{"url_path":"/sec/cik-0001883984/10-k/2026/item-7","section_key":"item-7","section_title":"Item 7 Management**’**s Discussion and Analysis of Financial Condition and Results of Operations.**","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-06-15","source_url":"https://www.sec.gov/Archives/edgar/data/1883984/0001437749-26-020545-index.html","accession_number":"0001437749-26-020545","cik":"0001883984","ticker":null,"issuer_name":"Alternus Clean Energy, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1883984/0001437749-26-020545-index.html","primary_entity_key":"0001883984","primary_entity_name":"Alternus Clean Energy, Inc."},"word_count":14406,"has_tables":true,"body_markdown":"**Item 7. Management**’**s Discussion and Analysis of Financial Condition and Results of Operations.**\n\n \n\n*The following discussion and analysis of the Company*’*s financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto which are included in*“*Item 8. Financial Statements and Supplementary Data*”*of this Annual Report on Form 10-K. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under*“*Special Note Regarding Forward-Looking Statements,*”**“*Item 1A. Risk Factors*”*and elsewhere in this Annual Report on Form 10-K.*\n\n \n\n**Overview**\n\n \n\nThe Company was incorporated on May 14, 2021 under the laws of Delaware and was originally known as Clean Earth Acquisitions Corp. The Company closed a business combination on December 22, 2023 and changed its name to Alternus Clean Energy, Inc.  We currently have 13 employees; 6 employees are located in Dublin, Ireland, 2 are located at the Company’s headquarters located in New York, 2 remote employees in the US and 3 are located in Europe. Our employees perform various services such as business development, finance, and management functions.\n\n \n\nAlternus Clean Energy, Inc. is a specialized energy transition platform dedicated to developing, owning, and operating decentralized, onsite clean energy solutions for commercial and industrial customers across the United States and the United Kingdom. The Company aims to deliver 24/7 energy independence to its customers through wind-powered microgrids and complementary energy technologies, that integrate compact wind turbines, solar, and battery storage, bypassing grid constraints and providing reliable, clean power directly at the point of consumption.\n\n \n\nThe Company's primary commercial vehicle is EverOn Energy, a joint venture formed with Hover Energy LLC, through which it develops and operates Wind Powered Microgrids™ for Blue-Chip Clients across four high-value verticals: big box retail, real estate, education, and manufacturing. Customers receive energy under long-term, 25-year Energy-as-a-Service (\"EaaS\") contracts at rates at or below what they currently pay to their grid provider, with no upfront capital expenditure required. This model is designed to deliver immediate and measurable cost savings to customers while generating stable, long-term recurring revenues for the Company.\n\n \n\nOver 50% of the Company's planned near-term growth is already represented in an existing pipeline of Blue-Chip Clients. Based on EverOn's current pipeline and growth projections, the Company is targeting the installation of approximately 93 cumulative microgrids by 2030, growing to 153 by 2032, with projected annual recurring revenues growing at a 54% compound annual growth rate between 2026 and 2035 under 25-year PPA contracts. EverOn is projected to reach EBITDA positive in 2027 and cash flow positive in 2028, at which point 70% of cash from operations will be reinvested to fund organic self-funded growth\n\n \n\nThe Company uses annual recurring revenues as a key metric in its financial management information and believes this method better reflects the long-term stability of operations into the future. Annual Recurring Revenue (\"ARR\") is defined as the estimated future revenue generated by operational microgrid installations under long-term Energy-as-a-Service (\"EaaS\") contracts, calculated as the contracted energy rate per kilowatt-hour (kWh) multiplied by the estimated annual energy generation of each installation over a full year of operation, inclusive of the contracted annual escalator.\n\n \n\nIt should be noted that the actual revenues reported by the Company in a particular period may be lower than ARR where a microgrid installation does not generate revenue for the full duration of that period, most commonly in the first year of operation, where commissioning and handover may occur part-way through the financial year. The Company must also account for the timing of new installations completed throughout the financial year, which will contribute to ARR on a pro-rated basis in the period of first operation and on a full-year basis thereafter. As the portfolio of operational installations grows, ARR accumulates accordingly, reflecting the stair-step growth profile inherent in the Company's long-term EaaS ownership model.\n\n \n\n34\n\n[Table of Contents](#toc)\n\n \n\n**Impacts of the U.S./Iran conflict and the ongoing Ukraine/Russia conflict**\n\n \n\nThe geopolitical situation in the Middle East intensified in early 2026 with the U.S./Iran conflict.  The conflict between the two countries continues to evolve as military activity proceeds and blockades of Iranian ports as well as the Straits of Hormuz are imposed.  In addition to the human toll and impact of the events on entities that have operations in Iran or its neighboring countries, or that conduct business with their counterparties, the war is increasingly affecting economic and global financial markets and exacerbating ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption.  The Company has seen fluctuations in energy rates due to inflation, increased interest rates, and other macro-economic factors.\n\n \n\nThe geopolitical situation in Eastern Europe intensified on February 24, 2022 with Russia’s invasion of Ukraine. The war between the two countries continues to evolve as military activity proceeds and additional sanctions are imposed. In addition to the human toll and impact of the events on entities that have operations in Russia, Ukraine, or neighboring countries (e.g., Belarus, Poland, Romania) or that conduct business with their counterparties, the war is increasingly affecting economic and global financial markets and exacerbating ongoing economic challenges, including issues such as rising inflation and global supply-chain disruption.  The Company has seen fluctuations in energy rates due to inflation, increased interest rates, and other macro-economic factors.\n\n \n\n**Known trends or Uncertainties**\n\n \n\nThe Company has a working capital deficiency and negative equity. Management has determined there is doubt about the Company’s ability to continue as a going concern if planned financing and/or equity raises do not complete. Refer to Footnote 2 of the accompanying financial statements.\n\n \n\nThe Company is currently working on several processes to address the going concern issue. We are working with multiple global banks and funds to secure the necessary corporate and project level financing to execute our transatlantic business plan.\n\n \n\n**Competitive Strengths**\n\n \n\nThe Company believes the following competitive strengths have contributed and will continue to contribute to its success:\n\n \n\n●\n\n**Fully Integrated Clean Energy Provider Model:**\n\n \n\nWe operate as a comprehensive energy provider, managing the full renewable energy value chain across both utility scale and behind-the-meter microgrid markets. This “develop-to-own or sell” strategy enables the Company to capture greater margin and retain control from early-stage development through to long-term operations or strategic monetization, unlike peers focused solely on operational asset acquisitions.\n\n \n\n●\n\n**Experienced and Adaptive Management Team:**\n\n \n\nThe leadership team brings decades of collective experience in capital markets, energy infrastructure, project development, and public company governance. Recent partnerships also bolster technical and operational capabilities in areas such as microgrids, reinforcing the Company’s strategic direction.\n\n \n\n●\n\n**Capital-Efficient Growth Through Project-Level Leverage:**\n\n \n\nOur approach emphasizes projects with minimal to no owner equity requirements, particularly in the U.S. where tax equity (ITC) and long-term debt can fund up to 100% of project costs. This model allows for rapid, capital-efficient scaling and high-return deployments, freeing up corporate equity for strategic growth.\n\n \n\n●\n\n**Unique Microgrid Technology and Offerings:**\n\n \n\nThrough partnerships such as with Hover Energy, Alternus delivers differentiated microgrid solutions combining rooftop wind, solar, storage, and AI-based energy management systems. This provides a compelling and exclusive offering, particularly in the high-growth commercial and industrial market segments.\n\n \n\n●\n\n**Proven International Expansion and Partner Network:**\n\n \n\nThe Company’s ability to enter new geographies and establish strong local partnerships has enabled consistent expansion across Europe and North America. These local relationships and Alternus’ development track record provide a competitive edge in securing grid access, permits, and financing in highly competitive markets.\n\n \n\n●\n\n**Flexible and Technology Agnostic Strategy:**\n\n \n\nAlternus is not tied to specific technologies or suppliers, allowing it to source best-in-class components and services globally. This flexibility supports cost optimization and futureproofing as new solutions and innovations emerge in the renewable energy space.\n\n \n\n**Vision and Strategy:**\n\n \n\nWe are expanding beyond our core utility solar operations by integrating microgrids and on-site generation systems that provide customers with energy resilience, grid independence, and long-term cost savings. These customer deployed systems enable faster revenue realization and lower capital intensity compared to utility scale projects.\n\n \n\nTo accelerate this transition, we are actively forming strategic partnerships and pursuing targeted ventures and acquisitions in high-growth areas such as battery storage and circular economy energy systems. These additions enhance our technical capabilities, diversify revenue streams, and strengthen our ability to meet the rising demand for consistent power driven by AI, data centers, and industrial onshoring.\n\n \n\nThis strategy builds on our foundation as an integrated independent power producer (IPP) with experience developing a portfolio of renewable energy assets across North America and Europe. By owning and operating long-term contracted energy projects, we generate stable, recurring income while unlocking lasting value for shareholders.\n\n \n\n35\n\n[Table of Contents](#toc)\n\n \n\nWith strong regulatory tailwinds and rapidly growing global demand for sustainable and reliable energy, Alternus is well positioned to scale as a more comprehensive energy provider, broadening our market reach, enhancing financial performance, and advancing our mission to power a cleaner, more resilient energy future.