khingan Forasen took proactive measures and temporarily ceased related productions to ensure compliance with current legal and regulatory standards. As of the date of this annual report, Khingan Forasen's delay in renewing its license did not have a material adverse effect on our business operations. Moving forward, our operating entities may apply for new licenses, a process expected to span three to six months, to resume related production activities. 

Under certain environmental, health, and safety laws, wethe operating entities could be held responsible for any and all liabilities and consequences arising out of past or future releases of hazardous materials, human exposure to these substances, and other environmental damage, in some cases, without regard to fault. The discovery of contamination at any of ourthe operating entities’ current site or at locations at which wethey dispose of waste may expose usthem to clean-up expenditures and other damages imposed by government agencies. In addition, private parties may have the right to pursue legal action to enforce compliance as well as to seek damages for non-compliance with such laws and regulations or for

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personal injury or property damage. Currently, wethe operating entities do not carry insurance that covers environmental risks and costs. Although wethe operating entities intend to procure environmental insurance in the future, such insurance may not cover all environmental risks and costs or may not provide sufficient coverage in the event an environmental claim is made against us.

Our

The operating entities’ operations emit carbon dioxide and other greenhouse gases. Currently, there are no industrial standards in the PRC specifying the emission of pollutants for activated carbon production. Weoperating entities are subject to the PRC environmental laws and regulations on air pollution prevention in general. Additionally, businesses within the activated carbon industry are mandated to adhere to specific industrial standards, including the Comprehensive Emission Standards for Air Pollutants (GB 16297-1996), Emission Standards for Air Pollutants from Industrial Furnace Kilns (GB 9078-1996) and Comprehensive Wastewater Emission Standards (GB 8978-1996). A number of other legislative and regulatory measures to address greenhouse gas emissions, including the Kyoto Protocol and the Draft Emission Standards of Activated Carbon Industrial Pollutants, are in various phases of implementation or discussion. The systems and measures could result in increased costs for usthem to install new controls to reduce hazardous air emissions from ourthe operating entities’ facilities, to purchase air emissions credits or allowances, or to monitor and inventory greenhouse gas emissions from ourthe operating entities’ operations.

Even though wethe operating entities devote considerable efforts to comply with environmental laws, regulations, and permits, there can be no assurance that ourthe operating entities’ operations will at all times be in compliance with them. The enactment of new environmental laws and regulations, the more stringent interpretation or enforcement of existing requirements, or the imposition of liabilities under environmental laws could force usthem to incur costs for compliance, capital upgrades, or liabilities relating to damage claims or limit ourthe operating entities’ current or planned operations, any of which could have a material adverse effect on ourthe operating entities’ business and financial results.

Our

The operating entities’ operations are subject to various litigation risks that could increase ourthe operating entities’ expenses and have a material adverse effect on ourtheir business and financial results.

The nature of ourthe operating entities’ operations exposes usthem to possible litigation claims, including environmental damage and remediation, intellectual property, workers’ compensation and other employee-related matters, insurance coverage, and property rights and easements. Any claim could be adversely decided against us, which could have a material adverse effect on ourthe operating entities’ business and financial results. Similarly, the costs associated with defending claims could dramatically increase ourthe operating entities’ expenses as litigation is often very expensive, divert management’s attention, and impact ourtheir profitability. If wethe operating entities become involved in any litigation, wethey may be forced to direct ourtheir resources to defending or prosecuting the claim, which in turn could have a material adverse effect on ourthe operating entities’ business and financial results.

We

The operating entities may not be able to keep up with competitive changes affecting the activated carbon industry.

The activated carbon industry is characterized by evolving industry and end-market standards, changing regulation, frequent enhancements to existing products and technologies, introduction of new products and changing customer demand, all of which can result in unpredictable product transitions, shortened lifecycles and increased importance of being first to market with new products. The success of ourthe operating entities’ new products depends on their initial and continued acceptance by ourtheir customers. If wethe operating entities are not able to anticipate changes or develop and introduce new and enhanced products that are accepted by ourthe operating entities’ customers on a timely basis and compete with new technologies, ourtheir ability to remain competitive may be adversely affected. In addition, wethe operating entities may experience difficulties in the research, development, production, or marketing of new products, which may delay usthem in bringing new products to market and prevent usthem from recouping or realizing a return on ourthe operating entities’ investments. Any of the foregoing could have a material adverse effect on ourthe operating entities’ business and financial results.

The activated carbon industry is highly competitive, and if wethe operating entities are unable to compete effectively with existing competitors, or with new entrants, ourthe operating entities’ business and financial results could be materially and adversely affected.

We

The operating entities compete in the PRC market with producers and importers of activated carbon. OurThe operating entities’ business faces significant competition from other PRC producers of activated carbon, some of which may from time to time have revenue and capital resources exceeding ours, which they may use to develop more advanced or more cost-effective technologies, increase market share, or leverage their distribution networks. In addition, new competitors and alliances may emerge to take market share away from us. OurThe operating entities’ competitive position in the market in which wethey operate depends upon the relative strength of these competitors in the market and the relative resources they devote to competing in the market. WeThe operating entities could experience reduced sales and loss of market share, which could lead to lower prices and decreased revenue, gross margins, and profits, any of which could have a material and adverse effect on ourthe operating entities’ results of operations.

Development of competitive technologies could materially and adversely affect ourthe operating entities’ business and financial results.

Activated carbon is utilized in various applications as a cost-effective solution to address ourthe operating entities’ customers’ needs. If other competitive technologies or alternative processes or combinations of technologies or processes, such as alternate sorbents, resins, certain types of

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membranes, ozone, and ultraviolet, are advanced to the stage at which they could compete on a cost-effective basis with activated carbon technologies, wethey could experience a decline in demand for ourthe operating entities’ products, which could have a material adverse effect on ourthe operating entities’ business and financial results.

Competitive technologies and new regulations may also affect ourthe operating entities’ customers, and therefore us. For example, a shift away from coal-burning technology due to environmental trends and regulations or new technologies could diminish future demand for ourthe operating entities’ activated carbon products, which could have a material adverse effect on ourthe operating entities’ business and financial results.

If wethe operating entities fail to hire, train, and retain qualified managerial and other employees, ourthe operating entities’ business and results of operations could be materially and adversely affected.

We

The operating entities place substantial reliance on the activated carbon and biomass electricity market experience and knowledge of ourtheir senior management team as well as their relationships with other industry participants. WeThe operating entities do not carry, and do not intend to procure, key person insurance on any of ourtheir senior management team. The loss of the services of one or more members of ourtheir senior management team due to their departure, or otherwise, could hinder ourthe operating entities’ ability to effectively manage ourtheir business and implement ourtheir growth strategies. Finding suitable replacements for ourthe operating entities’ current senior management could be difficult, and competition for such personnel of similar experience is intense. If wethe operating entities fail to retain ourtheir senior management, ourthe operating entities’ business and results of operations could be materially and adversely affected.

The market for engineers and other individuals with the required technical expertise to succeed in ourthe operating entities’ business is highly competitive. There may be a limited supply of qualified individuals in some of the cities in China where wethe operating entities have operations and other cities into which wethey intend to expand. WeThe operating entities must hire and train qualified managerial and other employees on a timely basis to keep pace with ourthe operating entities’ rapid growth while maintaining consistent quality of services across ourthe operating entities’ operations in various geographic locations. WeThe operating entities must also provide continuous training to ourtheir managerial and other employees so that they are equipped with up-to-date knowledge of various aspects of ourthe operating entities’ operations and can meet ourthe operating entities’ demand for high-quality products. If wethey fail to do so, the quality of ourtheir products may decrease in one or more of the markets where wethey operate, which in turn, may cause a negative perception of ourthe operating entities’ brand and adversely affect ourthe operating entities’ business.

The lease agreements of ourthe operating entities’ leased properties have not been registered with the relevant PRC government authorities as required by PRC laws, which may expose usthem to potential fines.

Under PRC laws, all lease agreements are required to be registered with the local land and real estate administration bureau. Although failure to do so does not in itself invalidate the leases, the lessees may not be able to defend these leases against bona fide third parties and may also be exposed to potential fines if they fail to rectify such non-compliance within the prescribed time frame after receiving notice from the relevant PRC government authorities.

The penalty ranges from RMB1,000 to RMB10,000 for each unregistered lease, at the discretion of the relevant authority. As of the date of this annual report, wethe operating entities have not registered the lease agreements for ourtheir headquarters or the leased properties of Tahe Biopower Plant with the relevant PRC government authorities. In the event that any fine is imposed on usthe operating entities for ourtheir failure to register ourtheir lease agreements, wethe operating entities may not be able to recover such losses from the lessors. However, as the fines, if any, will be minor, ourthe operating entities’ business and financial results will not be materially affected.

We

Unexpected termination of leases or other arrangements, failure to negotiate satisfactory terms for or duly perform leases or other arrangements, failure to renew the leases or other arrangements of the existing premises of the operating entities or to renew such leases or other arrangements at acceptable terms could materially and adversely affect our business, financial condition, results of operations and prospects.

The operating entities currently lease real estate for all of their facilities. The ability of the operating entities to increase the number of spaces and to operate these spaces profitably depends on the due execution and performance of the leases or other arrangements the operating entities enter into with lessors and whether the operating entities are able to negotiate these leases and other arrangements on satisfactory terms. Lessors may also not duly perform their obligations under the leases or other arrangements due to various reasons, such as lessors’ failure to deliver the possession of the premises as agreed.

In addition, the increases in rental rates, particularly those markets where initial terms under the leases are shorter, could adversely affect the operating entities’ business, financial condition, results of operations and prospects. Additionally, the ability of the operating entities to negotiate favorable terms to extend a lease agreement or in connection with an alternate space will depend on then-prevailing conditions in the real estate market, such as overall changes in lease expenses, competition from other would-be tenants for desirable leased spaces and the relationships of the operating entities with current and prospective building owners and landlords, or other factors that are not within their control. If the operating entities are not able to renew or replace an expiring lease agreement, they will incur significant costs related to vacating that space or redeveloping the space, which could result in loss of customers who may have chosen that space based on the design, location or other attributes of that particular space.

The operating entities depend on third parties for certain construction, maintenance, engineering, transportation, warehousing, and logistics services.

We

The operating entities contract with third parties, typically for a period of six to 18 months, for certain services relating to the design, construction, and maintenance of various components of ourthe operating entities’ production facilities and other systems. If these third parties fail to comply with their obligations, wethe operating entities may experience delay in the completion of new facilities or expansions of existing facilities or the facilities may not operate as intended, which may result in delays in the production of ourthe operating entities’ products and materially and adversely affect ourthe operating entities’ ability to meet ourtheir production capacity targets and satisfy customer requirements or wethey may be required to recognize impairment charges. In addition, production delays could cause usthe operating entities to miss deliveries and breach ourthe operating entities’ contracts, which could damage ourtheir relationships with ourtheir customers and subject usthem to claims for damages under ourtheir contracts. Any of these events could have a material adverse effect on ourthe operating entities’ business and financial results.

We

The operating entities also rely primarily on third parties for the transportation of the products wethey manufacture. OurThe operating entities’ contracts with these third parties are usually for one to two years. If any of the third parties that wethe operating entities use to transport products are unable to deliver the goods wethey manufacture

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in a timely manner, wethey may be unable to sell these products at full value, or at all, which could cause usthem to miss deliveries and breach ourtheir contracts, which could damage ourtheir relationships with ourtheir customers and subject usthem to claims for damages under ourthe contracts. Any of these events could have a material adverse effect on ourthe operating entities’ business and financial results.

Future acquisitions may have an adverse effect on ourthe operating entities’ ability to manage ourtheir business.

We

The operating entities may acquire businesses, technologies, services, or products which are complementary to ourtheir core activated carbon and biomass electricity businesses. Future acquisitions may expose usthem to potential risks, including risks associated with: the integration of new operations, services, and personnel; unforeseen or hidden liabilities; the diversion of resources from ourtheir existing business and technology; ourtheir potential inability to generate sufficient revenue to offset new costs; the expenses of acquisitions; or the potential loss of or harm to relationships with both employees and customers resulting from ourtheir integration of new businesses.

