Company: CNEY
Filing Date: 2025-10-29
Form Type: F-1/A
Source: 0001477932-25-007791
Chunk: 92

Company: CN ENERGY GROUP. INC.
Filing Date: 2025-10-29
Form: F-1/A
Chunk 92
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 ability to generate sufficient revenue sources in the future, and our operating and capital expenditure commitments. As of September 30, 2024, we had advances to suppliers of approximately $28.4 million. In order to secure a steady supply of raw materials, the operating entities are required from time to time to make cash advances when placing their purchase orders. We monitor the advances to suppliers account and the allowance level periodically in order to ensure the related allowance is reasonable. We have since enhanced our collections or realization on advances to suppliers through tightening vendor prepayment policy and strengthening the monitoring of unrealized prepayment. If we have difficulty collecting payment, we will take measures including discontinuing additional purchases from these suppliers, visiting the suppliers to request return of the prepayment promptly, and, if necessary, taking legal action. If all of these steps are unsuccessful, management will determine whether or not the prepayment will be reserved or written off.

With the uncertainty of the current market and the external environment, our management believes it is necessary to enhance the collection of the outstanding balance of accounts receivable and other receivables, and to be cautious on operational decisions and project selections. For fiscal year 2024, we generated negative operating cash flows of $1.9 million, primarily due to an increase of $5.3 million in advances to suppliers for anticipated sales in fiscal year 2025, an increase in inventory of $1.6 million in inventories for sales orders fulfillment for the first quarter of fiscal year 2025, a decrease of $4.0 million in accounts payable due to payment to suppliers, and a decrease of $1.3 million accrued expenses due to payments, as partially offset by a decrease of $10.9 million in accounts receivable due to collections. We made advanced payments to fulfill sales orders received and secure a steady supply of raw materials. Our management believes that income generated from our current operations can satisfy our daily working capital needs over the next 12 months.

Cash flows for the six months ended March 31, 2025, and 2024

Cash Flows

The following table sets forth a summary of our cash flows for the period indicated:

|                                                     |     | For the Six Months  Ended March 31, |       2025 |   |     |   |     2024 |   |
|:----------------------------------------------------|:----|:------------------------------------|-----------:|:--|:----|:--|---------:|:--|
| Net cash used in operating activities