\n\n \n\nT**o achieve its goals, the Company intends to pursue the following strategies:**\n\n \n\n \n\n●\n\nContinue our growth strategy of acquiring utility scale clean energy (e.g., solar, battery storage and other technologies) projects that are either in development, in construction, newly installed or already operational, in order to build a diversified portfolio across multiple geographies;\n\n \n\n \n\n●\n\nPursue expansion into complementary or strategic market segments either through M&A or strategic partnerships that enhance and diversify our core energy generation business. These additional segments are designed to create independent income streams and strengthen our asset platform;\n\n \n\n \n\n●\n\nStrengthen long-term relationships with high-quality developers and other partners, both local and international, to reduce competition in acquisition pricing and provide Alternus with exclusive rights to projects at varying stages of development. This provides the Company with a better understanding of the markets we address and, in some cases, enables it to contract for projects in a less competitive environment;\n\n \n\n \n\n●\n\nExpand our US and European portfolio in regions with attractive returns on investments, and increase the Company’s long-term recurring revenue and cash flow;\n\n \n\n \n\n●\n\nSecure strong and predictable cash flows via long-term FiT (feed-in tariff) contracts combined with the Company’s efficient operations. This allows for high leverage capacity and flexibility of debt structuring. Our strategy is to reinvest of project cash flows into additional projects to provide non-dilutive capital for Alternus to “self-fund” organic growth;\n\n \n\n \n\n●\n\nOptimization of financing sources to support long-term growth and profitability in a cost-efficient manner;\n\n \n\n \n\n●\n\nAs a renewable energy company, we are committed to growing our portfolio of projects in the most sustainable way possible. Alternus is highly aware and conscious of the ever growing need to mitigate the effects of climate change which is evident by its core strategy. As the Company grows, it intends to establish a formal sustainability policy framework in order to ensure that all project development is carried out in a sustainable manner, mitigating any potential local and environmental impacts identified during the development, construction, and operational process.\n\n \n\nGiven the long-term nature of our business, Alternus operates with a strategic focus on sustained value creation rather than short-term quarterly performance. Our approach prioritizes maximizing long-term shareholder returns by developing projects from the ground up and acquiring assets at various stages of maturity, whether in development, under construction, or already operational. In parallel, we are expanding into complementary market segments that enhance our operational capabilities and financial performance, strengthening the foundation for consistent, scalable growth.  \n\n \n\n**Key Factors that Significantly Affect Company Results of Operations and Business**\n\n \n\nThe Company expects inflation and energy rate fluctuations will affect its results of operations.\n\n \n\n**Offtake Contracts**\n\n \n\nCompany revenue is primarily a function of the volume of electricity generated and sold by its renewable energy facilities as well as, where applicable, the sale of green energy certificates and other environmental attributes related to energy generation. The Company’s current portfolio of renewable energy facilities is generally contracted under long-term FiT programs or PPAs with investment grade counterparties. Pricing of the electricity sold under these FiTs and PPAs is generally fixed for the duration of the contract, although some of its PPAs have price escalators based on an index (such as the consumer price index) or other rates specified in the applicable PPA.\n\n \n\n**Project Operations and Generation Availability**\n\n \n\nThe Company revenue is a function of the volume of electricity generated and sold by Company renewable energy facilities. The volume of electricity generated and sold by the Company’s renewable energy facilities during a particular period is impacted by the number of facilities that have achieved commercial operations, as well as both scheduled and unexpected repair and maintenance required to keep its facilities operational.\n\n \n\nThe costs the Company incurs to operate, maintain, and manage renewable energy facilities also affect the results of operations. Equipment performance represents the primary factor affecting the Company’s operating results because equipment downtime impacts the volume of the electricity that the Company can generate from its renewable energy facilities. The volume of electricity generated and sold by the Company’s facilities will also be negatively impacted if any facilities experience higher than normal downtime because of equipment failures, electrical grid disruption or curtailment, weather disruptions, or other events beyond the Company’s control.\n\n \n\n**Seasonality and Resource Variability**\n\n \n\nThe amount of electricity produced and revenues generated by the Company’s solar generation facilities is dependent in part on the amount of sunlight, or irradiation, where the assets are located. As shorter daylight hours in winter months result in less irradiation, the electricity generated by these facilities will vary depending on the season. Irradiation can also be variable at a particular location from period to period due to weather or other meteorological patterns, which can affect operating results. As most of the Company’s solar power plants are in the Northern Hemisphere, the Company expects its current solar portfolio’s power generation to be at its lowest during the first and fourth quarters of each year. Therefore, the Company expects first and fourth quarter solar revenue to be lower than in other quarters. As a result, on average, each solar park generates approximately 15% of its annual revenues in Q1 every year, 35% in each of Q2 and Q3, and the remaining 15% in Q4. The Company’s costs are relatively flat over the year, and so the Company will always report lower profits in Q1 and Q4 as compared to the middle of the year.\n\n \n\n36\n\n[Table of Contents](#toc)\n\n \n\n**Interest Rates on Company Debt**\n\n \n\nInterest rates on the Company’s debt, that are not measured at fair value, are mostly variable for the full term of the debt at annual interest rates ranging from 9% to 25%.\n\n \n\n**Cash Distribution Restrictions**\n\n \n\nIn certain cases, the Company, through its subsidiaries, obtain project-level or other limited or non-recourse financing for Company renewable energy facilities which may limit these subsidiaries’ ability to distribute funds to the Company for corporate operational costs. These limitations typically require that the project-level cash is used to meet debt obligations and fund operating reserves of the operating subsidiary. These financing arrangements also generally limit the Company’s ability to distribute funds generated from the projects if defaults have occurred or would occur with the giving of notice or the lapse of time or both.\n\n \n\n**Renewable Energy Facility Acquisitions and Investments**\n\n \n\nThe Company’s long-term growth strategy is dependent on its ability to acquire additional renewable power generation assets. This growth is expected to be comprised of additional acquisitions across the Company’s scope of operations both in its current focus countries and new countries. Our operating revenues are insufficient to fund our operations, and our assets already are pledged to secure our indebtedness to various third party secured creditors, respectively. The unavailability of additional financing could require us to delay, scale back, or terminate our acquisition efforts as well as our own business activities, which would have a material adverse effect on the Company and its viability and prospects.\n\n \n\nManagement believes renewable power has been one of the fastest growing sources of electricity generation globally over the past decade. The Company expects the renewable energy generation segment to continue to offer growth opportunities driven by:\n\n \n\n \n\n●\n\nThe continued reduction in the cost of solar and other renewable energy technologies, which the Company believes will lead to grid parity in an increasing number of markets;\n\n \n\n \n\n●\n\nDistribution charges and the effects of an aging transmission infrastructure, which enable renewable energy generation sources located at a customer’s site, or distributed generation, to be more competitive with, or cheaper than, grid-supplied electricity;\n\n \n\n \n\n●\n\nThe replacement of aging and conventional power generation facilities in the face of increasing industry challenges, such as regulatory barriers, increasing costs of and difficulties in obtaining and maintaining applicable permits, and the decommissioning of certain types of conventional power generation facilities, such as coal and nuclear facilities;\n\n \n\n \n\n●\n\nThe ability to couple renewable energy generation with other forms of power generation and/or storage, creating a hybrid energy solution capable of providing energy on a 24/7 basis while reducing the average cost of electricity obtained through the system;\n\n \n\n \n\n●\n\nThe desire of energy consumers to lock in long-term pricing for a reliable energy source;\n\n \n\n \n\n●\n\nRenewable energy generation’s ability to utilize freely available sources of fuel, thus avoiding the risks of price volatility and market disruptions associated with many conventional fuel sources;\n\n \n\n \n\n●\n\nEnvironmental concerns over conventional power generation; and\n\n \n\n \n\n●\n\nGovernment policies that encourage the development of renewable power, such as country, state or provincial renewable portfolio standard programs, which motivate utilities to procure electricity from renewable resources.\n\n \n\n**Access to Capital Markets**\n\n \n\nThe Company’s ability to acquire additional clean power generation assets and manage its other commitments will likely be dependent on its ability to raise or borrow additional funds and access debt and equity capital markets, including the equity capital markets, the corporate debt markets, and the project finance market for project-level debt. The Company accessed the capital markets several times in 2023 and 2024 in connection with long-term project debt, and corporate loans and equity. Limitations on the Company’s ability to access the corporate and project finance debt and equity capital markets in the future on terms that are accretive to its existing cash flows would be expected to negatively affect its results of operations, business, and future growth.\n\n \n\n**Foreign Exchange**\n\n \n\nThe Company’s operating results are reported in United States dollars (USD). The Company’s current project revenue and expenses are generated in other currencies, including the Euro (EUR), the Polish Zloty (PLN), and the Romanian Lei (RON). This mix may continue to change in the future if the Company elects to alter the mix of its portfolio within its existing markets or elect to expand into new markets. In addition, the Company’s investments (including intercompany loans) in renewable energy facilities in foreign countries are exposed to foreign currency fluctuations. As a result, the Company expects revenues and expenses will be exposed to foreign exchange fluctuations in local currencies where the Company’s renewable energy facilities are located. To the extent the Company does not hedge these exposures, fluctuations in foreign exchange rates could negatively impact profitability and financial position.\n\n \n\n37\n\n[Table of Contents](#toc)\n\n \n\n**Key Metrics**\n\n \n\n**Operating Metrics**\n\n \n\nThe Company regularly reviews several operating metrics to evaluate its performance, identify trends affecting its business, formulate financial projections, and make certain strategic decisions. The Company considers a solar park operating when it has achieved connection and begins selling electricity to the energy grid.\n\n \n\nOperating Nameplate capacity\n\n \n\nThe Company measures the electricity-generating production capacity of its renewable energy facilities in nameplate capacity. The Company expresses nameplate capacity in direct current (DC), for all facilities. The size of the Company’s renewable energy facilities varies significantly among the assets comprising its portfolio.\n\n \n\nThe Company believes the combined nameplate capacity of its portfolio is indicative of its overall production capacity and period to period comparisons of its nameplate capacity are indicative of the growth rate of its business. The production capacity listed below for Poland, the Netherlands, Romania, and the United States reflect the actual production from those parks while they were owned by or operating under the Company for the year ended December 31, 2024. The parks were sold on January 19, 2024, February 21, 2024, October 3, 2024, and November 5, 2024, respectively. Refer to Footnotes 17 for additional information on the sale/disposal of the parks.