Any of the potential risks listed above could have a material and adverse effect on ourthe operating entities’ ability to manage ourtheir business, our revenue, and net income. WeThe operating entities may need to raise additional debt funding or sell additional equity securities to make such acquisitions. The raising of additional debt funding by us, if required, would result in increased debt service obligations and could result in additional operating and financing covenants, or liens on ourthe operating entities’ assets, that would restrict ourtheir operations. The sale of additional equity securities could result in additional dilution to ourthe operating entities’ shareholders.

Risks Relating to Doing Business in the PRC

A severe or prolonged slowdown in the Chinese economy could materially and adversely affect ourthe operating entities’ business and our financial condition.

The rapid growth of the Chinese economy has slowed down since 20122021 and such slowdown may continue. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies adopted by the central banks and financial authorities of some of the world’s leading economies, including the United States and China; the withdrawal of these expansionary monetary and fiscal policies could lead to a contraction. There are also concerns about the relationship among China and other Asian countries, which may result in or intensify potential conflicts in relation to territorial disputes. Economic conditions in China are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. Any severe or prolonged slowdown in the Chinese economy would likely materially and adversely affect ourthe operating entities’ business, results of operations, and financial condition. In addition, continued turbulence in the international markets may adversely affect ourthe operating entities’ ability to access capital markets to meet liquidity needs.

Changes in the policies, regulations, rules, and the enforcement of laws of the PRC government may be quick with little advance notice and could have a significant impact upon ourthe operating entities’ ability to operate profitably in the PRC.

We

The operating entities currently conduct all of ourtheir operations and all of ourtheir revenue is generated in the PRC. Accordingly, economic, political, and legal developments in the PRC will significantly affect ourthe operating entities’ business, financial condition, results of operations, and prospects. Policies, regulations, rules, and the enforcement of laws of the PRC government can have significant effects on economic conditions in the PRC and the ability of businesses to operate profitably. OurThe operating entities’ ability to operate profitably in the PRC may be adversely affected by changes in policies, regulations, rules, and the enforcement of laws by the PRC government, which changes may be quick with little advance notice.

Given the Chinese government’s significant oversight and discretion over the conduct of ourthe operating entities’ business, the Chinese government may intervene or influence ourthe operating entities’ operations at any time, which could result in a material change in ourtheir operations and/or the value of our Ordinary Shares.ordinary shares.

The Chinese government has significant oversight and discretion over the conduct of ourthe operating entities’ business and may intervene or influence ourtheir operations at any time as the government deems appropriate to further regulatory, political, and societal goals, which could result in a material change in ourtheir operations and/or the value of our Ordinary Shares.ordinary shares.

​

The Chinese government has recently published new policies that significantly affected certain industries, such as the education and Internet industries, and wethe operating entities cannot rule out the possibility that it will in the future release regulations or policies regarding ourthe operating entities’ industry that could adversely affect ourtheir business, financial condition, and results of operations. Furthermore, if China adopts more stringent standards with respect to certain areas, such as environmental protection or corporate social responsibilities, wethe operating entities may incur increased compliance costs or become subject to additional restrictions in ourtheir operations. Certain areas of the law in China, including intellectual

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property rights and confidentiality protections, may also not be as effective as in the United States or other countries. In addition, we cannot predict the effects of future developments in the PRC legal system on ourthe operating entities’ 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 usour Company and subsidiaries as a whole and our investors.

Any actions by the Chinese government, including any decision to intervene or influence ourthe operating entities’ operations or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause usthem to make material changes to ourtheir operations, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless.

The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. OurThe operating entities’ ability to operate in China may be impaired by changes in its laws and regulations, including those relating to taxation, environmental regulations, land use rights, foreign investment limitations, and other matters. The central or local governments of these jurisdictions 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. As such, our PRC subsidiariesthe operating entities may be subject to various government and regulatory interference in the provinces in which they operate. WeThe operating entities could be subject to regulation by various political and regulatory entities, including various local and municipal agencies and government sub-divisions. WeThe operating entities may incur increased costs necessary to comply with existing and newly adopted laws and regulations or penalties for any failure to comply.

Furthermore, it is uncertain when and whether we will be required to obtain permission from the PRC government to list on U.S. exchanges in the future. According to the CSRC Notice, the domestic companies that have already been listed overseas before the effective date of the Trial Measures (namely, March 31, 2023) shall be deemed as Existing Issuers. Existing Issuers are not required to complete the filing procedures immediately, and they shall be required to file with the CSRC for any subsequent offerings. Based on the foregoing, as our registration statement on Form F-1 in connection with our initial public offering was declared effective on February 4, 2021 and we completed our initial public offering and listing on February 9, 2021, we are currently not required to complete the filing procedures pursuant to the Trial Measures. However, in the event that we undertake new offerings or fundraising activities in the future, we may be required to complete the filing procedures. We cannot assure you that we will be able to timely obtain such permission, and even whenif such permission is obtained, whetherthere are certain risks that it will be denied or rescinded. Although we believe our Company and our PRC subsidiaries are currently not required to obtain permission from any Chinese authorities and has not received any notice of denial of permission to list on the U.S. exchange, our operations could be adversely affected, directly or indirectly, by existing or future laws and regulations relating to our business or industry, particularly in the event permission to list on U.S. exchanges may be later required, or withheld or rescinded once given.

Accordingly, government actions in the future, including any decision to intervene or influence ourthe operating entities’ operations at any time or to exert control over an offering of securities conducted overseas and/or foreign investment in China-based issuers, may cause usthe operating entities to make material changes to ourtheir operation, may limit or completely hinder our ability to offer or continue to offer securities to investors, and/or may cause the value of such securities to significantly decline or be worthless.

Recent greater

Greater oversight by the Cyberspace Administration of China, or the “CAC,”CAC over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact ourthe operating entities’ business and our offering.offerings.

On December 28, 2021, the CAC, together with 12 other governmental departments of the PRC, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022. The Cybersecurity Review Measures provides that, in addition to critical information infrastructure operators (“CIIOs”) that intend to purchase Internet products and services, data processing operators engaging in data processing activities that affect or may affect national security must be subject to cybersecurity review by the Cybersecurity Review Office of the PRC. According to the Cybersecurity Review Measures, a cybersecurity review assesses potential national security risks that may be brought about by any procurement, data processing, or overseas listing. The Cybersecurity Review Measures further requires that CIIOs and data processing operators that possess personal data of at least one million users must apply for a review by the Cybersecurity Review Office of the PRC before conducting listings in foreign countries.

On November 14, 2021, the CAC published the Draft Regulations on the Network Data Security Administration (Draft for Comments) (the “Security Administration Draft”),Draft, which provides that data processing operators engaging in data processing activities that affect or may affect national security must be subject to network data security review by the relevant Cyberspace Administration of the PRC. According to the Security Administration Draft, data processing operators who possess personal data of at least one million users or collect data that affects or may affect national security must be subject to network data security review by the relevant Cyberspace Administration of the PRC. The deadline for public comments on the Security Administration Draft was December 13, 2021.

As of the date of this annual report, we have not received any notice from any authorities identifying usany of the operating entities as a CIIO or requiring usany of the operating entities to go through cybersecurity review or network data security review by the CAC. WhenAs the Cybersecurity Review Measures becomebecame effective and if the Security Administration Draft is enacted as proposed, we believe that ourthe operating entities’ operations and our listing will not be affected and that we willthe operating entities are not be subject to cybersecurity review or network data security review by the CAC, given that: (i) as a company that mainly

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manufactures and sells wood-based activated carbon and produces biomass electricity, our PRC subsidiary, CN Energy Development, and its subsidiariesoperating entities are unlikely to be classified as CIIOs by the PRC regulatory agencies; (ii) ourthe operating entities’ customers are enterprises in Anhui Province, Fujian Province, Zhejiang Province, Shanghai, and Heilongjiang Province in China and wethe operating entities do not have individual customers; as a result, wethe operating entities possess personal data of fewer than one million individual clients in ourthe operating entities’ business operations as of the date of this annual report and do not anticipate that wethe operating entities will be collecting over one million users’ personal information in the near future, which wethe operating entities understand might otherwise subject usthe operating entities to the Cybersecurity Review Measures; and (iii) since wethe operating entities are in the activated carbon and biomass energy industries, data processed in ourtheir business is unlikely to have a bearing on national security and therefore is unlikely to be classified as core or important data by the authorities. There remains uncertainty, however, as to how the Cybersecurity Review Measures and the Security Administration Draft 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 Cybersecurity Review Measures and the Security Administration Draft. If any such new laws, regulations, rules, or implementation and interpretation come into effect, wethe operating entities will take all reasonable measures and actions to comply and to minimize the adverse effect of such laws on us.them. We cannot guarantee, however, that wethe operating entities will not be subject to cybersecurity review and network data security review in the future. During such reviews, wethe operating entities may be required to suspend our operationtheir operations or experience other disruptions to ourtheir operations. Cybersecurity review and network data security review could also result in negative publicity with respect to our Company and diversion of ourthe operating entities’ managerial and financial resources, which could materially and adversely affect ourthe operating entities’ business, financial conditions, and results of operations.operations and our future offerings.

The opinions recentlyOpinions 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 usthe operating entities to additional compliance requirement in the future.

Recently, the

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 were made available to the public on July 6, 2021. The 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. The aforementioned policies and any related implementation rules to be enacted may subject usthe operating entities to additional compliance requirement in the future. As the Opinions were recently issued, official guidance and interpretation of the Opinions remain unclear in several respects at this time. Therefore,time, we cannot assure you that wethe operating entities will remain fully compliant with all new regulatory requirements of the Opinions or any future implementation rules on a timely basis, or at all.

The tariffs by the U.S. government and the trade war between the U.S. and China, and on a larger scale, internationally, may dampen global growth. If the U.S. government, in the future, subjects the products that wethe operating entities produce to tariffs, ourthe operating entities’ business operations and revenue may be negatively impacted.

The U.S. government has, among other actions, imposed new or higher tariffs on specified products imported from China to penalize China for what it characterizes as unfair trade practices and China has responded by imposing new or higher tariffs on specified products imported from the United States. Based on our analysis of the list of products affected by the tariffs, we expect that the tariffs will not have a material direct impact on ourthe operating entities’ business operations, as currently, wethe operating entities are based in the PRC, and deliver products to customers exclusively located within the PRC market. In December 2019, China announced that it suspended tariffs on certain products, and the U.S. and China signed a “Phase 1” agreement in January 2020 that cut some U.S. tariffs on Chinese goods in exchange for Chinese pledges to purchase more of American farm, energy, and manufactured goods and address some U.S. complaints about intellectual property practices. Due to various political developments, including a new administration in the U.S. government, however, it remains unclear whether any “Phase 2” agreement will be negotiated and how much economic relief from the trade war it will offer. The imposed tariffs may cause the depreciation of the RMB currency and a contraction of certain PRC industries that will likely be affected by the tariffs. As such, there is the potential for a decrease in the spending powers of activated carbon and biomass energy customers, which in turn, may lead to a contraction of the PRC activated carbon and biomass energy market. As such, wethe operating entities may have access to fewer business opportunities and ourthe operating entities’ operation may be negatively impacted. In addition, future actions or escalations by either the United States or China that affect trade relations may cause global economic turmoil and potentially have a negative impact on ourthe operating entities’ business and we cannot provide any assurances as to whether such actions will occur or the form that they may take.

Increases in labor costs in the PRC may adversely affect ourthe operating entities’ business and our profitability.

China’s economy has experienced increases in labor costs in recent years. China’s overall economy and the average wage in China are expected to continue to grow. The average wage level for ourthe operating entities’ employees has also increased in recent years. We expect that ourthe operating entities’ labor

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costs, including wages and employee benefits, will continue to increase. Unless wethe operating entities are able to pass on these increased labor costs to ourtheir customers by increasing prices for ourtheir products, ourthe operating entities’ profitability and results of operations may be materially and adversely affected.