\n\n \n\nThe table below outlines the Company’s operating renewable energy facilities as of December 31, 2025 and 2024:\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n**MW (DC) Nameplate capacity by country**\n\n \n\n**2025**\n\n \n \n\n**2024**\n\n \n\nUnited States\n\n \n \n-\n \n \n \n3.8\n \n\nTotal\n\n \n \n-\n \n \n \n3.8\n \n\n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n\nNetherlands\n\n \n \n-\n \n \n \n11.8\n \n\nPoland\n\n \n \n-\n \n \n \n88.4\n \n\nRomania\n\n \n \n-\n \n \n \n40.1\n \n\nTotal\n\n \n \n-\n \n \n \n140.3\n \n\n**Total for the period**\n\n \n \n**-**\n \n \n \n**144.1**\n \n\n \n\nMegawatt hours sold\n\n \n\nMegawatt hours sold refers to the actual volume of electricity sold by the Company’s renewable energy facilities during a particular period. The Company tracks MWh sold as an indicator of its ability to realize cash flows from the generation of electricity at its renewable energy facilities. The megawatt hours listed below for Poland, the Netherlands, Romania, and the United States reflect the actual volume of electricity sold during the year ended December 31, 2024. The parks were sold on January 19, 2024, February 21, 2024, October 3, 2024, and November 5, 2024, respectively. Refer to Footnotes 17 for additional information on the sale/disposal of the parks.\n\n \n\nThe Company’s MWh sold for renewable energy facilities for the years ended December 31, 2025 and 2024, were as follows:\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n**MWh (DC) Sold by country**\n\n \n\n**2025**\n\n \n \n\n**2024**\n\n \n\nItaly\n\n \n \n-\n \n \n \n-\n \n\nUnited States\n\n \n \n-\n \n \n \n4,540\n \n\nTotal\n\n \n \n-\n \n \n \n4,540\n \n\n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n\nNetherlands\n\n \n \n-\n \n \n \n466\n \n\nPoland\n\n \n \n-\n \n \n \n500\n \n\nRomania\n\n \n \n-\n \n \n \n42,741\n \n\nTotal\n\n \n \n-\n \n \n \n43,707\n \n\n**Total for the period**\n\n \n \n**-**\n \n \n \n**48,247**\n \n\n \n\n38\n\n[Table of Contents](#toc)\n\n \n\n**Consolidated Results of Operations**\n\n \n\nThe following table illustrates the consolidated results of operations for the years ended December 31, 2025 and 2024 (in thousands, except share and per share data):\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n\n \n \n \n \n \n \n \n \n \n\n**Revenues**\n\n \n$\n-\n \n \n$\n311\n \n\n \n \n \n \n \n \n \n \n \n\n**Operating Expenses**\n\n \n \n \n** **\n \n \n \n** **\n\nCost of revenues\n\n \n \n-\n \n \n \n(364\n)\n\nSelling, general, and administrative\n\n \n \n(8,065\n)\n \n \n(11,984\n)\n\nDepreciation, amortization, and accretion\n\n \n \n(593\n)\n \n \n(215\n)\n\nDevelopment costs\n\n \n \n-\n \n \n \n(748\n)\n\nImpairment of Spanish assets\n\n \n \n-\n \n \n \n(3,263\n)\n\nLoss on disposal of assets\n\n \n \n15,513\n \n \n \n-\n \n\n**Total operating income/(expenses)**\n\n \n \n6,855\n \n \n \n(16,574\n)\n\n \n \n \n \n \n \n \n \n \n\n**Income/(Loss) from continuing operations**\n\n \n \n6,855\n \n \n \n(16,263\n)\n\n \n \n \n \n \n \n \n \n \n\n**Other income/(expense):**\n\n \n \n \n** **\n \n \n \n** **\n\nInterest expense\n\n \n \n(4,198\n)\n \n \n(8,774\n)\n\nFair value movement of FPA asset\n\n \n \n-\n \n \n \n(483\n)\n\nFair value movement of convertible note\n\n \n \n(3,967\n)\n \n \n67\n \n\nDebt restructuring costs\n\n \n \n(753\n)\n \n \n-\n \n\nCosts associated with legal actions related to unpaid liabilities\n\n \n \n(1,232\n)\n \n \n-\n \n\nFair value movement of warrant\n\n \n \n1,564\n \n \n \n565\n \n\nLoss on issuance of debt\n\n \n \n(35\n)\n \n \n(520\n)\n\nLoss on extinguishment of debt\n\n \n \n(3,187\n)\n \n \n179\n \n\nGain on settlement of liabilities\n\n \n \n596\n \n \n \n-\n \n\nLoss on settlement of SAA with Hover\n\n \n \n(2,025\n)\n \n \n-\n \n\nProvision for loss from related party\n\n \n \n(561\n)\n \n \n-\n \n\nOther expense\n\n \n \n(363\n)\n \n \n(506\n)\n\nOther income\n\n \n \n \n \n \n \n1,571\n \n\nTotal other expenses\n\n \n \n(14,161\n)\n \n \n(7,901\n)\n\nLoss before provision for income taxes\n\n \n \n(7,306\n)\n \n \n(24,164\n)\n\nIncome taxes\n\n \n \n-\n \n \n \n(590\n)\n\n**Loss from continuing operations**\n\n \n \n**(7,306**\n**)**\n \n \n**(24,754**\n**)**\n\n \n \n \n \n \n \n \n \n \n\n**Discontinued operations:**\n\n \n \n \n** **\n \n \n \n** **\n\nLoss from operations of discontinued business components\n\n \n \n-\n \n \n \n(7,543\n)\n\nGain on sale of discontinued operations, net assets\n\n \n \n-\n \n \n \n53,462\n \n\nIncome tax\n\n \n \n-\n \n \n \n(87\n)\n\nIncome/(loss) from discontinued operations\n\n \n \n-\n \n \n \n45,832\n \n\n**Net income/(loss) for the period**\n\n \n$\n**(7,306**\n)\n \n$\n**21,078**\n** **\n\nNet income/(loss) attributable to noncontrolling interest\n\n \n \n(820\n)\n \n \n-\n \n\nNet income/(loss) attributable to common stock\n\n \n$\n(8,126\n)\n \n$\n21,078\n \n\n \n \n \n \n \n \n \n \n \n\n**Basic & diluted earnings loss per share of common stock:**\n\n \n \n \n** **\n \n \n \n** **\n\nContinuing operations\n\n \n$\n(35.71\n)\n \n$\n(1,402.00\n)\n\nDiscontinued operations\n\n \n \n-\n \n \n \n2,596.00\n \n\n**Total earnings loss per share of common stock, basic & diluted**\n\n \n$\n**(35.71**\n)\n \n$\n**1,194.00**\n** **\n\nWeighted-average common stock outstanding, basic & diluted\n\n \n \n479,613\n \n \n \n17,653\n \n\n \n \n \n \n \n \n \n \n \n\nComprehensive income/(loss):\n\n \n \n \n \n \n \n \n \n\nNet income/(loss)\n\n \n$\n(8,126\n)\n \n$\n21,078\n \n\nForeign currency translation adjustment\n\n \n \n#REF!\n \n \n \n#REF!\n \n\n**Comprehensive income/(loss)**\n\n \n \n**#REF!**\n \n \n \n**#REF!**\n** **\n\n \n\n39\n\n[Table of Contents](#toc)\n\n \n\n**Fiscal Year Ended December 31, 2025 compared to December 31, 2024.**\n\n \n\nThe Company generates its revenue from the sale of electricity from its solar parks. The revenue is from FiT, PPA, REC, or in the day-ahead or spot market.\n\n \n\nRevenue\n\n \n\nRevenue for the year ended December 31, 2025 and 2024 were as follows:\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n**Revenue by Country**\n\n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(**\n\n%)\n\n \n \n\n**in thousands**\n\n \n\nUnited States\n\n \n \n-\n \n \n \n311\n \n \n \n(311\n)\n \n \n(100\n)%\n\nTotal for continuing operations\n\n \n$\n-\n \n \n$\n311\n \n \n$\n(311\n)\n \n \n(100\n)%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n\nNetherlands\n\n \n$\n-\n \n \n$\n16\n \n \n$\n(16\n)\n \n \n(100\n)%\n\nPoland\n\n \n \n-\n \n \n \n106\n \n \n \n(106\n)\n \n \n(100\n)%\n\nRomania\n\n \n \n-\n \n \n \n9,687\n \n \n \n(9,687\n)\n \n \n(100\n)%\n\nTotal for discontinued operations\n\n \n$\n-\n \n \n$\n9,809\n \n \n$\n(9,809\n)\n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**-**\n \n \n$\n**10,120**\n \n \n$\n**(10,120**\n**)**\n \n \n**(100**\n**)%**\n\n \n\nRevenue for continuing operations decreased by $0.3 million for the year ended December 31, 2025 compared to the same period in 2024 as there were no revenue generating facilities in operation during 2025 following de-consolidation or sale of our utility operating parks as part of the group restructuring activities and refocus on microgrid energy facilities going forward.\n\n \n\nRevenue for discontinued operations decreased by $9.8 million for the year ended December 31, 2025 compared to the same period in 2024. All operating parks in Poland, the Netherlands and Romania were sold on January 19, 2024, February 21, 2024 and October 3, 2024 respectively, resulting in a $9.8 million decrease in revenues. \n\n \n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n**Revenue by Offtake Type**\n\n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(**\n\n%)\n\n \n \n\n**in thousands**\n\n \n\nCountry Renewable Programs (FiT)\n\n \n$\n-\n \n \n$\n311\n \n \n$\n(311\n)\n \n \n(100\n)%\n\nTotal for continuing operations\n\n \n$\n-\n \n \n$\n311\n \n \n$\n(311\n)\n \n \n(100\n)%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n\nCountry Renewable Programs (FiT)\n\n \n$\n-\n \n \n$\n334\n \n \n$\n(334\n)\n \n \n(100\n)%\n\nGreen Certificates\n\n \n \n-\n \n \n \n5,803\n \n \n \n(5,803\n)\n \n \n(100\n)%\n\nEnergy Offtake Agreements (PPA)\n\n \n \n-\n \n \n \n3,638\n \n \n \n(3,638\n)\n \n \n(100\n)%\n\nOther Revenue\n\n \n \n-\n \n \n \n34\n \n \n \n(34\n)\n \n \n(100\n)%\n\nTotal for discontinued operations\n\n \n$\n-\n \n \n$\n9,809\n \n \n$\n(9,809\n)\n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**-**\n \n \n$\n**10,120**\n \n \n$\n**(10,120**\n**)**\n \n \n**(100**\n**)%**\n\n \n\nCost of Revenues\n\n \n\nThe Company capitalizes its equipment costs, development costs, engineering costs, and construction related costs that are deemed recoverable. The Company’s cost of revenues with regard to its solar parks is primarily a result of the asset management, operations, and maintenance, as well as tax, insurance, and lease expenses. Certain economic incentive programs, such as FiT regimes, generally include mechanisms that ratchet down incentives over time. As a result, the Company seeks to connect its solar parks to the local power grids and commence operations in a timely manner to benefit from more favorable existing incentives. Therefore, the Company generally seeks to make capital investments during times when incentives are most favorable.\n\n \n\nCost of revenues for the year ended December 31, 2025 and 2024 were as follows:\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n**Cost of Revenues by Country**\n\n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(**\n\n%)\n\n \n \n\n**in thousands**\n\n \n\nUnited States\n\n \n \n-\n \n \n \n364\n \n \n \n(364\n)\n \n \n(100\n)%\n\nTotal for continuing operations\n\n \n$\n-\n \n \n$\n364\n \n \n$\n(364\n)\n \n \n(100\n)%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n\nNetherlands\n\n \n$\n-\n \n \n$\n115\n \n \n$\n(115\n)\n \n \n(100\n)%\n\nPoland\n\n \n \n-\n \n \n \n101\n \n \n \n(101\n)\n \n \n(100\n)%\n\nRomania\n\n \n \n-\n \n \n \n3,936\n \n \n \n(3,936\n)\n \n \n(100\n)%\n\nTotal for discontinued operations\n\n \n$\n-\n \n \n$\n4,152\n \n \n$\n(4,152\n)\n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**-**\n \n \n$\n**4,516**\n \n \n$\n**(4,516**\n**)**\n \n \n**(100**\n**)%**\n\n \n\n40\n\n[Table of Contents](#toc)\n\n \n\nCost of revenues for continuing operations decreased by $0.4 million for the year ended December 31, 2025 compared to the same period in 2024  as there were no revenue generating facilities in operation during 2025 following de-consolidation or sale of our utility  operating parks as part of the group restructuring activities and refocus on microgrid energy facilities going forward.\n\n \n\nCost of revenues for discontinued operations decreased by $4.1 million for the year ended December 31, 2025 compared to the same period in 2024. All operating parks in Poland, the Netherlands and Romania were sold on January 19, 2024, February 21, 2024 and October 3, 2024 respectively, resulting in a $9.8 million decrease in revenues. Refer to Footnote 17 for additional sale information.\n\n \n\nSelling, General, and Administrative Expenses\n\n \n\nSelling, general, and administrative expenses for the year ended December 31, 2025 and 2024 were as follows:\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(**\n\n%)\n\n \n \n\n**in thousands**\n\n \n\nSelling, general and administrative\n\n \n$\n8,066\n \n \n$\n11,984\n \n \n$\n(3,918\n)\n \n \n(33\n)%\n\nTotal for continuing operations\n\n \n$\n8,066\n \n \n$\n11,984\n \n \n$\n(3,918\n)\n \n \n(33\n)%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n\nSelling, general and administrative\n\n \n$\n-\n \n \n$\n1,564\n \n \n$\n(1,564\n)\n \n \n(100\n)%\n\nTotal for discontinued operations\n\n \n$\n-\n \n \n$\n1,564\n \n \n$\n(1,564\n)\n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**8,066**\n \n \n$\n**13,548**\n \n \n$\n**(5,482**\n)\n \n \n**(40**\n**)%**\n\n \n\nSelling, general, and administrative expenses for continuing operations decreased by $3.9 million for the year ended December 31, 2025 compared to the same period in 2024 mainly driven by an decrease in headcount and office costs  along with significant drop in audit, consulting, legal, and listing costs.