In addition, pursuant to the PRC Labor Contract Law, or the “Labor Contract Law,” that became effective in January 2008 and its implementing rules that became effective in September 2008 and its amendments that became effective in July 2013, employers are subject to stricter requirements in terms of signing labor contracts, minimum wages, paying remuneration, determining the term of employees’ probation, and unilaterally terminating labor contracts. In the event that wethe operating entities decide to terminate some of ourtheir employees or otherwise change ourtheir employment or labor practices, the Labor Contract Law and its implementation rules may limit ourthe operating entities’ ability to effect those changes in a desirable or cost-effective manner, which could adversely affect ourthe operating entities’ business and results of operations. Besides, pursuant to the Labor Contract Law and its amendments, dispatched employees are intended to be a supplementary form of employment and the fundamental form should be direct employment by enterprises and organizations that require employees.

As the interpretation and implementation of labor-related laws and regulations are still evolving, we cannot assure you that ourthe operating entities’ employment practice does not and will not violate labor-related laws and regulations in China, which may subject usthem to labor disputes or government investigations. If wethe operating entities are deemed to have violated relevant labor laws and regulations, wethe operating entities could be required to provide additional compensation to ourtheir employees and ourthe operating entities’ business, financial condition and results of operations could be materially and adversely affected.

We

The operating entities are not in compliance with the PRC’s regulations relating to employee benefit plans, and as a result, wethey may be subject to penalties if wethey are not able to remediate the non-compliance.

Companies operating in China are required to participate in various government sponsored employee benefit plans, including certain social insurance, housing funds, and other welfare-oriented payment obligations, and contribute to the plans in amounts equal to certain percentages of salaries, including bonuses and allowances, of their employees up to a maximum amount specified by the local government from time to time at locations where they operate their businesses. 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. Our PRC subsidiaries have not paid adequate social insurance and housing provident fund payments for all their employees. The relevant PRC authorities may order usthe operating entities to make up the contributions to these plans. In addition, failure to make adequate social insurance payments may subject usthem to 0.05% late fees per day starting from the date of underpayment, and fines equal to one to three times the underpaid amount if wethe operating entities cannot make up the payments within the prescribed time. For failure to open the housing provident fund accounts for all ourthe operating entities’ employees within the prescribed time, wethey may be ordered to open the accounts within the prescribed time, and if wethey cannot do so, wethey may be fined RMB10,000 to RMB50,000. For failure to make the adequate housing provident fund contributions, wethe operating entities may be ordered by the competent authorities to make such contributions within the prescribed time and any delay in doing so may subject usthem to a court order to make up the contributions. If wethe operating entities are subject to late fees or fines in relation to underpaid employee benefits, ourtheir financial condition and results of operations may be adversely affected. However, the risk of regulatory penalty that the relevant authorities may impose on our PRC subsidiariesthe operating entities for ourtheir failure to make adequate contributions to the employee benefit plans for all ourtheir employees as required is remote, because wethey have not received any order from the relevant local authorities requiring usthe operating entities to make up the payments for employee benefit plans, and the relevant local authorities confirmed in writing that no records of violation were found on our PRC subsidiariesthe operating entities for social insurance plan.

Because we are a British Virgin Islands corporation and all of our business is conducted in the PRC, you may be unable to bring an action against us or our officers and directors or to enforce any judgment you may obtain. It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China.

We are incorporated in the British Virgin Islands and conduct our operations primarily in China. All of our assets are located outside of the United States. In addition, almost allfour out of our six directors and officers, namely Xinyang Wang, Jinwu Huang, Wenhua Liu, and Wenbiao Zhang, reside outside ofin the PRC; the other directors, namely, Phillip Connelly and Jian Chen, reside in the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe we have violated your rights, either under United States federal or state securities laws or otherwise, or if you have a claim against us. Even if you are successful in bringing an action of this kind, the laws of the British Virgin Islands and of China may not permit you to enforce a judgment against our assets or the assets of our directors and officers.

It may also be difficult for you or overseas regulators to conduct investigations or collect evidence within China. For example, in China, there are significant legal and other obstacles to obtaining information needed for shareholder investigations or litigation outside China or otherwise with respect to foreign entities. Although the authorities in China may establish a regulatory cooperation mechanism with its counterparts of another country or region to monitor and oversee cross-border securities activities, such regulatory cooperation with

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the securities regulatory authorities in the United States may not be efficient in the absence of a practical cooperation mechanism. Furthermore, according to Article 177 of the PRC Securities Law, or “Article 177,” which became effective in March 2020, no overseas securities regulator is allowed to directly conduct investigations or evidence collection activities within the territory of the PRC. Article 177 further provides that Chinese entities and individuals are not allowed to provide documents or materials related to securities business activities to foreign agencies without prior consent from the securities regulatory authority of the State Council and the competent departments of the State Council. While detailed interpretation of or implementing rules under Article 177 have yet to be promulgated, the inability for an overseas securities regulator to directly conduct investigation or evidence collection activities within China may further increase difficulties faced by you in protecting your interests.

Recent joint

Joint statement by the U.S. Securities and Exchange Commission, or the “SEC,”SEC and the Public Company Accounting Oversight Board (United States) (the “PCAOB”)PCAOB, rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering.offerings.

On April 21, 2020, SEC Chairman Jay Clayton and PCAOB Chairman William D. Duhnke III, along with other senior SEC staff, released a joint statement highlighting the risks associated with investing in companies based in or have substantial operations in emerging markets including China. The joint statement emphasized the risks associated with lack of access for the PCAOB to inspect auditors and audit work papers in China and higher risks of fraud in emerging markets.

On May 18, 2020, Nasdaq filed three proposals with the SEC to (i) apply a minimum offering size requirement for companies primarily operating in a “Restrictive Market,” (ii) adopt a new requirement relating to the qualification of management or the board of directors for Restrictive Market companies, and (iii) apply additional and more stringent criteria to an applicant or listed company based on the qualifications of the company’s auditor. On October 4, 2021, the SEC approved Nasdaq’s revised proposal for the rule changes.

On May 20, 2020, the U.S. Senate passed the Holding Foreign Companies AccountableHFCA Act requiring a foreign company to certify it is not owned or controlled by a foreign government if the PCAOB is unable to audit specified reports because the company uses a foreign auditor not subject to PCAOB inspection. If the PCAOB is unable to inspect the company’s auditors for three consecutive years, the issuer’s securities are prohibited to tradefrom trading on a national exchange. On December 2, 2020, the U.S. House of Representatives approved the Holding Foreign Companies AccountableHFCA Act. On December 18, 2020, the Holding Foreign Companies AccountableHFCA Act was signed into law.

On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and documentation requirements of the Holding Foreign Companies AccountableHFCA Act.

On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act,which if passed by the U.S. House of Representatives andwas signed into law would reduceon December 29, 2022, amending the numberHFCA Act and requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchange if its auditor is not subject to PCAOB inspections for two consecutive years instead of consecutive non-inspection years required for triggering the prohibitions under the Holding Foreign Companies Accountable Act from three years to two.three.

On September 22, 2021, the PCAOB adopted a final rule implementing the Holding Foreign Companies AccountableHFCA Act, which provides a framework for the PCAOB to use when determining, as contemplated under the Holding Foreign Companies AccountableHFCA Act, whether the board of directors of a company is unable to inspect or investigate completely registered public accounting firms located in a foreign jurisdiction because of a position taken by one or more authorities in that jurisdiction.

On December 2, 2021, the SEC adopted amendments to finalize rules implementing the submission and disclosure requirements in the Holding Foreign Companies AccountableHFCA Act.

On December 16, 2021, the PCAOB issued a report on its determinations that it is unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and in Hong Kong because of positions taken by PRC and Hong Kong authorities in those jurisdictions.jurisdictions, which determinations were vacated on December 15, 2022.

The lack of access to

On August 26, 2022, the CSRC, the MOF, and the PCAOB inspection in China prevents the PCAOB from fully evaluating auditssigned Statement of Protocol (the “Protocol”) governing inspections and quality control proceduresinvestigations of the auditorsaudit firms based in China. As a result, investors may be deprived ofmainland China and Hong Kong, taking the benefits of such PCAOB inspections. The inability offirst step toward opening access for the PCAOB to conduct inspections of auditorsinspect and investigate registered public accounting firms headquartered in mainland China makes it more difficult to evaluate the effectiveness of these accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subjectand Hong Kong. Pursuant to the fact sheet with respect to the Protocol disclosed by the SEC, the PCAOB inspections, which

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could cause investorsshall have independent discretion to select any issuer audits for inspection or investigation and potential investorshas the unfettered ability to transfer information to the SEC. On December 15, 2022, the PCAOB Board determined that the PCAOB was able to secure complete access to inspect and investigate registered public accounting firms headquartered in our Ordinary Sharesmainland China and Hong Kong and voted to lose confidencevacate its previous determinations to the contrary. However, should PRC authorities obstruct or otherwise fail to facilitate the PCAOB’s access in our audit procedures and reported financial information and the quality of our financial statements.future, the PCAOB Board will consider the need to issue a new determination.

Our auditor theis an independent registered public accounting firm that issueswith the audit report included elsewhere in this annual report,PCAOB, and as an auditor of companies that arepublicly traded publiclycompanies in the United States and a firm registered with the PCAOB,U.S., is subject to laws in the United StatesU.S., pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.standards and was not identified in the Determination Report as a firm subject to the PCAOB’s Determination. Our auditor is headquartered in Manhattan, New York,Singapore, and has beencan be inspected by the PCAOB on a regular basis withPCAOB. However, the last inspection in June 2018,recent developments would add uncertainties to our offering and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. However, we cannot assure you whether the national securities exchange we are listed onNasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relatesthey relate to the audit of our audit. In addition,financial statements. To the Holding Foreign Companies Accountable Act, which requires thatextent this status changes in the future and our auditor’s audit documentation related to their audit reports for our Company is inaccessible for inspection by the PCAOB be permitted to inspect an issuer’s public accounting firm within three years, may result in the delisting of our Company or prohibition of trading in our Ordinary Shares in the future if the PCAOB is unable to inspect or investigate our accounting firm at such future time. Theauditor completely because of a position taken by an authority in a foreign jurisdiction, trading in our shares could be prohibited under the HFCA Act, and, as a result, our shares could be delisted from Nasdaq. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, if passed byand on December 29, 2022, the U.S. House of Representatives andConsolidated Appropriations Act was signed into law would reduceby President Biden, which contained, among other things, an identical provision to the period of timeAccelerating Holding Foreign Companies Accountable Act and amended the HFCA Act by requiring the SEC to prohibit an issuer’s securities from trading on any U.S. stock exchanges if its auditor is not subject to PCAOB inspections for foreign companies to comply with PCAOB audits to two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. If the PCAOB is unable to inspect our accounting firm in the future, the HFCA Act will prohibit trading in our securities, and, as a result, Nasdaq may determine to delist our securities. Delisting may cause a significant decrease in or a total loss of the value of our securities. Although a shareholder’s ownership of our Company may not decrease directly from delisting, the ownership may become worth much less, or, in some cases, lose its entire value.

PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, or otherwise expose us or our PRC resident shareholders to liabilities or penalties.

In July 2014, the State Administration of Foreign Exchange (“SAFE”) promulgated the Circular on Issues Concerning Foreign Exchange Administration over the Overseas Investment and Financing and Roundtrip Investment by Domestic Residents via Special Purpose Vehicles, or the “SAFE Circular 37,” which replaced the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ Corporate Financing and Roundtrip Investment through Offshore Special Purpose Vehicles. According to the SAFE Circular 37, PRC residents or entities are required to register with SAFE or its local branch in connection with their establishment or control of an offshore entity established for the purpose of overseas investment or financing. PRC residents or entities must update their SAFE registrations when the offshore special purpose vehicle, known as “SPV,” undergoes material events relating to any changes of basic information (such as change of such PRC residents or entities, name and operation term), increase or decrease of investment amount, transfer or exchanges of shares, and mergers or divisions.