\n\n \n\nSelling, general and administrative expenses for discontinued operations decreased by $1.6 million for the year ended December 31, 2025 compared to the same period in 2024 mainly due to sale of the operating assets during 2024. Refer to Footnote 17 for additional sale information.\n\n \n\nAcquisition Costs\n\n \n\nOn December 11, 2024, BESS LLC, a Delaware limited liability company and wholly owned subsidiary of the Company entered into an asset purchase agreement (the “APA”) with LiiON LLC (“LiiON”), a U.S.-based expert in advanced energy storage solutions, and closed on the acquisition of certain assets related to LiiON’s Battery Storage Business. The assets purchased included customer relationships, customer service agreements and intellectual property (IP). The Company determined that the set of assets and activities acquired in connection with the APA and related agreements constitute a business subject to the guidance in ASC 805 Business Combinations. Refer to Footnote 5 for more information.\n\n \n\nSubsequent to December 31, 2024, the Company and LiiON LLC mutually agreed to rescind the Asset Purchase Agreement (see Footnote 5). The rescission was driven by the discovery of certain material issues not known at the time of closing including questions surrounding the perceived value of certain assets or relationships acquired as well as NASDAQ’s delisting of the Company’s equity in February 2025. The agreement to rescind the transaction was finalized on April 29,2025, resulting in the unwinding of all consideration transferred and legal ownership.\n\n \n\nThe Company has evaluated the rescission in accordance with ASC 855, Subsequent Events, and determined it to be a non-recognized subsequent event, as the rescission did not change the condition of “control” that existed as of the acquisition date or the reporting period end. As such, no adjustments have been made to the financial statements for the period ended December 31, 2024. The rescission was reflected in the Company’s financial statements in the future accounting period in which the sale or disposal criteria are met (i.e., the second quarterly period of the year ending December 31, 2025).\n\n \n\nDevelopment Cost\n\n \n\nThe Company depends heavily on government policies that support our business and enhance the economic feasibility of developing and operating solar energy projects in regions in which we operate or plan to develop and operate renewable energy facilities. The Company can decide to abandon a project if there is material change in budgetary constraints, political factors or otherwise, governments from time to time may review their laws and policies that support renewable energy and consider actions that would make the laws and policies less conducive to the development and operation of renewable energy facilities. Any reductions or modifications to, or the elimination of, governmental incentives or policies that support renewable energy or the imposition of additional taxes or other assessments on renewable energy, could result in, among other items, the lack of a satisfactory market for the development and/or financing of new renewable energy projects, our abandoning the development of renewable energy projects, a loss of our investments in the projects, and reduced project returns, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Refer to Footnote 16 to the accompanying financial statements for more detail of development cost.\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(%)**\n\n \n\n \n \n\n**in thousands**\n\n \n\nDevelopment Cost\n\n \n$\n-\n \n \n$\n748\n \n \n$\n(748\n)\n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**-**\n \n \n$\n**748**\n \n \n$\n**(748**\n**)**\n \n \n**(100**\n**)%**\n\n \n\n41\n\n[Table of Contents](#toc)\n\n \n\nDevelopment cost decreased by $0.7 million for the year ended December 31, 2025 compared to the same period in 2024 due to final work performed for projects abandoned for the development of renewable energy projects in Spain and the United States.\n\n \n\nDepreciation, Amortization, and Accretion Expense \n\n \n\nDepreciation, amortization, and accretion expenses for the year ended December 31, 2025 and 2024 were as follows:\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(%)**\n\n \n\n \n \n\n**in thousands**\n\n \n\nDepreciation, Amortization and Accretion expense\n\n \n$\n593\n \n \n$\n215\n \n \n$\n378\n \n \n \n176\n%\n\nTotal for continuing operations\n\n \n$\n593\n \n \n$\n215\n \n \n$\n378\n \n \n \n176\n%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n\nDepreciation, Amortization and Accretion expense\n\n \n$\n-\n \n \n$\n1,691\n \n \n$\n(1,691\n)\n \n \n(100\n)%\n\nTotal for discontinued operations\n\n \n$\n-\n \n \n$\n1,691\n \n \n$\n(1,691\n)\n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**593**\n \n \n$\n**1,906**\n \n \n$\n**(1,313**\n**)**\n \n \n**(69**\n**)%**\n\n \n\nDepreciation, amortization and accretion expenses for continuing operations increased by $0.4 million for the year ended December 31, 2025 compared to the same period in 2024 due primarily to $0.5 million relating to the amortization EverOn intangible assets for the last three months in 2025 since acquisition, and $0.1 million relating to Liion amortization for three months in 2025 prior to its disposal. In 2024, there was only one country with operating parks recognizing depreciation in 2025 that was sold in Q4 in 2024.\n\n \n\nDepreciation, amortization and accretion expenses for discontinued operations decreased by $1.7 million for the year ended December 31, 2025 compared to the same period in 2024. All operating parks in Poland, the Netherlands and Romania were sold on January 19, 2024, February 21, 2024 and October 3, 2025 respectively. Refer to Footnote 17 for additional sale information.\n\n \n\nGain on Disposal of Assets\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(%)**\n\n \n\n \n \n\n**in thousands**\n\n \n\nGain on disposal of assets\n\n \n$\n15,513\n \n \n$\n-\n \n \n$\n15,513\n \n \n \n0\n%\n\nCosts related to disposal of asset\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n0\n%\n\nTotal for continuing operations\n\n \n$\n15,513\n \n \n$\n-\n \n \n$\n15,513\n \n \n \n0\n%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n\nGain on disposal of asset\n\n \n$\n-\n \n \n$\n3,374\n \n \n$\n(3,374\n)\n \n \n(100\n)%\n\nCosts related to disposal of asset\n\n \n \n-\n \n \n \n(1,843\n)\n \n \n1,843\n \n \n \n(100\n)%\n\nGain on sale of discontinued operations\n\n \n \n-\n \n \n \n51,844\n \n \n \n(51,844\n)\n \n \n(100\n)%\n\nTotal for discontinued operations\n\n \n$\n-\n \n \n$\n53,375\n \n \n$\n(53,375\n)\n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**15,513**\n \n \n$\n**53,375**\n** **\n \n$\n**(37,862**\n)\n \n \n**(71**\n**)%**\n\n \n\nOn March 25, 2025, one of the Company’s subsidiaries, AEG MH02, entered into a Share Purchase Agreement with Alternus Energy Group Plc, a related party, for the sale of the entire issued share capital of Alt Spain Holdco S.l.u., including all of its subsidiaries: ALT Spain 03, S.L.U., ALT Spain 04, S.L.U. and New Frog Projects SL, for a total consideration of €10. In accordance with ASC 360, the Company removed the net assets of the disposal group and recognized a gain of $3.6 million upon closing the sale in March 2025. The sale does not represent a discontinued operation because management continues to pursue clean energy investment and development opportunities in Spain and Europe and did not view the sale as a strategic shift for the Company. Therefore, the assets were not classified as discontinued operations in accordance with ASC 205-20. Refer to Footnote 18 for additional sale information.\n\n \n\nOn May 7, 2025, the Company sold AEG MH 02 Limited (“MH02”) and all its subsidiaries to two buyers. In accordance with ASC 360, the Company removed the net assets of the disposal group and recorded a gain on the sale of approximately $11.9 million and removed approximately $18.3 million in debt and payables related to MH02’s activities. The sale does not represent a discontinued operation because management continues to pursue clean energy investment and development opportunities in Italy and did not view the sale as a strategic shift for the Company. Therefore, the assets were not classified as discontinued operations in accordance with ASC 205-20, Refer to Footnote 19 for additional sale information.\n\n \n\nOn January 19, 2024, the Company sold its operating parks in Poland with a carrying value of $55.2 million for $59.4 resulting in a $4.2 million gain. The costs incurred to complete the transaction totaled $0.8 million and are reported together with the disposal of the assets according to ASC 360-10-35-38. Refer to Footnote 17 for additional sale information.\n\n \n\nOn February 21, 2024, the Company sold its operating park in the Netherlands with a carrying value of $8.0 million for $7.1 million resulting in a $0.9 million loss. The costs incurred to complete the transaction totaled $0.4 million and are reported together with the disposal of the assets according to ASC 360-10-35-38. Refer to Footnote 17 for additional sale information.\n\n \n\nOn October 3, 2024, the Company sold its operating parks in Romania as part of the sale of Solis Bond Company DAC and its subsidiaries in Romania to the Solis Bondholders for €1 in accordance with the terms of the Solis Bonds, as amended. The net of all assets and liabilities resulted in a $51.8 million gain to be reported on the Consolidated Statement of Operations and Comprehensive Loss in accordance with ASC 205-20. The costs incurred to complete the transaction totaled $0.7 million and are reported together with the disposal of the assets according to ASC 360-10-35-38. The sale of these entities and exit of this market represented a strategic shift for the Company resulting in the gain being recorded under discontinued operations.\n\n \n\n42\n\n[Table of Contents](#toc)\n\n \n\nInterest Expense, Other Income, and Other Expense\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(%)**\n\n \n\n \n \n\n**in thousands**\n\n \n\nInterest expense\n\n \n$\n(4,198\n)\n \n$\n(8,774\n)\n \n$\n4,576\n \n \n \n(52\n)%\n\nValuation of FPA asset\n\n \n \n-\n \n \n \n-\n \n \n \n-\n \n \n \n100\n%\n\nFair value movement of FPA asset\n\n \n \n-\n \n \n \n(483\n)\n \n \n483\n \n \n \n(100\n)%\n\nFair value movement of convertible note\n\n \n \n(3,967\n)\n \n \n67\n \n \n \n(4,034\n)\n \n \n(6,021\n)%\n\nDebt restructuring costs\n\n \n \n(753\n)\n \n \n-\n \n \n \n(753\n)\n \n \n100\n%\n\nCosts associated with legal actions related to unpaid liabilities\n\n \n \n(1,232\n)\n \n \n-\n \n \n \n \n \n \n \n \n \n\nFair value movement of warrant\n\n \n \n1,564\n \n \n \n565\n \n \n \n999\n \n \n \n177\n%\n\nLoss on issuance of debt\n\n \n \n(35\n)\n \n \n(520\n)\n \n \n485\n \n \n \n(93\n)%\n\nLoss on extinguishment of debt\n\n \n \n(3,187\n)\n \n \n179\n \n \n \n(3,366\n)\n \n \n(1,880\n)%\n\nGain on settlement of liabilities\n\n \n \n596\n \n \n \n-\n \n \n \n596\n \n \n \n100\n%\n\nLoss on settlement of SAA with Hover\n\n \n \n(2,025\n)\n \n \n-\n \n \n \n(2,025\n)\n \n \n100\n%\n\nProvision for loss from related party\n\n \n \n(561\n)\n \n \n \n \n \n \n(561\n)\n \n \n100\n%\n\nOther expense\n\n \n \n(363\n)\n \n \n(506\n)\n \n \n143\n \n \n \n(28\n)%\n\nOther income\n\n \n \n-\n \n \n \n1,571\n \n \n \n(1,571\n)\n \n \n(100\n)%\n\nTotal for continuing operations\n\n \n$\n(14,161\n)\n \n$\n(7,901\n)\n \n$\n(6,260\n)\n \n \n79\n%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n\nInterest income/(expense)\n\n \n$\n-\n \n \n$\n(9,724\n)\n \n$\n9,724\n \n \n \n(100\n)%\n\nOther expense\n\n \n \n-\n \n \n \n(221\n)\n \n \n221\n \n \n \n(100\n)%\n\nTotal for discontinued operations\n\n \n$\n-\n \n \n$\n(9,945\n)\n \n$\n9,945\n \n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**(14,161**\n**)**\n \n$\n**(17,846**\n**)**\n \n$\n**3,685**\n \n \n \n**(21**\n**)%**\n\n \n\nTotal other expenses for continuing operations increased by $6.3 million for the year ended December 31, 2025 compared to the same period in 2024. The primary drivers causing the increase from 2024 are a $3.4 million cost for debt extinguishment associated with the reclass of the SNC Notes on July 1, 2025 and a $4.0 million charge for movement in fair value of its convertible notes in the period (refer to Footnote 12 for additional information). In addition, we incurred debt restructuring costs of $0.7 million from the issuance of warrants in April 2025 offset by a gain on movement in fair value in warrants of $1.6 million $4.6 million decrease in interest expense. As part of the EverOn joint venture formation we incurred a $2.0 million loss on settlement of the SAA agreement with Hover (refer to Footnote 6 for additional information).  Other Income decreased by $1.6 million as the 2024 amount  related to the sale of Lightwave tax credits to an energy company in Texas with no such transactions in 2025. \n\n \n\nTotal other expenses for discontinued operations decreased by $9.9 million for the year ended December 31, 2025 compared to the same period in 2024. The primary driver is the interest expense for 2024 related to Solis that was sold on October 3, 2024. Refer to Footnote 17 for additional sale information.\n\n \n\nIncome Tax\n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n \n\n**Change**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n \n\n**(%)**\n\n \n\n \n \n\n**in thousands**\n\n \n\nCorporate tax expense\n\n \n$\n-\n \n \n$\n(590\n)\n \n$\n590\n \n \n \n(100\n)%\n\nTotal for continuing operations\n\n \n$\n-\n \n \n$\n(590\n)\n \n$\n590\n \n \n \n(100\n)%\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n \n \n \n** **\n\nCorporate tax expense\n\n \n$\n-\n \n \n$\n(87\n)\n \n$\n87\n \n \n \n(100\n)%\n\nTotal for discontinued operations\n\n \n$\n-\n \n \n$\n(87\n)\n \n$\n87\n \n \n \n(100\n)%\n\n**Total for the period**\n\n \n$\n**-**\n** **\n \n$\n**(677**\n**)**\n \n$\n**677**\n** **\n \n \n**(100**\n**)%**\n\n \n\nIncome tax expense for continuing operations decreased by $0.6 million for the year ended December 31, 2025 compared to the same period in 2024 due to the recognition of penalties assessed for the late filing of the 2024 corporate tax return.. The Company did not book additional penalties during the year ended December 31, 2025 as the business had decreased in size and operating subsidiaries on which the penalties were assessed in 2024.\n\n \n\n43\n\n[Table of Contents](#toc)\n\n \n\nIncome tax expense for discontinued operations decreased by $0.1 million for the year ended December 31, 2025 compared to the same period in 2024. Zonnepark Rilland receives a fixed payment each month per agreed rates with the customer. In the second quarter of the following year, the customer settles any difference in the average rates for the prior year and the agreed upon rate for the prior year. This settlement of the rates exceeded the receivables the company had booked and resulted in extra income recognized in 2022. The additional income received resulted in a higher tax liability and a balance due in 2022. The balance due was paid at the time of filing in 2024.\n\n \n\nImpairment Loss Recognized\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**Change ($)**\n\n \n \n\n**Change (%)**\n\n \n\n \n \n\n**in thousands**\n\n \n\nImpairment of Spanish assets\n\n \n$\n-\n \n \n$\n(3,263\n)\n \n$\n3,263\n \n \n \n(100\n)%\n\n**Total for continuing operations**\n\n \n$\n**-**\n** **\n \n$\n**(3,263**\n**)**\n \n$\n**3,263**\n \n \n \n**(100**\n**)%**\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**Discontinued Operations:**\n\n \n \n \n** **\n \n \n \n**)**\n \n \n \n \n \n \n \n**)%**\n\n**Impairment loss recognized on the remeasurement to fair value less costs to sell**\n\n \n$\n-\n** **\n \n$\n-\n** **\n \n$\n-\n \n \n \n0\n**%**\n\n**Total for discontinued operations**\n\n \n$\n-\n** **\n \n$\n-\n** **\n \n$\n-\n \n \n \n0\n**%**\n\n**Total for the period**\n\n \n$\n**-**\n** **\n \n$\n**(3,263**\n**)**\n \n$\n**3,263**\n \n \n \n**(100**\n**)%**\n\n \n\nImpairment loss recognized for continuing operations decreased by $3.3 million for the year ended December 31, 2025 compared to the same period in 2024 as the charge in 2024 related to the Spanish assets that were subsequently sold in March 2025. Refer to footnote 18 for sale information.\n\n \n\n \n\nNet Loss\n\n \n\nNet loss for continuing operations decreased by $17.4 million for the year ended December 31, 2025 compared to the same period in 2024. This is primarily due to a $15.5 million gain on disposal of assets, a $3.7 million reduction in impairment and development costs, $4.6 million (52%) reduction in interest charges in the period and a $1.5 million gain on movement in fair value of warrants. Selling, general, and administrative costs reduced by $4.0 million (33%) due to management's ongoing cost reduction programme and right sizing of the business for future growth. These gains were offset by $3.2 million loss on extinguishment of debt relating  to the re-class of the SNC notes on July 1, 2025 and a subsequent $4.0 million loss on movement in fair value of convertible notes for the year ended December 31, 2025. In addition the Company recorded one time costs of $2 million relating the SAA with Hover as part of the EverON acquisition and approximately $2.0 million of costs relating to debt restructuring and legal costs associated with unpaid liabilities.\n\n \n\nNet loss for discontinued operations decreased by $45.8 million for the year ended December 31, 2025 compared to the same period in 2024 primarily due to sale of Solis in October of 2024.\n\n \n\n**Liquidity and Capital Resources**\n\n \n\n**Capital Resources**\n\n \n\nA key element to the Company’s financing strategy is to raise much of its debt in the form of project specific non-recourse borrowings at its subsidiaries with investment grade metrics. Going forward, the Company intends to primarily finance acquisitions or growth capital expenditures using equity and long-term non-recourse debt that fully amortizes within the asset’s contracted life, as well as retained cash flows from operations and issuance of equity securities through public markets.\n\n \n\nThe following table summarizes certain financial measures that are not calculated and presented in accordance with US GAAP, along with the most directly comparable US GAAP measure, for each period presented below. In addition to its results determined in accordance with US GAAP, the Company believes the following non-US GAAP financial measures are useful in evaluating its operating performance. The Company uses the following non-US GAAP financial information, collectively, to evaluate its ongoing operations and for internal planning and forecasting purposes.\n\n \n\n44\n\n[Table of Contents](#toc)\n\n \n\nThe following non-US GAAP table summarizes the total capitalization and debt as of December 31, 2025 and December 31, 2024:\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n\n \n \n\n**(in thousands)**\n\n \n\nConvertible notes measured at fair market value\n\n \n$\n9,900\n \n \n$\n2,626\n \n\nConvertible and non-convertible other debt\n\n \n \n6,161\n \n \n \n27,718\n \n\nTotal debt\n\n \n \n16,061\n \n \n \n30,344\n \n\nLess current maturities\n\n \n \n(16,061\n)\n \n \n(28,715\n)\n\nLong term debt, net of current maturities\n\n \n$\n-\n \n \n$\n1,629\n \n\n \n \n \n \n \n \n \n \n \n\nCurrent Maturities\n\n \n$\n16,061\n \n \n$\n28,715\n \n\nDebt discount\n\n \n \n-\n \n \n \n(1,239\n)\n\nNet loss on issuance of convertible note & warrant\n\n \n \n-\n \n \n \n520\n \n\nMovement in fair value\n\n \n \n-\n \n \n \n(632\n)\n\nCurrent Maturities net of debt discount\n\n \n$\n16,061\n \n \n$\n27,364\n \n\n \n \n \n \n \n \n \n \n \n\nLong-term maturities\n\n \n$\n-\n \n \n$\n1,629\n \n\nLess long-term debt discount\n\n \n \n-\n \n \n \n-\n \n\nLong-term maturities net of debt discount\n\n \n$\n-\n \n \n$\n1,629\n \n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n\n \n \n\n**(in thousands)**\n\n \n\nCash and cash equivalents on the Consolidated Balance Sheets\n\n \n$\n32\n \n \n$\n161\n \n\n**Total cash, cash equivalents, and restricted cash on the Consolidated Statements of Cash Flow**\n\n \n$\n**32**\n \n \n$\n**161**\n \n\n \n\n \n\n**Liquidity Position**\n\n \n\nAs discussed in Footnote 2 to the consolidated financial statements, we have experienced recurring operating losses, generated negative cash flows from operations and have limited cash resources as of December 31, 2025 which, together with our current level of indebtedness, represent the existence of conditions that raise substantial doubt about our ability to continue as a going concern for twelve months from the issuance of this report, without additional financing.\n\n \n\nIn response to these conditions, over the past year, management has continued to pursue various actions to improve the Company’s financial position, such as reducing selling, general and administrative costs by approximately 50% (excluding stock compensation costs) and reducing loss from continuing operations from $24.9 million to $7.3 million for the twelve months ending December 31, 2024 and 2025, respectively. The Company also completed the acquisition of EverOn, valued at $56.5 million as at December 31, 2025, with the assistance of an independent third party valuation firm. As a result of these activities, Shareholders’ Equity/(Deficit) attributable to Alternus Clean Energy Inc. to $3.4 million as of December 31, 2025 from a deficit of $33.9 million as of December 31, 2024.\n\n \n\nThis improved balance sheet and business position is intended to support management’s plans to seek a listing on a national exchange at the earliest opportunity. As part of this activity, we are pursuing several financing initiatives intended to provide additional capital to support our operations, strategic objectives and near-term liquidity requirements.\n\n \n\nSubsequent to December 31, 2025, we have entered into a term sheet with a leading investment bank for an initial PIPE investment of $10 million in the form of convertible preferred equity with an additional $10 million available at the Company’s option within 11 months after the first closing. The agreement has a number of conditions precedent prior to closing, including the receipt of certain governmental and regulatory approvals and other requirements that are not entirely within our control. As a result, there can be no assurance regarding the timing of, or ultimate receipt of, any proceeds under the proposed financing arrangement.\n\n \n\nIn addition, we have also entered into a preliminary term sheet with an institutional investor for an equity line of credit facility that could provide access to up to $50.0 million of additional capital at the Company’s option over the following three years. The proposed facility remains subject to negotiation and execution of definitive agreements, satisfaction of customary closing conditions and other requirements. Further, our ability to access capital under such a facility would be dependent upon a number of factors, including the Company's stock price, trading volume and other market conditions at the time of any drawdowns.\n\n \n\nWhile we believe these financing initiatives, if successfully completed, would provide a significant source of additional liquidity, the transactions have not been completed as of the date of this filing and remain subject to uncertainties that are outside of our control. Accordingly, management cannot conclude that the successful completion of these transactions is probable at this time, and, therefore, these plans do not alleviate the substantial doubt regarding the Company's ability to continue as a going concern.\n\n.\n\n \n\n45\n\n[Table of Contents](#toc)\n\n \n\n**Financing Activities**\n\n \n\nIn May 2022, AEG MH02 entered into a loan agreement with a group of private lenders of approximately $10.8 million with an initial stated interest rate of 8% and a maturity date of May 31, 2023. In February 2023, the loan agreement was amended stating a new interest rate of 16% retroactive to the date of the first draw in June 2022. In May 2023, the loan was extended, and the interest rate was revised to 18% from June 1, 2023. In July 2023, the loan agreement was further extended to October 31, 2023. In November 2023, the loan agreement further extended to May 31, 2024. On December 31, 2025, the loan agreement was further extended to September 30, 2025 while also stating any accrued interest up to the date of the amendment was to be added to the principal loan balance. As a result of these amendments, $3.2 million of interest was recognized during the period ended December 31, 2024 and $5.9 million of accrued interest was added to the existing loan balance.  