As of the date of this annual report, four of our beneficial owners who are PRC residents have completed the registrations required by the SAFE Circular 37. We have urged all PRC residents or entities who directly or indirectly hold shares in our Company and who are currently known to us as being PRC residents to make the necessary applications, filings, and amendments as required under the SAFE Circular 37 and other related rules. We attempt to comply, and attempt to ensure that our shareholders and beneficial owners who are subject to these rules comply with the relevant requirements. We cannot, however, provide any assurances that all of our shareholders or beneficial owners who are PRC residents will comply with our request to comply with the SAFE Circular 37 requirements, nor can we assure that we will be inform of the identities of all the current and future PRC residents or entities holding direct or indirect interest in our Company. Failure by any of such shareholders or beneficial owners to comply with relevant requirements under these regulations could subject us to fines or sanctions, restrict our overseas or cross-border investment activities, limit our PRC subsidiaries’ ability to pay dividends or make distributions to us and limit our ability to increase our investment in our PRC subsidiaries, which could adversely affect our business and prospects.

Furthermore, as these foreign exchange regulations are still relatively new and their interpretation and implementation has been constantly evolving, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. For example, if we decide to acquire a PRC domestic company, we cannot assure you that we or the owner of such company, as the case may be, will be able to obtain the necessary approvals or complete the necessary fillings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

We may rely on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirement we may have, and any limitation on the ability of our subsidiaries to make payments to us and any tax we are required to pay could have a materially adverse effect on our ability to conduct our business.

We are a British Virgin Islands holding company and we rely principally on dividends and other distributions on equity from our PRC subsidiaries for our cash requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders

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and service any debt we may incur. If our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Any limitation on the ability of our PRC subsidiaries to distribute dividends or other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our businesses, pay dividends or otherwise fund and conduct our business.

Under PRC laws and regulations, our PRC subsidiaries, Zhejiang CN Energy and Manzhouli CN Energy, as wholly foreign-owned enterprises in the PRC, may pay dividends only out of their accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund certain statutory reserve funds, until the aggregate amount of such fund reaches 50% of its registered capital. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserve funds and staff welfare and bonus funds are not distributable as cash dividends.

In response to the persistent capital outflow and the Renminbi’sRMB’s depreciation against U.S. dollar in the fourth quarter of 2016, the People’s Bank of China (“PBOC”) and SAFE have implemented a series of capital control measures, including stricter vetting procedures for China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. For instance, PBOC issued the Circular on Further Clarification of Relevant Matters Relating to Offshore RMB Loans Provided by Domestic Enterprises, or “PBOC Circular 306,” on November 26, 2016, which provides that offshore RMB loans provided by a domestic enterprise to offshore enterprises with which it has an equity relationship shall not exceed 30% of the domestic enterprise’s most recent audited owner’s equity. PBOC Circular 306 may constrain our PRC subsidiaries’ ability to provide offshore loans to us. In addition, the Circular on Promoting the Reform of Foreign Exchange Management and Improving Authenticity and Compliance Review, or the SAFE Circular 3, issued on January 26, 2017, provides that the banks shall, when dealing with dividend remittance transactions from domestic enterprise to its offshore shareholders of more than US$50,000, review the relevant board resolutions, original tax filing form and audited financial statements of such domestic enterprise based on the principle of genuine transaction. The PRC government may continue to strengthen its capital controls, and our PRC subsidiaries’ dividends and other distributions may be subjected to tighter scrutiny in the future. Any limitation on the ability of our PRC subsidiaries to pay dividends or make other distributions to us could materially and adversely limit our ability to grow, make investments or acquisitions that could be beneficial to our business, pay dividends, or otherwise fund and conduct our business.

In addition, the EIT Law and its implementation rules provide that a withholding tax at a rate of 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless reduced under treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC resident enterprises are tax resident. See also “—Under the EIT Law, we may be classified as a ‘resident enterprise’ of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.”

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 us from using proceeds from our future financing activities to make loans or additional capital contributions to our PRC subsidiaries, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subject to approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on foreign-invested enterprises, or “FIEs,” in China, capital contributions to our PRC subsidiaries Zhejiang CN Energy and Manzhouli CN Energy, which are FIEs, are subject to the approval of or filing with the Ministry of Commerce of the PRC (“MOFCOM”) or its local counterparts and registration with a local bank authorized by SAFE. There is, in effect, no statutory limit on the amount of capital contribution that we can make to our PRC subsidiaries. The reason is that there is no statutory limit on the amount of registered capital for our PRC subsidiaries, and we are allowed to make capital contributions to our PRC subsidiaries by subscribing for their initial registered capital and increased registered capital, provided that the PRC subsidiaries complete the relevant filing and registration procedures.

On the other hand, any foreign loan provided by us to our PRC subsidiaries is required to be registered with SAFE or its local branches or filed with SAFE in its information system, and our PRC subsidiaries may not procure foreign loans which exceed the difference between its total investment amount and registered capital (the “Current Foreign Debt Mechanism”) or, as an alternative, only procure loans subject to the calculation approach and limitations as provided in the PBOC’s Circular on Matters concerning the Macro-Prudential Management of Full-Covered Cross-Border Financing, or “PBOC Notice No. 9” (the “PBOC Notice No. 9 Mechanism”), which shall not exceed 200% of the net asset of the relevant PRC subsidiary. According to PBOC Notice No. 9, after a transition period of one year since its promulgation, PBOC and SAFE will determine the cross-border financing administration mechanism for the FIEs after evaluating the overall implementation of PBOC Notice No. 9. As of the date hereof, neither PBOC nor SAFE has promulgated and made public any further rules, regulations, notices, or circulars in this regard. It is uncertain which mechanism will be adopted by PBOC and SAFE in the future and what statutory limits will be imposed on us when providing loans to our PRC subsidiaries. Currently, our PRC subsidiaries have the flexibility to choose between the Current Foreign Debt Mechanism and the PBOC Notice No. 9 Mechanism. However, if a more stringent foreign debt mechanism becomes mandatory, our ability to provide loans to our PRC subsidiaries may be significantly limited, which may adversely affect our business, financial condition, and results of operations.

If we seek to make capital contribution into our PRC subsidiaries or provide any loan to our PRC subsidiaries in the future, we may not be able to obtain the required government approvals or complete the required registrations on a timely basis, if at all. If we fail to receive

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such approvals or complete such registrations, our ability to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.

Because ourthe operating entities’ business is conducted in RMB and the price of our Ordinary Sharesordinary shares is quoted in U.S. dollars, changes in currency conversion rates may affect the value of your investments.

Our

The operating entities’ business is conducted in the PRC, our books and records are maintained in RMB, which is the currency of the PRC, and the financial statements that we file with the SEC and provide to our shareholders are presented in U.S. dollars. Changes in the exchange rate between RMB and U.S. dollar affect the value of our assets and the results of our operations, when presented in U.S. dollars. The value of RMB against the U.S. dollars and other currencies may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions and perceived changes in the economy of the PRC and the United States. Any significant revaluation of RMB may materially and adversely affect our cash flows, revenue, and financial condition.

Under the EIT Law, we may be classified as a “resident enterprise” of China, which could result in unfavorable tax consequences to us and our non-PRC shareholders.

The PRC Enterprise Income Tax Law (the “EIT Law”) and its implementing rules provide that 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 promulgated under the EIT Law 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. In April 2009, the State Administration of Taxation, or the “SAT,” issued a circular known as “SAT Circular 82” (partially abolished on December 29, 2017), which provides certain specific criteria for determining whether the “de facto management bodies” of a PRC-controlled enterprise that is incorporated offshore are located in China. There are, however, no further detailed rules or precedents governing the procedures and specific criteria for determining “de facto management body.” Although our board of directors and management are located in the PRC, it is unclear if the PRC tax authorities would determine that we should be classified as a PRC “resident enterprise.”

If we are deemed as a PRC “resident enterprise,” we will be subject to PRC enterprise income tax on our worldwide income at a uniform tax rate of 25%, although dividends distributed to us from our existing PRC subsidiaries and any other PRC subsidiaries which we may establish from time to time could be exempt from the PRC dividend withholding tax due to our PRC “resident recipient” status. This could have a material and adverse effect on our overall effective tax rate, our income tax expenses and our net income. Furthermore, dividends, if any, paid to our shareholders may be decreased as a result of the decrease in distributable profits. In addition, if we were considered a PRC “resident enterprise,” any dividends we pay to our non-PRC investors, and the gains realized from the transfer of our Ordinary Sharesordinary shares may be considered income derived from sources within the PRC and be subject to PRC tax, at a rate of 10% in the case of non-PRC enterprises or 20% in the case of non-PRC individuals (in each case, subject to the provisions of any applicable tax treaty). It is unclear whether holders of our Ordinary Sharesordinary shares would be able to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that we are treated as a PRC resident enterprise. This could have a material and adverse effect on the value of your investment in us and the price of our Ordinary Shares.ordinary shares.

There are significant uncertainties under the EIT Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our Hong Kong subsidiarysubsidiaries may not qualify to enjoy certain treaty benefits.

Under the EIT Law and its implementation rules, the profits of a foreign invested enterprise generated through operations, which are distributed to its immediate holding company outside the PRC, will be subject to a withholding tax rate of 10%. Pursuant to a special arrangement between Hong Kong and the PRC and the Notice of the SAT on Issues Regarding the Implementation of Dividend Provisions in Tax Treaties, or the “SAT Circular 81,” issued by the SAT, such rate may be reduced to 5% if the PRC enterprise is at least 25% held by a Hong Kong enterprise for at least 12 consecutive months prior to the distribution of the dividends and is determined by the relevant PRC tax authority to have satisfied other conditions and requirements under the China-Hong Kong special arrangement and other applicable PRC laws. Furthermore, under the SAT’s Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties effective in August 2015, non-resident taxpayers shall determine whether they are qualified to enjoy the preferential tax treatment under the tax treaties and file relevant report and materials with the tax authorities. See “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation.” We have determined that we are qualified to enjoy the preferential tax treatment. We cannot assure you, however, that our determination will not be challenged by the relevant PRC tax authority or we will be able to complete the necessary filings with the relevant PRC tax authority and enjoy the preferential withholding tax rate of 5% under the China-Hong Kong special arrangement with respect to dividends to be paid by our PRC subsidiaries to Energy Holdings and MZ HK, our Hong Kong subsidiary.subsidiaries.

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

In February 2015, the SAT issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or “SAT Bulletin 7,” which was partially abolished in 2017. Pursuant to this bulletin, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be re-characterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRC enterprise income tax. In respect of an indirect offshore transfer of assets of a PRC establishment, the resulting gain is to be included with the enterprise income tax 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%. Where the underlying transfer relates to the immovable properties located in China or to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-resident enterprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment under applicable tax treaties or similar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. SAT Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through a public stock exchange.

There is uncertainty as to the application of SAT Bulletin 7. We face uncertainties as to the reporting and other implications of certain future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries or investments. We may be subject to filing obligations or taxed if we are transferor in such transactions, and may be subject to withholding obligations if we are transferee in such transactions under SAT Bulletin 7. For transfer of shares in our Company by investors that are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under SAT Bulletin 7. As a result, we may be required to expend valuable resources to comply with SAT Bulletin 7 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 a material adverse effect on our financial condition and results of operations.

If we become directly subject to the scrutiny, criticism, and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matter which could harm our business operations, stock price, and reputation.

U.S. public companies that have substantially all of their operations in China have been the subject of intense scrutiny, criticism, and negative publicity by investors, financial commentators, and regulatory agencies, such as the SEC. Much of the scrutiny, criticism, and negative publicity has centered on financial and accounting irregularities and mistakes, a lack of effective internal controls over financial accounting, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism, and negative publicity, the publicly traded stock of many U.S. listed Chinese companies sharply decreased in value and, in some cases, has become virtually worthless. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effect this sector-wide scrutiny, criticism, and negative publicity will have on us, our business, and our stock price. If we become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we will have to expend significant resources to investigate such allegations and/or defend our Company. This situation will be costly and time consuming and distract our management from developing our business. If such allegations are not proven to be groundless, we and our business operations will be severely affected and you could sustain a significant decline in the value of our stock.