On May 7, 2025, AEG MH02 was sold, and the note was assumed by the buyer. See Footnote 16 for more information. The Company had principal outstanding of $0 and $16.0 million as of December 31, 2025 and December 31, 2024, respectively.\n\n \n\nIn July 2023, Alt Spain Holdco, one of the Company’s Spanish subsidiaries acquired the project rights for a 32 MWp portfolio of Solar PV projects in Valencia, Spain, with an initial payment of $1.9 million, financed through a €3.0 million ($3.3 million) bank facility having a six-month term and accruing ’Six Month Euribor’ plus 2% margin. On January 24, 2024, the maturity date was extended to July 28, 2024. On July 28, 2024, the loan was further extended to January 28, 2025 and the principal amount was reduced to €2.6 million ($2.8 million) from cash on hand.  On March 25, 2025, Alt Spain Holdco was sold, and the note was assumed by the buyer. See Footnote 15 for more information. This note had a principal outstanding balance of $0.0 million and $2.7 million as of December 31, 2025 and December 31, 2024, respectively.\n\n \n\nIn January 2024, the Company assumed a $938 thousand (€850 thousand) convertible promissory note with a 10% interest maturing in March 2025 as part of the Business Combination that was completed in December 2023. On January 3, 2024, the noteholder converted all of the principal and accrued interest owed under the note, equal to $1.0 million, into 264 shares of restricted common stock.\n\n \n\nOn March 21, 2024, ALCE, SPAC Sponsor Capital Access (“SCAF”), and the Sponsor of Clean Earth (“CLIN”) agreed to a settlement of a $1.4 million note assumed by ALCE as part of the Business Combination that was completed in December 2023. The note had a maturity date of whenever CLIN closes its Business Combination Agreement and accrued interest of 25%. ALCE issued 45 shares to SCAF in March 21, 2024 and a payment plan of the rest of the outstanding balance was agreed to with payments to commence on July 15, 2024. The closing stock price of the Company was $2,350 on the date of issuance.\n\n \n\nOn April 19, 2024, the Company entered into a Securities Purchase Agreement with an institutional investor pursuant to which the Company agreed to issue to the Investor a senior convertible note in the principal amount of $2,160,000, issued with an eight percent (8.0%) original issue discount and a warrant to purchase up to 482 shares of the Company’s common stock, at an exercise price of $2,400 per share.  As of December 31, 2025 the warrant was adjusted to purchase up to 1,360,755 shares at an exercise price of $0.85 per share. The Company received gross proceeds of $2,000,000, before fees and other expenses associated with the transaction. The Convertible Note matured on April 20, 2025, bearing interest at 7% per annum, which was adjusted in April of 2025 so that the Maturity Date is December 31, 2025 and the interest rate is 12% per annum, and ranks senior to the Company’s existing and future unsecured indebtedness. This note had a principal outstanding balance of $0.4 million as of December 31, 2025 and December 31, 2024, respectively.\n\n \n\nOn October 1, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”), by and between the Company and an institutional investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor a series of senior convertible notes up to an aggregate principal amount of $2,500,000, issued with a twelve percent (12.0%) original issue discount (each a “Convertible Note” and together, the “Convertible Notes”), and warrants (each a “Warrant” and together the “Warrants”) to purchase shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), equal to 50% of the face value of the Convertible Note divided by the volume weighted average price, at an exercise price of $2.00 per share (the “Exercise Price”). Pursuant to the Purchase Agreement, with the closing of the initial tranche of the Convertible Note and Warrant, the Company issued a Warrant to purchase up to 1,063 shares of Common Stock and the Company received gross proceeds of $700,000, before fees and other expenses associated with the transaction, accounting for the 12% original issue discount.  This warrant was adjusted on November 12, 2024 and on December 5, 2024 so that as of December 31, 2025 the warrant was as adjusted to purchase up to 500,377 shares exercisable at $0.85 per share.  In conjunction with the transaction, the Company issued warrants for the purchase of 106 shares of common stock with an exercise price of $440 per share to Maxim for their role as placement agent, which is exercisable at any time on or after April 1, 2025 and will expire on December 19, 2027.\n\n \n\nThe Convertible Note was extended and matures on December 31, 2025 (unless accelerated due to an event of default, or accelerated up to six installments by the Investor), bears interest at a rate of seven percent (7%) per annum, which shall automatically be increased to eighteen percent (18.0%) per annum in the event of default and, other than the First Convertible Note, ranks senior to the Company’s existing and future unsecured indebtedness. The Convertible Note is convertible in whole or in part at the option of the Investor into shares of Common Stock (the “Conversion Shares”) at the Conversion Price (as defined below) at any time following the date of issuance of the Convertible Note. The Convertible Note is payable monthly on each Installment Date (as defined in the Convertible Note) commencing on the earlier of December 1, 2024 and the effective date of the initial registration statement required to be filed pursuant to the Registration Rights Agreement (as defined below) in an amount equal the sum of (A) the lesser of (x) $79,545 and (y) the outstanding principal amount of the Convertible Note, (B) interest due and payable under the Convertible Note and (C) other amounts specified in the Convertible Note (such sum being the “Installment Amount”); provided, however, if on any Installment Date, no failure to meet the Equity Conditions (as defined in the Convertible Note) exits pursuant to the Convertible Note, the Company may pay all or a portion of the Installment Amount with shares of its common stock. The portion of the Installment Amount paid with common stock shall be based on the Installment Conversion Price. “Installment Conversion Price” means the lower of (i) the Conversion Price (defined below) and (ii) the greater of (x) 92% of the average of the two (2) lowest daily volume-weighted average price (“VWAP”) (as defined in the Convertible Note) in the ten (10) trading days immediately prior to each conversion date and (y) $150. “Equity Conditions Failure” means that on any day during the period commencing twenty (20) trading days prior to the applicable Installment Notice Date or Interest Date (each as defined in the Convertible Note) through the later of the applicable Installment Date or Interest Date and the date on which the applicable shares of Common Stock are actually delivered to the Holder, the Equity Conditions have not been satisfied (or waived in writing by the Holder).  This note had a principal outstanding balance of $0.5 and $2.2 as of December 31, 2025 and December 31, 2024, respectively.\n\n \n\nOn October 21, 2024, pursuant to the Purchase Agreement, the closing of the second tranche of the Convertible Note and Warrant occurred, whereby the Company issued a Warrant to purchase 813 shares of Common Stock exercisable at $400 per share and the Company received gross proceeds of $535,000, before fees and other expenses associated with the transaction, accounting for the 12% original issue discount.  This warrant was adjusted on November 12, 2024 and on December 5, 2024, such that as of December 31, 2025, the warrant was adjusted to purchase up to 382,430 shares at an exercise price of $0.85 per share. In conjunction with the transaction, the Company issued warrants for the purchase of 81 shares of common stock with an exercise price of $440 per share for their role as placement agent, which is exercisable at any time on or after April 21, 2024 and will expire on the third anniversary of the effective date of the registration statement registering the underlying warrant shares.\n\n \n\n46\n\n[Table of Contents](#toc)\n\n \n\nOn November 12, 2024, pursuant to the Purchase Agreement, the closing of the third tranche of the Convertible Note and Warrant occurred, whereby the Company issued a Warrant to purchase 1,520 shares of Common Stock exercisable at $300 per share and the Company received gross proceeds of $750,000, before fees and other expenses associated with the transaction, accounting for the 12% original issue discount. This warrant was adjusted on December 5, 2024 so that as of December 31, 2025, the warrant was adjusted to purchase up to 536,116 shares at an exercise price of $0.85 per share. In conjunction with the transaction, the Company issued warrants for the purchase of 114 shares of common stock with an exercise price of $440 per share to Maxim for their role as placement agent, which is exercisable at any time on or after May 12, 2025 and will expire on December 19, 2027.\n\n \n\nOn December 5, 2024, pursuant to the Purchase Agreement, the closing of the fourth and final tranche of the Convertible Note and Warrant occurred, whereby the Company issued a Warrant, which as of December 31, 2025 was adjusted to purchase up to 153,686 shares of Common Stock exercisable at $0.85 per shares and the Company received gross proceeds of $214,999 before fees and other expenses associated with the transaction, accounting for the 12% original issue discount. In conjunction with the transaction, the Company issued warrants for the purchase of 33 shares of common stock with an exercise price of $440 per share to Maxim for their role as placement agent, which is exercisable at any time on or after June 5, 2025 and will expire on December 19, 2027.\n\n \n\nOn April 28, 2025, the Company entered into a Letter Agreement with the Investor, which modifies certain terms and conditions of the Senior Convertible Note issued April 19, 2024 and the Senior Convertible Note issued October 1, 2024, by the Company to the Investor, collectively (the “2024 Notes”). The interest rate on the 2024 Notes is and will continue at a rate of 12% per annum. The conversion price of the 2024 Notes which remain outstanding shall be adjusted to the lesser of i) $6.00 and ii) 55% of the Market Price. Market Price shall mean the average of the three lowest traded prices of at least 100 shares during the twenty (20) Trading Days immediately prior to the Conversion Date. Unless mutually agreed upon, the Conversion Price shall not be less than $0.0001. The maturity date of the 2024 Notes shall be extended to December 31, 2025. Pursuant to the Letter Agreement, the Company agreed to issue the Investor a warrant (the “Warrant”) to purchase up to 170,000 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), at an exercise price of $6.00 per share.  This Warrant was adjusted such that as of December 31, 2025, the warrant was as adjusted to purchase up to 1,199,295 shares at an exercise price of $0.85 per share. The Warrant is exercisable immediately and will expire on the date that is five and one-half (5 1/2) years after its date of issuance.\n\n \n\nOn December 4, 2024, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”) with Secure Net Capital LLC (“Secure Net”), pursuant to which the Company issued a 20% Original Issue Discount promissory convertible note (the “2024 Note”) with a maturity date in April 2025, in the principal sum of $1,250,000. Pursuant to the terms of the 2024 Note, the Company agreed to pay to Secure Net the entire principal amount on the Maturity Date, failing which and certain events of default (as described in the 2024 Note), the 20% Original Issue Discount shall increase to 30% Original Issue Discount. The Purchase Agreement resulted in net proceeds of $1,000,000 to the Company. The 2024 Note, issued pursuant to the Purchase Agreement, is convertible at the option of the Holder at any time after the Maturity Date, including with registration rights, at a conversion price per share equal to ninety percent (90%) of the Company’s common stock’s VWAP (which is the three (3) Trading Days immediately prior to such Conversion Date (or the nearest preceding date)) as of the date of such conversion (the “Conversion Date”).\n\n \n\nOn December 11, 2024, the Company entered into an agreement with LiiON LLC as part of the business acquisition for a $2,000,000 note with a maturity date of December 31, 2027. Subsequent to December 31, 2024, on April 28, 2025, the Company and LiiON LLC mutually agreed to rescind the Asset Purchase Agreement. See Footnote 5 for further information.\n\n \n\nOn December 30, 2024, the Company assumed a $1,041,720 (€1,000,000) promissory note from AEG with a 10% interest maturing July 31, 2025. Additionally, the Company assumed multiple promissory notes totaling $1,025,000 million from AEG maturing June 30, 2025. This note had a principal outstanding balance of €1 million as of December 31, 2025 and December 31, 2024.\n\n \n\nOn December 31, 2024, the Company terminated their agreement with Meteora Capital LLC by issuing a $500,000 promissory note with a 10% annual interest rate maturing January 31, 2026. This note had a principal outstanding balance of $0.5 million as of December 31, 2025 and December 31, 2024.\n\n \n\nOn January 21, 2025, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain investors (the “Purchasers”) pursuant to which the Company sold, in a private placement (the “Offering”), unsecured 20% original issue discount promissory notes with an aggregate principal amount of $2,812,500 (the “Notes”). The Purchase Agreement also provides for the issuance of an aggregate of 7,630 shares of common stock of the Company, par value $0.0001 per share (the “Shares”) to the Purchasers. The transaction closed on January 23, 2025 (the “Closing Date”).\n\n \n\nThe aggregate gross proceeds to the Company were expected to be $2,250,000, before deducting placement agent fees and expenses. $580,000 of such proceeds were released on the Closing Date and the remaining amount were held in escrow, to be released to the Company upon the later of: i) filing the registration statement referenced below and ii) the date on which the Company receives a written communication from the Nasdaq Stock Market (“Nasdaq”) that Nasdaq has granted the Company an extension to meet the continued listing requirements of the Nasdaq. Because the Company received a delisting determination from the Nasdaq on February 10, 2025, the Escrow Agent disbursed the funds back to the Purchasers as provided below against cancellation of a proportional portion of each Purchaser’s Note (inclusive of original issue discount).\n\n \n\nThe Notes were issued with an original issue discount of 20%. No interest shall accrue on the Notes unless and until an Event of Default (as defined in the Notes) has occurred, upon which interest shall accrue at a rate of twenty percent (20.0%) per annum. The Notes matured on April 23, 2025, have not been repaid as of December 31, 2025 and are therefore in default. Upon the occurrence of any Event of Default and at any time thereafter, the Purchasers shall have the right to exercise all of the remedies under the Notes.\n\n \n\nMaxim served as the placement agent in the Offering, pursuant to the terms of a Placement Agency Agreement and received 8% of the gross proceeds of the Offering, and placement agent warrants to purchase up to 381 shares of common stock at $81.18 per share (the “Placement Agent Warrants”) and reimbursement of the legal fees of its counsel of up to $50,000. The Placement Agent Warrants will be exercisable on the six (6) month anniversary of issuance and will expire on the five (5) year anniversary of issuance.\n\n \n\n47\n\n[Table of Contents](#toc)\n\n \n\nOn April 28, 2025, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”), by and between the Company and an institutional investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor promissory notes in the aggregate total principal amount of up to $558,000, with the first tranche of $318,000 closing immediately and the remaining $240,000 to close upon request of the Company and at the Investor’s discretion, having a 16.67% original issue discount, an interest rate of 12% per annum and a maturity date of December 31, 2025 (the “Notes”). Pursuant to the Purchase Agreement, with the closing of the private placement of the Note (the “Private Placement”), the Company received gross proceeds of $265,000, before fees and other expenses associated with the transaction. On May 30, 2025, a second partial tranche in the amount of $180,000 of the Notes closed, and the Company received gross proceeds of $150,000.\n\n \n\nOn May 29, 2025, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”), dated as of May 29, 2025, with an institutional investor pursuant to which the Company issued a 20% Original Issue Discount promissory convertible note (the “2025 Note”) with a maturity date in August 2025, which was extended to November 5, 2025, in the principal sum of $312,500. Pursuant to the terms of the 2025 Note, the Company agreed to pay to the entire principal amount on the Maturity Date, failing which and certain events of default (as described in the 2025 Note), the 20% Original Issue Discount shall increase by 5% per month until the Note is fully repaid. The Purchase Agreement contains customary representations and warranties by the Company and closed on the same date thereof. The Purchase Agreement resulted in net proceeds of $250,000 to the Company, which the Company intends to use for working capital purposes.\n\n \n\nThe 2025 Note, issued pursuant to the Purchase Agreement, is convertible at the option of the Holder at any time after the Maturity Date, including with registration rights, at a conversion price per share equal to ninety percent (90%) of the Company’s common stock’s VWAP (which is the three (3) Trading Days immediately prior to such Conversion Date (or the nearest preceding date)) as of the date of such conversion (the “Conversion Date”). The current 2025 Note is a senior direct debt obligation of the Company ranking pari passu with all other Notes, but subordinate and junior in right of payment to the Senior Convertible Notes originally issued to 3i, LP., and other senior or pari passu Indebtedness (as defined in the Purchase Agreement) of the Company.\n\n \n\nOn June 6, 2025, the Company entered into a Note Purchase Agreement (the “Purchase Agreement”), by and between the Company and an institutional investor (the “Investor”), pursuant to which the Company agreed to issue to the Investor a promissory note in the aggregate total principal amount of $240,000, having a 16.67% original issue discount, an interest rate of 12% per annum and a maturity date of December 31, 2025 (the “Note”). Pursuant to the Purchase Agreement, with the closing of the private placement of the Note, the Company received gross proceeds of $200,000, before fees and other expenses associated with the transaction.\n\n \n\n**Material Cash Requirements from Known Contractual Obligations**\n\n \n\nThe Company’s contractual obligations consisted of operating leases generally related to the rent of office building space, as well as land upon which the Company’s solar parks are built. These leases include those that have been assumed in connection with the Company’s asset acquisitions. \n\n \n\nFor the year ending December 31, 2024, the Company incurred operating lease expenses from continuing operations of $126,000 for the United States office lease before Alternus Energy Americas Inc. was sold to AEG on November 5, 2024 and $48,000 for the land lease in Madrid, Spain. The Spanish SPV's were subsequently sold to AEG in March 2025 following which the Company has no lease obligations.\n\n \n\nThe Company had no leases as of December 31, 2025\n\n \n\n**Cash Flow Discussion**\n\n \n\nThe Company uses traditional measures of cash flows, including net cash flows from operating activities, investing activities, and financing activities to evaluate its periodic cash flow results.\n\n \n\n**For the Year Ended December 31, 2025 compared to December 31, 2024**\n\n \n\nThe following table reflects the changes in cash flows for the comparative periods:\n\n \n\n \n \n\n**Year Ended December 31,**\n\n \n\n \n \n \n \n** **\n \n \n \n** **\n \n\n**Change**\n\n \n\n \n \n\n**2025**\n\n \n \n\n**2024**\n\n \n \n\n**($)**\n\n \n\n \n \n\n**(in thousands)**\n\n \n\nNet cash provided by/(used in) operating activities\n\n \n \n(2,485\n)\n \n \n(3,222\n)\n \n \n737\n \n\nNet cash provided by/(used in) operating activities – Discontinued Operations\n\n \n \n-\n \n \n \n95,592\n \n \n \n(95,592\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nNet cash provided by/(used in) investing activities\n\n \n \n-\n \n \n \n(1,679\n)\n \n \n1,679\n \n\nNet cash provided by/(used in) investing activities – Discontinued Operations\n\n \n \n-\n \n \n \n23,088\n \n \n \n(23,088\n)\n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nNet cash provided by/(used in) financing activities\n\n \n \n2,356\n \n \n \n1,183\n \n \n \n1,173\n \n\nNet cash provided by/(used in) financing activities – Discontinued Operations\n\n \n \n-\n \n \n \n(137,729\n)\n \n \n137,729\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n\nEffect of exchange rate on cash\n\n \n \n-\n \n \n \n(1,636\n)\n \n \n1,636\n \n\n \n\n**Net Cash Used in Operating Activities**\n\n \n\nNet cash used in continuing operating activities decreased by $0.7 million for the year ended December 31, 2025 compared to 2024 . Net loss from continuing operations decreased by $17.4 million year on year, mainly due a gain on disposal of assets of $15.5 million and a reduction in selling, general, and administrative expenses, impairment and development costs and in interest expense as described above. The reduction in interest and selling, general, and administrative expenses reflects management ongoing focus on cost and debt reduction throughout the year. The remaining decrease was a mainly a result of a reduction in payables due to forgiveness of certain payables, conversion to equity offset by in increase in accrued expenses in the period.\n\n \n\n48\n\n[Table of Contents](#toc)\n\n \n\nNet cash provided by discontinued operating activities decreased by $95.6 million for the year ended December 31, 2025 compared to 2024 . The net loss decreased by $45.8 million in 2025, as a result of the disposal of the Romanian, Polish, and Netherlands parks during the year ended December 31, 2024.\n\n \n\n**Net Cash Used in Investing Activities**\n\n \n\nThere was no net cash used in continuing investing activities for the year ended December 31, 2025 compared to $1.7 million in  2024as the Company focused on asset reduction and completing the acquisition of EverOn for shares during the year.\n\n \n\nNet cash provided discontinued investing activities for the year ended December 31, 2025 compared to 2024 decreased by $23.1 million. This was a result of the disposal of the Romanian, Polish, and Netherlands parks during the year ended December 31, 2024.\n\n \n\n**Net Cash Provided by Financing Activities**\n\n \n\nNet cash provided by continuing financing activities for the year ended December 31, 2025 compared to 2024 increased by $1.1 million mainly driven from short term convertible and non convertible debt that was not repaid in the period.\n\n \n\nNet cash used in discontinued financing activities for the year ended December 31, 2025 compared to 2024 increased by $137.7 million. This was a result of the disposal of the Romanian, Polish, and Netherlands parks during the year ended December 31, 2024.