The disclosures in our reports and other filings with the SEC and our other public pronouncements are not subject to the scrutiny of any regulatory bodies in the PRC.

We are regulated by the SEC and our reports and other filings with the SEC are subject to SEC review in accordance with the rules and regulations promulgated by the SEC under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).Act. Our SEC reports and other disclosure and public pronouncements are not subject to the review or scrutiny of any PRC regulatory authority. For example, the disclosure in our SEC reports and other filings are not subject to the review by China Securities Regulatory Commission, a PRC regulator that is responsible for oversight of the capital markets in China. Accordingly, you should review our SEC reports, filings, and other public pronouncements with the understanding that no local regulator has done any review of us, our SEC reports, other filings, or any of our other public pronouncements.

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The M&A Rules and certain other PRC regulations establish complex procedures for certain acquisitions of Chinese companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China.

The Regulations on Mergers and Acquisitions of Domestic Companies by Foreign Investors, or the “M&A Rules,” and recently adopted PRC regulations and rules concerning mergers and acquisitions established additional procedures and requirements that could make merger and acquisition activities by foreign investors more time consuming and complex. For example, the M&A Rules require that MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, if (i) any important industry is concerned, (ii) such transaction involves factors that have or may have impact on the national economic security, or (iii) such transaction will lead to a change in control of a domestic enterprise which holds a famous trademark or PRC time-honored brand. Mergers or acquisitions that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to MOFCOM when the threshold under the Provisions on Thresholds for Prior Notification of Concentrations of Undertakings, or the “Prior Notification Rules,” issued by the State Council in August 2008 is triggered. In addition, the security review rules issued by MOFCOM that became effective in September 2011 specify that mergers and acquisitions by foreign investors that raise “national defense and security” concerns and mergers and acquisitions through which foreign investors may acquire de facto control over domestic enterprises that raise “national security” concerns are subject to strict review by MOFCOM, and the rules prohibit any activities attempting to bypass a security review, including by structuring the transaction through a proxy or contractual control arrangement. In the future, we may grow our business by acquiring complementary businesses. Complying with the requirements of the above-mentioned regulations and other relevant rules to complete such transactions could be time consuming, and any required approval processes including obtaining approval from MOFCOM or its local counterparts may delay or inhibit our ability to complete such transactions. It is clear that our business would not be deemed to be in an industry that raises “national defense and security” or “national security” concerns. MOFCOM or other government agencies, however, may publish explanations in the future determining that our business is in an industry subject to the security review, in which case our future acquisitions in the PRC, including those by way of entering into contractual control arrangements with target entities, may be closely scrutinized or prohibited. Our ability to expand our business or maintain or expand our market share through future acquisitions would as such be materially and adversely affected.

Risks Relating to Our Ordinary Shares and the Trading Market

Substantial future sales of our Ordinary SharesClass A ordinary shares or the anticipation of future sales of our Ordinary Shares in the public marketordinary shares, whether by us or our shareholders, could cause the price of our Ordinary SharesClass A ordinary shares to decline.

The market price of our Ordinary Shares could decline as a result of sales of substantial amounts of our Ordinary Shares in the public market, or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of our Ordinary Shares.

An aggregate of 20,319,276 Ordinary Shares2,285,826 Class A ordinary shares are issued and outstanding as of the date of this annual report and 17,118,307 are freely tradable. The remaining Ordinary Shares will be “restricted securities” as definedreport. If our existing shareholders sell, or indicate an intent to sell, substantial amounts of our ordinary shares in Rule 144. These Ordinary Shares may be sold without registration under the Securities Actpublic market, the trading price of our Class A ordinary shares could decline significantly. Similarly, the perception in the public market that our shareholders might sell our ordinary shares could also depress the market price of our shares. A decline in the price of our Class A ordinary shares might impede our ability to raise capital through the extent permitted by Rule 144issuance of additional Class A ordinary shares or other exemptions underequity securities. In addition, the Securities Act.issuance and sale by us of additional ordinary shares, or securities convertible into or exercisable for our ordinary shares, or the perception that we will issue such securities, could reduce the trading price for our Class A ordinary shares as well as make future sales of equity securities by us less attractive or not feasible.

We

Because we do not intendexpect to pay dividends forin the foreseeable future.future, you must rely on the price appreciation of our Class A ordinary shares for return on your investment.

We currently intend to retain most, if not all, of our available funds and any future earnings to financefund the operationdevelopment and expansiongrowth of our business, andbusiness. As a result, we do not expect to declare or pay any cash dividends in the foreseeable future. AsTherefore, you should not rely on an investment in our Class A ordinary shares as a result,source for any future dividend income.

Pursuant to the BVI Act, and our third amended and restated memorandum and articles of association, our board of directors may authorize and declare a dividend to shareholders at such time and of such an amount as they think appropriate, if they are satisfied on reasonable grounds that immediately following the dividend payment, the value of our assets will exceed our liabilities and we will be able to pay our debts as they become due. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions, and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our Class A ordinary shares will likely depend entirely upon any future price appreciation of our Class A ordinary shares. There is no guarantee that our Class A ordinary shares will appreciate in value or even maintain the price at which you purchased the Class A ordinary shares. You may only receivenot realize a return on your investment in our Ordinary SharesClass A ordinary shares and you may even lose your entire investment in our Class A ordinary shares.

We have adopted a share incentive planand may grant share-based awards in the future, which could lead to share-based compensation expenses and significant dilutive effect to existing shareholders.

In September 2023, our shareholders approved the 2023 Share Incentive Plan (the “2023 Plan”), pursuant to which share-based awards may be granted to our employees, directors, and consultants. Under the 2023 Plan, the maximum aggregate number of Class A ordinary shares that may be issued under the plan is 205,996 shares, on a post-Share Consolidation basis. The shares to be issued pursuant to the awards under this plan shall be authorized, but unissued, or reacquired ordinary shares. As of the date of this annual report, none of such awards has been granted. We expect to grant awards under 2023 Plan in the future, which we believe is of significant importance to our ability to attract and retain key personnel and employees. In the future, if additional share incentives are granted to our employees or directors, we will incur additional share-based compensation expenses, and our results of operations will be further adversely affected. Furthermore, the grant of share-based awards and the vesting and exercise thereof could significantly dilute existing shareholders’ ownership and materially and adversely affect the trading price of our Class A ordinary shares.

Securities analysts may not cover our Class A ordinary shares and this may have a negative impact on the market price of our Ordinary Shares increases.Class A ordinary shares.

If securities or industry analysts do not publish research or reports about our business, or if the publish a negative report regarding our Ordinary Shares, the price of our Ordinary Shares and trading volume could decline.

AnyThe trading market for our Ordinary Shares mayClass A ordinary shares will depend, in part, on the research and reports that industrysecurities or securitiesindustry analysts publish about us or our business. We do not have any control over theseindependent analysts (provided that we have engaged various non-independent analysts). We do not currently have and may never obtain research coverage by independent securities and industry analysts. If no independent securities or industry analysts commence coverage of us, the trading price for our Class A ordinary shares would be negatively impacted. If we obtain independent securities or industry analyst coverage and if one or more of the analysts who covercovers us downgrade us,downgrades our Class A ordinary shares, changes their opinion of our shares, or publishes inaccurate or unfavorable research about our business, the price of our Ordinary SharesClass A ordinary shares would likely decline. If one or more of these analysts ceaseceases coverage of our Companyus or failfails to regularly publish reports on us regularly, demand for our Class A ordinary shares could decrease and we could lose visibility in the financial markets, which could cause the price and trading volume of our Ordinary Shares and the trading volumeClass A ordinary shares to decline.

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The trading price of our Ordinary SharesClass A ordinary shares is likely to be volatile, which could result in substantial losses to our investors.

From the closing of our initial public offering on February 9, 2021 to February 8, 2022, the trading price of our Ordinary Shares has ranged from $1.62 to $12.82 per Ordinary Share.

The trading price of our Ordinary Shares is likely to continue toClass A ordinary shares may be volatile and could fluctuate widely due to factors beyond our control. This may happen because of broad market and industry factors, including the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. The securities of some of these companies have experienced significant volatility since their initial public offerings, including, in some cases, substantial price declines in their trading prices. The trading performances of other Chinese companies’ securities after their offerings may affect the attitudes of investors toward Chinese companies listed in the United States in general and consequently may impact the trading performance of our Ordinary Shares,Class A ordinary shares, regardless of our actual operating performance.

In addition, tothe market price of our Class A ordinary shares may be volatile, both because of actual and industryperceived changes in our financial results and reports, and because of general volatility in the stock market. The factors that could cause fluctuations in our share price may include, among other factors discussed in this section, the following:

In addition, the stock markets have experienced significant price and trading volume fluctuations from time to time, and the stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. These broad market fluctuations may materially and adversely affect the market price of our Class A ordinary shares.

Techniques employed by short sellers may drive down the market price of our Class A ordinary shares.

Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s interest for our Ordinary Sharesthe price of the security to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past, led to selling of shares in the market.

Public companies listed in the United States that have a substantial majority of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.

We may in the future be the subject of unfavorable allegations made by short sellers. Any such allegations may be highly volatile for factors specific to our own operations, including the following:

Any of these factors may result in large and sudden changes in the volume and price at which our Ordinary Shares will trade.

In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities.our Class A ordinary shares and negative publicity. If and when we were involved in a class action suit, itbecome the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, we could diverthave to expend a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses toinvestigate such allegations and/or defend the suit, which could harm our results of operations. Anyourselves. While we would strongly defend against any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us,short seller attacks, we may be requiredconstrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable federal or state law, or issues of commercial confidentiality. Such a situation could be costly and time-consuming and could distract our management from growing our business. Even if such allegations are ultimately proven to pay significant damages, whichbe groundless, allegations against us could have a material adverse effect onseverely impact our financial conditionbusiness operations and resultsshareholder’s equity, and the value of operations.any investment in our could be greatly reduced or rendered worthless.

The requirements of being a public company may strain our resources and divert management’s attention.

As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002, or the “Sarbanes-Oxley Act,” the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of Nasdaq, and other

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applicable securities rules and regulations. Despite recent reforms made possible by the Jumpstart Our Business Startups Act of 2012, or the “JOBS Act,” compliance with these rules and regulations will nonetheless increase our legal, accounting, and financial compliance costs and investor relations and public relations costs, make some activities more difficult, time-consuming, or costly, and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company.” The Exchange Act requires, among other things, that we file annual and current reports with respect to our business and operating results as well as proxy statements.

As a result of disclosure of information in the Form 20-F20‑F and in filings required of a public company, our business and financial condition are more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business, brand and reputation and results of operations.

Being a public company and these new rules and regulations make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

If we cease to qualify as a foreign private issuer, we would be required to comply fully with the reporting requirements of the Exchange Act applicable to U.S. domestic issuers, and we would incur significant additional legal, accounting, and other expenses that we would not incur as a foreign private issuer.

As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements, and our officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as United States domestic issuers, and we are not required to disclose in our periodic reports all of the information that United States domestic issuers are required to disclose. While we currently are qualified as a foreign private issuer, we may cease to qualify as a foreign private issuer in the future, in which case we would incur significant additional expenses that could have a material adverse effect on our results of operations.

Because we are a foreign private issuer and have taken advantage of exemptions from certain Nasdaq corporate governance standards applicable to U.S. issuers, you will have less protection than you would have if we were a domestic issuer.

As a business company incorporated in the British Virgin Islands company with limited liability that is listed on the Nasdaq, we are subject to the Nasdaq corporate governance listing standards. However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the British Virgin Islands, which is our home country, may differ significantly from the Nasdaq corporate governance listing standards. We have relied on and plan to rely on home country practice with respect to our corporate governance. Specifically, we have elected to be exempt from the requirementrequirements under NASDAQ(a) Nasdaq Listing Rule 5635 to obtain shareholder approval for (i) the issuance of 20% or more of our issuedoutstanding ordinary shares or voting power in a private offering, (ii) the issuance of securities pursuant to a stock option or purchase plan to be established or materially amended or other equity compensation arrangement made or materially amended, (iii) the issuance of securities when the issuance or potential issuance will result in a change of control of our Company, and outstanding Ordinary Shares.(iv) certain acquisitions in connection with the acquisition of the stock or assets of another company and (b) Nasdaq Listing Rule 5640, which requires that the voting rights of a listed company cannot be disparately reduced or restricted through any corporate action or issuance. As a result, our shareholders may be afforded less protection than they otherwise would enjoy under the Nasdaq corporate governance listing standards applicable to U.S. domestic issuers.