\n\n \n\n**Critical Accounting Estimates** \n\n \n\nThe preparation of financial statements in conformity with US GAAP requires the Company to make estimates and assumptions in certain circumstances that affect amounts reported in its consolidated financial statements and related footnotes. In preparing these consolidated financial statements, the Company has made its best estimates of certain amounts included in the consolidated financial statements. Application of accounting policies and estimates, however, involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. In arriving at the Company’s critical accounting estimates, factors the Company considers include how accurate the estimate or assumptions have been in the past, how much the estimate or assumptions have changed, and how reasonably likely such change may have a material impact. The Company’s critical accounting policies are discussed below.\n\n \n\nVariable Interest Entities (\"VIEs\")\n\n \n\nFor VIEs, the Company assesses whether it is the primary beneficiary as prescribed by the accounting guidance on the consolidation of a VIE.  \n\n \n\nThe Company evaluates its business relationships with related parties to identify potential VIEs under Accounting Standards Codification (\"ASC\") 810, *Consolidation*.  The Company consolidates VIEs in which it is considered to be the primary beneficiary.  Entities are considered to be the primary beneficiary if they have both of the following characteristics: (i) the power to direct the activities that, when taken together, most significantly impact the VIE's performance; and (ii) the obligation to absorb losses and right to receive the returns from the VIE that would be significant to the VIE.  The Company's judgment with respect to its level of influence or control of an entity involves the consideration of various factors including the form of its ownership interest, its representation in the entity's governance, the size of its investment, estimates of future cash flows, its ability to participate in policy making decisions and the rights of the other investors to participate in the decision making process and to replace the Company as manager and/or liquidate the joint venture, if applicable.\n\n \n\nBusiness Combinations\n\n \n\nThe Company acquires assets which operate in nature with existing revenue streams and assets which are constructed for the purpose of being sold. The Company applies the screen test per ASC 805 to determine an asset acquisition versus business combination and accounts for business combinations by recognizing in the financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interests in the acquiree at fair value at the acquisition date. The Company also recognizes and measures the goodwill acquired or a gain from a bargain purchase in the business combination and determines what information to disclose to enable users of an entity’s financial statements to evaluate the nature and financial effects of the business combination. In addition, acquisition costs related to business combinations are expensed as incurred. Cost directly attributed to an asset acquisition are capitalized to the asset per ASC 805 Business combinations is a critical accounting policy as there are significant judgments involved in the allocation of acquisition costs and determining the fair value of the net assets acquired. Refer to Note 6 to the accompanying financial statements for more information.\n\n \n\nWhen the Company acquires renewable energy facilities, the Company allocates the purchase price to; (i) the acquired tangible assets and liabilities assumed, primarily consisting of plant equipment and long-term debt, (ii) the identified intangible assets and liabilities, primarily consisting of the value of favorable and unfavorable rate PPAs and REC agreements and the in-place value of market rate PPAs, (iii) non-controlling interests, and (iv) other working capital items based in each case on their fair values in accordance with ASC 805.\n\n \n\nThe Company performs the analysis of the acquisition using income approach valuation methodology. Factors considered by management in its analysis include considering current market conditions and costs to construct similar facilities. The Company also considers information obtained about each facility as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets and liabilities acquired or assumed. In estimating the fair value, the Company also establishes estimates of energy production, current in-place and market power purchase rates, tax credit arrangements, and operating and maintenance costs. A change in any of the assumptions above, which are subjective, could have a significant impact on the results of operations.\n\n \n\nWhen an acquired group of assets does not constitute a business, the transaction is accounted for as an asset acquisition. The cost of assets acquired and liabilities assumed in asset acquisitions is allocated based upon relative fair value. The fair value measurements of the solar facilities acquired and asset retirement obligations assumed were derived utilizing an income approach and based, in part, on significant inputs not observable in the market. These inputs include, but are not limited to, estimates of future power generation, commodity prices, operating costs, and appropriate discount rates. These inputs require significant judgments and estimates at the time of the valuation. Transaction costs incurred, including legal and financing fees directly related to the acquisition, are capitalized as a component of the assets acquired.\n\n \n\nThe allocation of the purchase price directly affects the following items in the Company consolidated financial statements:\n\n \n\n \n\n●\n\nThe amount of purchase price allocated to the various tangible and intangible assets, liabilities, and non-controlling interests on the Company balance sheet;\n\n \n\n \n\n●\n\nThe amounts allocated to current assets or current liabilities are allocated at the acquisition value. The amounts allocated to long term tangible and intangible assets are amortized to depreciation or amortization expense, and\n\n \n\n \n\n●\n\nThe period over which tangible and intangible assets and liabilities are depreciated or amortized varies. Changes in the amounts allocated to these assets and liabilities will have a direct impact on Company results of operations.\n\n \n\n49\n\n[Table of Contents](#toc)\n\n \n\nImpairment of Long-Lived Assets and Identifiable Intangible Assets\n\n \n\nIdentifiable intangible assets with finite lives are amortized over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Factors that the Company considered in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of assets.  The Company evaluates recoverability by comparing the carrying amount of the asset group to the estimated undiscounted future cash flows expected to result from the use and eventual disposition of the assets. If the carrying amount of the asset group is not recoverable, an impairment loss is recognized equal to the amount by which the carrying amount exceeds fair value, determined using discounted cash flows or other appropriate valuation techniques.\n\n \n\nGoodwill Impairment\n\n \n\nGoodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. The Company evaluates goodwill for impairment at least annually and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Goodwill is tested for impairment at the reporting unit level by comparing the estimated fair value of the reporting unit to its carrying amount, including goodwill. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to the excess, limited to the carrying amount of goodwill. The Company determines fair value using a combination of income and market approaches, as appropriate. During the years ended December 31, 2025 and 2024, the Company recognized no impairment of goodwill.\n\n \n\nMeasurement of Level 3 Liabilities\n\n \n\nFinancial liabilities where values are based on valuation techniques that require inputs that are both unobservable and are significant to the overall fair value measurement are classified as Level 3 under the fair value hierarchy established in applicable accounting standards. The fair value of these Level 3 financial liabilities is determined by using a third-party pricing service using Monte Carlo simulations or similar techniques for which the determination of fair value requires significant management judgment or estimation. The Level 3 gains and losses are valued quarterly and recorded in earnings.\n\n \n\nImpairment of Renewable Energy Facilities\n\n \n\nRenewable energy facilities that are held and used are reviewed for impairment whenever events or changes in circumstances indicate carrying values may not be recoverable. An impairment loss is recognized if the total future estimated undiscounted cash flows expected from an asset are less than its carrying value. An impairment charge is measured as the difference between an asset’s carrying amount and its fair value. Fair values are determined by a variety of valuation methods, including appraisals, sales prices of similar assets, and present value techniques.\n\n \n\n**Quantitative and Qualitative Disclosures About Market Risk**\n\n \n\n**Market Risk**\n\n \n\nThe Company has no derivative financial instruments or derivative commodity instruments.\n\n \n\n**Foreign Currency Risk**\n\n \n\nThe Company is exposed to foreign currency risk as a result of certain transactions and borrowings which are denominated in foreign currencies.\n\n \n\nIn addition, the Company is exposed to currency risk associated with translating its functional currency financial statements into its reporting currency, which is the U.S. dollar. As a result, the Company is exposed to movements in the exchange rates of various currencies against the U.S. dollar.\n\n \n\nThe Company manages its exposure to currency risk by commercially transacting in the currencies in which the Company materially incurs operating expenses. The Company limits the extent to which it incurs operating expenses in other currencies, wherever possible, thereby minimizing the realized and unrealized foreign exchange gain/(loss). The currency of the Company’s borrowing is, in part, matched to the currencies expected to be generated from the Company’s operations. Intercompany funding is typically undertaken in the functional currency of the operating entities or undertaken to ensure offsetting currency exposures.\n\n \n\n**Interest Rate Risk**\n\n \n\nFluctuations in interest rates can impact the value of investments and financing activities, giving rise to interest rate risk. The debt of the Company is comprised of different instruments, which bear interest at either fixed or floating interest rates. The ratio of fixed and floating rate instruments in the loan portfolio is monitored and managed. Refer to Footnote 14 – Convertible and Non-convertible Promissory Notes for more information.\n\n \n\nThe Company believes that the interest rates on all borrowings compare favorably with those rates available in the market.\n\n \n\n**Emerging Growth Company Status**\n\n \n\nIn April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was enacted. Section 107 of the JOBS Act provides that an “emerging growth company,” or an EGC, can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company has elected to use the extended transition period for new or revised accounting standards during the period in which we remain an EGC.\n\n \n\nWe expect to remain an EGC until the earliest to occur of: (1) the last day of the fiscal year in which we, as applicable, have more than $1.235 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700 million in market value of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.\n\n \n\nAdditionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our stock held by non-affiliates is greater than or equal to $250 million as of the end of that fiscal year’s second fiscal quarter, or (ii) our annual revenues are greater than or equal to $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is greater than or equal to $700 million as of the end of that fiscal year’s second fiscal quarter. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.\n\n \n\n**Recent Accounting Pronouncements**\n\n \n\nA description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Footnote 2, “Significant Accounting Policies,” to our audited consolidated financial statements included elsewhere in this Report."}