If we cannot satisfy, or continue to satisfy, the continued listing requirements and other rules of the Nasdaq Capital Market, our securities may be delisted, which could negatively impact the price of our securities and your ability to sell them.

Our securities are listed on the Nasdaq Capital Market. We cannot assure you that our securities will continue to be listed on the Nasdaq Capital Market. In order to maintain our listing on the Nasdaq Capital Market, we are required to comply with certain rules, including those regarding minimum shareholders’stockholders’ equity, minimum share price, minimum market value of publicly held shares, and various additional requirements. Even ifOn January 13, 2023, we initially meetreceived a bid deficiency notice letter from Nasdaq indicating non-compliance with the minimum bid price requirement under Nasdaq Listing Rule 5450(a)(1) (the “Bid Price Rule”) for continued listing requirements and other applicable ruleson Nasdaq. On July 13, 2023, Nasdaq granted us an additional 180-day period, ending on January 8, 2024, to regain compliance with the Bid Price Rule. To regain compliance, our Class A ordinary shares must have a closing bid price of at least US$1.00 for a minimum of 10 consecutive business days. On December 29, 2023, we received a letter from Nasdaq (the “Letter”), which stated that because our securities had a closing bid price of $0.10 or less for 10 consecutive trading days as of the letter date, unless we timely requested a hearing before a Hearings Panel to appeal Nasdaq’s delisting determination, trading of our securities would be suspended at the opening of business on January 9, 2024. We appealed the determination pursuant to the procedures set forth in the Nasdaq Capital Market,Listing Rules, and a hearing before the Hearings Panel was subsequently scheduled on March 26, 2024.  In addition, we may not be able toeffected a consolidation of our issued Class A ordinary shares, no par value, and Class B ordinary shares, no par value, which was approved by our board of directors on December 20, 2023, beginning with the opening of trading on January 19, 2024. On February 2, 2024, we received a notification from the Nasdaq Office of General Counsel stating that the Company had regained compliance with the bid price requirement as set forth in Listing Rule 5550(a)(2). As a result, the scheduled hearing before the Hearings Panel was canceled and the matter was closed. As of the date of this annual report, our Class A ordinary shares continue to satisfy these requirementsbe listed and applicable rules. If we are unable to satisfy the criteria for maintaining our listing, our securities could be subject to delisting.traded on an adjusted basis on Nasdaq.

If our securities are subsequently delisted from trading, we could face significant consequences, including:

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We do not know whether a market for the Class A ordinary shares will be sustained or what the trading price of the Class A ordinary shares will be and as a result it may be difficult for you to sell your Class A ordinary shares.

Although our Class A ordinary shares trade on Nasdaq, an active trading market for the Class A ordinary shares may not be sustained. It may be difficult for you to sell your Class A ordinary shares without depressing the market price for the Class A ordinary shares. As a result of these and other factors, you may not be able to sell your Class A ordinary shares. Further, an inactive market may also impair our ability to raise capital by selling Class A ordinary shares, or may impair our ability to enter into strategic partnerships or acquire companies or products by using our Class A ordinary shares as consideration.

Anti-takeover provisions in our secondthird amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control.

We have adopted our second

Our third amended and restated memorandum and articles of association which became effective on April 20, 2020.July 22, 2022. Some provisions of our secondthird amended and restated memorandum and articles of association may discourage, delay, or prevent a change in control of our Company or management that shareholders may consider favorable, including, among other things, the following:

The exclusive jurisdiction provision in our secondthird amended and restated articles of association may limit our shareholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Our secondthird amended and restated articles provide that, to the fullest extent permitted by applicable law, unless our board of directors consents in writing to the selection of an alternative forum, the courts of the British Virgin Islands shall have exclusive jurisdiction to hear and determine:

To the fullest extent permitted by applicable laws, unless our board of directors consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the Exchange Act. Notwithstanding the foregoing, we note that holders of our Ordinary Sharesordinary shares cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder, and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a

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result, the exclusive jurisdiction provision will not preclude or contract the scope of exclusive federal or concurrent jurisdiction for actions brought under the Securities Act or the Exchange Act, or the respective rules and regulations promulgated thereunder.

Although we believe this provision benefits us by providing consistency in the application of BVI law in the types of lawsuits to which it applies, the provision may impose additional litigation costs on shareholders in pursuing such claims, particularly if the shareholders do not reside in or near the British Virgin Islands. Additionally, the provision may limit our shareholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with us or our directors, officers, or employees, which may discourage the filing of such lawsuits. The courts of the British Virgin Islands may also reach different judgment or results than would other courts, including courts where a shareholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our shareholders. Alternatively, if a court were to find the exclusive jurisdiction provision contained in our secondthird amended and restated articles to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and financial condition.

Our board of directors may refuse or delay the registration of the transfer of Ordinary Sharesordinary shares in certain circumstances.

Except in connection with the settlement of trades or transactions entered into through the facilities of a stock exchange or automated quotation system on which our Ordinary Sharesordinary shares are listed or traded from time to time, our board of directors may resolve to refuse or delay the registration of the transfer of our Ordinary Shares.ordinary shares. Where our directors do so, they must specify the reason(s) for this refusal or delay in a resolution of the board of directors. Our directors may also refuse or delay the registration of any transfer of Ordinary Sharesordinary shares if the transferor has failed to pay an amount due in respect to those Ordinary Shares.ordinary shares. If our directors refuse to register a transfer, they shall, as soon as reasonably practicable, send the transferor and the transferee a notice of the refusal or delay in the approved form.

This, however, will not affect market transactions of the Ordinary Sharesordinary shares purchased by investors in a public offering. Where the Ordinary Sharesordinary shares are listed on a stock exchange, the Ordinary Sharesordinary shares may be transferred without the need for a written instrument of transfer, if the transfer is carried out in accordance with the rules of the stock exchange and other requirements applicable to the Ordinary Sharesordinary shares listed on the stock exchange.

During the course of the audit of our consolidated financial statements, we identified a material weakness in our internal control over financial reporting. If we fail to establish and maintain an effective system of internal control over financial reporting, our ability to accurately and timely report our financial results or prevent fraud may be adversely affected, and investor confidence and the market price of our Ordinary Sharesordinary shares may be adversely impacted.

We are subject to reporting obligations under U.S. securities laws. The SEC adopted rules pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 requiring every public company to include a management report on such company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of its internal control over financial reporting.

We, in connection with the preparation of our consolidated financial statements for the fiscal year ended September 30, 2021,2023, identified a material weakness in our internal control over financial reporting, that is, we do not have sufficient in-house personnel in our accounting department with sufficient knowledge of the accounting principles generally accepted in the U.S. GAAP(“U.S. GAAP”) and SEC reporting rules. See “Item 15. Controls and Procedures—Disclosure Controls and Procedures.” Our management is currently in the process of evaluating the steps necessary to remediate the ineffectiveness, 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. Measures that we implement may not fully address the material weakness in our internal control over financial reporting and we may not be able to conclude that the material weakness has been fully remedied.

Failure to correct the material weakness and other control deficiencies or failure to discover and address any other control deficiencies could result in inaccuracies in our consolidated financial statements and could also impair our ability to comply with applicable financial reporting requirements and make related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations, and prospects, as well as the trading price of our Ordinary Shares,ordinary shares, may be materially and adversely affected. Due to the material weakness in our internal control over financial reporting as described above, our management concluded that our internal control over financial reporting was not effective as of September 30, 2021.2023. This could adversely affect the market price of our Ordinary SharesClass A ordinary shares due to a loss of investor confidence in the reliability of our reporting processes.

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We are an “emerging growth company” within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this will make it more difficult to compare our performance with other public companies.

We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This will make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Because we are an “emerging growth company,” we may not be subject to requirements that other public companies are subject to, which could affect investor confidence in us and our Ordinary Shares.Class A ordinary shares.

In April 2012, President Obama signed into law the JOBS Act.

We are classified as an “emerging growth company” under the JOBS Act. For as long as we remain an “emerging growth company,” as defined in the JOBS Act, we will elect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. Because of these lessened regulatory requirements, our shareholders would be left without information or rights available to shareholders of more mature companies. If some investors find our Ordinary SharesClass A ordinary shares less attractive as a result, there may be a less active trading market for our Ordinary SharesClass A ordinary shares and our share price may be more volatile.

The laws of the British Virgin Islands may not provide our shareholders with benefits comparable to those provided to shareholders of corporations incorporated in the United States.

Our corporate affairs are governed by our secondthird amended and restated memorandum and articles of association, by the BVI Act and the common law of the British Virgin Islands. The rights of shareholders to take action against our directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under British Virgin Islands law are to a large extent governed by the common law of the British Virgin Islands. The common law in the British Virgin Islands is derived in part from comparatively limited judicial precedent in the British Virgin Islands and from English common law. For example, under the rule established in the English case known as Foss v. Harbottle, a court will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express dissatisfaction with the conduct of the company’s affairs by the majority or the board of directors subject to a number of limited exceptions. Decisions of the Privy Council (which is the final Court of Appeal for British overseas territories such as the British Virgin Islands) are binding on a court in the British Virgin Islands. Decisions of the English courts, and particularly the Supreme Court and the Court of Appeal are generally of persuasive authority but are not binding in the courts of the British Virgin Islands. Decisions of courts in other Commonwealth jurisdictions are similarly of persuasive but not binding authority. The rights of our shareholders and the fiduciary responsibilities of our directors under British Virgin Islands law are not as clearly established as they would be under statutes or judicial precedents in the United States. In particular, the British Virgin Islands has a less developed body of securities laws relative to the United States. Therefore, our public shareholders may have more difficulty protecting their interests in the face of actions by our management, directors or controlling shareholders than would shareholders of a corporation incorporated in a jurisdiction in the United States.

Recently introduced economic

Economic substance legislation of the British Virgin Islands may adversely impact us or our operations.

The British Virgin Islands, together with several other non-European Union jurisdictions, have recently introduced legislation aimed at addressing concerns raised by the Council of the European Union (the “EU”) as to offshore structures engaged in certain activities which attract profits without real economic activity. With effect from January 1, 2019, the Economic Substance (Companies and Limited Partnerships) Act, 2018 (the “Substance Law”) came into force in the British Virgin Islands introducing certain economic substance

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requirements for British Virgin Islands “relevant entities” which are engaged in certain banking, insurance, fund management, financing and leasing, headquarters, shipping, holding company, intellectual property or distribution and service center business (being “relevant activities”) and are in receipt of gross income arising from relevant activities in any relevant financial period. In the case of business companies incorporated before January 1, 2019, the economic substance requirements apply for financial years commencing June 30, 2019.

The economic substance requirements that are imposed include that in-scope companies be directed and managed in the British Virgin Islands, have core income generating activities in the British Virgin Islands, and have an adequate level of employees, expenditures, and premises in the British Virgin Islands. Business companies that carry on holding company business (which means it only holds equity participations in other entities and only earns dividends and capital gains) will be subject to reduced substance requirements.

Based on the Substance Law and announced guidance currently issued, we are currently subject to limited substance requirements applicable to a holding company. At present, we are only required to confirm we comply with the BVI Business Companies Act, 2004 and that we have adequate premises and employees in the British Virgin Islands for passively holding or actively managing the equity participation, but to the extent we are required to increase our substance in the British Virgin Islands due to any regulatory change, it could result in additional costs. Although it is presently anticipated that the Substance Law (including the ongoing EU review of the British Virgin Islands’ implementation of such law), will have minimal material impact on us or our operations, as the legislation and guidance are new and remain subject to further clarification, adjustment, interpretation, and the EU review, it is not currently possible to ascertain the precise impact of these developments on us, for example, whether we could also be treated as carrying out “headquarter business” in the British Virgin Islands (despite our headquarters physically being in China). It is therefore possible that we may be subject to additional requirements under the Substance Law in the future. Should that occur, it is our intention to seek appropriate advice and take appropriate steps to ensure that we (to the extent we fall within the scope of the Substance Law) are fully compliant.

If we are classified as a PFIC, United States taxpayers who own our Class A ordinary shares may have adverse United States federal income tax consequences.

A non-U.S. corporation such as ourselves will be classified as a PFIC, for any taxable year if, for such year, either:

Passive income generally includes dividends, interest, rents and royalties (other than rents or royalties derived from the active conduct of a trade or business), and gains from the disposition of passive assets.

If we are determined to be a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our Class A ordinary shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.

Depending on the amount of cash we have and any other assets held for the production of passive income, it is possible that, for our current taxable year or for any subsequent year, more than 50% of our assets may be assets which produce passive income, in which case we would be deemed a PFIC, which could have adverse U.S. federal income tax consequences for U.S. taxpayers who are shareholders. We will make this determination following the end of any particular tax year.

Although the law in this regard is unclear, we treat the operating entities as being owned by us for United States federal income tax purposes, not only because we exercise effective control over the operations of such entities but also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their operating results in our consolidated financial statements. For purposes of the PFIC analysis, in general, a non-U.S. corporation is deemed to own its pro rata share of the gross income and assets of any entity in which it is considered to own at least 25% of the equity by value.

For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. taxpayers if we were or are determined to be a PFIC, see “Item 10. Additional Information—E. Taxation—United States Federal Income Taxation—PFIC.”

The dual class structure of our ordinary shares has the effect of concentrating voting control with Ms. Yefang Zhang, and her interests may not be aligned with the interests of our other shareholders.

We have a dual-class voting structure consisting of Class A ordinary shares and Class B ordinary shares. Under this structure, holders of Class A ordinary shares are entitled to one vote per one Class A ordinary share, and holders of Class B ordinary shares are entitled to 50 votes per one Class B ordinary share, which may cause the holders of Class B ordinary shares to have an unbalanced, higher concentration of voting power. As of September 30, 2023, Ms. Yefang Zhang indirectly holds 100,698, or 100% of our issued and outstanding Class B ordinary shares, representing approximately 68.78% of the voting rights in our Company. As a result, until such time as his collective voting power is below 50%, Ms. Zhang as the controlling shareholder has substantial influence over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors, and other significant corporate actions. She may take actions that are not in the best interests of us or our other shareholders. These corporate actions may be taken even if they are opposed by our other shareholders. Further, such concentration of voting power may discourage, prevent, or delay the consummation of recent change of control transactions that shareholders may consider favorable, including transactions in which shareholders might otherwise receive a premium for their shares. Future issuances of Class B ordinary shares may also be dilutive to the holders of Class A ordinary shares. As a result, the market price of our Class A ordinary shares could be adversely affected.

The dual-class structure of our ordinary shares may adversely affect the trading market for our Class A ordinary shares.

Several shareholder advisory firms have announced their opposition to the use of multiple class structures. As a result, the dual class structure of our ordinary shares may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A ordinary shares.

Since we are a “controlled company” within the meaning of the Nasdaq listing rules, we are allowed to follow certain exemptions from certain corporate governance requirements that could adversely affect our public shareholders.

Our largest shareholder, Ms. Yefang Zhang, through Global Clean Energy Limited, owns more than a majority of the voting power of our outstanding ordinary shares. Under the Nasdaq listing rules, a company of which more than 50% of the voting power is held by an individual, group, or another company is a “controlled company” and is permitted to phase in its compliance with the independent committee requirements. Although we do not intend to rely on the “controlled company” exemptions under the Nasdaq listing rules, we are allowed to elect to rely on these exemptions in the future. If we were to elect to rely on the “controlled company” exemptions, a majority of the members of our board of directors might not be independent directors and our nominating and corporate governance and compensation committees might not consist entirely of independent directors. Accordingly, if we rely on the exemptions, during the period we remain a controlled company and during any transition period following a time when we are no longer a controlled company, you would not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance requirements of Nasdaq.

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Item 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Corporate History and Structure

We are an offshore holding company incorporated in the British Virgin Islands. AsOn March 31, 2022, we established a holding company with no material operations of our own, our operations are conducted in China through our wholly owned indirect PRC subsidiary, CN Energy Development, and its subsidiaries. Our Ordinary Shares are shares of our offshore holding company in the British Virgin Islands, instead of shares of our operating companies in China. Therefore, our shareholders will not directly hold any equity interests in our operating companies.

On November 23, 2018, we establishedUSA Inc., as a holding company, CN Energy, undercorporation pursuant to the laws of the British Virgin Islands.State of Delaware. CN Energy owns 100% of Energy Holdings, a Hong Kong company incorporated on August 29, 2013.

On January 14, 2019, Zhejiang CN Energy was formed pursuant to PRC laws as a wholly foreign owned enterprise. Energy Holdingscurrently holds 100% of the equity interests in Zhejiang CN Energy. On January 24, 2019, Manzhouli CN Energy was formed pursuant to PRC laws as a wholly foreign owned enterprise. Energy Holdings holds 100% of the equity interests in Manzhouli CN Energy. On June 10, 2019, Manzhouli CN Technology was formed as a limited company pursuant to PRC laws. Zhejiang CN Energy and Manzhouli CN Energy currently hold 90% and 10% of the equity interests in Manzhouli CN Technology, respectively.USA Inc.

On April 18, 2019,8, 2022, we establishedformed Zhoushan Xinyue, a PRC limited liability company. Zhoushan Xinyue is a wholly owned indirect subsidiary of Hangzhou Forasen.

On April 13, 2022, we formed Ningbo Nadoutong, a PRC limited liability company. Ningbo Nadoutong is a wholly owned subsidiary of CN Energy Development, as a limited company pursuant to PRC laws. Zhejiang CN Energy and Manzhouli CN Technology currently hold 90% and 10% of the equity interests in CN Energy Development, respectively.Development.

On February 5, 2021, our Ordinary Shares commenced trading on the Nasdaq Capital Market under the symbol “CNEY.” On February 9, 2021,October 11, 2022, we closed our initial public offering. We raised approximately $23 million in gross proceeds from our initial public offering and underwriters’ exercise of the over-allotment option, before deducting underwriting discounts and other related expenses.

In May and June 2021, we conducted a reorganization in order to simplify our corporate structure and make use of supportive government policies. The reorganization consisted of (i) the transfer of 60% of the equity interests in CN Energy Development from Manzhouli CN Technology toformed Zhejiang CN Energy, (ii) the transfer of 100% of the equity interests in Zhongxing Energy from Khingan

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variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. As confirmedwhich was approved by our PRC counsel, we are not subject to cybersecurity review or network data security review with the CAC when the Cybersecurity Review Measures become effective and if the Security Administration Draft becomes effective as they are published, because our customers are enterprises in Anhui Province, Fujian Province, Zhejiang Province, Shanghai, and Heilongjiang Province in China and we do not have individual customers.board of directors on December 20, 2023. As a result we currently do not have overof the Share Consolidation, every 30 issued Class A ordinary shares automatically consolidated into one million users’ personal informationClass A ordinary share and do not anticipate that we will be collecting overevery 30 issued Class B ordinary shares automatically consolidated into one million users’ personal information in the foreseeable future, which we understand might otherwise subject us to the Cybersecurity Review Measures. Since these statements and regulatory actions are new, however, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, ifClass B ordinary share, without any and the potential impact such modified or new laws and regulations will have on our daily business operation, ability to accept foreign investments, and our continuous listingaction on the Nasdaq Stock Market. part of the shareholders. Beginning with the opening of trading on January 19, 2024, our Class A ordinary shares began to trade on a post-Share Consolidation basis on Nasdaq.

See “Item 3. Key Information—Risk Factors—Risks Relating to Doing Business in the PRC—Recent greater oversight by the Cyberspace Administration of China, or the ‘CAC,’ over data security, particularly for companies seeking to list on a foreign exchange, could adversely impact our business and our offering.”

In addition, our Ordinary Shares may be prohibited to trade on a national exchange or over-the-counter under the Holding Foreign Companies Accountable Act if the PCAOB is unable to inspect our auditors for three consecutive years beginning in 2021. Our auditor has been inspected by the PCAOB on a regular basis with the last inspection in June 2018, and our auditor is not subject to the determinations announced by the PCAOB on December 16, 2021. If trading in our Ordinary Shares is prohibited under the Holding Foreign Companies Accountable Act in the future because the PCAOB determines that it cannot inspect or fully investigate our auditor at such future time, Nasdaq may determine to delist our Ordinary Shares and trading in our Ordinary Shares could be prohibited. On June 22, 2021, the U.S. Senate passed the Accelerating Holding Foreign Companies Accountable Act, which, if passed by the U.S. House of Representatives and signed into law, would reduce the period of time for foreign companies to comply with PCAOB audits to two consecutive years instead of three, thus reducing the time period for triggering the prohibition on trading. See “Item 3. Key Information—Risk Factors—Risks Relating to Doing Business in the PRC—Recent joint statement by the U.S. Securities and Exchange Commission, or the ‘SEC,’ and the Public Company Accounting Oversight Board (United States) (the ‘PCAOB’), rule changes by Nasdaq, and the Holding Foreign Companies Accountable Act all call for additional and more stringent criteria to be applied to emerging market companies upon assessing the qualification of their auditors, especially the non-U.S. auditors who are not inspected by the PCAOB. These developments could add uncertainties to our offering.”

Permission Required from PRC Authorities

We are currently not required to obtain permission from any of the PRC authorities to operate and issue our Ordinary Shares to foreign investors. In addition, we and our subsidiaries are not required to obtain permission or approval relating to our Ordinary Shares from the PRC authorities, including the China Securities Regulatory Commission (“CSRC”) or the CAC,Information” for our subsidiaries’ operations, nor have we or our subsidiaries received any denial for our subsidiaries’ operations with respect to the offering of our securities. Recently, however, 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, which were made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision over overseas listings by Chinese companies. The 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. The aforementioned policies and any related implementation rules to be enacted may subject us to additional compliance requirements in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of different interpretation and enforcement of the rules and regulations in the PRC adverse to us, which may take place quickly with little advance notice. See “Item 3. Key Information—Risk Factors—Risks Relating to Doing Business in the PRC—The opinions recently 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 us to additional compliance requirement in the future.”latest corporate structure.

Corporate Information

Our principal executive offices are located at Building 2-B, Room 206, No. 268 Shiniu Road, Liandu District, Lishui City, Zhejiang Province, the PRC, and our phone number is +86-571-87555823. Our registered office in the British Virgin Islands is located at 2/F, Palm Grove House, P.O. Box 3340, Road Town, Tortola, British Virgin Islands, and the phone number of our registered office is +1 (284)-393-6004. 393-6004. We maintain a corporate website at www.cneny.com.www.ir.cneny.com. The information contained in, or accessible from, our website or any other website does not constitute a part of this annual report. Our agent for service of process in the United States is Cogency GlobalCN Energy USA Inc., located at 122 East 42nd900 19th Street 18thNW, Floor New York, NY 10168.5, Squad 23, Washington, DC 20006.

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The SEC maintains a website at www.sec.gov that contains reports, proxy, and information statements, and other information regarding issuers that file electronically with the SEC using its EDGAR system.

For information regarding our principal capital expenditures, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Capital Expenditures.”

B. Business Overview

Overview

Through our wholly owned PRC subsidiary, CN Energy Development,Overview

The operating entities manufacture and its subsidiaries, we are a manufacturer and supplier ofsupply wood-based activated carbon that is primarily used in pharmaceutical manufacturing, industrial manufacturing, water purification, environmental protection, and food and beverage production (“Activated Carbon Production”), and a producer ofproduce biomass electricity generated in the process of producing activated carbon.carbon (“Biomass Electricity Production”).

As a manufacturer of wood-based activated carbon, ourthe operating entities’ primary raw materials are forestry residues, little fuelwood, and wood wastes, which wethe operating entities source from ourtheir suppliers. OurThe operating entities’ current facility is located in Tahe County, Heilongjiang Province, in close proximity to the Greater Khingan Range, where ourtheir suppliers are primarily located. WeThe operating entities also source raw materials from Inner Mongolia.Mongolia Autonomous Region.

We

The operating entities produce wood-based activated carbon that is conformed to ourtheir customers’ specifications. OurThe operating entities’ activated carbon customers are primarilymainly activated carbon wholesalers and companies engagingengaged in the activated carbon deep processing business. OurThe operating entities’ activated carbon customers are all based in the PRC and currently are mainly located in Anhui Province, Fujian Province, Zhejiang Province, and Shanghai. The primary end users of ourthe operating entities’ activated carbon are mainly food and beverage producers, industrial manufacturers, pharmaceutical manufacturers, and companies engagingengaged in environmental protection. In addition, wethe operating entities have provided activated carbon related technical services to Hangzhou Lianmu Technology Co., Ltd. (“Lianmu Technology”) from time to time since January 1, 2017. TheTheir technical services we provided included activated carbon mixing ratio adjustments, activated carbon component indicator analyses, absorptive capacity tests, and other technical support. WeThe operating entities expect to continue to provide similar technical services to Lianmu Technology and our other customers if requested.

The biomass electricity generated during the process of producing activated carbon is supplied to State Grid Heilongjiang Electric Power Company Limited, a subsidiary of State Grid Corporation of China in Heilongjiang Province. WeThe operating entities do not supply biomass electricity to any other state-owned or other entity.

Our

The operating entities generate revenue is primarily generated through sales offrom selling activated carbon.

For the fiscal years ended September 30, 2023, 2022, and 2021, 2020,the operating entities sold 40,251, 28,911, and 2019, we sold 15,018 9,525, and 8,584 tons of activated carbon and 421,440, 2,721,000, and 2,817,600 2,641,964, and 3,044,574 kWhKWh of biomass electricity, respectively. For the same years, we hadthe total revenue was approximately $57.9 million, $40.2 million, and $19.8 million, and the results of $19,846,921, $12,476,314, and $10,893,164,operation were at a net loss of $5.4 million, net income of $2.4 million, and net income of $1,296,360, $2,344,770, and $1,667,812,$1.3 million, respectively. TheFor the same years, the revenue derived from Activated Carbon Production accounted for 98.62%99.9%, 96.99%99.3%, and 96.31%98.62% of ourthe total revenue, forrespectively; the fiscal years ended September 30, 2021, 2020, and 2019, respectively. The revenue derived from Biomass Electricity Production accounted for 0.72%0.1%, 2.05%0.4%, and 1.80%0.72% of ourthe total revenue, forrespectively; and the fiscal years ended September 30, 2021, 2020, and 2019, respectively. The revenue derived from technical services accounted for 0.66%, 0.96%nil, 0.3%, and 1.89%0.66% of ourthe total revenue, for the fiscal years ended September 30, 2021, 2020, and 2019, respectively.

Competition

All of ourthe operating entities’ activated carbon sales are in the PRC market. OurThe operating entities’ major competitors are companies that manufacture and sell activated carbon in the PRC market. OurThe operating entities’ main competitors in Activated Carbon Production include wood-based activated carbon manufacturers, such as Fujian Xinsen Carbon Industry Co., Ltd., and coal-based activated carbon manufacturers, such as Shanxi Xinhua Activated Carbon Co., Ltd., Ningxia Huahui Activated Carbon Company Limited, Shenhua Ningxia Coal Industry Group Co., Ltd., and Xingtai Coal Chemical Co., Ltd. WeThe operating entities compete for customers primarily on the basis of activated carbon prices, activated carbon quality and characteristics, transportation costs, customer relationships, and the reliability of supply. The demand for ourthe operating entities’ activated carbon is significantly dependent on the general economy in the PRC.

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Since State Grid Corporation of China is the only purchaser of biomass electricity in the PRC and the electricity purchase price is determined by the National Development and Reform Commission of the PRC (“NDRC”(the “NDRC”), there is no competition in terms of the customer or price in the PRC biomass electricity market. WeThe operating entities instead focus on reducing ourtheir production cost and increasing ourtheir production capacity of the biomass electricity. Some other major producers of biomass electricity in the PRC are Sunshine Kaidi New Energy Group Co., Ltd. and National Biological Energy Co., Ltd.

Our

Competitive Strengths

We believe wethe operating entities have the following competitive strengths:

Advanced Technology and Established Relationship with a Research Center

Activated carbon is typically produced using either of the following two processes: (i) steam activation, in which raw materials are carbonized and then activated with steam, and (ii) chemical activation, which involves mixing raw materials with an activating agent, usually phosphoric acid, to swell the raw materials and open up the cellulose structure. WeThe operating entities produce wood-based activated carbon and biomass electricity from forestry residues, little fuelwood, and wood wastes through an activated carbon and electricity cogeneration process (the “Cogeneration Process”) wethey have developed over the years. OurThe operating entities’ Cogeneration Process is based on steam activation, instead of chemical activation, and does not involve mixing raw materials with phosphoric acid. As a result, the activated carbon wethe operating entities produce does not contain residual phosphate and, unlike activated carbon produced through chemical activation, may be used in industries that require activated carbon with higher purity, such as pharmaceutical manufacturing and food and beverage production. In addition, compared with the traditional steam activation process, which only produces activated carbon and makes no use of the synthesis gas from raw materials being carbonized, ourthe operating entities’ Cogeneration Process uses the synthesis gas to generate biomass electricity. Therefore, we believe ourthe operating entities’ production process is more efficient, results in less pollution, and yields higher profits after selling both activated carbon and biomass electricity when compared with the traditional steam activation process. For details of ourthe production process, please see “—Production Process.”

As of the date of this annual report, wethe operating entities own 2332 patents in the PRC and claim ownership of certain trade secrets and proprietary know-how developed by and used in ourtheir business. WeThe operating entities cooperate with Huadian Electric Power Science Academy (“Huadian”) pursuant to a Strategic Cooperation Agreement dated April 3, 2014, to research, develop, and share technologies related to activated carbon and biomass energy, which include improvements to the ignition system and speed control system of electric generators. See “—R&D” for more information. WeThe operating entities are also constantly looking for new cooperative opportunities with additional research centers to further improve ourtheir method.

Strategically Placed Facilities and Lower Costs

We strategically placed our current Tahe County facility in the middle of the Greater Khingan Range, where most of our suppliers are located and where there is abundant supply of forestry residues, little fuelwood, and wood wastes. Our Tahe County facility is close to multiple roads and only 1.24 miles from the nearest train station, thereby facilitating the transportation of our activated carbon products to customers in East China and South China. Our new facility under construction, in which we expect to manufacture activated carbon and generate steam for heating upon completing the first stage of construction in September 2022, is located in Manzhouli City, Inner Mongolia, where there are over 100 woodworking factories that could potentially supply us with a large number of wood wastes and which has similarly good transportation infrastructure. For detailed information of our new facility under construction in Manzhouli City, please refer to “—Facilities” below. Our stable feedstock supply and low transportation cost help us maintain lower general costs than those of our competitors.

High-Quality Wood-Based Activated Carbon Products and Biomass Electricity

The chemical activation process of activated carbon production uses coal as raw material. Coal often contains impurities, metal salt, and ash, and chemicals used in the chemical activation process may cause secondary pollution to the activated carbon products. Therefore, activated carbon products manufactured through the chemical activation process often are of low quality and can only be used in industrial manufacturing. In contrast, ourthe operating entities’ wood-based activated carbon products, manufactured from forestry residues, little fuelwood, and wood wastes and through the physical activation process, are of higher quality than carbon activated products manufactured through the chemical activation process and therefore have a wide range of uses in industries such as pharmaceutical manufacturing, industrial manufacturing, water purification, food and beverage production, and environment protection. The biomass electricity generated in ourthe operating entities activated carbon production process offers usthem an additional revenue source.

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Strong Management and Professional Team with Extensive Industry Experience

Our senior management team, led by Mr. Kangbin Zheng,Ms. Xinyang Wang, our chief executive officer and chairman,chairwoman, has significant experience in the activated carbon and biomass energy industries. Our management team is comprised of highly-skilled and dedicated professionals with wide ranging experience in research, services, product development, business development, and marketing. We believe that our management and professional team will be able to effectively grow our business through continued operating improvement and research.

Our Strategy

OurGrowth Strategies

The operating entities’ goal is to become one of China’s leading wood-based activated carbon and biomass energy producers. Accomplishing this goal requires the successful implementation of the following strategies:

Increase the Capacity of Activated Carbon Production

Since the demand for activated carbon in general and orders for ourthe operating entities’ activated carbon products more particularly have been increasing in recent years, ourthe operating entities’ facility at ourtheir Tahe Biopower Plant almost reached its full operating capacity in fiscal year 2018recent years and wethe operating entities had to outsource some of ourtheir orders to third-party producers to keep up with the demand for ourthe operating entities’ products. These third-party producers do not have the same manufacturing processes or quality control as wethe operating entities do, nor do wethe operating entities share technology with them. WeThe operating entities mainly purchase activated carbon from these third-party producers to fulfill orders from customers who do not require the wood-based activated carbon wethe operating entities produce. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business—WeThe operating entities rely on third-party manufacturers to produce some of ourtheir activated carbon products and problems with, or loss of, these manufacturers could harm ourthe operating entities’ business and operating results.” We are currently constructing a new manufacturing facility in Manzhouli City, Inner Mongolia, to increase our capacity of activated carbon production. As of January 2022, we had completed the construction of the groundwork of the factory workshop, the auxiliary buildings, and the pipe networks.

Expand Customer Base

We plan to explore new markets for ourthe operating entities’ activated carbon products while maintaining ourthe operating entities’ current customer base. WeThe operating entities are considering establishing branch offices in various strategic areas, including Beijing, Shanghai, Hebei Province, Jiangsu Province, and Fujian Province. These branch offices will focus on increasing activated carbon product sales to existing customers, providing customer support in those areas, and acquiring potential new customers. By increasing the number of customers and optimizing ourthe operating entities’ transportation and sales network, wethe operating entities aim to reduce the marginal cost of ourtheir activated carbon products and increase ourtheir profits.

Focus on Products with Growing Demand

Due to the rapid development of industrial technology, stricter environmental protection regulations, and increased attention to food safety, there has been increased demand for activated carbon used in the water, food, and beverage industries, and activated carbon for pharmaceutical raw materials, intermediates, and finished products. We believe wethe operating entities are well positioned to meet each of these growing areas of demand. WeThe operating entities will seek to continue ourtheir innovative approach, while ensuring reliability and efficiency in the delivery supply chain, to the extent wethe operating entities are able to continue to access a consistent supply of raw materials, by designing and manufacturing activated carbon products for use in a broad range of applications. While maintaining a diversified customer base and product line, wethe operating entities will seek to focus on ourtheir products with growing demand and capitalize opportunities for increasing their sales.

Increase Research and Development Efforts

We

The operating entities plan to increase ourtheir research and development efforts by seeking partnerships with well-established research institutes to develop more efficient methods for producing activated carbon and generating biomass energy. WeThe operating entities have been working on applying ourtheir activated carbon production technology currently used with forestry residues, little fuelwood, and wood wastes to crop residues as well. WeThe operating entities are seeking to reduce ourtheir reliance on forest resources and therefore expand ourtheir network of suppliers to other provinces in the PRC.

Explore New Business Opportunities

We

The operating entities have been monitoring possible business opportunities in the downstream sectors of the activated carbon industry, such as environment restoration, water purification, and air cleaning. In the long term, wethe operating entities plan to strategically establish or acquire companies that use activated carbon as raw materials. We have not entered into any binding agreement for anyIn November 2022, we completed the acquisition nor identified any definite

Table of Contents

Table

Production of Contents

Table of Contents

The following table shows the sales for ourthe operating entities’ four categories of activated carbon in the fiscal years ended September 30, 2021, 2020,2023, 2022, and 2019:2021:

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